To mediate or not to mediate – that is the question

Guest blog by Simon Gerrard, Head of Insolvency at Prosperity Law LLP

In the mist of battle, emotions invariably run high. Often parties become entrenched, hardened and ready to go all the way to trial. That is not necessarily a bad thing – the reality is that you need to have a thick-skin when embarking on litigation, and a solid resolve to pursue the claim to the bitter end.

However, at some point in the litigation process, the parties will be expected to consider whether the dispute could be resolved by some form of alternative dispute resolution method. The most common (and, in my experience, most effective) method is that of mediation.

What is mediation?

A form of alternative dispute resolution whereby the parties agree to appoint an independent third party (usually a current or former practicing lawyer) to act as a facilitator between the parties at an agreed venue, with the aim of achieving a settlement or resolution to the dispute.

Is agreeing to mediate a sign of weakness?

In short – no.

The courts expect the parties to at least consider whether the dispute can be resolved by ADR (alternative dispute resolution) and, therefore, it is almost always something which is discussed at some point in the process by the parties in every commercial dispute.

It is important to note that agreeing to mediate the dispute does not in any way mean that you have to settle the claim. If the terms on offer at the mediation are not palatable, you can simply refuse to settle and continue with the litigation.

What are the benefits of mediating?

• It provides the parties with the opportunity to speak directly to one another. This is typically the only opportunity to do so before trial.
• If the case settles at mediation, it will obviate incurring additional legal costs to pursue the litigation to trial.
• The mediator is bound by privilege – meaning he/she cannot relay any information that you tell him/her to the other side, unless you agree.
• Even if the case does not settle, by participating in mediation you may learn more about the other side’s case or, at the very least, the price to settle the dispute.
• Opening dialogue between the parties can sometimes lead to the repair of commercial relationships (as unlikely as that may seem at times), which can lead to new opportunities.
• A wider scope to argue a commercial settlement (or receive an apology) compared with the rigid approach adopted by the court.

What are the negatives?

Frankly, there are very few negatives.

There is, of course, the cost of the mediation itself (solicitor fees and the mediator’s fee) that would be incurred irrespective of the outcome of the mediation. However, those costs are likely to pale in comparison to the costs if the litigation goes all the way to trial.

What if I refuse to mediate?

Refusing to mediate a dispute can result in a significant costs risk for the refusing party. The costs can be significant, so care is needed if refusing to mediate (or ignoring an invitation to do so).

How can we help?

We recognise that it is not always in our client’s best interest for litigation to go to trial.

Prosperity Law LLP are skilled negotiators that can help clients to secure excellent commercial outcomes through mediation.

For more information on how we can help you, please contact Simon Gerrard, Head of Insolvency, at [email protected] or 0161 667 3686.