USING MEDIATION TO REDUCE LITIGATION COSTS
by R. Michael Kasperzak, Jr.
As an HR professional, you are currently facing a number of controversial issues that can cost your
organization thousands, if not millions, of dollars in legal fees and damages. These issues include
claims in such areas as sexual harassment, discrimination, Workers' Compensation, and the ADA.
The cost of taking these issues to court may also include:
Loss of productivity and morale for the primary employee involved, as well as others who hear of the
dispute or are drawn into it. A loss of time as top executives are deposed and a number of man-hours are spent on producing certain
records for court. Adverse publicity that can negatively affect the attitudes of your stockholders, customers, and
potential job applicants.
The good news is that these costs are not inevitable. Mediation is an increasingly popular alternative to litigation.
It involves bringing in a neutral third party who can help the disputants reach a mutually acceptable resolution of the dispute.
Unlike in arbitration, a mediator does not make any decisions about the outcome. The actual resolution of the problem comes
directly from the parties, and each side is free to accept or reject a particular solution.
The benefits of bringing a dispute to mediation are substantial. For example, it is far less expensive than going to court. The only
cost involved is the mediator's hourly fee, which is usually split between the parties. Because the average mediation only lasts
one or two days, the total cost per party is likely to be less than a thousand dollars. Additionally, research and discovery costs,
court fees, and expert witness expenses are eliminated.
Since mediation can be completed so quickly, it will allow you to put the matter to rest within a few weeks and get back to the
business at hand. In sharp comparison, the average court case can take anywhere from two to five years to be resolved. A
mediation also allows you to avoid the endless hours spent in discovery, research and depositions.
Another key benefit of mediation is that the resolution of the matter remains completely in the hands of the two parties; no judge
or jury will settle the matter for you. You get to decide whether to accept the other party's offers.
Mediation also tends to preserve and may even strengthen the relationships involved, while a court case inevitably drives a
wedge between the parties. During a mediation, you may learn something about the other side's needs that will allow you to change
your policies or work environment for the better. And in that process you may regain the trust of a valued employee.
You can even avoid the negative publicity that usually comes from most of these disputes by making an agreement before the
mediation begins that no information about the mediation or the terms of the settlement will be given to the press. This allows
the mediation to remain an in-house learning experience, rather than a free-for-all in the press.
Research shows that over 85% of the cases that are submitted to mediation are resolved to the satisfaction of both parties.
It works because of the parties' common willingness to resolve the dispute. But if you are in the minority of those who aren't
able to resolve the dispute, you can still go to court afterwards and any information that was revealed during the mediation
cannot be used against you.
Assuming that these benefits have begun to pique your interest, the rest of this article will focus on how to bring the other side
into the process and what happens during the average mediation. The process is actually much simpler than many people think.
To begin with, you might place a paragraph in your employment contract, saying that all disputes will be brought to a mediator
before going to court. You can also use this opportunity to educate your new employees about the potential benefits of mediation
during their initial orientation session.
If you're in the beginning of a dispute with one of your people, you can suggest the possibility of mediation to him or her, or you can
ask your lawyer to discuss it with his or her lawyer. If your lawyer is not inhouse, make sure that he or she is familiar with the benefits
of mediation and is willing to support you in the process even if it means lower fees for him or her in this particular instance.
Tell him or her that you will ask him or her to be at the mediation and that it's important for you to explore this approach as an
alternative to the courts.
When you or your lawyer raises the topic of mediation, the other side may be hesitant to try it because they figure that if you want it,
then it must not be good for them. So, emphasize the benefits up front and make sure to emphasize that they can always go to court
Let them know that there is no guarantee that they will get a settlement at all, after pursuing what may turn into a five-year court battle.
Tell them that they can avoid the stress of that whole process by attempting to resolve the problem directly with you-without the
intervention of a judge or jury. If they are still reticent, you might even offer to pay the full cost of the mediation if it doesn't resolve
the dispute. They have nothing to lose. When all else fails, most mediators are willing to speak to hesitant parties in an effort to
bring them to the table.
However, when push comes to shove, and your employee doesn't want to try mediation before taking your organization to court,
it's best not to try to force him or her to the table. The high success rate of mediation is based on the fact that both parties are
If the other side agrees to mediate the dispute, the next step is to pick a mutually acceptable mediator. A list of trained mediators
can be obtained from the Society of Professionals in Dispute Resolution, or from your local bar association.
When you interview potential mediators, look for someone who seems fair and reasonable. It is actually more important to have
someone with good mediation skills than with knowledge of the subject of the dispute. Remember that the particular mediator is
not as important as the willingness of all parties to reach an agreement.
Once a mediator is chosen and a session is scheduled, it's vitally important to make sure to include all the actual parties to the
dispute, as well as the decision-makers who have full authority to actually resolve the matter. This might include your CEO, if
you're in a small organization, or the director of your personnel department. Your employee may wish to have his or her spouse
present so that they can both agree on a potential offer to settle the dispute. Every side may wish to have their lawyers present
to let them know if a particular form of settlement is a viable alternative to going to court A representative from your insurance
company may also need to be there.
The first session will usually begin with a statement from the mediator about how the process works. He or she will go over the
steps of the mediation process so everyone is clear on what's about to happen.
Then the mediator will usually ask both sides to sign a confidentiality agreement before the proceedings go any further. This will
tend to encourage a climate of openness in which the mediation can take place.
After the mediator's introduction, each party makes an opening statement that describes what the dispute is about from their
perspective and how they would like to see it resolved. This allows all parties to hear the other side's point of view firsthand.
The mediator will then restate what has been said, to let everyone know that they have been heard and to confirm his or her
understanding of the facts. The mediator will be as neutral and objective as possible, e.g., he or she may tone down any
inflammatory statements and try to state the interests that both sides have in common.
Once this stage is completed, then everyone will collaborate in the process of preparing an agenda of the specific issues that
need to be resolved. It's usually best if the smaller, less controversial issues are put on the agenda first.
Next, the underlying needs of all parties have to be clarified. The mediator will ask each side, "What do you really want?
What are your real concerns?" Many times, what each side really wants is somewhat different from his or her stated position.
For example, an employee's stated position in an ADA case might be, "You broke the law and I'm entitled to damages."
But what he or she really needs is a wheelchair ramp and if that's agreed to quickly, then the damages may be a secondary
issue. Or, in an AIDS case, an employee may agree to leave voluntarily if you agree to extend his or her medical benefits over
a particular period of time.
At this point, in most cases, the mediator will begin to meet with each side in private, or in "caucuses," to explore the details. This
form of "shuttle diplomacy" is particularly effective because it allows all parties to reexamine their position, as well as any hidden
agendas, in a safe environment.
The mediator will attempt to get each side to really examine the strengths and weaknesses of their positions and their underlying
needs. The mediator may ask what's the worst case scenario and could each side live with that. He or she may also ask what's
the best case scenario and what would it take to get both sides there. Of course, many times it's the middle ground between these
two alternatives that's actually agreed upon.
The mediator will remain as neutral as possible. He or she will ask both sides, "What would work for you?" Very rarely, he or she
may ask pointed questions that might lead to a solution that no one has considered. But his or her main function is to get the
participants to resolve the problem. He or she just keeps the process moving so things don't get stuck.
During the caucuses, the mediator will bring potential solutions generated by each side to the other parties. This process will
continue until a satisfactory agreement emerges.
There are a number of creative ways that particular disputes may be resolved in a mediation. For example, let's say you were
downsizing and in the process you laid off a man who was over 40 years old. He might sue, claiming that it was a case of age
discrimination. In the mediation, you could explain the specific circumstances of the layoff directly to him. You might also be able
to resolve the issue by offering him a favorable reference and a generous severance package.
In a sexual harassment case, you might be able to resolve the issue in a mediation, once the alleged harasser apologizes and
you agree to do an awareness training to change the current cultural attitudes in your organization.
In a stress disability case, a creative resolution might involve retraining the person for another position or modifying his or her
working conditions. You might also agree to pay for his or her doctors' bills.
When an agreement is reached, the mediator will always suggest that it be written down before the parties adjourn, so that no
distortions will creep in later. He or she may also have a standard agreement that can be modified.
The lawyers will probably wish to formalize the agreement and study it, prior to recommending assent. If any problem comes
up at this stage, the mediator will try to resolve it either in another meeting or separately with each party.
When there is a single issue that can't get resolved and it stands in the way of an agreement, the parties might consider bringing
that one issue to an arbitrator for a binding decision. This may be a useful way to avoid a protracted court battle over a single issue.
But if worse comes to worst and a mediation doesn't resolve the issues, at least all parties will have talked with each other and heard
what really matters. The simple fact of being heard usually makes an employee less inclined to ask for outrageous damages in court.
The bottom line is: Mediation works. It saves time, money, and valuable relationships. When you think about it, what have you got to
A former litigation attorney, Michael Kasperzak is a Mountain View, California-based commercial mediator and public speaker on
mediation and dispute resolution. He can be reached by calling (650) 948-5340.
R. Michael Kasperzak, Jr.-Dispute Resolution Specialists-(650) 948-5340
Reprinted with permission from the PERSONNEL NEWS (c)