Bicknell Law Offices

Mediation: What Good Is It?

Is mediation for me? Look at this story and then decide. Adrianna, the owner of seven convenience stores, was frustrated and angry. The arbitrators of a dispute between Adrianna and David, her store manager, had awarded the manager $4,300-with no explanations. Adrianna and David had been arguing over the issue of percentage compensation for more than a year. The award was not appealable since the contract between them called for binding arbitration. David, who had invoked the arbitration clause, was just as unhappy. Although his claim was for $58,600, the award was about $2,000 less than David's attorney's fees, accountant's fees and arbitration costs.
It had taken about a year to get to the two-day hearing and none of the questions they raised had been answered. Countless hours spent with lawyers and accountants had been wasted. It was a lose-lose result. Both David and Adrianna felt that they would have been better off going to court since then they would at least have gotten findings from the court that would let them know how they should approach the accounting in the future.
With the help of a skilled mediator Adrianna and David probably could have worked out their differences in the space of a day, ending their dispute with a win-win result and better feelings for their future relationship. They would have saved time, money and months of bitter wrangling.
Like most business people, they did not know that they were not locked into arbitration (and only arbitration) by the language of their contract-but no one told them that. It was not until a salesman for one of their vendors heard their tales of woe that they learned about mediation. He told them that his company will not sign a contract that does not provide for early non-binding mediation in the case of a dispute.
Many multi-national companies now require mediation clauses in their contracts: Motorola, General Mills, The Travelers Companies and Aetna to name a few. The difference between mediation and arbitration is substantive. In arbitration, a decision-maker listens to witnesses and looks at documents. Then the arbitrator makes a decision for the people involved in the dispute. Unless the arbitration clause requires it, the arbitrator does not have to explain the decision he or she makes.
In mediation, a trained neutral, with no decision-making power, helps the parties negotiate their own settlement. The parties, not the attorneys, control the process.
Just what is mediation? Mediation is a non-binding process where the parties meet with a neutral third party called the mediator. The mediator attempts to bring the parties together so that they can find a mutually acceptable solution to their problems. When mediation is successful, it saves the parties lots of time and lots of money.
Even if you decide to sue your opponent, the chances are you will be urged to mediate your dispute. All California courts require that before trial the parties try to resolve their differences without the intervention of the court via alternative dispute resolution. Most of those courts are now urging parties to choose mediation as their alternative dispute method. A mediator does not have the authority to make a decision for the parties so the parties remain in control of the ultimate outcome.
A mediator will often play the role of the "devil's advocate" in order to persuade each party to reach a settlement. A mediation can be administered by the mediator chosen by the parties or by a neutral body such as the American Arbitration Association ("AAA"). The AAA has published rules for conducting mediations which can be reviewed on-line at www.adr.org.
Does it work? Mediation is usually very successful in construction and real estate disputes and in disputes involving employment issues and intellectual property. Statistics show that 85% of commercial matters submitted to mediation end in written settlement agreements.
Disclaimer: The foregoing is not intended as legal advice. The facts and circumstances of any case requires the review of an attorney familiar with real estate and/or construction law. Before taking any action, please consult with your counsel.