Commercial advantages and early use of mediation
Commercial advantages
There are a number of advantages of mediation. Some of them are more obvious than others.
Obvious advantages
The process is entirely private and confidential, unlike court proceedings which may scare off customers, investors or future business.
You lose none of your legal rights by using mediation. It is entirely without prejudice to your case and rights in court. This allows you to explore options for settlement without any commitment to settle and without abandoning your position in any legal proceedings.
In fact, you may improve your position in court. The courts have been encouraging parties to use mediation since the Civil Procedure Rules came into effect in April 1999.
There has been a series of cases concerning the costs penalties which may result from refusing mediation. Most recently, the Court of Appeal decided the case of Burchell v Bullard, which warned that even obstinate parties may be penalised for not using mediation and that this is so even if their lawyers or experts told them not to use mediation.
Successful process: Approximately 70% to 80% of mediations result in a settlement at or soon after the mediation.
Quick: Normally mediations take one day. This is not just a huge saving of time to resolution, compared to litigation. It also drives huge commercial benefits of certainty, sensible risk management and saving of time of key personnel and directors.
Options: Anything can be agreed (or not) in a mediation. The parties are completely free to structure a solution around their own commercial needs, as opposed to having to accept a solution from a judge or arbitrator which only reflects their legal rights in the dispute. Furthermore, where time is a commercial imperative, an immediate solution to the commercial problem is often needed - but not available throught the courts. Mediation offers all the options.
Less obvious advantages
The parties retain control over their dispute - instead of losing control to their own lawyers who, in turn, are controlled by the courts, as is the case in litigation.
Commercial relationships (even with direct competitors) can be preserved, repaired or enhanced and a reasonable and workable degree of goodwill restored.
Mutual interests are far more likely to be discovered by mediation than by any other process, including bi-lateral or traditional negotiation. This increases the chances of creating genuine value to the parties through the process (see for example: Beyond Winning, Mnookin & others, Harvard University Press, 2000).
Early use
Given the obvious benefits and negligible downside of using mediation, the advantages of its early use are evident.
Early use of mediation avoids:
- Entrenchment of positions
- Escalation of the dispute
- Huge legal costs
- Unnecessary damage to relationships
- Uncertainty hanging over the business indefinitely until trial
- Distracting personnel from key business objectives
- Unnecessary damage to reputation and goodwill
Early use of mediation means getting on with your business. It is a truly commercial solution to commercial disputes.
