The Value of Mediation as an Alternative to Litigation

As we have said in the past, every San Diego and California business can expect to have business-related legal disputes at some point. Disputes arise not necessarily because someone is behaving badly, but often are because mistakes happen or circumstances have changed or other reasons. As your business grows, there is a corresponding growth in areas where disputes can happen. Examples include:

• Disputes among the owners and managers of the business about many things — how to grow the business, whether to lease or buy, etc.
• Employment disputes
• Disputes with lenders
• Vendor and supplier disputes
• Payment disputes
• and more

All of these disputes can be the subject of mediation as an alternative to litigation in court or arbitration. There are many advantages to considering mediation. You need a good and trusted business attorney to provide legal guidance on how and when mediation might be more beneficial than other dispute resolution mechanisms.

San Diego Businesses: What is Mediation?

In San Diego and California, mediation is a voluntary process during which two disputing parties agree to submit their dispute to a neutral third party — a mediator — who will help try to resolve the dispute.

Sometimes the process is formal, somewhat court-like. However, this depends on what the parties want. Often, the process is informal, conducted, for example, in a business conference room. Generally, lawyers are present and offer some limited documentation to the mediator. There is some amount of lawyerly presentation and some limited, informal, “testimony” given by the parties to the dispute as they sit collectively around the table. But sometimes, the parties will be separated. One of the main goals of mediation is to extract emotion from the dispute and, as such, sometimes the mediator takes testimony from each side when the other side is out of the conference room. Sometimes the mediation occupies three rooms: one for each side and a third room for mediator-lawyer-only discussions/debates. Again, how a mediation operates depends on what the parties want and the mediator.

The mediator is chosen by the parties to the dispute and is hired specifically to be neutral and have no affiliation or affinity for either party to the dispute. Often the mediator is a retired judge or a law professor or some other professional deemed experienced enough by the parties to understand and help resolve the case. The mediator is paid for his or her time.

As with all things human, mediators are unique. Some are active in getting to the issues and resolving the dispute. Some are more passive, taking in the information provided by the parties. Largely, the type of mediator is determined by what the parties want.

San Diego Businesses: What are the Advantages to Mediation?

As noted at the beginning, mediation has many advantages and few disadvantages. Here is a quick list of the advantages:

• Voluntary: Parties only mediate if everyone agrees to mediate; this helps since everyone, in theory, is seeking a solution; otherwise, why agree to the mediation?
• Confidential: In general, everyone agrees that what is said during the mediation will remain confidential.
• Not admissible in court: As a corollary, what is said during the mediation is not admissible in court if the mediation fails and the parties resort to litigation; this allows free-flow of information and settlement stances which, in turn, help in resolution.
• Informal: This reduces stress and can enhance the chances of success.
• Non-binding: If the parties cannot reach agreement, the parties depart and consider other options; this also reduces stress since there is no pressure to “win-at-all-costs.”
• Non-emotional: As noted, mediations are intended to be non-emotional and a good mediator will structure the mediation in such a way as to remove emotion; if parties are angry, then a good mediator separates the angry parties; minimizing emotion can help resolve business disputes.
• Informative: Even if no agreement is reached, mediations can be valuable as information-gathering mechanisms; sometimes the problem is that the other side does not understand; maybe after the mediation, they have a better understanding.
• Often narrows the gap between the parties: Even if no agreement is reached at the mediation, it starts the parties talking and negotiating; that often narrows the gap between the parties and enhances the chances of resolution.
• Money saving: In general, if successful, mediations can save money over the expense of litigation or arbitration.

Contact San Diego Corporate Law Today

If you need help with any legal issues with respect to running your business, including issues related to business disputes and whether medication might be a way of resolving those disputes, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for businesses here in San Diego and surrounding communities including reviewing and drafting business contracts and all services related to business formations. Mr. Leonard can be reached at (858) 483-9200 or via email.

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