By: Simon B
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Most people who run their own business will eventually end up in a disagreement of some kind with another firm, whether overpayment, quality of work, or other contentious issues.
Often the immediate reaction to a seemingly unresolvable business dispute is the worry that things will end up in court, but there are a variety of options that can be taken before legal action needs to be considered. One that’s definitely worth considering is mediation.
What is mediation?
Mediation is a method of resolving disputes which involve bringing in a neutral third party to help your business to reach an agreement with the other business. This is done by helping the involved parties to negotiate and reach an acceptable solution, without taking a side in the dispute.
In mediation, the final decision is not imposed upon you, as with a court – instead, you and the other business must both agree upon the outcome and decide to carry it out. The mediator is there to guide you in finding a compromise.
Benefits of mediation
There are many reasons that mediation can be better than legal action, though it does, of course, depend on the situation. The most obvious benefit is that it is cheaper than going to court, and will likely take less time as well. Legal proceedings can be extremely costly and may end up being dragged out for months or even years.
There is also no risk with the mediation of being forced into an outcome you are not happy with – the goal is to find a solution with which both parties are satisfied, and the mediator has no power to impose a solution on you. This means you will have more control than you would in a courtroom situation, where a ruling may be made with which you are not happy.
Another good thing about the mediation process is that it is confidential. Taking a dispute to court involves the risk of confidential information about your business ending up in the public eye, while most things revealed during the course of mediation can remain a secret.
Finally, even if mediation does not work out, it may be a requirement of some business contracts that you attempt it before taking legal action. Additionally, if the dispute does end up going to court, it will at least demonstrate that you have already tried to resolve the dispute through other means – it is expected that some form of alternative dispute resolution will have been considered prior to make a civil claim. Furthermore, the process of mediation may have given you a better grasp on what exactly you are looking for in terms of resolution and what is important to you about the dispute.
Downsides of mediation
Mediation does, of course, have its weaknesses. The main problem with mediation is that it is not suitable for particularly contentious situations – for example, where you and the other business are not on speaking terms or where they refuse to acknowledge there is even a problem. The process is based entirely on reaching an agreement between yourselves with the aid of the mediator, which is of course not possible if one side refuses to participate or will not compromise on their position.
There is also the fact that litigation carries more weight when it comes to stopping another business from doing something immediately. If someone is infringing on your copyright, for example, a letter stating that you will take legal action if they don’t stop can be effective; a letter stating that you will seek mediation may not have quite as much impact.
It’s also important to bear in mind that, if there is a time limit for taking legal action against the other business for something they have done, mediation will not put this on hold, so if you risk missing a deadline by undertaking mediation, it may not be a good move.
Preparing for mediation
In order to prepare for mediation, the first thing you should do is consider the facts of the situation, gather evidence for any claims you make (for example, copies of contracts and so on), and put together a good explanation of the dispute to give to the mediator.
To get yourself into the right frame of mind for mediation, it’s best to try and look at the dispute from a detached perspective and describe the issues involved dispassionately, rather than get wrapped up in how frustrated or angry you are about it. Set out the fundamental reasons that a problem has happened.
Looking at the issue objectively is also useful in that mediation is likely to involve compromise, so it is worth deciding on a “negotiating position” prior to the process beginning – you should figure out which issues you are unwilling to budge on, and which are less important.
If your business has a number of employees, and you will not be attending the mediation sessions yourself, you should pick someone who has the authority to make the necessary decisions and sign any agreement that may arise. You may also wish to consider seeking legal advice, as you should bear in mind that the mediator will not be able to advise you – they are only there to help you reach an agreement.
The mediation process
Once both parties have agreed on a mediator, copies of your case summary and the evidence will be sent to both the mediator and the other party, so that everyone is fully informed of the situation. The mediator will introduce themselves to both parties and ensure that everything is properly arranged.
Following this, there will be an initial meeting with both parties present in which the mediator will explain what is expected, and in which each party can state the essentials of their case. Following this, the mediator will meet privately with each party to discuss the issues confidentially.
The rest of the process will mainly involve a continuation of these private meetings. When speaking privately with the mediator, you can let them know which parts of the discussion you do not mind them bringing up during their meetings with the other party. They will then try to negotiate a potential compromise during the private meetings using the information they are entitled to disclose.
Eventually, another joint meeting will be held to discuss each party’s current position on the issues, which will lead to the mediator proposing an intended solution to the dispute. If both parties accept this solution, an agreement specifying the details will be drawn up and signed by both parties. In some cases, this agreement can be made legally binding by a court, but due to the fact that both parties have signed it willingly, further enforcement will hopefully not be necessary.