Resolving Conflicts Without Court
By: Robert A. DeRise
Imagine your business is in the middle of a dispute, and it is getting contentious.
For many, unfortunately, this exercise doesn’t take a lot of imagination. Your business, let’s say a custom clothing store, has several owners.
You’ve poured blood, sweat, and tears into getting it up and running. It’s taken years of hard work. But things are finally taking shape. You’ve made a few large sales. You’re turning a profit. Just when things are starting to look up, you and your co-owners want to take the business in totally different directions. They may think the time is right for a brick-and-mortar storefront.
But you want to focus on online sales and generating positive engagement on social media.
When running a business, friendships and professional relationships alike can come under strain. Communication can break down. One side or another may begin to think about calling it quits, breaking off to form a new company, or even seek legal recourse in response to a real or perceived slight. So, what are your options when you and your company are at an impasse?
One option individuals and business owners are increasingly turning to is mediation. Mediation is a voluntary process to attempt to settle disputes without a lawsuit. It is, in essence, a settlement conference, but one that uses a neutral third-party (often a respected lawyer or retired judge), to attempt to guide the negotiations. At the mediation, the parties will start out in the same room and the mediator will begin by discussing confidentiality. Each side may make an opening statement, but that is not necessary if emotions are too high. Then the parties will break out into separate rooms, and the mediator will engage in “shuttle-diplomacy,” talking to each side about the strengths and weaknesses of their positions, to try to find common ground, and to help the parties reach a negotiated settlement.
Mediations are non-binding, so you do not have to settle if you can’t reach an agreement that is acceptable to you.
There are many benefits to mediation, especially when compared to seeking a resolution in court through litigation. Most turn to mediation for one or more of the following reasons: speed and efficiency, reduced cost, confidentiality, less formality, and effectiveness.
Speed & Efficiency. A mediation may be scheduled and completed in as soon as a few weeks. The mediation itself usually lasts no more than a day, perhaps only a few hours. Leading up to the date of mediation, a mediator may call each side independently to understand their position and may allow the parties to request and exchange targeted information needed to ensure the mediation is productive.
Contrast that with a litigation timeline, where you are likely looking at a trial date many months out at best (usually more than a year). The presentation of each side’s position to the court in legal memoranda, as well as requesting and exchanging documents (“discovery”), is often lengthy and formal, and can last many months and prompt mini fights. Often it may take years for a case to come up for trial, if it makes it that far.
Reduced Cost. Going to mediation rather than litigation can save the parties from having to spend substantial amounts on attorney’s fees. To be sure, a private mediator will have an hourly rate and their bill will have to be paid by one or both parties (split equally, or with one side covering the bill). But that extra expense for prep time and a one-day or half-day mediation will likely be a fraction of even the most cost-conscious attorney’s fees needed to prepare a case for trial.
Confidentiality. In mediation, there is no need to air your “dirty laundry” in public. In Virginia, communications during a mediation are generally treated as confidential, with a few exceptions. That helps the parties engage in a full and frank discussion to resolve the dispute. By contrast, in litigation, most filings (including the complaint that kicks off the lawsuit, briefs, and court rulings) as well as witness testimony at trial, are all matters of public record and accessible to any interested member of the public.
Informality. Going to court can appear very formal and intimidating to many—both the uninitiated and the initiated alike! And that can be a barrier to getting resolution of a real dispute. By contrast, mediation is decidedly less formal and is conducted in the privacy of a conference room. The mediator is not there as a judge and does not apply the rules of evidence. Usually, there is little emphasis on procedure and process.
Effectiveness. Finally, mediations have a proven track record for effectiveness. The American Bar Association reports that 70% to 80% of mediations end in a settlement. Those numbers should be welcome news to anyone who wants to get back to running their business and putting their dispute in the rear-view mirror. In addition, given that parties in mediation are actively involved and have had “buy-in” on any agreed-upon settlement, they typically are more likely to stay committed to that settlement than those who got a result handed down to them (whether by a judge or jury).
For these and other reasons, mediation has become an increasingly popular way to resolve intra-business disputes, disputes between an employer and employee, or between companies. Of course, it is not a silver-bullet. It requires buy-in from both sides and a willingness to negotiate in good faith. And there are costs involved.
As a result, mediation may not be appropriate in all cases, or at some stages of a dispute. There may be reasons why one would want to file a lawsuit to preserve legal claims, including before any statute of limitations expires.
If you are facing a dispute, consult with a lawyer to assess your specific options. Given mediation’s benefits as a quicker, cheaper, and more streamlined process, it should certainly be one option to consider to get back to your business and move on with your life.
