In our last blog, we discussed Informal Dispute Resolutions, where parties try to resolve their conflict without having to spend a large amount of time or money associated with the more formal types of dispute resolutions, such as litigation or arbitration. If parties are unable to agree during the informal resolution process, but both are interested in solving this amicably, mediation is a good alternative. Let’s take a look at the facts about mediation.
What is mediation?
Mediation is a dispute resolution system designed to assist parties in amicably settling the underlying dispute. This process can be entered into by parties in conflict both before and during the litigation process. In fact, mediation has been so successful in assisting parties with mutually settling disputes that most courts require the completion of mediation prior to going into trial.
In the mediation process, both parties come together in an informal setting and present what they believe to be the strengths and/or weaknesses of one another’s claims and/or defenses. They are then separated, and a neutral third party discusses the wants, desires, and settlement expectations of that party. While keeping this information confidential, the neutral third party (which is typically an attorney who practices in the specific area of the dispute) will enter each room individually to discuss offers of settlement.
What are the benefits of mediation?
Although this process can take anywhere from one hour to an entire day, by the end of the process, the neutral third party is expected to be able to assist the parties in reaching an amicable settlement, resulting in avoiding litigation altogether. A significant benefit of mediation is that the parties are in control of what the settlement entails, and the decision is not left up to a judge, jury, or arbitrator. Additionally, one of the facts of mediation is that costs are generally split by the parties and may be the most economical form of dispute resolution.
In construction contracts, there is often a dispute resolution clause that states which dispute resolution process will be used should a conflict arise. It can be advantageous to have that clause state that mediation will be used first to try and resolve any potential conflicts.
Is mediation binding?
Mediation is one of the most preferred types of dispute resolutions. As we mentioned earlier, even the courts will often request that the parties try mediation before allowing them to go to trial. Mediation, though, only works if both parties are willing to reach a solution amicably, and often results in a compromise. If one of the parties is not willing to budge at all on their claim or demand, litigation, commonly known as a lawsuit, may be the better option. Learn more about litigation in our next blog post.
This blog is part of our 2020 Mastering the Subcontract series. Come back each week as we deep dive and pull apart everything you need to know about a subcontract.