Conflict Avoidance and Resolution Through Mediation

by James S. Margolin

Business disputes often degenerate in- to fiercely contested, prolonged, and expensive lawsuits. The number of civil lawsuits filed, especially those involving employment discrimination allegations, and the expense of litigating, have sky-rocketed in recent years. Unfortunately, small business owners who are sued are at an immediate economic disadvantage, due to the combination of "no risk" contingent fee arrangements for certain types of plaintiffs, significant hourly rates for defendants and, in most cases, the unavailability of recovery of attorneys' fees and expenses from unsuccessful adversaries. Because of lengthy delays, disproportionate legal costs, and the concern of jury uncertainty, an increasing number of companies are utilizing alternative dispute resolution methods, in particular mediation.

Mediation is a process that employs a neutral person, the mediator, to facilitate negotiations between the parties in an effort to help them evaluate their own best interests and reach a mutually acceptable resolution. By using mediation as an alter-native or adjunct to the court system, the small business owner may mitigate, or completely avoid, many of the risk factors inherent in the civil litigation system. Mediation is quick, private, fair, and inexpensive compared to the costs of protracted litigation. Settlements reached in mediation are immediately reduced to writing and are a final and binding end to a pending lawsuit.

A mediator's role is strictly limited to bringing the two parties together to discuss the issues, acting only as an intermediary in these discussions. Often the mediator encounters parties and attorneys who, in addition to having opposing views and conflicting goals, have personal animosity towards each other. It is the job of the skilled mediator to work with the parties to reduce tension and antagonism, set the pace of the negotiations, manage the agenda, provide focus, clarify misunderstandings, frame the issues, explore new areas of discussion, help the parties make realistic assessments, offer suggestions for mutually acceptable solutions, and thus ensure fairness in the process.

The process of mediation is private and confidential. With very few exceptions, what is said during mediation cannot be revealed outside the mediation proceedings or used later in court. By contrast, trials are open proceedings, and all testimony and evidence at trial becomes available to the public, including competitors and future adversaries. So whether the small business owner's desire is to protect secrets or just to avoid airing dirty laundry in public, privacy will be substantially greater with a mediated settlement than with an open trial.

Mediation encourages the parties to communicate directly with each other rather than filtering all communications through attorneys, and thus allows the parties to escape the full force of the attorneys' approach to the lawsuit. Because parties can speak for themselves in mediation, they can formulate creative ideas and practical solutions that litigation might discourage. Attorneys and parties, by virtue of the very nature of adversarial proceedings, can become so focused on winning a case that it is often possible to lose sight of opportunities for resolution that could include repairing the parties' relationship. The mediator can point out, in nonadversarial terms, the strengths and weaknesses of each side's position, which may, in turn, change each party's view of the prospects of winning or losing at trial, and open the door to a mutually acceptable settlement.

There is an often told story among mediators involving two children fighting over the last orange in the refrigerator. The parent, with Solomon-like wisdom, resolved the dispute by telling the children to share the orange equally by splitting it in half, satisfying neither one of them. In contrast, a mediator would have asked the children why each wanted the orange. Upon hearing that one child wanted to make orange juice, and the other wanted to make marmalade, a mediator would have facilitated a better result by encouraging one child to take the juice of the whole orange, and the other child to take the rind and pulp. Similar solutions can often be achieved in legal disputes.

Jim Margolin, is the principal in the Margolin Alternative Dispute Resolution Firm in Kansas City. He may be reached at 816.753.3838 or by e-mail at margolin@swbell.net.