Why mediate?

 

Mediation is a way of resolving a dispute. It involves a skilled, impartial mediator understanding the dispute, exploring the reasons why gridlock has occurred and working actively with the parties to achieve a workable, durable settlement.

Talksense specialises in resolving disputes concerning private companies, whether involving shareholders, directors, employees, customers or suppliers.

• Shareholder & investor disputes
• Boardroom disputes
• Acquisitions:
  - warranty claims
  - claims under earn-outs
  - Professional negligence
• Supplier/customer disputes

Unresolved disputes can be devastating for private companies. But resorting to the courts is expensive, often cripplingly so, takes months or even years and rarely delivers the desired outcome. Litigation is also deeply stressful. The adversarial nature of the process causes feelings to run high – attack is met with counter-attack, and what may have started as a commercial dispute becomes a charged personal contest of will. Litigation absorbs scarce management time and becomes emotionally draining. A private company embroiled in litigation may find it hard to raise or even borrow money.

These are all reasons why private company directors need to be aware that there is a credible, proven, cheap and effective alternative method of resolving disputes. Mediation is used where participants want to reach a settlement but need help to do so.

 

What is mediation?

In mediation the parties involved agree to appoint an independent mediator. The appointment is a joint one and the mediator’s fee is usually shared equally between the parties, thus underlining the impartiality of the mediator’s role. It is helpful, and usual, for the parties to provide the mediator with written briefings beforehand although this is not always the case.

Typically the mediator will then invite the participants to convene at a neutral venue. Participants are often accompanied by their legal advisers. The mediator will chair an opening session in which the parties briefly state their positions, following which they will retire to separate meeting rooms. The mediator then begins to work independently with each party in private session to understand their needs and objectives, to create an atmosphere in which progress becomes possible, and to begin to suggest ways in which the gridlock can be broken.

Talksense believes that the route to dispute resolution starts with detailed analysis. Once the parties are separated we coach each through a rigorous examination of their position – what are the facts of the case, what are their needs and objectives? Each party is asked to describe and quantify their best and worst possible outcomes. These outcome statements are used to generate a risk analysis. The parties are then separately asked to revisit their needs and objectives. It is essential during the process that the mediator has the experience, skills and authority to challenge and confront the parties, as a realistic assessment of the opportunities and risks of the dispute is vital to the prospects of a successful conclusion.

Once the mediator is satisfied that each party is clear as to its needs and objectives, he will work to generate proposals and take responsibility for tabling these. Initially this is usually done by shuttle diplomacy, tabling the ideas in private session and testing each against the outcome framework developed earlier. As progress is made, it is likely that the mediator will bring the participants back together to conclude a workable and durable settlement.

One of the advantages of mediation is that it provides disputing parties with a wider range of solutions than those available in litigation e.g. an apology, an explanation, the continuation of an existing professional or business relationship, perhaps on new terms, and an agreement by one party to do something without any existing legal obligation to do so.

Mediation works with any type of dispute, whether it involves shareholders or banks, directors, employees or suppliers or customers. Although there is a basic structure which is common to most mediation, it is the skill and experience of the mediator which is critical. Very often a dispute is fuelled by factors, emotional and commercial, adjacent to the narrow issue in dispute. But if these factors are not tabled by the participants, they can cause gridlock. A skilled mediator knows where to look for these issues and how to help participants bring them to the table in a safe and constructive way. The mediator has to be able to work positively with conflict, converting the hostile energy into momentum and coaching the participants towards a workable and lasting agreement. The mediator also needs gravitas and authority. While it is not the role of the mediator to decide the relative merits of the claims, he will challenge the parties on the strength of their case as a means of encouraging a realistic assessment of the risks of continuing with the dispute.