Over the past 16 months, I have been conducting mediations within the Magistrates Court Civil List. On average, these claims are for values of around $25,000. Often, the amount in dispute is even less than that as the defendant comes to the mediation partially accepting the claim.
What I have noticed throughout these mediations, is that there are two common outcomes.
The parties reach agreement on a settlement of the issues, but resolution at mediation fails, because the parties cannot agree on who shall bear the legal costs incurred to date.
The parties reach a commercial settlement on an “all in” basis. Often this amount, once taking account of legal costs incurred to the date of the mediation, leaves parties with very little in terms of what they have gained through the process.
Overall, what I see is a significant amount being spent on legal costs in what are relatively small disputes. The amount of legal costs incurred prior to mediation either impedes settlement or, means that the settlement amount is significantly eroded.
Knowing that in a family law context, parties for certain matters must mediate prior to being permitted to commence proceedings, it made me wonder whether this might be an appropriate way for dealing with commercial matters as well, particularly in small claims where the legal costs seem particularly out of proportion to the amounts in dispute.
While services such as the Victorian Small Business Commissioner make mediation services available to small businesses at very low cost, knowledge of these services seems to be low in the business community and the service appears to be under-used.
I’m hoping that 2018 is the year in which business understanding of the mediation process is increased and we see more businesses turning to mediation to resolve commercial disputes before turning to the slow, expensive process of litigation. Stay tuned for more about this topic from me in 2018.
In the meantime, I wish everyone a safe, happy and conflict-free festive season!!