Legal Information for Entrepreneurs

Mediation as an Alternative to Lawsuits

Mediation is a much cheaper alternative to pursuing a lawsuit. Smart business owners embrace mediation as a great way to come up with a fair solution to a conflict without making the attorneys rich.

Your small business is being sued and it looks like you are facing an extended legal process.

Mediation as an Alternative to Lawsuits

But not so fast...Before you resign yourself to a lengthy court fight you need to consider all your options, including mediation - an increasingly popular alternative to lawsuits.

Mediation is a method of dispute resolution that occurs outside of the normal legal process. Instead of taking a claim to court, the two parties agree to sit down with a neutral third party to resolve their conflicts. Many litigants prefer mediation over the traditional, court-based process because it is significantly less expensive and creates the opportunity for people to resolve their problems face to face. It also gives litigants the opportunity to step back and see the situation from a more objective perspective.

Although it is less formal than a lawsuit, successful mediation involves no small amount of structure and professionalism. If you hope to recruit a friend to conduct mediation over your lunch break, you're probably missing the point. However, legitimate mediation is both accessible and beneficial, especially for owners of small businesses.

Finding a Mediator

Unless you enlist the services of a professional, the chances of your mediation's success are slim, at best. Although the requirements vary from one state to the next, mediation professionals are commonly required to undergo extensive training in their craft. Training is critical because a mediator's role is not to make a ruling on the "case", but to facilitate a discussion between the two parties, hopefully culminating in an arrangement everyone can live with.

Even though attorneys are familiar with the mediation process, it would be inappropriate for your attorney to serve as your mediator. But your attorney will likely be able to provide you with contact information for qualified mediators in your area. If all else fails, you may also be able to locate an able mediator at

The Mediation Process

Once both parties have agreed to pursue mediation and have settled on a mediator, a date is set for mediation to begin. The amount of information the mediator receives prior to the mediation itself is limited to a brief overview of the issue that is being disputed. The mediator may choose to meet with both parties individually before the first mediation session, or he may opt to start the process by bringing everyone together in the same room. Either way, both parties and the mediator will eventually be sitting across the table from each other at the same time.

A typical mediation session can last as long as four hours. A lot depends on the willingness of the parties to agree on a compromise, which is presumably the reason you are pursuing mediation in the first place. If a compromise cannot be reached during the initial mediation session, the mediator will likely schedule another session. In the meantime, he may again ask to meet individually with both parties to clarify issues and assess the potential for a compromise.

Mediation is usually a very effective way of resolving conflicts with outside parties or even with people inside your business. However, if the mediation process fails, you may have no other choice than to pursue a legal remedy.

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