Mediate or litigate?

Alternative dispute resolution (ADR) processes generally, and mediation specifically, were increasingly used in the USA in the 1980s as an alternative to lengthy and extremely costly formal legal processes. The legal reforms introduced by Lord Woolf in 1999 – allowing judges to order mediation and financially penalise those unwilling to give it a go – provided an important catalyst for a wider use of mediation in the UK. Since then, there has been a steady increase in the number of commercial/civil mediations conducted, and in the number of mediators and mediation providers available.

There are clear parallels with workplace mediation (AP241) and some differences. The role of the mediator is again that of impartial facilitator, but here much of the negotiation is conducted through individual ‘caucus’ sessions with the mediator passing information and offers between the sides until settlement is reached. The mediator doesn’t pass judgement on the legal merits of the case but encourages the parties to explore options for settlement on commercial – rather than legal – grounds. In commercial mediation, any written settlement becomes, on signature, a legally binding contract.

The process is confidential and, in legal terms, ‘without prejudice’, meaning that anything said – including any settlement offers made – remain confidential to the mediation and can’t be referred to in any subsequent legal proceedings. The safety that this confidentiality provides is key to encouraging parties to experiment with offers for settlement, knowing they won’t be required to stand by them at a later date should the mediation fail. Mediation is quick and can take place at any time – including once legal proceedings are already underway, when those proceedings can be put on hold to allow time for the parties to try and find a solution. If the dispute doesn’t settle – and it won’t without some flexibility from both sides – parties are able to revert to legal proceedings should they so wish.

Mediation is cost effective, and dealing with the dispute quickly (usually within a day) avoids the risk of the amount in dispute becoming disproportionate to the time and legal costs associated with seeking its recovery. Mediation is informal and takes place in private, avoiding the stress and publicity of a protracted and public legal process. The parties decide the terms of settlement, replacing the uncertainty of a legal process with the ability to keep control over what is agreed to.

A very small percentage of cases going through the courts at any one time will make it to trial, with many deals getting done at the last minute. If there’s ultimately going to be a negotiation, taking the mediation route at the outset will avoid poorly-thought-through settlements being agreed under pressure on the courtroom steps. And although mediation is an alternative to litigation, that doesn’t mean that any surrounding legal context is irrelevant. On the contrary, the mediator will work closely with parties and their legal teams to help them explore the relative merits of continuing down a legal route versus the options for settlement identified at mediation.

Whether a dispute has become legal or not, mediation is well suited to any number of the disputes common to our industry. Perhaps it’s a dispute triggered by a poorly worded clause in a contract. Maybe both sides have exchanged contracts and there’s a lack of clarity as to whose takes precedence in a particular circumstance. Perhaps a verbal agreement has been made that subsequently needed to be renegotiated in the light of changing circumstances. What if a consultant has failed to deliver on time, or if the standard of work delivered is unacceptable? Maybe there’s a copyright dispute and issues around ownership of intellectual property. All of these situations have been encountered and successfully resolved in mediations I’ve been involved in over the years.

Disputes are never black and white, and the flexibility of mediation provides time and space for a far more nuanced, imaginative and creative solution to be crafted. A mediator can help parties think through creative options for settlement that include aspects other than money. When was the last time that a court ordered an instruction for ‘payment in kind’ or for an apology to be given? Yet an expression of regret can unlock a negotiation like nothing else.

Not all mediation need be measured in days. Depending on the value, the number of parties involved and the overall complexity, mediations can be ‘time limited’ and conducted within hours. Telephone mediation is also emerging as a cost-effective option when the sums involved are relatively small and the parties live a long way from one another. The cultural industries have the same issues with customers and suppliers as any other business and, increasingly, businesses at large are turning to mediation. And being a consensual rather than adversarial process, ongoing relationships are far more likely to be retained. So if you find yourself with a dispute, whatever the circumstance, take a moment to consider whether mediation might be appropriate: it’s commercial, convenient, creative, confidential, consensual and you keep control.