How to Prepare for Mediation

by Richard Whittingham

 

In practically every commercial dispute nowadays the question of whether or not to mediate will arise. The obligation to consider ADR procedures is embedded in the Practice Direction for pre-action conduct and protocols and even if the idea of mediation is dismissed pre-action, it is likely to be raised again as an action proceeds. 

I set out below some of the key questions you should consider before embarking on mediation: 

Is mediation appropriate at this stage or at all?

In most cases, mediation will definitely be worth trying at some point in the process and usually sooner rather than later as the costs burn can limit the parties’ ability to compromise. It is rare that there will be an entirely binary dispute where there can only be a winner and a loser. Mediation therefore provides an avenue both to minimise costs and achieve a mutually beneficial outcome. 

In terms of timing, there is a balance to be struck between mediating at an early stage before legal costs become significant and later in the process, when it is likely that each party has a sufficient grasp of the points in issue. It is important that each party has a proper understanding of their opponent’s contentions before a mediation takes place, otherwise, it risks becoming an information exchange or, even worse, a shouting match. 

What do the parties want to achieve from mediation? 

This is a separate, though generally parallel, set of considerations to what is in each party’s pleaded case. By way of example, in some cases, there is the potential for ongoing business relations between the parties provided that a mutually acceptable compromise can be reached. It is fair to say that very few commercial relationships survive a contested trial. 

It is therefore worthwhile for each party and their representative to spend time exploring what possible solutions might be acceptable to them and what they think might be acceptable to their opponent  (which is almost equally as important). This will inform what is contained in the Position Statement. 

What should the Position Statement contain? 

What it should not contain is a rehash of the pleadings (assuming that these have been served). Instead, it affords the parties to summarise the claim as they see it in a cogent narrative form. It should be borne in mind that a good Position Statement will ensure that the mediator is well on the way to understanding the issues before the process even starts. This will not only save time but will assist in bringing forward the critical negotiation stage. 

If the Position Statement is confidential and for the mediator’s eyes only, then it is often sensible for it also to sketch out some possible routes to settlement. Once again, this can save time and lead to a swifter consideration of negotiated outcomes.

 If the Position Statement is to be disclosed to the other party, then it can be a way not only of informing the mediator but also summarising to the decision-makers on the opposing side, how the case appears to the party submitting it. As litigation proceeds, the fundamental issues can become lost in a thicket of legal argument. A good Position Statement can serve as a useful re-focusing upon essentials. 

What about the supporting bundle? 

It is worthwhile bearing in mind that a large part of every mediation bundle will go unread. Whilst copies of key pleadings will assist the mediator, the inclusion of large sections of disclosure or witness evidence will not. Having said that, there are frequently a limited number of documents around which a dispute revolves. These can be essential to the mediation process, particularly if there are issues of interpretation. 

Schedules of loss can also be vital in facilitating a negotiated outcome, particularly if the parties can agree on the relevant heads beforehand even if they do not agree actual amounts. 

Costs

Depending upon the stage in the dispute, costs may already be an issue and potential block to settlement – they almost certainly will be as trial approaches. It is therefore imperative that each party can provide details of costs to date but also estimate future costs.  

Cost estimates are part of the legal landscape and therefore details of prospective costs should be more readily accessible. There is still however the prospect of satellite disputes within the mediation over the reasonableness of cost estimates.

It is also worth bearing in mind that settlements still tend to be all-inclusive and that there can be a psychological unwillingness amongst some parties to pay anything towards the opposing party’s legal costs. 

Who should attend? 

It is generally the case that the more senior the representative, the greater the chance of a resolution being reached. As a corollary, one of the quickest ways to guarantee a failed mediation is for one party to attend with an unrealistically limited authority. This suggests to the other side that the process is not being treated with appropriate seriousness. When this occurs, not only can potential solutions be lost but subsequent negotiations will be made that much harder.

Therefore, as part of the preparation process, parties should give detailed consideration as to realistic levels of settlement. Failure to do so can lead to mediations failing or the possibility of proposals being considered in haste with the key decision-maker being briefed over the phone. This is rarely ideal. 

Conclusion 

It is often said that time spent in preparation is rarely wasted. This is particularly true with mediations which frequently represent the one occasion where the parties make a formal commitment to the ADR process. Diligent prior work often pays dividends in securing a satisfactory outcome.

 

To view Richard’s profile, click here.

 

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