This article is reprinted with permission from the January/February 2006 issue of TEQ Magazine, a publication of the Pittsburgh Technology Council.

Mediation is a powerful dispute resolution tool that permits the parties to structure a solution rather than having one imposed on them by an arbitrator or the court. When properly used, mediation increases the chances that a dispute can be resolved efficiently, privately and at far less expense than through traditional court proceedings. The following are some key points and questions concerning mediation:

How does mediation differ from arbitration?

In arbitration, one or more designated arbitrators hear evidence in a formal proceeding and render a decision that binds the parties. With only a few narrow exceptions, there is no appeal from an arbitration decision. A mediator jointly chosen by the parties does not decide the dispute but leads the parties – sometimes by reasoning with them, sometimes by cajoling them – to a mutually agreeable solution.

How do we get into mediation?

Arbitration clauses are common in contracts, but it is equally, if not more effective, to negotiate a mediation clause in the contract. These clauses usually provide that the parties must engage in mediation for a certain period of time as a pre-condition to beginning an arbitration or lawsuit. They also typically provide that the parties will cooperate in some limited discovery – usually a document exchange – prior to the mediation so that the mediation is more likely to be fruitful. Some clauses also pre-select the mediator – usually one of several commercial mediation firms, a particular individual or a category of individual (for example, a professor knowledgeable in metallurgy, then teaching at the University of Pittsburgh). If mediation is not written into the contract, or the dispute is not a contractual one, you or your attorney should not hesitate to suggest mediation. The days of viewing an offer to mediate as a sign of weakness are long gone. Moreover, if you are already in court, many jurisdictions require you to engage in mediation before a trial.

Who should serve as mediator?

This is a crucial question. Some mediators do little more than shuffle from room to room in the mediation collecting and transmitting successive demands and offers. This detached approach does little to bring the parties to closure. A mediator must not only be persuasive, but also think outside the box to get both sides to an agreeable settlement. Be sure to carefully research all potential mediators by checking with attorneys or business associates who have used the mediators in the past. Also, don’t hesitate to ask the mediator what his or her mediation style is. Most mediators fall generally into two categories – “facilitative” or “evaluative.” Facilitative mediators have been described as the facilitators of the parties’ own negotiations. Evaluative mediators, on the other hand, provide an opinion on a dispute, suggest an outcome, or predict how a court might resolve the case. The evaluative mediator is more likely to put pressure on the parties to accept his or her proposal or evaluation. No one type, or combination of types, is necessarily better. An evaluative mediator might make more sense if you believe that the law is solidly in your favor or if money is the predominant issue. Conversely, if the object of the mediation is to preserve an ongoing relationship (for example, employer-employee, supplier-distributor), it may be wise to employ a mediator who leans toward the facilitative side of the spectrum.

How do we prepare for mediation?

A mediation is like a hearing in several respects. You should prepare your position, decide who the primary spokesperson will be, and have a definite settlement goal in mind. Typically, mediators start the session with all parties and attorneys in one room. The mediator then gives a synopsis of his or her understanding of the dispute (usually obtained from pre-mediation submissions) or else the mediator asks the parties to briefly provide their positions. The mediator will then break the parties into groups and shuttle between them. If the parties are represented by counsel, be sure to discuss beforehand the question of whether you wish to allow the parties to discuss the issues with the mediator without counsel present. Mediators will sometimes suggest this and the opposing party – if they believe it is in their best interest – may also put it forth. This is a very powerful but potentially risky way to reach a settlement. Counsel and client have to honestly assess their client's ability to advocate a position in front of a mediator who may be pushing hard for a settlement. Even though both sides have the option of simply walking away from the mediation – assuming a good faith effort has already been made – do not underestimate the pressure to settle after both sides have expended the time and money preparing for the mediation. Particularly in complex disputes, there are numerous other strategic and tactical issues that need to be addressed – for example, should the mediation be held near the beginning of the dispute or after significant discovery, how many mediation sessions should be held before deciding the parties cannot agree, how much evidence should be presented to the mediator. These are matters that need to be thought through and discussed with counsel. In any event, mediation is an excellent way to settle disputes without the publicity, cost and disruption of trial or the costs and lack of an appeal option of arbitration.