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Mediation Pros and Cons

5. What are the advantages and disadvantages of mediation?

There are numerous advantages and a few disadvantages to mediating a dispute, as follows:

•    Control – Recall that mediation allows the parties to retain control over the dispute. They are free to refuse to negotiate, and they are not required to find a resolution to the dispute. The voluntary nature of negotiation in the mediation process allows the parties to decide to pursue litigation or some other form of ADR. The level of control retained by the parties can also be seen as a disadvantage. Neither party can be certain that the mediation will result in a settlement. This lack of certainty can frustrate the parties with the process.

•    Costs – There is significant cost savings associated with mediation. While the parties generally share the responsibility of paying the mediator, it avoids court fees, some legal fees, and other expenses associated with going to trial. Further, the cost of mediation is generally far lower than the cost of other ADR approaches, such as arbitration. The cost disadvantage of mediation is that it can still be expensive and not result in a resolution. A simple negotiation between the parties can resolve a dispute for free; but, employing counsel to represent the parties at mediation and employing the mediator can cost significant money. Generally, the mediator takes a small percentage of the total settlement amount between the parties.

•    Privacy – As with other types of ADR, mediation is a private process. The parties do not have to disclose the dispute or any of the facts of the situation to the rest of the world. Litigation, on the other hand, is generally a public affair. Unless the court orders otherwise, anyone can attend a public trial and can access the court records. This includes access to all allegations, testimony, and the evidence presented in the case. The disadvantage to privacy generally concerns the expectations of the aggrieved party. In many cases, the injured party seeks compensation for the harm or loss to make certain that the alleged wrong is not repeated. Negotiating a settlement of the dispute outside of the public’s knowledge does less to prevent a party from repeating the allegedly illegal conduct. This is particularly true when that party’s conduct is intentional.

•    Relationships – Disputes between parties can destroy their on-going relationship. Being able to work out a mutually agreeable settlement of the dispute can serve to preserve the relationship. This is important for businesses that depend upon each other as future business partners (such as in supplier-purchaser relationships). Litigation generally destroys the business relationship, as the process is highly competitive and confrontational. The negative aspect of mediation is that relationships can still be strained without any resolution to guide the relationship going forward. A judicial determination that one party’s conduct is not legal establishes precedent to guide the future conduct of a business. A negotiated settlement does not always achieve this same effect.

The above-mentioned advantages and disadvantages of mediation are general examples. There may be any number of party or case-specific benefits or detriments to mediation.

•    Discussion: Can you think of any other benefits to pursuing mediation over litigation? Why do you think mediators are often successful in negotiating a settlement between parties? Do you think businesses generally see litigation as a favorable or unfavorable option? Why?

•    Practice Question: Mark and Sam are in a business relationship. They are now in a dispute over the quality of the last shipment of goods. While they generally get along well, they are unable to reach a resolution on this dispute. Mark and Sam are considering submitting their dispute to a mediator. What are the advantages of pursuing mediation?

 

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