Mediation: Why Not?

In the age of ever increasing global and domestic competition in the world economy, the threat and cost of litigation can be burdensome and exorbitant for most small and medium size business. One unfortunate liability lawsuit can see a company’s costs skyrocket to the point where all the good work done in a quarter, or even calendar year, seems to go down the drain. Oftentimes, even if a suit or dispute is successfully defended, the costs of simply paying for the defense, whether it be in legal fees or court costs, can exhaust the reserves of any business.

So in the fast, speedy and increasingly busy modern world, could there be a cost effective alternative?

Arbitration is one go to alternative many firms prefer to take. It offers a faster judicial process, and one hearing or legal process without appeal. However, in the GCC and other regions, enforcing a judgment brings about additional costs, and the proceeding is still generally of a legal nature, requiring representation. The arbiters are also paid professionals, and the proceedings are hosted at professional arbitration centers, which also carry a price tag.

So what is, then, the fast track alternative?

Perhaps, Mediation can provide an answer. In the process of mediation, an experienced mediator will usually bring both parties to the table in order to resolve a dispute. This mediator can take on somewhat of a “model” judicial role, without any official legal powers. However, an experienced mediator will know how to establish the facts and legal precedents governing a case, and express these clearly to both parties. In addition, the mediator will have experience in communicating this information in a way which encourages parties to resolve their dispute and come to a more cost effective solution.

Mediation may be simple in principle, but within the web of any legal system, it is something which requires complex expertise. Not just any person can make a good mediator. This is why the government agencies, such as the Dubai Economic Department, and the Chamber of Commerce offer professional Mediation Services as well, in addition to the legal framework available to resolve disputes. The mediator must be able to give an accurate legal view on the nature and potential consequences of the dispute, as well as manage the emotions of both parties. Effective dispute resolution becomes an exercise in emotional intelligence, as well as judicial expertise, unlike traditional litigation.

So why is Mediation Beneficial?

The cost of litigation, at minimum, amounts to approximately AED 35,000 or USD 10,000 in even the smallest of cases. Oftentimes, this amount is protracted by an appeals processes, the appointment of experts, and in the US, the discovery and trial process. Litigation expenses, at the extreme, can run into the hundreds of thousands of dollars, even for small businesses at times!

In comparison, the cost of mediation can be marginal. For example, services through expert mediators can cost far less, and lead to a resolution of a dispute for costs lower than AED 5000. The dispute can also be finalized via a settlement agreement, signed and agreed in a short period of time, making it a quick and efficient solution. This can prevent the use of the courts entirely, and prevent dependence on the legal system to a large extent.

If a matter was to be resolved in this way, in only a day, would it not be worth it?

What Mediators Bring to the Table?

Many of the lawyers we work with have helped settle a great deal of high value disputes. From labor claims, to real estate, and major business transactions. Even debt collection agencies can make use of Mediation, which will help implement a cost benefit analysis in the collection process (i.e. factoring the cost savings from mediation, a collector may well choose to settle for a lower amount. This happens routinely in the United States).

The above highlights the serious results mediation can bring to the table, at the fraction of the price of traditional dispute resolution.

So the question which remains after considering the information above, is why not try mediation if it can bring success and results, at the fraction of the price?

We invite you to give it a go….

Get in touch with us at info@borderlesscounsel.com. We can offer services in the United States, GCC (including Dubai or Bahrain) and other jurisdictions as well, over Skype and in-person.