June 1, 2012

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Consider Mediation

An Alternative Method to Resolving Business Disputes

Shane D. Gosdis is a litigation attorney at Vantus Law Group in Salt Lake City.

June 1, 2012

You retained a software company to design and implement a new software program for your business. You have paid for the software, but it is nine months behind schedule with one problem after another. There is no end in sight. You want blood. You call your attorney. You direct him or her to file a complaint immediately. You want damages and attorneys’ fees and anything else you can extract from the other side. But before you pull the trigger on litigation, you first should consider mediating your dispute.

Mediation is a negotiation between the parties facilitated by an independent third-party. Mediation can occur before or even during litigation. It is often highly successful in resolving disputes. Mediation, however, will only work if both parties are interested in negotiating a settlement. If one of the parties is not interested in settling, or is not in a position to settle, mediation will not be effective. Mediation may also fail if it is premature. If the parties have yet to gather enough information to make informed decisions, or if they are otherwise unprepared, mediation is unlikely to produce a settlement. In that case, mediation will be better utilized after the parties have completed their investigation of the facts.

Economical, Fast and Effective
If you have ever been involved in litigation, you know it can be expensive. It requires the parties to spend significant amounts of time and money on discovery, takes months to complete and often involves protracted disputes regarding the exchange of relevant information. Litigation also involves costly motion practice. 

Unlike litigation, mediation requires neither discovery nor motion practice. As a result, parties can mediate a dispute for a relatively small amount of money. That means parties can use their resources to build business, not war rooms full of discovery documents and deposition transcripts.  

Mediation is also often faster than litigation. It can easily take a year and a half or more to get your case to trial. And it may take several more years if there are appeals. Mediation, on the other hand, is extraordinarily quick. Parties can schedule a mediation to fit their schedule (not a court’s) and can complete the entire process within a relatively short amount of time.

Parties often worry that they may have wasted time and money if mediation does not result in settlement. Mediation, however, has significant benefits even if settlement is not reached. It allows a party to better understand its opponent’s case and to see the weaknesses in its own case. Mediation may also serve to narrow the scope of the litigation and may even result in a partial settlement.

Involvement Encouraged
Mediation allows the parties themselves to be involved in the settlement process. They pick their own mediator and can directly participate in and control the proceedings (unlike litigation). Because parties can take a direct role in mediation, they are often able to negotiate personally satisfactory outcomes.

Mediation is also unique because it allows both sides to tell each other—not a judge or an arbitrator—their respective sides of the story. The parties are also able to tell their story to the mediator in the private sessions. This facet of mediation is particularly important if one of the parties simply wants his or her “day in court.” After telling his or her story, a party may be more willing to settle.  

Another benefit mediation affords is privacy. Litigation is public and can be bad for business when customers, strategic partners, suppliers or employees learn that your company is involved in litigation. And it can be embarrassing when skeletons fall out of the closet along the way. Unlike litigation, mediation is completely private. Most states (including Utah) have laws ensuring the confidentiality of mediation and settlement offers exchanged during mediation cannot be used at trial. 

Mutually Beneficial
Parties often leave a mediation without being totally satisfied because one side paid more than it had hoped and the other side received less than it expected. The parties, however, have the mutual satisfaction of having resolved their dispute for less attorneys’ fees than they would have spent in litigation and are generally more satisfied with mutually agreed upon settlements, as opposed to a decision imposed by a court or a jury.

Mediation is much less adversarial than litigation. As such, mediation provides a venue where parties can resolve their dispute while at the same time salvaging their business relationship.

These are only a few of the many benefits of mediation. It is not right for every dispute, but can often lead to surprisingly quick and efficient results.

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