Business mediation: What is it really?

Bill Ohle, The Daily Record Newswire

Previous articles in this space have discussed different forms of business dispute resolution - negotiation, mediation, arbitration and litigation. Here is a closer look at the mediation process, which often is confused with the more formal - and binding - arbitration and litigation procedures. Also, mediation is often combined with arbitration and litigation, although it does not need to be, which adds to the confusion.

The best way to explain mediation is to compare it to shuttle diplomacy involving an independent and, hopefully, unbiased third party (the "mediator") who acts as a communicator between the disputing parties. Often, the parties' emotions make it very difficult to be in the same room with one another and their natural tendency to see only their side of the story makes direct communication difficult if not impossible.

Mediation usually works by having the parties and their attorneys sitting in different rooms - close, but not too close - so the mediator can walk between them. The mediator's first job is to listen to each party's position, understand the facts as each party sees them, and then discern the middle ground.

The mediator's second job is to move each of the parties toward that middle ground. This often involves the mediator focusing on the negative aspects and downside risks in each party's case so as to overcome that "natural tendency" to see only one's own side of the story.

The mediator's final job is to get the parties to agree on a final and lasting resolution to the dispute, which usually results in a written document called a "Settlement Agreement."

The most important thing to remember about mediation is that it is a completely voluntary process and will never resolve a dispute unless all the parties agree to the solution. Any of the parties, and mediation often involves multiple parties and not just two, can get up and walk out at any time. And, unlike arbitration or litigation, the mediator cannot issue a binding decision that the parties must follow.

If an agreement cannot be reached voluntarily between the parties, then they must move on to a binding process, such as arbitration or litigation. Then an arbitrator, a judge or a jury will decide the case and issue a mandatory order that the parties must abide by.

In the end, the only way mediation can succeed is if all sides are willing to compromise. I've often heard that a successful mediation leaves no one happy, but the compromise is better than the lengthy, expensive and sometimes draconian outcome that results from arbitration or litigation.

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Bill Ohle is an attorney in the Portland office of Schwabe, Williamson & Wyatt, and represents business and design professionals in the construction industry. Contact him at 503-796-2414 or wohle@schwabe.com.

Published: Thu, Dec 03, 2015

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