A win-win solution
Businesses spend well over a third of their legal budget on litigation – and every major dispute costs an average of 477 working days in management time. These are some of the findings from our survey of business disputes, conducted jointly with CEDR, the Centre for Effective Dispute Resolution.
Disputes are an ever-present feature of modern corporate life and they are rarely a welcome one. Apart from being a distraction, they can cause those involved worry, uncertainty and great expense. Fear and suspicion can quickly set in where reason and calm would be more useful. Worst of all, the dispute can get personal.
Four out of every five respondents told our survey that, compared with litigation, mediation is a much more effective way to resolve disputes and reduces legal costs. Three in every four say it reduces delay too. Yet four in five say they have never or only occasionally used it. In summary, everyone agrees that mediation is a great idea – but only for others.
Why is this? When disputes affect individuals, whether corporately or personally, they find more reassurance in resolution processes offering formality, structure and finality. They assume they will win, so why should they settle for anything less than the absolute victory a court judgment will give them? Unfortunately, certainty in law is a rare commodity.
At the outset, litigants want to know how long it will take and how much it will cost. Since, they don’t teach psychic powers at law school, the answers can only be predictions; and the assumption that parties will co-operate is seldom correct. While mediation can produce favourable outcomes in terms of both cost and delay, it is not favoured for one simple reason.
This is that mediation usually lets the other side win too. Anything that admits another party might be right, or have a relevant point, is seen as weak. On the contrary, it requires unusual strength of purpose and pragmatism.
All too often, disputes are complicated by so much heat and fog that just solutions lying somewhere between the absolutes of victory and defeat are not considered until shortly before trial. But early mediation is most effective, allowing the parties to explore every shade of grey before positions are entrenched. In this way, commercial disputes can find commercial solutions. For that reason alone, boardrooms everywhere should be prepared to use it from the outset of every dispute.
This article first appeared in our Litigation Annual Review January 2006. To view this publication, please click here to open a new window.
