Time and again I have been asked by clients whether mediation is something they should consider. I find that when I explain the benefits of mediation, typically, most clients will jump at the chance to give it a go.
In the franchise space, mediation is the most common method of dispute resolution. The Franchising New Zealand 2017 survey (conducted by Massey University and Griffith University in conjunction with FANZ) found that 49% of all disputes are resolved by mediation, 41% were resolved or dealt with by way of correspondence through solicitor involvement and only 10% were resolved by way of litigation (court or arbitration).
In other commercial and civil disputes, I expect that there would be similar (or close to) figures supporting the very high percentage of disputes that find themselves being resolved by way of mediation.
So, what are the main benefits of mediation?
In no particular order, they are as follows:
Once you enter the litigation process and choose to have your dispute resolved by way of a trial and judge-imposed decision, you lose a great deal of control and certainty around the outcome. Your case is decided by a judge and you find out about that decision some time well after the trial. Although you make submissions and conduct your case before the court, the ultimate decision is made by a judge.
With mediation, outcome is something the parties control, 100%. There is nothing left to uncertainty. Successful mediation will involve a mediation agreement being prepared and executed by all parties, spelling out the terms of their settlement. Everyone has input into the process and can choose whether to take or leave any settlement offers that are on the table. No settlement or any term is imposed on any party.
b) Savings of cost and delays.
Depending on which stage you are at in dealing with a dispute, there can be considerable cost savings with choosing mediation over court. Mediation of even very complicated cases that might be expected to run several weeks if they went to Court can be dealt with in one day. If the mediation is being conducted early on in the dispute, then there will be substantial cost savings. Likewise, mediation has the advantage of avoiding delays. From the point of filing a statement of claim to conclusion of a trial and receiving judgment, the time will be months if not years.
Conversely, a mediation can be booked and completed as soon as the parties and a mediator are available to undertake the mediation and often, depending on how many parties are involved, that will be less than a month away.
c) Freedom to choose the mediator.
When a case is filed in court, you have no choice over the Judge who is assigned to your case. With mediation you have, in most cases, complete freedom to choose your own mediator. The mediator still needs to be agreed by the other party but, by and large, the only instance where a mediator is imposed is where there is a provision in an agreement to mediate and that provision provides a mechanism to appoint a mediator where parties can’t agree. For instance, it is very common in franchise agreements for there to be a clause which says the parties will approach the Franchise Association of New Zealand or the New Zealand Law Society to appoint a mediator from its Mediation panel in the event the parties cannot agree.
d) Less stressful than a court hearing.
Because parties are not giving evidence or being cross-examined at a mediation, they usually find mediation and its informal processes far more “user-friendly” and overall less stressful than a trial.
e) You can negotiate outcomes that a court would never be able to order.
One of the beauties of mediation is that because the process is voluntary and the terms of any mediation agreement require the consensus of all parties, the parties are free to negotiate whatever they want to be included as part of any settlement. This means that it is possible for parties to agree on outcomes that a court could never order, even if it was asked to do so. For instance, one common outcome with franchise disputes is agreement that the franchise or will buy back the franchise. This is typically not a remedy that a court would be able to order.