Legal disputes can cost you money, create ill will, try your patience, and gobble up tons of your time. Fortunately, you can resolve most disputes without the hassle of a lawsuit.  You can use mediation in which a neutral third party helps both sides reach a voluntary solution.

Over the life of your business, you’ll probably face at least one legal dispute – and perhaps more. The dispute may be between your business and a customer or client. It may be between your business and a supplier or employee. Or it may be between you and other owners of your business.

Ideally, you and the other side can come to terms on your own. But maybe, despite your best efforts, you and the other person or company can’t amicably settle the matter.

When that happens, either mediation or arbitration may be successful. Both methods use a neutral third party in finding a solution. There’s a major difference, however: In arbitration, an arbitrator imposes a binding solution on the parties – one that can be legally enforced. By contrast, in mediation, a mediator helps the parties come up with their own solution.

And here’s an amazing statistic: Mediation succeeds in over 80 percent of the disputes in which it’s used.

Consider the Advantages

• Let’s look at the advantages that mediation offers, courtesy of Peter Lovenheim, a mediation pioneer:
• You control the outcome. If you reach a settlement through mediation, it’s because you and the other party have agreed on the terms. A judge, jury, or arbitrator hasn’t dictated the outcome.
• You control the process. The parties select the mediator and decide which issues will be covered and how costs will be allocated.
• You save on legal fees. In a court case, you typically need a lawyer – in part because lawsuit procedures are complicated. Legal fees can mount up rapidly. In mediation, if you use a lawyer at all, you’ll be billed for a relatively small number of hours.
• You can intelligently address technical issues. In a courtroom, the judge or jury may not understand some technical issues. In mediation, you can call in a mediator who has the technical background to properly analyze your dispute.
• You control the timing. Rather than being at the mercy of court dockets and lengthy adjournments, the parties who choose to mediate can work out a speedy time schedule. Your dispute needn’t drag on endlessly.
• You avoid unwanted publicity. A lawsuit is public. Mediation is private. The world won’t learn about business mistakes, internal problems or trade secrets.  Explosive allegations by an employee, for example, can hurt any business – but not if these allegations are confined to the privacy of the mediation room.
• You can preserve relationships. Going to court tends to harden people’s attitudes.  Not so with mediation. There’s a good chance that the relationship – whether with a customer, supplier or employee – will outlast the dispute. This may be the biggest benefit of all.

Getting Started

If your dispute grew out of a written contract, perhaps the contract says that you’ll mediate any dispute before going to court or to an arbitrator. But even if you haven’t agreed to mediation in the contract – or if there is no contract – you and the other party can agree to mediate. In fact, even if the case is already in court, you can still try mediation.

You can find a mediator through organizations such as the American Arbitration Association or through a dispute resolution center in your community. You may want a mediator with specialized knowledge. For example, if you have a construction dispute, you may want to find a mediator who understands construction issues. 

But generally, special knowledge isn’t essential for a successful mediation. Most mediators are quick studies who can easily come up to speed on technical issues.

How Mediation Works

The mediator starts by outlining the procedures you’ll be following. Then each party makes an opening statement. You’ll explain your position and how you’d like to see the dispute resolved.

Next, you and the other party will discuss the dispute face-to-face. The mediator will ask questions and offer comments. At some point, the mediator will meet separately with each party and may carry settlement proposals back and forth between the opposing camps – a sort of shuttle diplomacy.

As needed, the mediator gets everyone back together in one room for face-to-face discussions. When the parties agree on settlement terms, the mediator drafts a settlement agreement reflecting those terms, and both parties sign it.

For more information, consult Peter Lovenheim’s excellent book, How to Mediate Your Dispute.