Mediation: The Misunderstood Alternative Dispute Tool

Written By Daniel T. Gallagher

In speaking with you, our clients, it has become clear that while many of you have heard of the term "mediation", most clients have a limited understanding of this particular term. This is hardly surprising as many lawyers do not understand what mediation involves.

Mediation is a voluntary and informal process in which the parties to a dispute select a neutral third party to assist them in reaching a negotiated settlement. The parties can employ mediation as a result of:

1. A contractual provision;
2. By mutual agreement after the dispute arises; or
3. As part of a Court-annexed program that diverts cases to mediation.

Unlike a judge or arbitrator, a mediator has no power to impose a solution on the parties. Rather, mediators assist parties in shaping solutions to meet their interests and objectives.

Mediation can take a number of forms. In some cases, the mediator largely acts as a facilitator, encouraging the parties to concentrate on their interests (needs, desires, concerns, fears, priorities and values) as opposed to their position.

In other cases, mediators not only act as facilitators, but also are asked by the parties to give their opinions as to the strengths and weaknesses of the positions of the parties on either side of the dispute. Mediators explore with the parties the best alternative to a negotiated agreement, as well as the worst alternative so as to the help the parties better recognize both the benefits of settlement and the bounds within which a reasonable settlement might exist.

Mediation has the benefit of allowing parties to use creative solutions to resolve their disputes, including solutions which do not exist when the standard litigation process is used. For example, clients can look at the use of business credits as opposed to an exchange of cash, with such business credits having the benefits of maintaining the business relationship between the parties and potentially expanding that business relationship.

While mediation is not a panacea for all disputes, mediation does bring with it the potential benefit of savings in both time and cost. As also alluded to above, mediation creates a greater possibility for preserving business relationships than does the traditional litigation process. It is estimated that anywhere between 75 percent and 90 percent of private commercial mediations result in a settlement. Interestingly enough, it has been found that under processes which exist in certain jurisdictions (such as British Columbia), where only one party to the dispute is required to request a mediation before it becomes obligatory for all parties, the success rate in achieving a settlement through such a form of "mandatory mediation", is still close to 75 percent.

Notwithstanding its high success rate, studies have shown that the use of mediation has not grown in the fashion one would expect based upon that success rate. As a result, various jurisdictions have implemented processes whereby parties to disputes can be compelled to participate in a mediation process. In Toronto and Ottawa, this has been effected by way of changes to the civil procedure rules applicable in those particular areas of Ontario, making mediation mandatory within a few months of the commencement of litigation. In Toronto and Ottawa, mediation is mandatory even if none of the parties to the litigation wish to participate in a mediation process. The main criticism of this process in Ontario appears to be in relation to the very early stage of the proceedings at which mediation must take place (notwithstanding the parties may be of the view that the mediation should take place later on in the litigation process), and the quality of the mediators that come as part of this mandatory process. It should also be noted that under the Rules of the Law Society of Upper Canada, legal counsel are required to discuss with their clients the alternative of mediation before instituting litigation on behalf of clients. It can be anticipated that similar rules will eventually be implemented in other parts of Canada.

In the Province of British Columbia, rules have been implemented by way of regulation, allowing any party to a litigation proceeding to compel the other parties to participate in a mediation over a broad time frame which stretches from shortly after the litigation commences to the time when intensive trial preparation would start.

It is also anticipated that in 2004, Alberta will institute a change under its rules of civil procedure so as to allow a pilot project in Edmonton and Lethbridge pursuant to which any party or court proceeding in those parts of the Province may compel another party or parties to participate in the mediation process. It should then be possible for such a mediation to take place any time from 90 days after a Statement of Defense is filed up to and until a date much closer to trial, depending on when a party to the litigation requests the mediation.

Mediation, like settlement, is an alternative that should be considered by any party entering into the litigation process. Bennett Jones LLP through its Arbitration and ADR Practice Group has given its lawyers special training in the area of mediation so as to allow us to serve you better. We look forward to discussing the mediation alternative with you.