NH Legal Perspective: Mediating business disputes
MANY BUSINESSES are initially reluctant to engage in mediation, opting instead for an aggressive litigation posture.
There are times when tough litigation is just what a business needs. Other times, though, mediation is delayed or rejected unnecessarily due to a party's mistaken belief that litigation is the only option and that their version of events will necessarily prevail at trial.
Additionally, even sophisticated corporate decision-makers can personalize disputes and sometimes fail to separate personal feelings from broader corporate goals.
Finally, businesses unfamiliar with the mediation process can mistakenly view participation as a sign of weakness, or worse, don't fully understand what mediation entails.
Usually, mediators are chosen based not only on their dispute resolution skills, but also on their specialized, substantive experience - typically a match for the type of dispute at hand.
A mediator (sometimes a retired judge) does not hear testimony, review evidence or make decisions.
Instead, a mediator meets informally with the parties to help them understand the factual and legal issues and to gain a different perspective of the dispute.
The goal of mediation is to remove the obstacles to settlement, which, more often than not, are emotion, misunderstanding, and confusion.
Skilled mediators are able to understand the important issues; communicate the strengths and weaknesses of a case without antagonizing the participants; identify the parties' common interests; explore creative options for resolution; and bring a sense of optimism and persistence, especially when the prospects for resolution seem bleak.
The mediation process
Mediation comes about in different ways.
Parties sometimes agree to mediate before a lawsuit is filed, often when a contract includes a provision requiring pre-suit mediation.
Mediation may also arise at almost any time during litigation, and courts frequently require parties to attempt in good faith to settle a case through mediation at some point prior to trial.
The mediation session typically takes place at the mediator's office and begins with the mediator establishing key ground rules.
Chief among these is that the process is confidential.
This fosters an environment in which parties do not hold back key information or documents for fear that their positions will be weakened at trial should mediation fail. Another key rule is that the process is voluntary.
This means that participants generally are free to leave at any time, although good mediators will persuade parties to "hang in" and endure the inevitable phases when settlement appears unlikely.
Once the ground rules are established, each side has an opportunity to present a brief overview of the dispute from that party's perspective.
Although the lawyer for each side typically makes the opening presentation, the parties themselves are often given the opportunity to speak during the joint session if they want to.
Usually, after the joint session, each party and their lawyer go into their own "breakout" room and the mediator shuttles back and forth for the remainder of the mediation, trying to get the parties to reach common ground for settlement.
The mediator helps the parties prioritize their interests and deflate extreme or irrelevant demands.
The mediator facilitates discussion and understanding by getting each party to view their case differently - getting them (even if only temporarily) to suspend their attachment to their own case.
Whatever the methods employed, the mediator is not attempting to arrive at an outcome he or she deems fair.
The mediator's sole motivation and purpose is to help the parties reach a negotiated agreement to resolve their dispute, so that the parties control the outcome instead of leaving it to the uncertainty of a judge or jury.
While litigation is often necessary, either to set the stage for settlement discussions or to prepare a case for trial, mediation has real benefits in the business context and often helps parties to end a dispute amicably and get back to work.
A successful mediation often saves time and expense, avoids the uncertainties of litigation and sometimes preserves a valuable business relationship, enabling the parties to work together towards a common purpose in the future.
NH Legal Perspective is a bi-weekly column sponsored by Sheehan Phinney Bass + Green PA. This column does not provide legal advice. We recommend that you consult an attorney for specific guidance on legal questions.