In the legal world, the idea of early mediation of disputes has historically been viewed as unconventional at best, and as a sign of weakness, and thus, a poor strategy, at worst. However, with the increasing reputational and financial ramifications of litigation, the prospect of resolving a dispute as early as possible is gaining increasing attention and popularity. Mediation provides parties to a dispute with the opportunity to resolve a matter on their own initiative and terms, outside the formal structure of court-based litigation, at a fraction of the cost of an arbitration or a trial. This article, the fifth in a six article series exploring tools for in-house attorneys to utilize in addressing litigation issues facing their companies, examines mediation as a proactive dispute resolution tool. Specifically, the in-house practitioner should not be afraid of exploring the possibility of early mediation of company disputes when litigation appears imminent, should consider drafting mediation agreements into company agreements, and should have a “go to” list of mediators that he or she can call on when the need arises.
Do not be afraid to mediate early
Perhaps the biggest hurdle to the early mediation of disputes is the feeling that doing so is a sign of weakness, that suggesting mediation at the early stages of a dispute somehow signals a lack of confidence in one’s case. This is true whether the company is acting offensively to protect its interests or enforce its rights, or whether the company is defending its actions. There is no doubt that suggesting mediation early in a dispute situation requires some courage by the in-house attorney, both internally and externally. However, there is virtually no downside to pursuing an early mediation of a case. A mediation session is typically treated as confidential, and pursuant to most evidentiary standards, what happens in mediation cannot be used by one party against another in litigation if the mediation fails to resolve the dispute.
On the plus side, an experienced, evaluative mediator can give all parties to the dispute an objective, honest appraisal of the strengths and weaknesses of their respective cases. Many times, a mediator can get through to a strident opponent or client in a way that an attorney (either in-house or outside counsel) cannot. If the matter settles, there are significant savings in terms of time and cost. If the matter does not settle, the company will at a minimum have a better sense of the case and what it needs to do going forward to maximize its potential for a favorable result, or conversely, minimize the risk of a bad one.
Make mediation a part of company contracts
Mediation can be initiated at virtually any time during a dispute, but a company that is open to utilizing mediation to resolve matters early in the litigation cycle should consider including provisions for mediation in its agreements with other parties. Making mediation part of an agreement can counter the fear of raising the issue discussed above, as the parties can establish a process before an actual dispute ever arises. Although arbitration provisions in corporate contracts are more common and thus, benefit from a wealth of legal precedent through court opinions, it is possible to set up a process and procedures for mediation in such contracts as well. Things like the format of a mediation, the trigger(s) for it, the confidentiality of any sessions, the identification of potential mediators or their qualifications, the apportionment of mediation costs, among others issues, can all be addressed in a contract. Essentially, the parties are free to decide and contract for whatever they can agree upon with respect to a mediation provision in an agreement.
The freedom to shape a mediation provision to meet the needs of the parties to an agreement highlights the importance of having an attorney who is experienced with mediation involved in the drafting process. Litigators who have represented clients in mediation can be a major asset in preparing a clear and effective mediation agreement.
Have a list of “go to” mediators ready
Finally, a key to a proactive mediation strategy is having a “go to” list of potential mediators ready for when the need arises. There is a balance that must be struck here—the company attorney should have a list, or at least an idea, of who could be an effective mediator for disputes involving the company, based on the mediator’s experience, background and demeanor. However, in order to preserve objectivity and achieve “buy-in” from a counter-party to any prospective mediation, the company cannot be “too close” to a particular mediator. Accordingly, the in-house attorney should keep track of mediators who have handled matters for the company in the past, noting whether it was a positive or negative experience. Outside counsel can assist in the effort as well, and can broaden the scope of potential mediators. When the need arises, the company will want to have several “known quantities” upon which it can draw.
The final article in this series will examine steps that an in-house attorney can take at the conclusion of a matter to “tie up loose ends” and maximize the litigation experience—regardless of the result.