Krinick: Business mediation can avoid the grind of litigation
My friends who own boats often share with me the famous adage that the best two days of boat ownership are the day that the boat is purchased and the day the boat is sold. The joys of boat ownership are quickly subsumed by the day-to-day grind of maintenance and other aggravations that come with owning a water craft.
The same can be said for business litigation, at least for the party that starts the lawsuit. The client is always outraged by the wrongful conduct of the soon-to-be defendant and is itching to sue. All the evidence is gathered, research is done to figure out the best legal claims – “how about RICO” – and a carefully constructed complaint is prepared that just screams for justice. The euphoria is hard to contain as the day that the complaint is to be filed and made public approaches. The day comes, the complaint is filed and then . . . nothing.
The filing party – the plaintiff – has just had the best day of the lawsuit. Ahead is the grind of pleadings, motions, document discovery, meetings with your attorneys, depositions, more motions and on and on, until the real best day arrives – when the case ends.
How can one get from the first best day — when the case starts – to the next best day – when the case ends – without the grind of all that litigation aggravation? Mediation may be the answer.
Mediation is different than litigation and is also different from arbitration. Litigation is what happens in court. Arbitration is litigation outside the courthouse where an arbitrator or arbitrators – often with specific knowledge of the industry involved in the dispute – act as decision-makers in lieu of a judge or a jury. Arbitration is often compelled by an agreement and leads to a binding resolution, with very limited access to the courts to review an award.
Mediation is generally voluntary and can only lead to a negotiated resolution. No settlement can be imposed on any party. A third party – the mediator – is chosen to meet with the parties to help them reach a workable solution to the problem. The mediator’s role is to provide unbiased, impartial assistance from the position of someone with no stake in the dispute’s outcome. The discussions are confidential and unlike the public nature of court proceedings, the entire process is a private affair.
As compared to litigation and arbitration, mediation is less expensive and far quicker. Further, mediation can lead to a resolution broader than the issues raised in a particular lawsuit and may even lead to an ongoing business relationship among the parties.
The Commercial Division of New York recognizes the benefits of mediation and has incorporated it into its rules. In particular, Rule 3 allows a court to direct, or counsel to seek, the appointment of a mediator for the purpose of mediating a resolution. An amendment from earlier this year encourages counsel to work together to select a mediator, which allows the parties to select professional mediators, who may or may not be included on court-approved lists.
In response to concerns that the mere fact of suggesting a mediation is a sign of weakness, Rule 8 requires counsel to consult with each other regarding the use of alternate dispute resolution (arbitration or mediation) prior to the preliminary conference and Rule 10 requires counsel to discuss alternative dispute resolution options with the client prior to every conference with the Court. By requiring mediation to be discussed with each client and then with the Court, the notion that a party that raises the idea of mediation lacks confidence in their claim is negated.
Buying and enjoying a boat can be fun. Selling a boat is a happy day. Starting a lawsuit can feel good, for a brief moment. Settling a lawsuit brings lasting joy. Mediation may be the pathway to that good feeling.
Evan H. Krinick is the managing partner of Rivkin Radler LLP.