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Questions which were previously asked relating to arbitration should be posed for mediation as well. How does mediation come about? Again there are two ways, much like arbitration. The first is by written agreement before a dispute arises. In a standard form residential real estate purchase and sale contracts, for example, there is a clause which says that, should a dispute arise, the parties shall first seek to resolve the dispute by mediation. Such a mediation clause is common in many business agreements as well, such as in agreements for the purchase and sale of businesses.
The other mode by which mediation is triggered is through the court system. When you file a lawsuit in court, the court often requires the parties to seek mediation as part of the litigation process. The reason for this requirement is the large volume of cases filed in court. If all cases in court were to be tried by a judge and jury, the system simply could not accommodate that volume of work. Again like mediation triggered through prior agreement, the mediator assisting the process has no power to impose a decision upon the parties. The mediator’s role is to facilitate the parties in arriving at their own resolution. Early resolution eliminates a case having to be tried and can save a considerable amount of money.
Where are mediators found? As with arbitrations, in the case of mediation brought about by written agreements, there are both non-profit and for-profit type of associations. The American Arbitration Association is one, and there are many other non-profits which specialize in different types of disputes such as real estate, securities, and so forth. Again JAMS is a well known for-profit organization providing mediation services. When mediation is court-mandated, the courts have a list of mediators which they recommend, though you can typically choose your own.
What exactly happens in a mediation process? During the process, each side often has the opportunity to present a legal brief in support of their case and/or make an opening statement explaining their side of the story to both the mediator and the other side. Sometimes, these briefs and arguments are altered in some agreed-upon way or waived. Just like arbitration, parties are permitted to be represented by legal counsel. Unlike arbitration, however, no witness is called and, though the parties may agree to exchange certain information, no right exists to question any witnesses or examine the documents of the other side. Partly because of the need for frank discussions with the mediator in the context of an emotionally charged case and/or to explore confidentially specific settlement prospects or issues, the mediator will frequently confer with each party separately. The mediator will shuttle back and forth between the parties, placed in separate rooms, to convey one party’s proposal to the other. If all goes well, the parties arrive at an agreement resolving the conflict. Because the mediator has no power to impose a decision, frequently parties do not arrive at a resolution. But that does not mean that the process was a failure. It should at least have permitted both sides to better understand the viewpoint of the other side. Because of seeds planted during mediation, parties may eventually find solutions outside the mediation process. If there is a settlement, it will be put in writing at some point and signed by the parties. In the event mediation did not bring about a settlement, the dispute will proceed to either arbitration or litigation.
Cautionary Reminder. This article contains some general information as to the American legal system. It is not meant as legal advice. It is always important to consult lawyers and other professionals before making important business and legal decisions.
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