Your company is not able to resolve a dispute with a supplier. The supplier files a lawsuit which you turn over to your lawyers. A period of uncertainty and expense begins. You are convinced that you have a strong position and the pleadings you have seen from the other side are "preposterous." Yet, the process continues and the supplier does not back down. You focus an increasingly significant amount of time and thought on the battle in court. Then, your lawyer notifies you that the matter must be set for mediation. Questions arise. What is mediation? How will it affect the case? How do you "handle" mediation?

What is Mediation?

Mediation is a type of settlement conference in which a trained mediator focuses the parties into communication and negotiation that may resolve the case. The purpose of mediation is for the parties to reach a voluntary and mutually acceptable settlement. The mediator facilitates that process.

The Mediation Process

Mediation should not be confused with arbitration. Arbitration involves selection of a third party to hear evidence, consider legal arguments, and make a decision. Arbitration may be binding or non-binding, depending on the agreement of the parties or the context in which it arose.

Mediators do not decide who is right or wrong. In fact, the only decision reached must be a mutual one, and involves the parties--not the mediator. Mediation is a process. Often, a mediation session begins with each party presenting its side of the case in a joint session. Then, the parties may meet separately with the mediator to further explore the issues. The information discussed in mediation need not be evidence that is admissible in court. This information, communicated through the mediator, assist each party in evaluating its case, understanding the risks involved, and recognizing means to a voluntary settlement.

Suggestions for Mediation

Mediation is an opportunity for each party to step back and take a "big picture" look at the case. It is common to become so involved in buttressing your positions and defusing the facts or law supporting the other side's position that the overall purpose of the case, and particularly, business interests are overlooked.

The person attending the mediation session should have sufficient knowledge of your business interests to understand the "big picture." For example, in the dispute with the supplier, there may be a business reason to preserve the relationship. Possibly, that relationship may form the basis for a settlement that benefits both parties. Only a person in the organization with sufficient depth of understanding may recognize these possibilities. A person who has that big picture can structure a creative settlement or one that involves non-monetary arrangements.

The person must have sufficient authority to reach a settlement. Because a mediation session often takes all day, it is difficult, if not impossible, to reconstruct the negotiations by which the parties have reached a settlement. By having the person with authority present, the communication and negotiation is directly between the parties.

A party should not approach a mediation unprepared. Typically, the attorney handling the case will be best suited to present the case at the joint session. A party's direct statement can also be effective in communicating the company's case to the other side and to the mediator.

The company should consider what it desires from a settlement. While consideration must be given to prior mediation as to what is an unacceptable settlement, the mediation must be entered into with an open mind.

Companies prefer to focus on their business. Mediation, approached in a committed, prepared manner, with an open mind to the process, is an opportunity for management to understand the positions and requirements of the other side and achieve a settlement in the interests of the company. A voluntary, satisfactory settlement permits the company to get back to its real business.

If the mediation process works when referred by the court, another question that arises is whether mediation can be otherwise employed. Today, more and more companies are voluntarily agreeing to mediation, either before or just after a lawsuit is filed. One advantage of early mediation is that each party has not gotten entrenched and may more readily achieve an assisted settlement. Early mediation may be suggested when a dispute arises with a customer, supplier, or an employee. Mediation should be approached as a positive step towards the resolution of disputes.