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Mediation in commercial disputes: mediation is a useful alternative to the cost and effort of litigation. Is it right for your business case? These tips will help you decide - and help you use it to your client's advantage.

Article Excerpt
Trial lawyers know they must be prepared to try every case, even though the reality is that most cases settle before trial--many in mediation. But how do you propose mediation to your client and opposing counsel without appearing weak? How do you find the right mediator for your case? How do you decide your opening settlement position in the mediation? And how do you close what seems to be an unbridgeable gap between the parties' positions?

Correctly addressing these and other mediation issues in business cases--and avoiding the most common mistakes commercial litigators make--can be the difference between success and failure in resolving cases through mediation.

The threshold question is whether your commercial case is a good candidate for mediation. In some circumstances, parties are obligated by contract to mediate before arbitrating or litigating, so find out if your client has signed such a contract.

If the client is a corporation, determine whether it is one of more than 4,000 companies that signed the International Institute for Conflict Prevention and Resolution's "Corporate Policy Statement on Alternatives to Litigation." (1) Signing that letter is a commitment to seriously explore mediation and other alternative dispute resolution methods before pursuing full-scale litigation.

Factors favoring mediation for your client include the need for confidentiality; the desire for resolution without the expense, uncertainty, and disruption of litigation; the need to preserve an ongoing business relationship; and a concern about establishing an adverse precedent. Factors weighing against mediation include a need to establish a legal precedent; the likelihood of success in a motion to dismiss or for summary judgment; a need for immediate equitable relief; and, of course, the unwillingness of your client to mediate.

Consider mediation only after you have a solid grasp of the facts supporting all claims and defenses and a thorough knowledge of applicable law. For example, you may want to complete key depositions or document discovery before you mediate.

On the other hand, you don't want to wait too long. It is best to propose mediation well before trial. By the time of trial, both parties will have invested so much time, effort, and money that positions will likely have hardened, and clients may feel that it is too late for mediation.

Clients sometimes perceive the suggestion of mediation as a sign of weakness. It is important to explain the cost and time savings and the privacy benefits of mediation, while emphasizing that a proposal to mediate, made by one commercial litigator to another, is common. Explain that it signals not weakness but a willingness to resolve the case without putting both parties through litigation to the last appeal.

Stress that mediation is not binding; instead, it is guided negotiation. If appropriate, advise your client that the merits of the claims are so strong that a mediator is likely to validate your client's position, encouraging the opposing party to resolve the dispute in the client's favor.

Assure your client that, when you propose mediation to opposing counsel, you will emphasize that a successful mediation will benefit both parties and is therefore worth pursuing. After all, your client and the opposing party are in the same boat: Neither wants to incur...

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