Do You Really Want ‘Your Day In Court’?

Don’t litigate…mediate urges Italo Cerullo

With the ‘credit crunch’ continuing to bite and inflation soaring, small businesses are finding trading conditions more and more challenging. And an economic downturn often leads to more disputes between businesses. But is it really worth ‘getting all legal’ and going to court to settle a business dispute? I don’t think so. There is a much more practical and cost-effective alternative to going to court: mediation.

It’s a no-brainer really. Going to court to resolve a dispute can often end up costing a lot of money. And litigation in court is never cut and dried. You always run the risk of losing, even if you think you have an open-and-shut case. And that could mean having to pay your opponent’s legal costs as well.

There will be times when you have no alternative but to go to court. But smaller firms can’t run the risk of expensive legal litigation, they just can’t afford it.

Small and medium-sized businesses are vital to the local economy. Smaller firms in the Devon and Exeter simply can’t afford to pay for expensive legal. That’s why it’s so important to look at cheaper, easier ways of sorting out business disputes.

So what are the alternatives to going to court? The cheapest and most common alternative is mediation. This is, effectively, a form of structured negotiation between the parties in dispute, chaired by an independent third party.

How does it work? The mediation is basically a concentrated day of negotiation, without the formality of a court setting. Hopefully producing a satisfactory, binding settlement agreement at the end of the day. All discussions and documents are confidential and ‘without prejudice’ so they can’t be used against you in any future legal proceedings if the mediation proves unsuccessful.

The key point about mediation is that the parties have to agree to mediate, and turn up (usually with lawyers!) with a desire to make the mediation work. It also offers an opportunity to overcome misconceptions face to face and preserve a working relationship.
The independent chairperson – the ‘mediator’ – is chosen jointly by the parties. He or she can be a specialist in the particular field of business the parties are involved with, for example, construction, manufacturing, engineering or agriculture. A recognised expert in their field helps give the parties confidence that he or she ‘speaks their language’.

The mediator is neutral and helps the parties to explore solutions to the dispute, assesses their weak and strong points and but also point out risks to each party’s position. The mediator will speak with each party to discuss the problem in confidence.

The mediation can take place in a neutral venue, such as a hotel or the mediator’s offices and can involve more than two parties.

Mediation is certainly worth pursuing as the courts actually compel parties in dispute to consider mediation before issuing full-blown legal proceedings. If you don’t, the courts may award all the costs to you whether you win or lose at a future trial.

So, does mediation work? Yes, undoubtedly. Statistics say between 65% and 85% of mediations succeed in reaching a settlement, without the need to litigate. If a deal is not struck on the day, some offers are put on the table which form the basis for further negotiation.

The message is clear: before launching costly lawsuits, that can ruin reputations, lawyers should encourage their clients to mediate. It can avoid high-risk court proceedings, save big legal fees and time and lead to claims settling sooner.

Contact Italo Cerrullo for further information or advice.

Published 12/09/2008. The author of this article is Italo Cerullo