Civil and Commercial Mediation
Civil and Commercial Mediation
What is Civil and Commercial Mediation?
Mediation is a flexible and confidential process used to settle disputes between two or more people, businesses, or organisations. The mediator – a neutral, independent person – actively assists the parties to work towards a negotiated settlement of a dispute or a difference, with the parties in ultimate control of the decision to settle and the terms of resolution. Any settlement reached is recorded in a written agreement.
At a mediation, there is no judge deciding the outcome. Instead, the parties, supported by the mediator, identify the key issues, and try to negotiate a mutually acceptable resolution of the dispute. The mediator helps the parties to reflect on commercial considerations as well as the legal strengths of their stated positions. The consensual nature of the process means that either party can elect to end it.
Mediations can be held before legal action is taken or while it is ongoing. Any offers or concessions made, or information shared in the mediation are made “without prejudice” and cannot be relied on by the other side to advance their case in court.
Small claims disputes follow a different format. Similarly, business to consumer complaints schemes which sometimes incorporate mediation are not covered by this factsheet. This factsheet only relates to civil or commercial disputes which are capable of being resolved before the civil or commercial courts.
What are the benefits of civil and commercial mediation?
Most disputes that are mediated settle, resulting in substantial savings for those involved. These can include a reduction in legal fees, management and stakeholder time, experts’ fees, document management costs, the costs of damaged relationships, lost productivity and the negative impacts disputes have on morale and wellbeing.
Those who mediate observe that the value of the process goes beyond the parties settling. For example, creating an opportunity for the key individuals involved, to attend a facilitated meeting where they can explain their perspective, can have a hugely positive effect on the dynamics between the parties. Additional benefits can include finding out about the other side’s interests and the wider context within which the dispute is taking place.
Mediations can also be organised quickly, unlike taking a dispute through the litigation process to trial, facilitating speedier resolutions and certainty for those involved.
How does civil or commercial mediation work?
Parties’ lawyers select the mediator, agree a date and location for the mediation and settle the terms of the mediation agreement. They also prepare written summaries of the case and a supporting bundle of relevant documents. Preparation prior to the mediation includes consideration of commercial context, legal advice, and a negotiation strategy. Where lawyers are not instructed to assist, parties undertake these tasks themselves. Pre-mediation meetings are held by the mediator with each party. Mediations are usually fixed for a day but can be longer, shorter or take place over a period of time.
The mediator greets the parties in their private rooms and gives them an opportunity to explain the situation, the key issues, and their hopes for the mediation process. The mediator formulates a process which often starts with a joint meeting. At such a meeting, the mediator welcomes attendees, asks everyone to introduce themselves, sets out the ground rules and often invites the parties to make opening remarks.
The parties return to their private rooms where the mediator meets with them, listens to their thoughts, and seeks to move them beyond their stated positions to understand their interests. The mediator aims to exchange information between the parties and to identify a broad foundation for settlement. However, the information to be shared will be carefully agreed, as the private discussions which the mediator has with the parties will be confidential.
The outline of the settlement is shaped, offers are framed and conveyed to the parties. If deadlock is reached the mediator seeks to help the parties break through it.
Detailed settlement terms are finalised, the settlement agreement is signed and any follow up is agreed. For example, an agreed court order may be required to bring any outstanding proceedings to a close. If settlement is not reached, or only heads of terms are settled during the mediation, then next steps are also agreed.
What can I expect from the mediator?
The mediator is neutral and independent. Unlike a judge, a mediator is not tasked with deciding on the merits of the case or the resolution, but instead with actively assisting the parties to formulate a negotiated agreement.
Mediators spend time shuttling between the parties in private, confidential sessions. They seek to widen the parties’ perspectives, help them appraise their situation, their risks, and opportunities and to consider a range of ways of resolving the dispute. They probe each side’s position and test the reality of their assumptions and expectations. The parties usually authorise the mediator to share particular information with the other side but also reveal certain information only to the mediator. As skilled negotiators, mediators also deploy their skills and experience to help the parties to negotiate more effectively with one another.
What will the mediator expect from me?
To effectively assist the parties, the mediator needs to understand the key issues in the dispute and its background. Parties will therefore provide the mediator with copies of any relevant documentation, usually some or all of the documents filed at court and key correspondence between the parties; this is referred to as the mediation bundle.
Parties also often provide the mediator with a mediation case summary which can be shared only with the mediator or exchanged. The mediation case summary is an overview of the facts, issues and key considerations surrounding the dispute from each party’s perspective. The aim of the document is to help the mediator to understand the dispute and set the scene for further discussion at the mediation. It is not intended to be an all-encompassing document and should be kept as short as possible.
Preparation prior to a mediation impacts the efficacy and efficiency of the process. In advance of the mediation, parties should discuss the dispute in detail with their advisers, including the strengths and weaknesses of their case, the commercial context, whether they have all necessary information (including facts and possibly expert opinion), the pros and cons of settlement, the key issues, the costs associated with litigating through to trial, the time those involved will have to spend on the case if the parties litigate to trial, the timeline to trial, settlement expectations, a negotiation strategy, thoughts on the other parties’ interests and needs, and their settlement expectations. This can either be kept private or can be shared with the mediator as part of the mediation case summary or orally during pre-mediation meetings.
Prior to the mediation, the mediator holds pre-mediation meetings with each of the parties. During those meetings, the lawyers and, if they attend, the clients, outline the background to the dispute, the key issues from their perspective and their hopes for the mediation. The mediator explains the process and the mediator, the lawyers and the clients are given the opportunity to pose questions and have them answered.
At the mediation, the parties are expected to engage in the mediation process and work with the mediator to try and identify a settlement which resolves the dispute. At no time are they expected to act in a manner that would be detrimental to their interests or agree to a settlement that does not align with their needs.
Commercial mediation success story
An electrical engineer was contracted to provide services to a medium-sized retailer. The retailer was then taken over by a national chain of shops and following the takeover the national chain then tried to cancel the contract with the engineer.
There was a clash of cultures at the heart of this dispute – as the large chain was used to using process and documentation but the sole trader engineer, preferred to just give informal quotations for their work.
The company did not pay the engineer’s invoices, so he took them to court for £250,000.
The case was shortly to go to trial when the mediation took place. The relationship between the two sides in the dispute had deteriorated to the point where they were only speaking through lawyers. At the start, neither side would have considered that the business relationship could be saved.
Although each side was firm in their views about the contract they had between each other, as a consequence of the mediator talking to them about the different options and what might happen at court, they found they could talk to each other more calmly. They both had solicitors with them to help them examine the different elements of their dispute. By the end of the mediation, they started talking about how they could work together again and agreed a payment to end the dispute.
The mediator took five hours to prepare for the mediation by talking to everyone and reading the legal papers. The mediation started at 9am and finished with the agreement being signed in the early evening.
Civil & commercial mediation FAQs
- What sorts of disputes will a civil or commercial mediator deal with? Civil and commercial mediators work with parties seeking to negotiate the resolution of civil or commercial disputes. Civil disputes are between private individuals or between a private individual and an organisation. Commercial disputes are disputes relating to commerce between two or more parties; it can involve any aspect of a commercial transaction and covers all commercial sectors. Civil and commercial mediators will not assist with family law disputes e.g. Divorce/children/power of attorney or disputes with government bodies e.g. The NHS, education/SEND appeals.
- How much will mediation cost me? Mediators charge based on the length of the mediation, the value in dispute and the amount of preparatory work they need to undertake prior to the mediation. The fee paid for the mediator is therefore greater for a multi-day high value dispute than it is for a low value half day mediation. The parties usually split the cost of the mediator and absorb their own costs of preparing for and attending the mediation.
- How long will a civil or commercial mediation take? Most mediations are set-up in within two to six weeks and take place over a day or half a day. The mediator will almost always hold pre-mediation meetings with the lawyers and sometimes also with clients prior to the mediation day itself. More complex disputes, particularly multi-party disputes, involve multi-day mediations.
- What happens if we do not manage to sign an agreement on the mediation day? Most mediations do end with an agreement, either on the day or shortly after. If there has not been an agreement the mediator will agree next steps with the parties and often continues to work with the parties, beyond the mediation day, to try and reach a resolution.
- Where does mediation take place? Mediations take place remotely, usually using zoom, or in person using a law firm’s offices or rooms at a neutral venue. One room is usually reserved for each party and a further room for all the parties to come together for a joint meeting, if it is thought that might be helpful.
- Who should be at the mediation? Those with authority to make decisions and to sign a settlement agreement should attend the mediation. They should be accompanied by any adviser that they think would be helpful and any colleagues who would assist them to resolve the dispute.