Court or Out of Court: The Potential Benefits of Pursuing Mediation
Sometimes solving issues without waiting for a court ruling—while being prepared to take things all the way—can be the best possible outcome
Litigation is not the only option when resolving a legal matter. And sometimes, it’s the wrong one. There are compelling reasons to pursue early and aggressive mediation in specific cases instead of a court date.
Mediation can represent a good-faith effort to find a mutually satisfying resolution to a dispute and avoid the challenges of a drawn-out legal battle. It is not always appropriate or realistic, but it’s often worth pursuing.
The case against litigation
Of all likely dispute-resolution methods, litigation is typically the most time-consuming, risky, and costly option. A lengthy and contentious case can irreparably destroy relationships and use significant resources before it is resolved. Litigants have less control than they do during a mediation. And outcomes can sometimes be difficult to predict.
As for the cost, while it is difficult to generalize or determine an average expense per litigant, the aggregate numbers are significant. In 2020, organizations with at least $1 billion in revenue spent $22.8 billion on outside litigation costs. The surveyed companies represented 15 industries, including banking, consumer goods, financial services, and healthcare. This expense is projected to increase by four percent in 2021. Among the practice areas responsible for most of the costs are employment, class actions, and cybersecurity litigation.
For smaller businesses that do not have the financial reserves of large corporations, the expense of a lengthy trial can be crippling. Even in relatively straightforward cases, court costs, discovery investigations, expert witness fees, and attorney fees may chip away at potential winnings from a favorable verdict. And an affirmative ruling does not ensure the full collection of what is owed.
In some cases, litigation is absolutely the best path forward—no other method has the power to achieve the desired outcome. And in all cases, qualified legal teams prepare as if a trial is imminent, until it becomes clear that another resolution method is advisable.
The case for mediation
Of all types of alternative dispute resolution (ADR), arbitration and mediation are the most common and frequently used. This discussion focuses on voluntary (i.e., not court-ordered) mediation, which is often used as a first step toward finding a resolution. If early mediation or direct negotiation fails, arbitration and litigation options are then weighed.
Mediation is simply an assisted negotiation facilitated by a neutral third party with the goal of reaching an agreement to a dispute. It is a private process that is more flexible than both arbitration and litigation but is non-binding without a subsequent written agreement. A mediated settlement agreement is not a legal judgment, and a mediator cannot impose a resolution upon the disputing parties. The parties must arrive at a voluntary, mutually agreed-upon resolution.
The mediation process typically includes the following steps:
- Parties agree on the selection of a mediator; a neutral party with experience in settling disputes and appropriate training
- Parties meet in a neutral, usually informal setting
- The mediator establishes ground rules and an agenda for the session
- The mediator conducts either a joint session and/or separate sessions to bring both parties closer to a resolution
- If the parties are able to come to a resolution, the mediator outlines the terms of the mediation agreement and submits it to the parties for review
If the parties ultimately do not sign off on the agreement, other ways to achieve resolution must be explored.
Although there are jurisdictional differences and exceptions for specific categories of disputes (e.g., labor relations and custody battles), mediation is generally not governed by statute. In Texas, The Texas Alternative Dispute Resolution Act of 1987 established mediation as a viable option. St. Mary’s University School of Law Professor L. Wayne Scott assessed that mediation “has proved to be more successful than ever imagined” in the years following the act’s passage.
Other critical considerations
Exploring mediation can open the door for more inventive solutions and faster closure for all involved. Since many mediation sessions occur after the discovery process has commenced and evidence is exchanged, both parties gain a better understanding of the elements of their case. They can make an informed decision about proceeding when the stakes are much lower.
Because mediation is private and confidential, it is the preferred resolution method for sensitive matters that the parties would not want to be aired in a public courtroom. Also, because the terms of a settlement agreed to in mediation are drafted by the disputants and not an outside party or the court, parties are more likely to comply with them. That said, a mediated settlement may lack the thrill of a dramatic court victory since it is, by definition, a compromise between all parties.
Aside from the costs involved, there is often little risk in attempting mediation. If the parties cannot reach an agreement, they may find themselves better prepared for trial having gone through the mediation process. But if the parties can agree upon a settlement, they have eliminated the need to take the case further.
Some words of caution
One benefit of mediation is its lack of formality, but that also means mediation lacks the procedural and constitutional protections guaranteed by federal and state courts. Also, there is no way to set legal precedent in mediation if a case has the potential to do so, and it has no formal discovery process. The entire process relies heavily on good faith—which can also be a cause for concern.
Mediation has a low probability of success if the disputing parties are hostile and can cede no common ground. In some cases, there is simply no substitute for litigation, and it would be wasteful to even attempt mediation.
When faced with a high-stakes legal dispute, the best asset a company can have is a team of experienced, highly qualified attorneys. At Johnston Clem Gifford, our litigation team prepares every case as though it will proceed to trial. While most cases do settle or are otherwise resolved out of court, experience and statistics confirm that clients who are prepared to go all the way almost always earn better results.
The attorneys of Johnston Clem Gifford have significant experience with litigation and alternate methods of dispute resolution, including mediation. For more information, contact us online or by calling (214) 974-8000.