Commercial mediation is an underrated dispute resolution tool. Don’t believe me?
Let’s check out the data. Stats don’t lie!
In audit of 12,000 cases, 89% were settled on the day or shortly after the day of commercial mediation. Despite this, there are people who doubt the viability of commercial mediation.
There are many factors that influence a workable settlement from commercial mediation. For the benefit of both internal and external lawyers, I explore some of the key things that can make or a speedy resolution.
Financial Settlement
The financial compensation obviously plays a key role in any commercial mediation. It’s crucial to not only look out for one’s own interest. From the claimant’s side you have to think about what would make a fair settlement. The amount and speed at which they receive compensation may determine their survival.
At the defendant’s side, it’s being realistic about how soon they can generate the settlement cash. Can they pay it all in one go? Or do they need to pay a lumpsum followed by monthly instalments?
Commercial mediation breaks down when one side is only looking to serve their interests and is unwilling to meet the other party halfway.
The Legal Case
Court proceedings may have helped move the dispute forward but not much of it matters if it gets to mediation. Remember, the court is about ‘winning’ and mediation is about making sure nobody loses (within reason). It’s imperative for all parties involved to be ready to concede something in the hope everyone is happy and can move on.
Emotional Considerations
As with any type of dispute, there is a sizeable emotional element. Emotions can run high and often cloud one’s ability to move forward with a resolution. A feeling of anger, resentment and being hard done by are all common as well as a general dislike of someone on the other side. These need to be set aside and everyone concerned needs to look at the bigger picture.
And that’s where a commercial mediator comes in. They’re highly skilled in managing and navigating such issues between parties and encourage healthy debate, and even suggest acceptable solutions.
The Commercial Mediation is Successful, Now What?
Now, it’s all about putting the solution into effect and making it binding on all parties, with a settlement agreement.
The settlement agreement is a contract that describes the resolution in detail and what each party will get out of it, financial or otherwise, as well as the terms for any payments. The contract should be written in as much detail as possible, printed and signed by everyone concerned.
Lawyers should be afforded enough time to write and draft the settlement agreement. If there is not enough time on the day of the commercial mediation to do this, a Heads of Terms (HoT), should be put forward.
A HoT is another contract that needs to be signed by all parties. The HoT stipulates the timescales by which the full settlement agreement must be drafted and signed.
We Didn’t Settle on the Day, Now What?
It’s perfectly OK if a settlement was not reached and the final whistle for the mediation has blown. All you have to do is:
- Summarise in writing where you got to. This includes what was agreed and what remains to be discussed.
- Plan the next commercial mediation to further discussions.
It’s also helpful if the mediator positively reminds all parties of the progress, they have made to ensure people stay motivated and nobody loses hope for an eventual solution! This is, after all, what a successful commercial mediation depends on – a willingness from all parties to get a resolution.
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