Law is filled with terms and words with special legal significance and meaning. It is my opinion that one of the many important reasons why having an attorney in disputes or in transactional matters is so critical is because a licensed attorney is “fluent” so to speak in legal language or “Legalese.” Sometimes we attorneys take for granted that words we use every day are not familiar to our clients. I hope that with this post and others on The Sayyar Reporter I can help define and explain away any confusion people unfamiliar with Legalese may have so that they can better understand their case, their transaction and the services their attorney is providing for them.
Some key and basic terminology refers to the type of mechanism or forum where a legal dispute can be heard and resolved. These words can sound similar but refer to three very different methods of dealing with any legal dispute. Those words are in no particular order as follows: mediation, arbitration and litigation. Each of these terms refers to a complex process of dispute resolution. This particular post will discuss what mediation is, its upsides and down and subsequent posts will discuss arbitration and litigation.
Mediation is a form of guided or assisted settlement negotiations. Settlement is the process by which two or more people or entities (or parties) come to an agreement by which their problem is resolved and each side agrees to be legally bound by the terms of the settlement. When two or more people or entities have a problem with one another they can agree to have a qualified third party attempt to assist them in solving their problem by negotiation. The third party is referred to as a mediator. The mediator is sometimes a judge or a retired judge or some other qualified individual with experience in negotiation and/or the topic area which relates to the problem the parties are having with each other. The mediator does not decide the case. The mediator, even if he or she is a current judge (though never the judge involved in an active lawsuit between the partes), makes no rulings that legally bind the parties. Very often, the negotiations of the mediator are privileged and confidential. Mediation can be an effective tool by which parties can meet with someone who has no “dog in the fight,” who is neutral but who has some experience in the law and can candidly try and bring the parties to a settlement agreement. The mediator cannot force settlement. The mediator can only talk to the various sides, pass along authorized messages or offers of settlement, and provide his or her opinion as to the risks and benefits of settlement. Mediators are ultimately facilitators of open, frank and hopefully fruitful negotiations.
Mediation can be public or private. Public mediation refers in this context to the use of governmental or administrative mediators and usually does not require the parties to pay for the mediator’s time. Some courts have court mandated mediation that requires parties to engage in negotiation through mediation at different points in a lawsuit. Other jurisdictions and states only force mediation if there is a written contract between the fighting parties wherein they agreed ahead of time for mediation. Mediators are offered also by non profit organizations affiliated with the court system. There is a general public policy in most states which favors settlement and mediation over lengthy lawsuits to cut down on legal costs and preserve court resources. The courts and the law want parties to try and work out their disputes. It is often the public policy of a state that courtrooms should be the last resort in a dispute, not the first. That is why some legal cases involve mandatory mediation at various stages of the proceedings.
Private mediation refers to mediation using a company or individual mediator that must be paid for their time; unusually the cost is shared equally between the parties. The parties can agree to engage in mediation in the event of a dispute even before a dispute arises in a written contract. Many written agreements have mandatory mediation provisions where the parties agree in writing that they will engage in some form of mediation (sometimes very specifically spelled out in the contract) in the event of a dispute before either party is allowed by contract to bring a formal lawsuit. Courts generally enforce these provisions because of the public policy in favor of settlement. Alternatively, parties in a dispute can always offer to engage in mediation and if the other side agrees, it is only a matter of picking a mediator, picking a date, and arranging payment of a mediator.
Meditations can be fairly informal and are frequently held in offices or conference rooms. Unusually prior to mediation, each side will submit a written brief to the mediator which is confidential (the other side does not get to see it) where the party can candidly inform the mediator of the facts and the party’s honest take on the situation. Strategically, the information contained in the mediation brief may be highly confidential but provided solely to the mediator to assist in negotiations. Mediators generally never disclose to the other side anything the party does not want them to disclose. If you tell the mediator something in confidence, he or she is bound to keep that confidence and only pass on what you authorize to be disclosed to the other side.
Different mediators had their own style of how they handle Meditations. Some want to only meet with the parties separately in different offices or conference rooms. Some want to meet with the parties all together. Some mediators will pressure both sides to settle. Some mediators do very little other than shuttle offers back and forth between the parties, acting as a messenger. Some mediators have a great deal of advice to offer, some speak very little. I once represented a party in a mediation that involved he and I sitting in a conference room for 3 hours before the mediator even came to say hello. During that 3 hours the mediator had spent the entire time with the other side, persuading and urging them to make an offer which the mediator presented to us largely as a “a take it or leave it” offer. Very little actual negotiation or “back and forth” offering took place in that case even though a fair compromise was reached. The different styles of a mediator can be a downside to mediation. Because you may not know the style of your mediator, the mediator you are assigned (if you have no choice) or the mediator you pick with the other party may not fit the needs of the parties or the case. Some cases are ripe for negotiation so a less “hands on” approach from the mediator is all that is needed. Some cases involve parties who hold unrealistic legal or economic positions and require a great deal of input by a mediator to reach compromise. If you get the wrong style of mediator for your case, the mediation can seem like a waste of time.
Mediation can occur before, during or after a case. Mediation can happen just about any time the parties agree and can arrange their schedules. If a court orders mediation or a settlement conference, very often there is an obligation by all parties to participate in good faith. Since no one can force a party to settle in a mediation, what constitutes good faith is not a hard and fast rule. Meditations end either when one or more of the parties informs the mediator that they are not willing to go any further in negotiation (say when the parties are too far apart in their negotiating position) or when the mediator decides the parties are too far apart or that further mediation would be polarizing and a waste of time. I have seen parties make one offer and when it was rejected walk out of a mediation. Was that bad faith? Hard to say.
I have been in meditations where the representative of the company on the other side of the dispute showed up to mediation without any authority or power to settle. This frequently happens when insurance companies are involved in lawsuits or when a company is involved in a lawsuit but the board of directors has not authorised the client representative to settle for certain terms. In that instance it is very hard not to feel as if the other side is acting in bad faith. I once represented a client who reached a settlement with the president of a company only to be told that the board of directors had to approve the matter at next month’s meeting and the settlement was later rejected by the board of directors. I have also represented clients in mediation when insurance is involved and the insurance agent with the power to settle was not available via phone to participated in the negotiations. I have participated in Meditations where the mediator talked briefly to both sides, threw his hands in the air and declared the matter incapable of resolution without making any effort to try and talk either side around. I have also seen times where the parties were ready to quit but the mediator refused to let either side leave and insisted that the parties stay for the full 4 or 8 hours (with lunch break) while the mediator pressured (but never forced) the parties to settle. While your attorney may have some personal knowledge or have prior experience about a prior mediator’s style or what to expect, mediation can be a very fluid and surprising experience.
The benefits of mediation are many. First, mediation can provide the parties with a neutral third party’s view of the problem or dispute. It can be very helpful to hear from an experienced outsider who is hearing the case for the first time, even if no settlement is reached. Second, mediation cast light on weaknesses in a case before it is brought in a court. A mediator who is an experienced lawyer or judge may be able to give his or her opinion on how they would rule on the case if they were the judge. The offers from the other side can also illuminate potential weaknesses in your own case and can give you a idea of the other side’s strategy and thinking. This can also help a client determine whether the risk of a lawsuit is worth it or is compromise preferred. Third, mediation is generally much cheaper in terms of costs and attorneys fees than a full blown court case, and can resolve a matter unusually much faster than filing a complaint with a court. Court cases now can take years to be fully ruled upon in some cases. Fees and costs can mount quickly and can climb into the 5 or even 6 figure range. This is especially troublesome when considering demanding fees and costs as part of a mediation settlement is usually not an acceptable term. Mediation, especially early on can save a great deal of time and money.
Fourth, and most valuable in my opinion is the fact that mediation allows the parties, if they reach a compromise, to craft their own agreement resolving a problem. Why is that valuable? Because a judge or arbitrator is limited by law on what relief it can grant to the “winning side.” In mediation, the parties can be as creative as they want without regard to the law. One memorable occasion illustrating this point sticks in my mind. I represented a party in a private mediation involving a business dispute. The parties reached an agreement regarding their problems and part of the resolution was rather than one side paying the other in cash money, one side was effectively paying the other in the form of manure (more specifically, organic fertilizer). No judge would be able to award someone manure in a court of law but that was of value to the parties so in mediation they were able to reach a compromise using manure rather than money. Fifth, mediation if successful provides a certain outcome to a dispute. You know what you are getting. In a court room there are no guarantees no matter how “strong” your case is that you will get what you hope to receive. Moreover, even if you win in court, you still have to collect on what you are awarded whereas in settlement, someone is unusually agreeing to pull out their check book then and there.
Some quick general tips to remember therefore when engaging in mediation or deciding to engage in mediation are as follows:
1. If you have a choice of who your mediator is, consider the cost benefit of choosing a public mediator versus a private mediator. Also consider who your mediator is. A private mediator may be worth the extra money if their mediation style is just what your case needs.
2. When you know your communications with a mediator are confidential, be candid about your case. Take the opportunity to pick your mediator’s brain, though take what they say with a grain of salt. Their evaluation of a case is not always accurate.
3. Be creative. Remember, you do not only need to think in terms of money. Manure can work just as well, or whatever services or assets you have to exchange or barter for. Sometimes a simple apology can be part of a settlement and make a world of difference.
4. When making an offer or considering an offer in mediation, remember the process is about compromise. A good mediation outcome is where neither side is 100% happy but they can both live with the agreement. That is a fair or “good” compromise.
5. Bring a book or something to occupy your time. Mediation can be filled with a great deal of “hurry up and wait” time.
6. Remember that if the mediator or even your attorney keeps bringing up the negatives and risks of not settling, they are not trying to force you to settle but are wanting you to make your decisions fully aware and understanding the risks and potential negative consequences. There is no greater gamble than going to court. The mediator and your attorney are doing what they can to help you by being frank and even being a bit pessimistic about your case in mediation.
7. No one can force you to settle.
8. If you do make an offer or consider an offer, think of all the little details not just the big terms. Nothing is worse than agreeing to settle for X amount of money but then forgetting that you have to agree as to when it is paid, how it is paid, in what form is it paid, and what about the attorney fees and costs, the liability release, the convents and other promises, etc.. The devil is in the details. Don’t forget them as they can ruin a potential settlement if you do and plunge you back into an expensive and uncertain legal dispute.
9. Make sure that any settlement reached is put in writing and signed by the parties. Do not leave the mediation table until that is done even if your attorney has to hand write it out, something I have done on occasion. All to often, the second the parties end the mediation thinking they have a settlement, someone wants to change a term or change their mind and without something in writing, you have no basis to enforce the settlement in court. Get it in writing AND signed or you have no deal. Insist upon it no matter what the other side says.
10. Come to the mediation prepared. That means have your financials in order so you know what you can offer and/or what you can accept. Have your facts straight ahead of time so you can urge the mediator to spend more time persuading the other side than you. Make the most of the process and participate in good faith.
11. Make sure that if you are ordered to mediation you ask the judge to order the other side’s decision maker, someone with actual authority to be present or available via telephone. If you are offering privately to mediate with the other side, make that a condition of agreeing to mediation. This may not avoid the problem of having someone at the mediation with no authority but it can help with the problem.
I hope your mediation experiences are positive ones and you use them to your advantage even if settlement is not reached.
Assly Sayyar, Esq.