Elizabeth’s Hospitality Law Blog / by Elizabeth Ardanowski

On this Monday morning, I find myself answering a question from a client that has been repeated many times by many clients during my fourteen years of law practice – what, REALLY, is mediation and what is it good for?  

Mediation is an out of court process that is used in many jurisdictions around the United States to attempt to settle disputes and lawsuits.  In Texas, where I am, mediation is often ordered by the court before any trial will take place.  Some judges even refuse to hear certain motions (for instance,  motions for summary judgment) until after the parties have attended mediation.  (Although I disagree with that practice as an attorney, I understand that judges taking that stance are really trying to move their dockets along and “encourage” the parties to resolve their disputes outside of court).  Generally, our judges will appoint a mediator to hear the dispute, but will allow the parties to agree among themselves on a mediator to hear their dispute, and the court records will be changed to reflect the mediator chosen by the parties.  

So, what is mediation?  Mediation (similar, but not identical, to arbitration) is an out of court process where parties to a dispute (either a lawsuit, or a dispute that has not yet made it to the courthouse steps) schedule a time to meet with a neutral third-party who is trained and certified (according to your state’s requirements) to assist parties in resolving their disputes.  Mediators are sometimes (but not always) attorneys who have been trained to act as mediators, and who may also maintain their private legal practices (like me).  All mediators are trained and certified, regardless of their professional backgrounds.  Some mediators obtain specified training (such as mediators hearing family law disputes) that allows them to better assist in resolving particular types of disputes.  In the process, the parties usually meet in a conference room with the mediator in what is called a “joint session” here in Texas, and discuss what their dispute is about and their specific positions regarding the dispute.  Usually, then, the parties will move into separate rooms, and the mediator will go back and forth among the rooms with settlement offers and other information that can be shared with the other parties in an attempt to reach an agreement on how to resolve the dispute.  If a resolution is reached, the mediator will then prepare an agreement that the parties will sign reflecting the terms of the resolution.  In Texas, that signed agreement will become a binding legal instrument, and will be treated as a contract in the event that one or more parties to that agreement violate it.   If the dispute does not get resolved, the parties leave in no worse position than when they arrived.

Generally, that is mediation.  It is non-binding (in other words, the mediator will not make a decision on how to settle any given dispute, like a judge, jury, or arbitrator would do.  If the parties can’t reach agreement, the mediation ends and they go back to whatever process their dispute was proceeding under prior to the mediation).   Mediation is extremely useful in these times.  It can be used early on in the lifetime of a dispute to settle a matter that otherwise would not be resolved by the parties speaking with each other directly.  For instance,  perhaps you own a restaurant and your major food supplier has decided that because of the economy, the prices quoted to you and part of your contract with the supplier will have to be raised because the food supplier will go out of business if it doesn’t raise prices.  Unfortunately, this has been a common occurence in the past year with increased production and gas prices.  You and your food supplier now have a dispute.  The supplier is refusing to deliver the products, and you are refusing to pay a higher price than negotiated.  At this point, you can do nothing, find a new supplier (this afternoon!) and hope that your restaurant has enough food on hand that will stay fresh for the time period it takes to find a new supplier, reach an agreement, and get food delivered.  Or, you and the food supplier can call your respective attorneys (if you even have one, or you can start searching for one) and start talking about eventually filing a lawsuit, or at least threatening a lawsuit.  Or, you can agree to attend a mediation session with a trained mediator.  Most people are not aware that you do not need an attorney to engage in the mediation process.  Perhaps you can resolve your dispute without a lawsuit being filed.  It will save you and the food supplier money and perhaps save your relationship with your food supplier because you will not be fighting face to face and hurling insults (as the mediator will be to go between), and the mediator will likely be trained in recognizing and discussing the legal issues that affect your dispute (even issues that you do not recognize) in a manner that can guide both parties to an agreed upon resolution. 

Even if you find yourself in mediation after you are involved in the legal process (at this point, it will likely be court-ordered mediation), mediation can assist in resolving a dispute in ways that attorneys having settlement discussions will not be able to do.  The mediator is a neutral party who does not have an interest in how the dispute is resolved.  Your attorneys (as good as they are) do have an interest (yours) and often find it hard to encourage both you and your adversary and his/her attorney to think outside the box in resolving the dispute.  Your attorney will of course protect your interests in the mediation (that is what they are hired to do), but it is the mediator that has best chance of hearing all sides of the dispute and coming up with a reasonable solution that perhaps none of the parties would have thought of on their own.  I have seen this happen countless times while attending mediations with my clients. 

Even if mediation does not result in a resolution of your dispute, it can be a useful tool in getting the parties to better understand their own legal positions, and more importantly understand the weaknesses of their positions.   Most of my collegues refer to it as a “reality check.”  Both clients and their attorneys can benefit from such a reality check.  Often for the first time, a neutral person is looking at and weighing the merits of the dispute and attempting to find a resolution to which the parties can agree.  I have also personally been involved in mediations (as an attorney) that do not immediately result in settlement, but perhaps over the next week, the parties continue settlement discussions through their attorneys, and a resolution is reached shortly after mediation.  In this way, mediation can be a catalyst to better, more serious and realistic, settlement negotiations.

So there you have it – a little more information on mediation, how it works and what practical use it can provide both before and during a lawsuit.  For more information, please feel free to contact me. 

- Elizabeth