Mediation has quickly become an extremely popular method for resolving business disputes. Whenever there are misunderstandings, mediation is the best answer. A third party mediator will be brought in a dispute to assist the parties to reach a settlement. In majority of the cases, the mediator will not have the authority to pass a binding decision. There are many benefits of mediation. Some of these are mentioned below.
- The mediator proposes creative accommodations or solutions to help solve the business dispute.
- It increases the possibility of continuing the personal or business relationship later as the dispute would be resolved with consideration of the parties.
- The overall mediation process is more affordable as compared to a costly and long trial. Both of the parties will share the cost of the mediator.
- Sometimes, the process of mediation is used instead of litigation. Often, it is used to resolve business disputes before they reach a point where it is necessary to seek arbitration or litigation.
- The mediator has to be objective which is why he or she is able to help the parties look at alternatives. Sometimes the parties caucus and separate with the mediator’s guidance.
- Mediation is private and confidential unlike trials which are very much public.
About 85 percent of mediations lead to a settlement according to the American Arbitration Association. If it is not possible for the parties to agree through mediation, it is only then that the case would proceed to litigation or arbitration.
What Is Business Disputes Resolution?
Just like the integration of new technologies and paying taxes, there is no denying that business disputes are inescapable. They can be about any type of oral agreement, a contract, or even a dispute.
It can be extremely tough and frustrating to go through business disputes, no matter the conflict. They could financially and emotionally drain you. It might seem to be the last resort to get through a business dispute is through a long, expensive and public court battle when things get heated. However, business disputes resolution offers an alternative solution to the problem. It is proven to be a successful method in eliminating this type of complication, one where there is a need for an amicable solution.
The Importance of Mediation for Businesses
Mediation helps you settle business disputes outside of court. Mediation is a voluntary process in essence. It is a process in which the neutral third party which is the mediator provides assistance to the parties and guides them through the conflict. The main purpose of mediation is to make sure that the concerns of all the parties have been heard. It allows the parties to find a solution on their own through productive dialogue.
One of the many benefits of mediation over litigation is that it allows the power to control the outcome to be retained. It saves money and time, is confidential, not as adversarial, and has a structure to prevent reoccurrence and maintains relationships. Mediation results in a signed, written agreement that both of the parties agree to as the best solution.
How Does the Business Mediation Process Work?
The first step of the mediation process requires making the parties agree on important issues. Mediation is voluntary and once mediation has been selected to be the desired mode of resolution, the parties have to decide on about the mediator together.
The basic structure of mediator is consistent, even though the majority of mediators follow their own unique style. The mediator would have to be informed before the mediation session is organized, by inquiring the parties to have a written summary prepared for the dispute. It allows the parties to look at situation and schedules individual meetings where each party discusses their issues.
As the details have been gathered, a meeting would be organized at an agreed location. It might be an office, a boardroom, or a meeting space online. Prior to the meeting, the mediator would offer a brief over the process, in order for everyone is aware of the situation. After, each of the attorney and the party would be provided with the chance to tell their side of the story.
Even though the relationship might be constrained, the business mediator would ensure that the parties are able to identify and communicate mutual goals to reach a settlement.
Why Business Mediation Should Be Considered?
When it comes to traditional litigation, there are certain issues that are clear. The conflicting characteristic of the court, rigidity, cost, and time is solved through alternative dispute resolution, and mediation to be more specific.
Neutral Expertise
One of the main disadvantages of filing litigation is that the outcome can be unpredictable. Although an experienced judge might possess the capability to understand the particulars of a case quickly, when you opt for litigation, it leads to giving up of control over to someone that would simply not possess the time to fully learn the issues related to the case in full detail.
When you consider an expert neutral party such as a mediator, it allows both of the parties to retain control over the outcome and also to take advantage of professional help.
Cost
When you consider a private mediator who is high-priced, the costs would still be less than if the case were to go to litigation. The cost will be shared by both of the parties. Rather than paying the lawyer high fees for litigation, mediation allows you to save cost. It takes much less time as compared to court. Mediation saves businesses up to 70 percent of the overall cost in general as compared to having gone to court.
Flexibility
Everyone in a court needs to be equally treated. It is an important part of the court system. Litigation does not offer any litigation. Mediation on the other hand provides greater flexibility. Ingenuity parties can display the issues to reach an agreement and innovation can be applied in mediation.
Amicability
A main difference between mediation and litigation is that mediation requires one party to work with the other to achieve a beneficial outcome, while litigation focuses on one party vs. another party. It is this important difference that saves your business relationship. This main difference can easily save the business relationship and prevent it from devolving into a battle. Good business relationships are preserved through mediation.
Confidentiality
Mediation offers complete confidentiality. Traditional litigation on the other hand becomes public knowledge. If the case focuses on sensitive issues like trade secrets, then mediation is the best solution.
Party Representation
Companies may be represented through an attorney only in U.S. courts. It forces them to incur more cost when deciding to go to court to make a claim. If you consider representing yourself, you would need to make sure that you are fully familiar with the case and be able to effectively cut costs. If you feel comfortable having a lawyer present, it is possible to choose this option. It guarantees you would have someone skilled who represents you. You can work for what is best for your situation and you.
Why Mediate Instead of Litigate?
Due to a number of reasons, the outcomes of mediation can be powerful. The parties are given the opportunity to offer their input in mediation and it is because of this reason that the resolution tends to be more meaningful and effective as all the sides contribute mutually.
Furthermore, litigation is polarizing, while mediation helps preserve business relationships. Whether the dispute is with an important supplier or a valuable client, mediation focuses on ensuring that the matter is resolved in a way through which the relationships are kept intact. The discussion is shaped by mediators to promote common goals and respect. It leads to creative ideas to generate to resolve the dispute. Parties are free to offer their own unique solutions when they are not confined to the limiting parameters of the potential judgment of the court. The open flow of information is encouraged in mediation.
As the business owner, legal fees can be expensive, so the sooner the disputes are settled, the less costly it would be. Mediation is an alternative dispute resolution process in which both the parties agree to work out a legal matter on their own with a third party. Typically, mediation is a speedy process which is certainly faster than going to court. It saves you a lot of money on legal fees. The recommendations that are made from mediation are not binding on the parties. However, they are normally acceptable after the process is completed. The following are 3 business situations where you will want to consider mediation before proceeding to litigation.
- Contract Disputes
It does not matter how specific or lengthy the terms of the contract might be, there is always room for situations that had not been contemplated and ambiguity.
Only if the parties agree informally to resolve the conflicts, one party might take the other to court to seek the enforcement of terms, to seek monetary rewards or prevent certain actions. Instead of following this timely and costly route, the parties will agree to mediation. The neutral third party acts as the mediator. It is the job of the mediator to help the parties in reaching a solution.
It might be helpful for the drafting of future agreements to include terms that suggest if a dispute were to arise, then, mediation would be the first option to resolve the conflict. Arbitration might be needed for certain contracts. It is a non-judicial resolution process which is binding on parties. It might not be something that you want to do. Mediation can be conducted in case of contract disputes. A contract dispute is one of the most common business situations.
- Tax Dispute with the IRS
There is a fast track settlement program under the IRS Small Business/ Self Employed Division which allows you to resolve tax disputes with the IRS that are not settled with the IRS appeals process or through court. Once the application for mediation has been accepted, it would take about 60 days for the process to be done.
The Appeals mediator is an IRS-trained expert. There is no cost for using the services of such a person. However, if you want to hire an outside mediator, then you will need to foot the bill. Keep in mind that certain cases cannot be mediated such as frivolous issues, those already in collection and others mentioned in the IRS Announcement 2011-5.
- Martial Dissolution
The disposition of the business owner’s interest undergoing a divorce can be financially devastating and traumatic. Couples who split up use mediation to aid structure their own property settlement and other matters. Legal costs for handling a divorce tend to be about 2 to 10 times higher as compared to when mediation is used. Mediation is confidential, while court proceedings are public record. Mediation addresses all types of issues, no matter how complex they are. The mediator suggests bringing in an accountant, appraiser or any other professional as needed. Remember if couples do not agree to martial dissolution issues which usually involve the dissolution itself and even child custody matters, there are certain states which require mediation before the court is approached to hear the matter. For instance, in Alaska, a court requires mediation if the court is of the view that it would lead to a settlement. The mediator is appointed by the court.
Importance of the Mediation Expert
Mediation not only eliminates your rights to seek any legal redress for an issue. But, it is the least costly and the best. You might be worried about the course of action taken to resolve the issues that plague the business. It is crucial to hire an expert mediator such as Tony Pletcher to help both of the parties reach a mutually beneficial settlement. He is a licensed by the State Bar of Texas and Tennessee and has extensive experience in dealing with all types of mediations.