The reasons to mediate business disputes as
opposed to others is really; there are really three.
The first is privacy. This is important.
Most businesses do not want the financial details of their business aired to the public.
A lawsuit in court, far from guaranteeing privacy, almost necessarily makes the financial
details of a dispute public. A court may or may not seal certain portions
of the record. Second; confidentiality.
Mediation is confidential, usually by state law; sometimes by federal court rule.
Confidentiality enables the parties to talk about risks in a safe environment.
And finally, mediation has a very good chance of resolving the dispute.
This is very important in disputes where the parties may want to preserve their business
relationship. It can include internal disputes, such as
employment issues, or external disputes, such as contracting with other parties, or partnership
disputes, which is another form of internal dispute.
Often, business disputes should be mediated early for the reasons I just mentioned.
If business disputes, like many other disputes, are allowed to fester, parties positions can
become more entrenched, the cost goes up and the focus of executives, directors and shareholders
is inevitably drawn away from the business itself, and instead, to the litigation and
the prospect of victory or defeat. This doesn’t help the business.
The cost of mediation is very small compared to almost anything in a formal litigation,
and at worst, the parties are going to learn something at a very low cost, and pretty quickly,
in a mediation. In business mediations, like any other mediation,
it is extremely important that decision makers attend.
It isn’t always the case, but unless they do, the process simply doesn’t work at its
best. Aside from having mediated or arbitrated hundreds
of business disputes, I am a business owner. I have co-founded a very successful law firm.
And I was a part owner, one of many, of the nation’s largest mediation and arbitration
firm for nearly ten years. All of these experiences help.