Most lawyers reject, instinctively, mediation clauses in contracts. We believe that the well-settled rules of contract law as augmented by the applicable rules of procedure are the sure and safe means to fully protect a client when a contract goes bad and litigation becomes inevitable.
Unlike arbitration, mediation is non-binding, until its end product – a settlement agreement is reached. Only then does it become binding and enforceable. It is that uncertainty, its unbinding attributes, which causes attorneys to be hesitant, if not hostile, to the mediation process. This includes the attorneys in Doylestown at Benner & Wild.
Simplistically, mediation is structured negotiation. Its goal is to help parties resolve that dispute. Litigation has the same goal. The difference is that litigation represents the failure of negotiation because the litigants effectively admit that they cannot agree to a means to settle their differences and look to a judge and/or jury to settle the case for them.
Mediation necessarily involves the parties coming to their own agreement with the help of a mediator to settle their differences on terms that both parties accept. Attorneys intuitively assess, quite correctly, that the risk of participating in the mediation process is that any party may withdraw without consequence. That is, any party not invested in reaching a reasoned settlement can insure that mediation will fail thereby imposing on the other party both the loss of time and in many cases considerable unnecessary expense. It is no wonder that we look at mediation with a healthy degree of skepticism.
I represented a client in a commercial mediation. That experience has prompted a re-evaluation. My client is a general contractor. It became embroiled in a complex construction dispute with the subcontractor. At issue were not only matters of contract interpretation, but also, some highly technical engineering issues. The amount in controversy was considerable. The contract at issue was a standard AIA contract that included a mandatory mediation clause. As an aside, had I been involved in the contract process, I would have removed that clause. Had I done so, I would not have served my client because the mediation as conducted was remarkably successful.
The advantages of mediation include a quick and efficient means to resolve disputes at considerable savings to the client. Mediation typically does not include expensive discovery. It is a process of negotiation aided by a skilled mediator. The operative word is ‘skilled.” Mediation does not always work. To be successful, all of the following elements must be present: (1) both parties must act in good faith; (2) both attorneys must act in good faith; and (3) most important, the mediator must be skilled and strong. If the mediator understands the facts, the legal issues and is perceived to be fair and willing to state objectively his/her assessment of the case to parties willing to listen, the likelihood of a successful outcome is excellent. In the right case, mediation can be a very effective tool in resolving complex construction or other commercial disputes.
Going forward, I will be less likely to dismiss mediation out of hand and will carefully weigh mediation as a tool to resolve even those disputes that appear “so complex that only a court has the ability to sort out the issues” – as I once thought.