Monday, July 16, 2012

The Value of Mediation: Your Opportunity to Control the Outcome of a Dispute

What if you had a crystal ball that could predict the outcome of your pending litigation in court or even a proposed legal action? Would you do things differently? Oh, don’t you wish! The stark reality is that once you go to trial, the resolution of a dispute is out of your hands. You are essentially waiving your control of any legal settlement to an unfamiliar third party, whether it is a judge, a judicial panel or a jury. You do, however, have an alternative to this litigious situation: mediation. The process involves the selection of a neutral third-party that attempts to resolve a legal dispute through discussion, negotiation and, hopefully, a mutually acceptable compromise.

Yes, I did say “compromise,” but that is actually a good thing. All parties in a dispute need to regard compromise as a means for resolution, not confrontation or disappointment. It is the last point in litigation in which you still have control of your decisions before someone else steps in and takes over completely. At that point, all disputing parties must face the truly unknown consequences of a trial procedure. Unfortunately, in a courtroom you don’t know what’s going through a judge’s mind or through the minds of jury members. In fact, the expected outcome of a judge’s determination or a jury’s deliberation can sometimes be quite the opposite. But when you are arguing the merits of your case or defending your position during the mediation process, you have a prime opportunity to influence the outcome with your decisions — and your compromises.

In the state of Washington, whether in a federal or state court, all disputed claims or actions must defer to mediation first before a judge will even allow a case to go to trial. This is a systematic approach I strongly support. I often find that clients, even if they are sophisticated business clients, don’t always understand what mediation is or its benefits. So in all of of the contracts that I draft for my business or transactional clients, I insert a mediation provision requiring all parties in a dispute to engage in mediation before they can even file suit in state or federal court. I rarely receive an objection to this provision, because all clients at least ponder the idea of settling a case before entering litigation. A neutral third-party can provide a fresh perspective on the merits of your case and your defense, as well as the weaknesses of your case and your defense.

Occasionally a client may have a corporate policy barring the use of mediation, but overall, I have found the process to be a valued alternative to lengthy litigation in court, and mediation can be applied to virtually all types of legal disputes — large and small. Of course, mediation is not always successful the first time out of the gate. I have encountered this often in multi-party construction claims cases, in which the initial mediation doesn’t solve the issue, and nobody wants to settle. However, as the trial deadline approaches, everybody realizes that this opportunity to determine and control an equitable outcome is fast-disappearing, so they call back the mediator in an attempt to reach a settlement. That scenario, unfortunately, is becoming more and more common. Perhaps people think they can gain bargaining power as a case proceeds, but more often than not, their bargaining power actually dwindles as the trial date gets closer. Inevitably, most will go back to the mediator.

Mediation agreements are not without recourse either, should a stakeholder default on the terms of the settlement. In Washington, for instance, the provisions of a mediation agreement can be legally binding and enforceable when a prepared document is signed jointly by all parties to the dispute. If someone later decides to back out on the settlement, the other parties can proceed to court and have the mediation agreement enforced as a matter of law. That action in itself shows a judicial preference and favor for mediated dispute resolution over a court trial bureaucracy.