Mediation is a good way to settle disputes

12 September, 2014 | Peter Smith

Settling commercial disputes by mediation is now a commonly used and widely accepted practice, but it does require some special skills to get the best possible results. The plus points for mediation are its speed, and much lower cost (relative to the costs of court) and the results achieved are almost always better than in a court process.

In mediation both parties have participated in reaching an agreement. They have not had one forced upon them – as happens in a court or in arbitration.

The chances of success in a mediation are very high. In my twenty years of being involved in mediation, both as a mediator and as an advisor to parties in mediation, I have seen only one case that wasn’t successful.

The potential downside is that there is a very small chance of not being successful.  But these days people appreciate the need to settle disputes and move on, so there is more willingness to get a result.

I have been involved in mediation as a lawyer and as a mediator for a large part of my professional life. I use the LEADR model of mediation.

LEADR means Lawyers Engaged in Alternative Dispute Resolution. The practice started in Australia where the courts made mediation compulsory in the workers compensation court. A body of professional mediators developed and their skills and techniques came to be used in this country.

I like the LEADR model. The mediator has to be impartial, unbiased and confidential. A mediation agreement is established at the start. This identifies the issues, and confirms that the parties have the authority to settle.

Both parties then have the opportunity to set out their case fully and at their own pace. The other parties must listen without comment or eye rolls. Once people have had the opportunity to state their case, to vent their frustration if you like, they usually feel a lot better.

Then the discussion can start. There are an established set of techniques which mediators use to tease out options, find common ground and narrow the issues down. Soon it becomes obvious what gaps have to be bridged to get a settlement.

Sometimes the mediator will meet with each party privately and explore options, and will go backwards and forwards between the parties to find common ground.

Once that’s happened, the parties will meet together again to firm up the terms of settlement, and the mediator will sequence the preparation of a settlement deed.

Mediation still works when the parties are far apart and are still angry with each other – it just takes longer, and here you need an experienced mediator.

In one mediation I was involved in, the gap between the parties was over four hundred thousand dollars. One side was offering $70 000; the other side wanted over half a million. With good mediation we got there and the parties each walked away satisfied.

The vast majority of cases we deal with through Alternative Dispute Resolution involve mediation rather than arbitration. At Smith Partners we tend to shy away from arbitration – which is really like a private court system – because it can end up being just as expensive as the regular courts.

To be successful, a mediator has to have a lot of experience in life, be well rounded and open to listening to both sides, trained in the art of communication to get the best out of people and able to find the nub of the dispute.  They don’t have to be legally trained but it can help as a lot of disputes do have a legal basis.

The lawyer advising the client in mediation has to have many of the same qualities and be attuned to look for solutions. Your job is to help the client get the best outcome. There are always two sides to any story, and sometimes the lawyer has to “sell” the solution to the client.

Often the last half an hour of a mediation involves horse-trading to get the final result.

The lawyer needs to be firm, and able to say to the client that the costs of not settling are almost always greater than the difference between the two parties at the final stage. You have to be tough on the client, to know how mediation works and to sell the solution being reached.

Generally lawyers consider mediation as the go to option, because it is speedy and efficient, effective and reasonably priced compared to the alternatives.

At Smith Partners, we bring a lot of experience and expertise to the table. This helps our clients to get results they can accept, and then they can move on with their businesses.

Mediation works, and we know it works, and when it does it is very rewarding because you have saved the parties a lot of trouble, expense and grief.

For further advice or information on mediation and how it can benefit you, please contact Peter Smith by phone on 09 837 6882 or email peter.smith@smithpartners.co.nz