Australia: An update from our Mediators – 5 reasons why Mediation is good for business

Last Updated: 31 August 2017
Article by Brigid O’Dwyer and Andrew Cox

Did you know that Pointon Partners offers mediation as a cost effective dispute resolution service to enable your clients to get back to business?

Mediation can be organised at any time – you don't need to be involved in Court proceedings, you just need to agree with the other party to the dispute to try the process, and engage a mediator.

Pointon Partners offer the services of two qualified mediators – Brigid O'Dwyer and Andrew Cox.

Why Mediate?

As much as most people would prefer to maintain harmonious business relationships, and operate on a purely good faith basis, it is inevitable that disputes crop up from time to time in many commercial dealings. How these disputes are dealt with can make a huge difference to their impact and outcome.

Litigation is a notoriously expensive process. Even more detrimental, in particular for a small business, can be the hidden cost of director and staff time. Being involved in a Court case can take up significant time and money which could otherwise be spent profitably. And that's if you win! A worst case scenario of losing a case and being ordered to pay the other party's claim, as well as interest and costs, could be disastrous.

One way to keep disputes to a minimum is to invest in and adhere to clear procedural documentation, including terms of engagement, credit management and quality control. Another is to act early when things go wrong, and not wait for a dispute to escalate.

One of the most popular and widely used forms of alternative dispute resolution is mediation.

What is Mediation?

Mediation is a process whereby settlement negotiations are facilitated by a neutral and impartial third party. A mediator is not a judge, and does not make any decision about the merits of each party's claim. The mediator's job is to assist the parties in highlighting areas of agreement, clarifying the issues in dispute, sticking to a process and staying focussed, exploring various options for settling a dispute, and working towards a resolution that everyone can live with.

Mediation is a confidential process –things said at mediation can't be used against a party in Court, which can encourage people to be frank and honest with each other when looking for possible solutions.

It is also a flexible process. Mediations can be attended just by the people involved in the dispute, or with the assistance of lawyers. It can occur as part of the litigation process, or can be instigated by the parties prior to any litigation. The parties choose where and when to mediate. If an agreement is reached, the parties usually sign up to terms of settlement on the day recording their deal. Terms of settlement are legally binding as a contract, except in exceptional circumstances, so it can pay to have your lawyer attend mediation with you to give you advice along the way, and before you sign.

Mediators don't give you legal advice – their job is to oversee the process, not dictate the outcome.

Mediation vs Litigation:

Some of the reasons it is a good idea to mediate rather than litigate are:

  1. To keep ownership of the outcome: One reason people choose to run their own business is to avoid being told what to do. Mediation helps keep this alive – the alternative, if a dispute is litigated, is to ultimately have to comply with an order handed down by a Magistrate, Judge or VCAT Member, who will generally have to make a decision which goes against one party. A mediated outcome gives you a level of control, and certainty at an early stage, avoiding the stress and risk inherent in litigation.
  2. To find a solution which works for you and your business: Third party adjudicators, such as Magistrates, naturally won't have the same knowledge about the business, and the industry, as the parties to the dispute. A good mediator can help the parties use this knowledge to come up with solutions 'outside the box' that are sustainable and mutually beneficial in the long term.
  3. To maintain an ongoing commercial relationship: Statistics and common sense show that an ongoing commercial relationship is more likely to be preserved if parties are able to settle disputes by agreement, rather than fight their battles out in Court. Utilising the mediation process to resolve disputes, particularly at an early stage, can keep valuable relationships on foot, to the benefit of everyone involved. This is particularly the case for business disputes involving families.
  4. To save precious time and tens of thousands of dollars: Mediation is usually a very quick process to organise, especially in contrast to the delays which are notorious in Court proceedings. And although mediator fees are comparable to lawyer's fees (many mediators are lawyers), the expenses of mediation, including the costs of your own lawyer, will in almost every case be dwarfed if compared to the ongoing cost of briefing lawyers, and spending time away from your business, throughout months, if not years, of litigation.
  5. Because you have to: At some point in time in almost every jurisdiction in Australia, mediation is a mandatory step before a matter can proceed to trial. By that point, both parties will usually have spent thousands of dollars in legal costs, if not tens of thousands, even in relatively minor disputes. This obviously has an impact on the bottom line for settlement negotiations, and reduces the chances of salvaging any commercial relationship. So why not mediate early?

The benefits of early mediation have been recognised in legislation – in certain disputes the law now requires that mediation must be attempted before proceedings can even be commenced. For example, in most retail landlord/tenant disputes in Victoria, a certificate from the Office of the Victorian Small Business Commissioner (OVSBC) stating that mediation has failed must be obtained before proceedings can be issued.

Both Brigid and Andrew have completed extensive mediator training, in addition to their many years of experience as commercial litigation lawyers (more than five decades between them!).

Brigid holds national accreditation under the National Mediation Accreditation System, and is a member of the panel of mediators at the OVSBC.

Although the requirement for impartiality would preclude Brigid or Andrew from acting as mediator in any disputes to which Pointon Partners' clients are parties, we welcome referrals and enquiries in respect of any new matters, and would be pleased to answer queries you or your clients may have regarding the mediation process.

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Authors
Brigid O’Dwyer
 
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