CHOICES, CHOICES – COMPARING ALTERNATIVES

Life is about choices, just as the cliché says. When faced with a serious dispute, each party must make choices about how to respond – ranging from inaction and ignoring the problem in the hope it will go away, at one extreme, to extra-legal actions and even violence at the other extreme. This discussion focuses on alternatives between the extremes, by comparing mediation to serious alternatives that disputants may consider to resolve their conflict and achieve as many objectives as possible. Although litigation, arbitration, mediation, and negotiation are the primary alternatives, there are numerous hybrids and variations of these approaches, including med-arb (mediation followed by arbitration), mini-trials, and early neutral evaluation, among others.

Mediation v. Litigation. Litigation is the standard response against which other alternatives are measured, but the uncertainty, cost, delay, and distraction of full-blown litigation are so extensive as to make other alternatives worth examining seriously in every dispute. On occasion the principles at stake are so important that litigation is worth the risk and burden. Litigation may be the only option if one party is not amenable to a more reasonable method of resolving the conflict. But in most cases it is preferable to avoid litigation and seek some form of alternative dispute resolution, particularly mediation. The benefits of mediation are most dramatic when compared to no-holds-barred litigation.

Mediation v. Negotiation. Parties will generally attempt direct negotiations with each other before engaging a mediator, and when the solution is easy, it may not be necessary to involve a neutral party. But in many cases, attempting to negotiate directly can unnecessarily use up any remaining good will by the time the parties decide to bring in a professional. Thus, it is preferable to move quickly to mediation so that positions do not have the opportunity to become entrenched. Even after negotiations have stalled, however, a mediator can bring new perspective to the parties. Further, a mediator who is knowledgeable about the subject matter can assist the disputants in exploring alternatives that they may not have previously considered. Moreover, in disputes between competitors it may be helpful to have a mediator involved to demonstrate that discussions between the parties were not an improper means of dividing markets between the competitors or otherwise conspiring in violation of the antitrust laws.

Mediation v. Arbitration. Many business people (and even lawyers) think of mediation and arbitration as synonymous, but they are very different approaches that share a common theme of staying out of court. Mediation is the more versatile and creative of the two. It permits the parties to control the outcome, even though it doesn’t guarantee a final resolution. By contrast, arbitration relies on a neutral – essentially a private judge – to hear the evidence from the parties and render a decision that is binding (if the parties have agreed that it will be). Thus, arbitration ensures that there will be some outcome, but the parties lose control, so the outcome is not necessarily any more satisfactory than one rendered by a court. However, arbitration may be desirable when the parties need a definitive outcome – one way or the other – in a timeframe that is shorter than a court could accomplish.

Arbitration lacks several of the benefits of mediation. Arbitration is usually more expensive than mediation (although still less expensive than a trial) and results in a losing party who may not have the ability to appeal. Mediation is much faster than arbitration (or of course litigation). Mediation can be convened quickly and often is resolved within a day or two, although complex cases may take longer. Legal fees and expenses are significantly less than in arbitration, and the distraction of business executives is correspondingly reduced. For historical reasons, arbitration has received a disproportionate share of attention in the antitrust and regulatory environments, even though it often has less to offer than mediation. However, the arbitration clauses in many agreements are often interpreted to encompass mediation or any other appropriate form of efficient and satisfactory alternative dispute resolution.

Need for Realism. Although the benefits and potential of mediation make it worth considering in every dispute, mediation is not a panacea. Mediation is hard work, and it depends on the good faith and real commitment to the process by the parties to the dispute. Many conflicts are simply not suitable for resolution through mediation, and it may be only partially successful in others. But a large majority of cases are good candidates for mediation and will benefit from the process if parties agree to it. When the parties are willing to engage in mediation, the prospects for resolving the dispute are high. Nationally, over 80% of commercial matters in mediation succeed in reaching a written settlement agreement.

Although the substantial benefits of mediation to the disputants are quite clear, the benefits to their legal counsel may not seem apparent. The primary benefit to counsel comes from representing the client in the best possible manner, leading to stronger, longer term client relationships, and an enhanced reputation for providing what is in the client’s best interest. Moreover, the role of counsel in mediation may be significant, and it often involves the lawyers more deeply in their clients’ long-term business goals and strategies in a way that builds relationships that transcend the particular dispute.