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Pre-Litigation mediations sometimes DO resolve disputes.

September 3, 2011

In some contracts nowadays, a mediation clause may exist requiring mediation before anyone files suit over a dispute arising out of the contract.  Some trade associations, like the California Association of Realtors for instance, have built this dispute resolution device into the boilerplate of many of their form contracts (CAR forms).

The CAR forms even contain a penalty for not mediating first:  With limited exceptions, if the party who would be plaintiff fails to request the mediation prior to suit, or the party who would be defendant refuses the request for mediation, that party may not be permitted to recover attorneys fees under the contract even if otherwise entitled.

When one of these pre-litigation mediations comes to me, as with any mediation, I am particularly interested in the goals of the parties:

They may be interested only in assuring their opportunity in the impending lawsuit to seek recovery of their attorneys fees that will be expended.

Or, they may be looking further into grappling with, and resolving, the dispute facing them, without first having to litigate.

Certainly the latter (actual resolution) has been the intention behind the clauses of the CAR forms; but the former (assuring attorney fees) has often been the goal instead, with the result of assuring the lawsuit as well.

In a recent pre-litigation mediation, I was pleased to learn, through the joint and private sessions, that the parties actually were willing and able to grapple with resolution short of litigation.

It was also a help that these were sophisticated business people on both sides who were ably represented by seasoned attorneys.

Consequently, after the attorneys guided their respective clients past the inevitable emotional turmoil of the dispute, informed them privately of the uncertainties, risks, consequences, time consumption and expense of litigation, and gave them the perspective necessary to settle their dispute, the parties were able to come to terms and sign a settlement agreement, all in one session.

Of course, they each gave up something to get something through the negotiation.  But they also gained a tremendous benefit in resolving their dispute without litigation.

Pre-Litigation mediations sometimes DO resolve disputes.

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From → Mediation

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