The number of civil trials throughout the United States continues to decline.  Mediation is a significant factor in the decline of the civil jury trial.  More businesses and individuals are turning to mediation to resolve disputes because of its flexibility and the control it affords participants.

What is mediation?

A mediation is a settlement conference that is facilitated by a mediator, a neutral third-party.  Mediators do not have a financial interest in the case and they are typically paid by the hour.  This fee is split by the parties, unless otherwise agreed.  Importantly, unlike judges or juries, mediators do not make decisions about the case.  Instead, a case settles at mediation only if the parties voluntarily agree to a settlement.  The court will then, if necessary, enforce the settlement so long as it is enforceable (e.g. not against public policy) and the essential terms have clearly been agreed upon.

Mediation as practiced in North Carolina typically begins with all parties together in a conference room.  This is symbolic because a primary purpose of mediation is to bring the parties together to see if they can agree on a resolution to their dispute.

During the opening session, each side will have an opportunity to make an opening statement.  Next, the parties adjourn into separate rooms for the private sessions with the mediator who shuttles back and forth between the rooms to facilitate settlement discussions.  The mediator is the only person at the mediation with the authority to keep the parties present at the mediation or to end the mediation before a settlement is reached.  If a settlement is reached then the parties should put the essential terms in writing before leaving the mediation.

Brief history

Mediation dates back to the 1990s in North Carolina.  Before the use of mediations in North Carolina, if cases were settled they would often be settled on the proverbial courthouse steps before trial. This was often the first time any serious settlement discussions took place following months, and perhaps years, of litigation.

One of my partners, Richard Boyette, a certified mediator who has mediated more than 1600 business disputes in North Carolina recalls:

“I became interested in this thing called “mediation” in the early 90s.  It was a process that required lawyers and their clients to address settlement before the Monday morning when the case was set for trial.  At that point the client had incurred legal fees, risks and expenses that could have been avoided had the parties been forced to address the settlement earlier.”

The federal court in the eastern district of North Carolina aptly notes on its website that “mediation is used to secure the just, speedy and inexpensive resolution of the controversies while preserving the right of all parties to a conventional trial.”

Mediation: Key Components to Understand

It is critical to understand several key characteristics and components of mediation, and how it fits into the overall dispute resolution process.  While mediation offers participants flexibility and control, successful mediation requires careful consideration of participants’ desired outcome, suitable alternatives, and the strategies necessary to achieve favorable results.

 1.  Mediation is required in most instances in North Carolina.  Most civil cases pending in federal court require mediation.  Most states require mediation for particular cases.  For example, in North Carolina, mediation is required for all civil cases with the amount in controversy in excess of $25,000.

 2.  The parties will have the opportunity designate a mediator.  Do not take this step lightly.  There are good mediators, bad mediators and, in my experience, a handful of excellent mediators.

 3.  If you cannot agree on a mediator then one will be designated for you by the court.  This may be someone that has no experience in the area of law that your case involves. Using an inexperienced mediator will likely turn your mediation into a waste of time and exercise in futility.

 4.  The rules of evidence forbid the introduction or mention of any evidence at trial of prior settlement discussions.  In other words, the jury is not permitted to hear about settlement offers or demands that occurred at any time during the case.  This longstanding rule is designed to promote open and frank settlement discussions.

 5.  There is no requirement for any participants or their attorneys to say, argue, or disclose anything at mediation.  The opening statements at the beginning of the mediation can vary widely – from saying nothing at all to presentations lasting an hour or more aided by power-point, video, exhibits etc.  It is crucial to consider how and when you want to argue at mediation versus saving it for future discovery, motions or trial.

 6.  Mediation participants are permitted to communicate ex parte with the mediator before, during, and after the mediation.  Ex parte means that the parties can communicate without the other side present.  Conversely, all ex parte communications are strictly prohibited with the judge and jury.  This gives the mediation process even more flexibility in how you use the mediator.  For example, you may communicate with the mediator before the mediation and you may decide to try and use the mediator for future negotiations if the case does not settle at the mediation.  It is not unusual to have more than one mediation with the same or a different mediator.

 7.  Unlike most trial dates, the timing of the mediation is predictable and much more flexible.  The court will typically set a mediation deadline but the parties can agree to a date within that deadline. Further, pre-suit mediations are common.  The parties are free to mediate before a lawsuit is filed.  The timing of when to mediate is another key strategy of the case.

 8.  Not all cases should settle and not all can or do settle.  It is not a failure when you cannot settle a case at mediation – it is a choice – and there is no penalty if the case does not settle.  Many cases involving legitimate disputes need to be tried to a judge or jury.

 9.  The parties have great latitude and control over the settlement terms.  Ron Perkinson, another leading North Carolina based mediator, states that “during mediation the parties have the opportunity and flexibility to craft their own outcomes whereas in court there are often very limited outcomes and much less flexibility.”

Creativity is Key

The opportunity to craft a wide variety of settlement terms is one of the greatest benefits of mediation.  I have seen this many times in my practice.  For example, in a wrongful death case that our firm was defending, part of the resolution we proposed was that my client, the defendant trucking company, would agree to show a safety video to its employees across the nation.  This was an important part of resolving the case and it was not a provision the court or jury could have ordered.

Mr. Boyette similarly recognizes that “parties are free to be creative in crafting settlements at mediation.  Most commercial lawsuits are about money – one party wants the other to pay something.  Settlements can be based on agreements to do things that cannot be accomplished by a jury verdict.  For example, one party might agree to purchase all of its requirements of a particular product or service for a set term from the other, in settlement of a dispute over payment or performance.  This is particularly useful where the parties are interested in an ongoing relationship.”

Other possible settlement terms that can be negotiated at mediation and that are not available if you take your case to trial include provisions on confidentiality, non-disparagement, and no contact.  Indeed, by design, the possibilities of settlements are limited only by the creativity of the participants and attorneys.  Thinking outside the box at mediations can lead to great results.

Conclusion

Some cases need to be tried.  However, mediation is a flexible and efficient way to explore settlement opportunities.  The process gives you the opportunity and control to resolve a dispute on your own terms.  Make sure you partner with a lawyer who understands the process and has the experience of working with clients in mediation.