You may be facing a lawsuit or you may have started a lawsuit and the other side suggests “mediation”. What is mediation and should you mediate?
Mediation is a form of negotiation. Negotiation is about reaching an agreement to resolve a dispute. In most disputes the people involved try to reach an agreement either by speaking directly to each other or through their lawyers. Typically offers to settle go back and forth until an agreement is reached or one of the parties gives up trying to reach an agreement. Where no agreement is reached, in order to decide the dispute, the parties must go to court or binding arbitration where a judge or arbitrator hears the evidence and arguments of each side and makes a decision. That decision is binding on both sides, subject only to an appeal to a higher court.
In mediation an independent person trained in helping people reach agreements, assists the parties in trying to reach an agreement. Like arbitration or court, the mediation involves a third party who is unbiased and neutral. However, unlike an arbitrator or a judge, the meditator cannot make a final decision. The mediator is only there to assist the parties themselves in coming to an agreement. Mediators have been used in all kinds of disputes including claims involving Aboriginal title and Treaty rights as well as First Nation business disputes.
Sometimes a mediator is helpful since he or she can deal with the issues unemotionally and can make sure each side understands the other side’s position. He or she can gain a better sense of where the parties are and whether there are any common areas where agreement can be reached. The mediator can ensure that each side understands the true costs of not reaching an agreement. At the end of a successful mediation, both sides agree on the terms of a settlement. Those terms are documented in a settlement agreement which becomes binding on the parties.
A mediator can only become involved if both parties agree. Usually a mediation agreement sets out the role of the mediator and the mediator’s fees and both sides agree to share the fees equally. Typical fees are $5,000 per day but can be much higher or lower depending on the skill and seniority of the mediator. The fee is payable whether the dispute is settled or not.
Clients often ask me if they should mediate. My experience is that in order to get the best bang for the buck at mediation, the parties should have tried to reach agreement through their lawyers first. If one side has not responded to an offer made by the other side, it may be that they have no genuine interest in settling and no amount of mediation will make them change their mind. If offers are made and the parties are still far apart, it can be a sign that mediation may not work. The larger the gap between the positions of the parties, the harder it is to get both sides to agree on a middle ground. However, if both sides appear interested in trying to resolve the dispute, even if the parties are far apart, mediation may still be helpful. An agreement may be reached at mediation on some or all of the issues. At the very least, each side should come away from mediation with a better appreciation for the position of the other side and the barriers to settlement.
The bottom line is that when the other side has not made a genuine offer or attempt at settle, I do not recommend mediation as it may be a waste of my client’s money. However, if the other side is prepared to pay for the entire mediation whether an agreement is reached or not, then mediation cannot hurt and may be helpful.
Mediation is definitely worth a try when both sides want to settle, but if one side has no genuine interest in settling and has not made a serious offer, beware of wasting your money.