USEFULNESS OF MEDIATION

Mediation is a high benefit, low risk option for creatively resolving or narrowing telecommunications, antitrust and other commercial disputes. With a high likelihood of a superior outcome compared to other alternatives, along with reasonable cost, minimal time commitment and control over the outcome, mediation should be a preferred alternative to consider for resolving most disputes.

Mediation Fundamentals. Mediation is a form of alternative dispute resolution (ADR) in which a trained neutral facilitator – the mediator – helps the parties reach a voluntary, mutually agreeable resolution of their dispute. The mediator is not a decision-maker and does not hear evidence in order to render a decision, as would a judge or arbitrator. Instead, the mediator focuses on the business interests and concerns of each party and helps the disputants see where their interests converge and where they can find common ground.

The optimal situation is to have a trained mediator who is also expert in the subject matter of the dispute. Without subject matter knowledge, the mediator may need extensive time to understand the legal principles involved and can hamper resolution of the dispute. In antitrust and regulatory matters in particular, the nuances of the law are sufficiently challenging that there are significant benefits from using a mediator with extensive antitrust or regulatory experience.

Mediation is not simply for straightforward contractual disputes. Complex antitrust, regulatory, and other commercial issues may be best resolved through mediation because of the difficulties and expense of litigating such cases. Matters may be particularly ripe for mediation when the following needs or factors exist:

Maintain Control by the Parties. The single greatest benefit of mediation is the control that the parties maintain over the outcome. Although the tremendous savings of dollars and time from mediation get the headlines, even bigger benefits are found in the parties’ control, which makes possible more creative and positive outcomes. Mediation keeps control of a business’s future where it belongs – in the hands of its executives, rather than a judge or other third party.

Get Past Posturing to the Parties’ Underlying Interests. The disputants’ adversarial posturing – and even their own perceived interests – may differ significantly from their underlying business interests. The mediator works with the parties to help them focus on and advance their critical interests, which may end up being different from or only loosely related to the initial issues in dispute. For example, the stated issues are often expressed in monetary terms, but even in business disputes, parties’ deeper interest may lie in being treated properly in the business relationship or in maintaining an ongoing business interest.

This is particularly true in antitrust disputes, where antitrust claims or counterclaims are often surrogates for concerns about the course a business relationship has taken. Thus, the loss of a distributorship may translate into an antitrust claim of a concerted refusal to deal, but the real solution will not be found in laborious litigation – to determine, for example, whether the supplier acted “in concert” with others. Instead, mediation may achieve a breakthrough and resolve the dispute by determining why the business relationship broke down and whether it can be repaired. That may be the distributor’s real objective, despite aggressive posturing and a claim for multi-million dollar treble damages. This real objective is not generally achievable through litigation where, even if the parties are able to reach a voluntary agreement, it commonly happens through tense negotiations on the eve of trial that tend to focus on how to cut the baby in half.

Mediation can reach well beyond the issues articulated in litigation and achieve more creative solutions to accommodate the vital business interests of the parties. This does not necessarily happen easily. Even experienced business people with good legal representation can become so deeply involved in a dispute that they do not readily see a more desirable path. In an effort to punish their opponent, they may even act contrary to their own economic self-interest. The mediator can help them focus on their real interests and open the way for all parties to achieve their key objectives. For example, the real interest of a physician bringing antitrust claims against a hospital for deciding to limit the physician’s staff privileges is usually not to reform the hospital’s peer review process, but to find a way to serve patients in an ongoing medical practice. Mediation works to avoid zero-sum disputes – where any gain to one party is a loss to the other – by helping the parties examine alternatives and re-frame issues in ways that allow a satisfactory conclusion for all parties.

Control Costs and Avoid Undue Delay. Most cases settle before trial. Even those cases, however, are typically very expensive as a result of the complexity of the issues and the time-consuming nature of document requests, interrogatories and depositions, motions practice, expert and witness prep and other trial preparation. Moreover, complex civil litigation can grind away for years without ever coming close to resolution, while the market rapidly evolves and smaller (or even larger) parties may face financial stress. Much of the cost and delay – not to mention critical diversion of executive time – can be avoided by relying on mediation at an early stage so the parties can get on with business. This can be particularly important in cases involving technology issues, where markets evolve so quickly that it can be a challenge for proper analysis to keep up, much less achieve a workable solution after multiple years of litigation.

Improve Business Conditions After the Dispute. Another major benefit of mediation is that it increases the likelihood that the parties will be able to work together after the dispute is resolved. While litigation often results in significant bitterness and by definition has a loser (and even the “winners” frequently don’t achieve what they really want), mediation often results in a resolution that enables the parties to work with each other on a satisfactory basis in the future. This potential alone can be a compelling reason to try mediation prior to litigation or other alternatives.

Avoid Disclosure of Confidential Information. Many cases involve sensitive business information that one or both parties need to keep confidential. Often, even the dispute itself is something that the parties would rather not see in the newspaper. The fear of setting a bad precedent may also inhibit resolution of the dispute, for a compromise that a company can afford in a single case may not be viable if applied to every similar business relationship. Mediation solves these problems. It can be conducted so that the parties have greater control over what – if anything – is made public. Everything stated in mediation sessions is generally protected as confidential settlement discussions which cannot be used in litigation or publicly disclosed. The parties can also shield confidential information from one another. Each party can confidentially give the mediator information that can help clarify the issues and reach a resolution, but that will not be conveyed to the opposing party.

Avoid Bad Decisions by Third Parties. When a third-party – whether a randomly selected judge or jury or even an arbitrator – is entrusted with reaching a final decision, each party risks a very bad decision for any number of reasons, regardless of the merits of its case. This uncertainty and loss of control highlights the desirability of mediation, where there is no binding outcome unless the parties conclude it is satisfactory.

Permit Second Chances. A powerful incentive for pursuing mediation before litigation or arbitration is that it has a tremendous upside with very little downside. As discussed above, mediation is not final and binding until the parties are satisfied with the outcome. In this respect, mediation is a no-lose proposition. The parties take very little risk by first proceeding with mediation, and they can always move on to arbitration or litigation (or other alternatives) if the mediation is not completely successful. Also, mediation can often resolve tangential issues, so that even if there is an eventual need to litigate, the case will be more focused and can be litigated in a more streamlined fashion without having to address (with extensive discovery, motions practice, etc.) all the side issues that invariably seem to accompany complex disputes.