CHOICES, CHOICES – COMPARING
Life is about choices,
just as the cliché says. When faced with a serious dispute, each
party must make choices about how to respond – ranging from inaction
and ignoring the problem in the hope it will go away, at one extreme,
to extra-legal actions and even violence at the other extreme. This
discussion focuses on alternatives between the extremes, by comparing
mediation to serious alternatives that disputants may consider to
resolve their conflict and achieve as many objectives as possible.
Although litigation, arbitration, mediation, and negotiation are
the primary alternatives, there are numerous hybrids and variations
of these approaches, including med-arb (mediation followed by arbitration),
mini-trials, and early neutral evaluation, among others.
Mediation v. Litigation.
Litigation is the standard response against which other alternatives
are measured, but the uncertainty, cost, delay, and distraction
of full-blown litigation are so extensive as to make other alternatives
worth examining seriously in every dispute. On occasion the principles
at stake are so important that litigation is worth the risk and
burden. Litigation may be the only option if one party is not amenable
to a more reasonable method of resolving the conflict. But in most
cases it is preferable to avoid litigation and seek some form of
alternative dispute resolution, particularly mediation. The benefits
of mediation are most dramatic when compared to no-holds-barred
Mediation v. Negotiation.
Parties will generally attempt direct negotiations with each other
before engaging a mediator, and when the solution is easy, it may
not be necessary to involve a neutral party. But in many cases,
attempting to negotiate directly can unnecessarily use up any remaining
good will by the time the parties decide to bring in a professional.
Thus, it is preferable to move quickly to mediation so that positions
do not have the opportunity to become entrenched. Even after negotiations
have stalled, however, a mediator can bring new perspective to the
parties. Further, a mediator who is knowledgeable about the subject
matter can assist the disputants in exploring alternatives that
they may not have previously considered. Moreover, in disputes between
competitors it may be helpful to have a mediator involved to demonstrate
that discussions between the parties were not an improper means
of dividing markets between the competitors or otherwise conspiring
in violation of the antitrust laws.
Mediation v. Arbitration.
Many business people (and even lawyers) think of mediation and arbitration
as synonymous, but they are very different approaches that share
a common theme of staying out of court. Mediation is the more versatile
and creative of the two. It permits the parties to control the outcome,
even though it doesn’t guarantee a final resolution. By contrast,
arbitration relies on a neutral – essentially a private judge –
to hear the evidence from the parties and render a decision that
is binding (if the parties have agreed that it will be). Thus, arbitration
ensures that there will be some outcome, but the parties lose control,
so the outcome is not necessarily any more satisfactory than one
rendered by a court. However, arbitration may be desirable when
the parties need a definitive outcome – one way or the other – in
a timeframe that is shorter than a court could accomplish.
Arbitration lacks several of the benefits of mediation.
Arbitration is usually more expensive than mediation (although still
less expensive than a trial) and results in a losing party who may
not have the ability to appeal. Mediation is much faster than arbitration
(or of course litigation). Mediation can be convened quickly and
often is resolved within a day or two, although complex cases may
take longer. Legal fees and expenses are significantly less than
in arbitration, and the distraction of business executives is correspondingly
reduced. For historical reasons, arbitration has received a disproportionate
share of attention in the antitrust and regulatory environments,
even though it often has less to offer than mediation. However,
the arbitration clauses in many agreements are often interpreted
to encompass mediation or any other appropriate form of efficient
and satisfactory alternative dispute resolution.
Need for Realism.
Although the benefits and potential of mediation make it worth considering
in every dispute, mediation is not a panacea. Mediation is hard
work, and it depends on the good faith and real commitment to the
process by the parties to the dispute. Many conflicts are simply
not suitable for resolution through mediation, and it may be only
partially successful in others. But a large majority of cases are
good candidates for mediation and will benefit from the process
if parties agree to it. When the parties are willing to engage in
mediation, the prospects for resolving the dispute are high. Nationally,
over 80% of commercial matters in mediation succeed in reaching
a written settlement agreement.
Although the substantial benefits of mediation to
the disputants are quite clear, the benefits to their legal counsel
may not seem apparent. The primary benefit to counsel comes from
representing the client in the best possible manner, leading to
stronger, longer term client relationships, and an enhanced reputation
for providing what is in the client’s best interest. Moreover, the
role of counsel in mediation may be significant, and it often involves
the lawyers more deeply in their clients’ long-term business goals
and strategies in a way that builds relationships that transcend
the particular dispute.