Resolving Disputes: The Benefit of Mediation
Author:
John McCarthy
Readers of this article may have heard of the concept of mediation, but may not be absolutely clear as to what it is or how it works. Mediation is often confused with arbitration and the purpose of this article is to explain exactly what mediation is all about and how it could be useful in helping accountants resolve disputes booth with other professionals and with their clients.
Why mediation?
Mediation is a widely used method for helping parties resolve disputes and is now well recognised as an integral component of the litigation system in its own right. Commercial and business sectors acknowledge the benefits of the process and it can be applied to all kinds of business situations.
To quote Paulyn Marrinan Quinn ( S.C. and founder/coordinator Conflict and Dispute Resolution Studies, ISE – Trinity College and Mediation Forum Ireland) ‘Mediation takes account of the interests of the parties involved. The key benefit in Alternative Dispute Resolution concepts such as civil mediation is recognition that the adversarial processes of litigation and arbitration do not provide for any constructive input to the outcome of a dispute between conflicting parties which is crucial for sustaining relationships - business or otherwise.
Well known chartered accountant, Anthuan Xavier, Founder, BDO Simpson Xavier says ‘I have used the mediation process on many occasions. The value of an independent mediator is absolutely immeasurable. Their role as independent facilitator provides the crucial catalyst to find that elusive mutually satisfactory outcome’
What is mediation?
Mediation is a voluntary, non-binding method of resolving disputes. It is “without prejudice” until the point of written agreement whereupon the parties can enjoy the benefits of binding enforceability in the resolution of their dispute. Information is shared with a neutral individual who helps the parties in dispute to negotiate a settlement (“the mediator”). The mediator is specially trained to act as a facilitator so that the parties can arrive at a mutually agreed solution.
Unlike arbitration or litigation, the mediator has no power to impose a settlement on the parties: The agreement is arrived at by the clients and their solicitors and the mediator does not decide or judge the case. At all times during the mediation process, the parties themselves retain control of the terms of any final agreement and in fact it is the parties or their advisers who usually write up the terms of the final settlement.
Many disputes are compounded by poor communication, a breakdown of trust and the polarisation of views. As positions harden and the dispute escalates, all these problems increase, and settlement becomes even more difficult.
Mediation is a way of improving communication and of preserving or restoring relationships, where litigation invariably brings an end to the business relationship.
Mediation often lends itself to more creative solutions than alternative forms of dispute resolution like arbitration and the courts and helps preserve the relationships of the parties going forward in a confidential setting. It frequently results in measurable savings in both management time and expense.
How do I preparation for a mediation?
The best way to effectively prepare for a mediation session is as follows:
-Agree on a suitable mediator: Both parties need to think carefully about what they want by way of mediation skills to deal most effectively with the dispute in question.
-Prepare a case summary, ideally on a single page for the mediator and the opposing team to see in advance.
-Work through possible negotiating positions and do a proper written risk analysis. This will almost certainly need to be modified during the mediation.
-Plan for where you believe your bottom line to be, and be prepared that this may be affected by how the opposing case is presented. You need to leave room for a possible change of mind, but equally you need to know what might make you change it.
-Make sure that someone attends with adequate authority to pay the worst case that may emerge, even if they have no present intention of doing so. At the very least, have a telephone contact for out of hours referral with authority to settle:
-Remember that you will be fully involved in drafting the settlement agreement so bring a laptop and printer to speed the process up, if the venue does not have IT facilities.
-Liaise with the mediator to confirm the timetable and arrangements for the day.
What happens at a mediation?
Preparation is crucial. The parties are encouraged to ensure that they have thoroughly examined all aspects of their case including a comprehensive risk analysis and a detailed preparation of a full costs schedule. Worst and best case scenarios are also useful exercises to carry out.
The mediator’s role is to help the parties reach an agreed outcome through discussions off the record, both in joint meetings (often called plenary sessions) with each other (which the mediator will chair) and in private unilateral meetings (sometimes known as a caucus) with the mediator alone. The mediator does not make any decision on who is right or wrong, but acts as a facilitator of a negotiated settlement process. The outcome thus belongs to and is controlled by the parties.
Each party’s team will have a private room as a confidential base for the day, for papers and private discussions. The mediator will visit each team in their rooms to prepare for an opening joint meeting, at which each side is invited to make a brief oral presentation to the other side. The mediator will open the joint meeting by reminding the parties that the process is voluntary, informal and private and confidential.
The mediator then meets with each party privately (caucus) and in confidence to discuss their respective positions. With this information and with the parties’ express authority, the mediator will try to establish areas of common ground and provide the parties with the opportunity of exploring proposals for a commercially viable settlement.
The plenary session gives the parties a unique opportunity to explain their case directly to the other party, unfiltered through the opposing lawyer, and can be a powerful and useful occasion. Body language and tone of voice can be a powerful dynamic during such sessions and both parties may gain a new appreciation and respect for each other’s points of view during such sessions. Good observation and listening skills on the part of the mediator are required to maximise the effect of the occasion.
The mediator will regularly throughout the day try to summarise the issues and then meet with each party in the privacy of their separate rooms, to explore the main points and see what scope there is to move towards settlement.
Responsibility for the order of discussions rests with the mediator as does the combinations of various members of each team with whom to discuss at each stage. Further joint meetings may be convened with everyone present. The mediator at all times must maintain an independent stance, use conciliatory language and help both parties quickly identify common ground and focus on the core problems.
While the process does not guarantee to produce a binding outcome, if agreement is reached it will be recorded in writing and have the force of a binding contract in its own right.
The opening joint session
The mediator makes an introductory opening statement, and the parties make opening statements. These opening statements are intended to give each side the opportunity to put forward its own version of the dispute.
Private session
The mediator conducts these with each party in turn. Private sessions are absolutely confidential. The mediator cannot pass any information gained in these private sessions to other parties unless he has permission to do so. The number of private sessions is variable. Also, the mediator may choose at any time to call a joint session with the parties if he or she considers that it is appropriate to do so.
The final joint session
If the parties have settled, the mediator outlines the terms of the agreed settlement and the settlement is then written up in an appropriate format, which is signed by the parties. If the parties have not settled, the mediator makes any closing remarks that he or she considers are appropriate and then formally closes the mediation. The parties and the mediator are bound to the confidentiality of the process.
What other benefits can mediation bring?
Even where settlement is not achieved; mediation will probably have helped the parties to narrow the issues in dispute, speed up resolution of many other ancillary matters and at the very least help make arbitration or litigation faster and cheaper.
Mediation minimises many of the hidden costs of a dispute, such as:
-Diverted management time
-Disruption to normal trading patterns
-Permanent damage to business and personal relationships
What does mediation cost?
It is usual that the costs of the mediation including the cost of hiring the meeting facilities are borne equally between the parties. The cost of mediation is based on a fixed fee structure (not dictated by the value of the claim) and the parties’ solicitors’ fees, if they attend.
Where does the mediation take place?
A mediator acceptable to all the parties is chosen and a mutually agreeable time and date agreed. The mediation will then usually take place at a neutral location most convenient to all parties, with the emphasis on privacy and maintaining the confidential nature of the process.
What will a good mediator bring to the table?
An effective mediator will:
-have a good understanding of the role mediation plays in the business and legal community
-have well developed facilitation skills to promote communication between parties
-have the ability to distinguish issues from interests and develop commercial solutions
-have good listening, probing and evaluation skills thereby improving internal communication and working practices
Lastly a quote from well know Barrister and speaker on the Institute’s CPD Programme, Brian Walker BL - ‘Mediation is a confidential service, based on facilitating the parties reach a negotiated settlement, where they are free to choose the outcome that best serves their mutual benefit’.