To Mediate or Not to Mediate, Is That The Question?
Advantages and Disadvantages to Mediating Before a Lawsuit
Why would anyone want to mediate a threatened claim before a lawsuit or administrative claim has been filed? Aren’t the parties opening the door to litigation by even suggesting that a mediation take place?
Mediating before a lawsuit has been filed or an administrative claim is pursued offers many advantages to all of the participants. First, a preemptive mediation offers the parties the opportunity to sit down and talk to each other before each side has invested time and money. A determination can take place as to whether the problem is one that lends itself to being solved without the need for an extensive formal process. In addition, the parties can invest their monetary resources, as well as their energies, towards working their claim out, rather than on fighting with each other.
A preemptive mediation also allows the parties to resolve their claims at an early point in their disagreement. Most administrative and legal claims take time. Regardless of how quickly one of the parties wants to have a determination, the court or administrative process will have its own time line, one that usually cannot be rushed by either side. Most parties, regardless of how sophisticated, will be distracted by being involved in litigation. Failing to resolve the dispute early on will divert that party’s time and energies towards addressing the litigation, rather than on their business or their personal lives.
Mediating before an administrative or legal proceeding has begun also will allow the parties not to have any public record of their dispute. A lawsuit, whether in state or federal court, is a public record and can be accessed by anyone, whether the news media or one’s neighbor. While many administrative proceedings are private, there will still be a record that a claim has been asserted.
Most courts are now requiring parties to engage in mediation once a lawsuit has been filed. As a result, the parties will have to mediate their claim at some point, in virtually every case. An early mediation simply brings the mediation to the beginning of the process rather than putting it in the middle or the end of the process.
If the parties are unable to resolve their dispute, usually, parties will discover what their areas of disagreement truly are, rather than on what they may think they are. An early mediation may also help each side determine how the other side is evaluating its claims. There are times when a potential plaintiff believes that the potential defendant will not want to go to court and will pay a high sum to avoid that risk. If that is not the case, then an mediation will send that signal to the claimant. Conversely, if the potential defendant is undervaluing what the claimant will take to settle the case, the information about the claims and the basis for the value of the claims will give the defendant the opportunity to reevaluate its assessment.
There are disadvantages to mediating too early. In some cases, the parties do not know enough about each others’ claims to form an appropriate analysis of their potential risks. In other words, an appropriate evaluation of what the settlement value of the claim cannot be made until the important witnesses or documents have been scrutinized. Engaging in the discovery process in litigation, even if the case could have been settled early on a more favorable basis, will enable the parties to be more confident in their position on the claims.
Agreeing to an early mediation will also signal to opposing party that there is a basis for resolving the claim. There are times where a person or business may have decided to fight a claim, but will agree to an early mediation in order to persuade the individual who is bringing the claim that there is no valid claim. As a practical matter, the person bringing the claim will come to the presuit mediation with an expectation that the claim is going to be resolved and thus mediating early may result in negative feelings by the potential plaintiff. On the other hand, if the claimant has an unrealistic expectation about what the case may settle for at an early mediation, then the willingness of the defendant to take a hard stance on the claims may increase.
Before agreeing to an early mediation, the parties should consider whether they have enough information to proceed with the mediation and what they are willing to do to resolve their dispute. Consulting with legal counsel as soon as a claim is considered or threatened is important and should involve a discussion of whether or not an early mediation will be helpful.
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