Why Business Owners Benefit from Mediation

My name is Glenn Meier and I am happy to be contributing a series of guest posts for Gina’s blog. These posts are inspired by one of the first posts I ever read on Gina’s blog, a post entitled, “Someone Owes Me Money – What Are My Options?” In that post, Gina doses out her usual serving of good, practical, and common sense advice. She wisely recommends that prior to initiating a formal lawsuit you send a written demand for the money your owed. She also says that your next step if that demand goes unanswered is to file a lawsuit.

In my last guest post, I discussed the basic idea of mediation. In this post we’ll discuss some of the benefits that you as a business owner can realize by using mediation. Mediation can be an extremely beneficial way for business owners to resolve disputes especially in pursuing money owed to them. First of all, mediation is usually much quicker than a lawsuit. Lawsuits typically take somewhere between 1-2 years to get to trial. If all parties have the necessary information to make rational settlement decisions then most mediations can finish within a full day.

Mediation is also usually much cheaper than pursuing a lawsuit both in terms of direct and indirect costs. The direct costs of pursuing a lawsuit include court fees and of course, legal fees. Because mediation is much quicker than lawsuits (and because legal fees are most often calculated by the hour), those direct costs in a mediation are far lower. Legal fees can be substantially reduced and court costs can be eliminated entirely. The parties do have to pay for the services of a mediator, but that cost is typically split equally between the parties, so it is more affordable.

The indirect costs of pursuing a lawsuit include lost opportunity costs (time you spend working your lawsuit is time you cannot spend on increasing the value of your business) and what I like to call the psychic toll of being in a lawsuit. What I mean is that being a party to a lawsuit takes a lot out of most people emotionally. I have had countless litigation clients tell me about sleepless nights, complete distraction from vital issues, and deterioration of important relationships that all stem back to their being thoroughly preoccupied with their case.

Mediation not only minimizes these costs, it has the ability to create value for the participants in these areas. Now instead of feeling helpless because you can’t control the outcome of the case, you can take control and craft your own solution. Instead of missing opportunities because you’re focused on the case you can often find opportunities either because your time is freed up or because during the course of mediation you discover that you and the other party have an opportunity to create a win-win solution that is simply not something the court would have the power to order.

By now I would imagine that you are either very intrigued by this dispute resolution method or else you really don’t mind paying a lot of money to lawyers. If it’s the latter, please contact Gina and me as soon as possible. If you’re interested in exploring this option though, my next post will offer some tips on how to get your dispute mediated.