How Businesses Use Mediation To Resolve ConflictNick Richards FDRP LL.B MBA GDLP DMgmt MQLS
Mediation is a better way for businesses to resolve disputes
Every day a business enters into transactions, whether it is with a customer, goods or services supplier and each transaction comes with its own associated risks sometimes beyond the parties own control such as supply chain issues, loss of staff, defective workmanship, negligence, poor advice or even pandemics.
Some options that most businesses face are:
- Ignoring the issue in the hope its gets better.
- Attempting to resolve with the other party themselves.
- Seeking a judgment in the court.
- Involving a mediator early on outside of court.
It has been long acknowledged that mediation is the most effective form of dispute resolution given that mediators can engage promptly with the parties, offering a solution where the parties control the outcome rather than the strict and rigid approach of the court system, by an individual that may not have a detailed understanding of their business and processes. The success rate of settlement in a mediation prior to court lodgement is up to 90%.
Mediation brings considerable benefits for businesses
The costs of mediation are generally split between the parties to the dispute; however one party may also be willing to pay the fees of the mediation. Mediation organisations will generally charge an hourly fee for each party to brief them on the matter and an hourly rate for the mediation conference and document drafting. Many mediators are Solicitors or Barristers that have considerable experience negotiating and advocating their rate will generally start at $400 + GST per hour.
The key cost benefit with mediation is that unlike the court system, a party is not liable for the other parties costs. In the court system an unsuccessful party may be liable for the cost of the other parties legal fees plus any other judgment/order made by the court.
Control of Outcome
Mediation provides parties control on how the dispute is handled, ultimately enabling them to control the outcome. No solutions are imposed on parties, rather the parties will work together in a time and location that suits all involved. Agreements met needn’t be legal outcomes, but can be practical and personal, allowing a flexible approach in resolution that is likely to suit the parties better.
The mediation process is much quicker than going through the court system. Any agreements met should be documented and signed by the parties to make the agreement enforceable. Should a party failure to adhere to the agreement, the other party may make an application for an order of the court. The time associated with mediation of a business matter may be as little as a month, whereas the court process could take up to 1.5 years.
Mediation is conducted in a confidential setting away from the public unlike the court system, whereby members of the public may attend hearings. Should a matter proceed to court after mediation, any communications in mediation cannot be used for the purposes of evidence. Information can be shared in the mediation to assist the mediator in steering the parties towards resolution, however anything passed to the mediator will remain confidential.
When it comes to commercial matters, relationships and reputation are key factors in successful trade. Mediation allows parties to work with one another, giving a voice to both parties in the steps towards resolution, preserving relationships as opposed to the court process whereby relationships generally come to an end.
Some general types of disputes in which mediation can assist:
- Contracts (goods and services)
- Quality issues
- Negligence and liability
- Workplace bullying
How to prepare for a mediation
When engaging a mediator a business manager, should be able to clearly communicate to the mediator the history of the dispute and what they would like to achieve. Any documents that are necessary will be requested by the mediator and discussed at the formal consultation. Prior to the mediation conference, the mediator will prepare you to narrow down the issues in dispute and assist you with your communication strategies so you can clearly communicate to the other party what the issue is and how you would see it being resolved.
The mediation process
One party will reach out to a mediator and brief them on their matter after which the mediator will forward an invitation to mediate to the other party. After a brief initial discussion with the other party as to their engagement, fees and time the mediator will then complete a consultation with the other party and set a mediation date.
The mediator will the work with the parties individually to isolate their key issues and prepare them to mediate with the other party. At the conference, the mediator will guide the parties to focus on the historical aspects of the dispute and allow each party to communicate their position and proposed resolution. The mediator will discuss the options with the parties and guide them towards a mutually acceptable outcome and then document the agreements for signing by both parties.
The mediation process can be effectively administered in person, over video conferencing and tele conferencing.
Reaching an agreement (or not)
Agreements in mediation are drafted by the mediator and signed by the parties at the conference. Should one party fail to adhere to the written agreement, the other party may seek the court to make an order that the agreement is enforceable.
Mediation for businesses is an effective way to resolves disputes privately, quickly, cheaply and effectively.
When faced with a dispute parties can do the following:
- do nothing in the hope things get better;
- attempt to resolve directly with the other party;
- apply to the court for a judgment;
- engage a mediator (pre-court or post-application)
Advantages of Mediation
The advantages of mediation over the court system are:
- considerably lesser cost
- preservation of relationships
NOTICE: The above is not legal advice and it is recommended that you obtain tailored legal advice related to your own personal circumstances from an Australian legal practitioner.