For most businesses, when a dispute arises the first place they may turn for advice is their lawyer. This makes sense. Lawyers understand rights and obligations and can give assistance in telling you what your chances of success of resolving the dispute are.
This however, can lead to a problem. The law is an adversarial process. It is all about determining which party is right and which party is wrong. The law attributes blame. Now, the human psyche doesn’t like to be wrong. It doesn’t like to be found at fault. When we hear from another party’s lawyer, it sets up an automatic stress reaction and can very easily lead to an adversarial response and heightening tension.
Often in business, we have ongoing relationships that are valuable to the business. Through legal action, these relationships are severely strained and often break down. Imagine that parties have gone through a legal process and had a decision in court. Regardless of who wins, what are the chances that these 2 businesses will want to continue working together?
Mediation looks to resolve business disputes and protect the business relationship. In a mediation, an independent neutral facilitates a conversation between the parties to assist them in breaking down the dispute to its core elements. The mediator helps the parties recognise the underlying interests they have and working solutions that are acceptable to both parties.
In a litigation scenario, it can take 12 months or even longer to have a resolution. During this time, both parties spend significant amounts of money on the dispute. The dispute also takes a huge amount of time away from management that could be better spent running the business. Not only that, but ultimately, the decision in their case is left in the hands of it unrelated third-party who may not be familiar with the industry and does not know the individuals involved in the dispute.
A mediation can be held relatively quickly. This limits costs as well. An added benefit, is that the parties are ultimately in the patrol of any decision that is made. The mediator is not in a role that forces either party to accept any decision.
Lawyers generally should be involved in the mediation process. The key role is to ensure their client knows the realistic outcomes of litigation. These are what any potential settlement should be weighed up against as well as the cost of business disruption and stress. The lawyer also has an important role in documenting settlements to make sure they are enforceable.
We are now seeing more areas of commercial practice where mediation is a compulsory requirement before proceedings can be issued. Franchising and Retail Leases are examples of this. The data is showing us that over 50% of cases in these industries which are mediated settle without any requirement for proceedings being issued. If this is working in franchising and leasing, there seems to be no reason why it can’t work in a much wider range of commercial disputes.
So, if your business has the unfortunate position of being involved in the dispute, perhaps it’s an option to consider calling the mediator before going down the path of litigation.
For more information about mediation or to have a confidential discussion regarding your disputes, please contact Nicole Davidson on 0403 523 700 or nicole@growingbeyond.com.au.