When parties in dispute cannot agree, various routes to resolution are available. Increasingly, individuals and businesses are turning away from the complex and potentially costly court process and utilising alternative dispute resolution (ADR) to reach a solution – often using both in tandem.
We've blogged previously on the core concepts and benefits of mediation, including that it is confidential and formally "without prejudice" to parties' positions.
Parties meet in person or online to negotiate their desired outcome for the dispute. The objective is to reach a mutual agreement with the assistance and guidance of an impartial third party – the mediator. The mediator will guide these parties towards an agreement without prejudice to either side. Ultimately, the parties in dispute must agree to the outcome of the mediation as final agreements are contractual and so legally binding.
But what can parties expect from the process and the mediation day?
What format might you expect from the mediation day?
Mediation is informal. The traditional model usually sees the disputing parties come to the table together in a joint session with the mediator at an early stage of the day. Typically, parties express what they wish to achieve from the mediation through an opening statement or discussion during this session, before breaking out to their own rooms. This process can be informed in advance by each party lodging a "position paper" setting out what they see as the main issues and their approach to them. After the joint session parties will return to their own room and the mediator will move from room to room to facilitate negotiation.
However, there can be flexibility in this model. More recently, initially evolving from social distancing restrictions and then with an eye to sustainable and environmentally friendly practices, mediators are encouraging online and hybrid meetings with both online and in-person participants at different locations. The online process will be very much the same as in person and can come with added benefits for the parties: the waiting periods will be from the comfort of parties' own homes, or other preferred setting with online access. On occasion, we have seen this result in a less adversarial atmosphere. Further, parties with concerns regarding expenditure of cost and time, particularly in lower value disputes, may prefer to avoid travel to and attendance at a mediation, particularly where large legal and expert teams are involved.
What is important is that those with final decision-making power (whether the paying client or, for example, their insurers) are either present or readily available to provide authoritative instructions.
The mediator will be aware or, as the process unfolds, will become aware of the objectives of each party. If there is a sense that parties would benefit from the opportunity to 'have their say', a plenary session is an avenue for it though if the mediator feels that a fruitful day of discussion is unlikely to be served by a joint session, with tensions running high from the outset, that can be dispensed with.
Parties can break from negotiation at any time. The mediator will move from room to room during individual sessions to discuss the bargaining position of each party in private, which will not be disclosed to other parties unless there is an instruction to do so. This means the day is likely to involve (sometimes extended) periods of waiting, so think about bringing some reading material! The mediation process can vary dramatically in length depending on the nature, complexity and value of the dispute, meaning you might also be in for a very long night if all parties are prepared to continue negotiating until agreement is reached.
How should you prepare for the mediation?
Fundamentally, mediation is about setting out positions and negotiation around them, meaning compromise will almost inevitably be required to reach a resolution to the issues in dispute which both parties can "live with".
Parties should consider their best and worst-case scenarios ahead of the mediation day. As most mediated commercial disputes concern a sum of money, parties should have an idea of their hard limits and might also consider what their opening offer will be in order to expedite negotiations on the day.
Parties should be prepared to leave the mediation not having achieved their 'best case scenario' in its entirety. Some elements of the dispute may be easily agreeable, and others more contentious. A good mediator will distinguish between those quickly and turn most focus to the resolution of the difficult issues, allowing the others to fall into place when hopefully, the greatest heat has been removed..
We often advise our clients that mediation, whilst it carries numerous benefits as a dispute-resolution forum, should not be entered into lightly. In particular, beware of proceeding to mediation under-prepared (or worse yet, unprepared): this is perhaps just one reason we see many mediations take place at a relatively advanced stage of court or other proceedings when parties' respective cases are in a near-finalised state.
What outcomes might be reached?
Agreement/ Partial Agreement
If the dispute can be resolved entirely within the mediation parties will have a binding agreement. Where at all possible, it is best practice that a written agreement is drawn up for signature on the day, either by the mediator or one or more of the participants. Partial agreement may happen when some issues are resolved and others are left unresolved. A written statement on what has been agreed is made with the unresolved issues being addressed in another way which can be recommended by the mediator, or litigation might prove necessary.
Suspension
Parties can pause a mediation if they are not willing or able to reach agreement at a specific point in time. Usually, this is because they require to obtain more information, think about, or discuss with others what they are willing to agree upon. The mediation would then be resumed at a later date as necessary.
Non-Agreement
In our experience, it is also possible that in the course of a mediation it becomes apparent that parties cannot agree on any outcome. Again, the mediator can recommend alternative solutions, or parties might decide to progress court proceedings for a ruling on the issues, albeit with attendant "litigation risk".
What factors should you consider when deciding whether to proceed to mediate upon a dispute?
There are important factors to be considered before deciding to enter mediation to resolve a dispute. Consider:
- What legal remedies would you be entitled to, and what would be the likely outcome of other ADR forums.
- What the other parties are likely to agree to and whether this is likely to lead to a better outcome than through court proceedings. Factor in the costs of proceeding to a full hearing on evidence in court – consider both your own and any other parties' costs for which you might be found liable.
- What you intend to achieve from mediation - it could help to create a list of objectives, priorities and elements you are willing to compromise on.
Our litigation teams have significant experience in representing and advising clients in mediating both commercial disputes and regulatory and disciplinary proceedings. For advice or information, contact our Professional Indemnity specialists or your usual Brodies contact.
