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Probate and Trust Litigation Avoidance: Mediation FAQs

What is Mediation?

A mediation is an assisted settlement negotiation.  In a typical mediation, two parties that want to settle a dispute agree to call upon a neutral third party, known as the mediator, to assist them to achieve their mutual objective.  If the parties are sincere in their desire for a settlement and the mediator is experienced and qualified, then it is likely that a settlement will be achieved.  The parties may agree upon certain preliminary mediation ground rules relating to, for example, selection of the mediator, confidentiality of the mediation proceedings, and the sharing of certain expenses, such as the costs of the mediator’s services and, possibly, of the mediation conference facilities.  It is not the role of the mediator to judge the merits of the dispute, declare a winner and loser, and impose a judgment, penalty, or award.  The role of the mediator is to help the parties arrive at a compromise, ideally a win-win solution that maximizes the total benefit to all the parties.   

What Usually Happens in Mediation?

The mediator will often have an initial meeting or conference call with the parties and their counsel, or possibly just with counsel.  The mediator may then confirm the preliminary mediation ground rules agreed upon by the parties and inform the parties of how the mediator expects the parties to proceed, usually including a requirement that all key decision-makers attend the mediation or, if that is not possible, be available by phone during the entire mediation.  The mediator may ask for a joint written mediation submission setting forth what is agreed upon by the parties, what is disputed, and, possibly, some information regarding the background and history of the dispute.  The mediator may also invite each party to make a confidential mediation submission to the mediator presenting that party’s side of the dispute, suggestions regarding the best approach to settling the dispute, and, possibly, what that party is and is not willing to agree to in order to achieve a settlement in the mediation.

At the mediation session, the parties may make initial presentations of their positions with all parties present, after which the mediator may separately meet with each party and that party’s counsel.  There may then be some “shuttle diplomacy,” during which the mediator alternately meets with the parties as the mediator closes in on a mutually acceptable settlement.  The mediator’s techniques may include separately advising each parties that its expectations in the mediation are unrealistic, that its case is not as airtight as it thought, and that there may be underestimated strengths in the opposing side’s position.  Usually every effort will be made to craft a creative mutually beneficial win-win solution, in which neither side is left empty-handed, neither side loses face, and both sides have something of real value to show for their efforts.  As the parties begin to show some flexibility and the prospect of a mediation settlement appears more likely, the mediator may ask to meet privately with each party, outside the presence of counsel, for a final round of reality checks, benevolent arm-twisting, and common sense advice.  Finally, the mediator may meet with all the parties and propose a mediation settlement to which all parties have, in principle, already agreed in their private meetings with the mediator.  Finally, if the mediation has succeeded, the details are ironed out and the parties’ agreement is recorded in a term sheet signed by both parties.

What Are Some Benefits of Mediation?

The major benefit of mediation is control over outcome.  There are only two possibilities at the end of a mediation: no settlement or a settlement that both parties have agreed upon. In a trial or in binding arbitration, the possibility of a glorious victory is balanced by the possibility of a humiliating defeat.  Good mediators can often provide a reasonably accurate prediction of what will probably happen if the case is tried.  That prediction can provide an informed basis for a fair mediation settlement.  However, any trial is still, to some extent, a roll of the dice.  It is not unheard of for juries to return verdicts that experts, in opinions expressed before the trial, had not predicted.  Mediation reduces this uncertainty.

Another major benefit of mediation is cost.  The costs of compensating the lawyers and the mediator for their services, is usually a small fraction of the costs of protracted litigation with charges incurred for discovery proceedings, motion practice, litigation support personnel, legal research, transcripts, expert witnesses, a trial, and then a possible appeal.  Mediation costs can be reduced through narrowing the issues to be mediated by agreeing, before the mediation on items not in contention or where the parties’ differences are minimal.  Then the mediator can use the mediation time to focus on the issues at the heart of the dispute.  The choice of a mediator who is trusted by both sides and who is familiar with the kind of matter being mediated increases the likelihood of a successful, less costly and time-consuming mediation.  A well-crafted settlement may also have tax advantages over a litigation outcome.  Parties should also bear in mind one less obvious cost of a drawn out and demanding full-fledged litigation: diversion of their own attention and precious time from other matters and pursuits.  Parties need to consider, as a cost, the value of their own lost “litigation time” that would otherwise have been devoted to their families, their businesses, and personal commitments.          An equally important benefit of mediation is the possibility of preserving relationships or, at least, minimizing the damage to relationships.  Corporate parties to a mediation may still have to do business with each other after the mediation.  Resolving their differences in a confidential mediation may help both parties avoid public relations damage and may open the door to a resolution to their dispute that has economic benefits for both parties—something that a public court battle is unlikely to achieve.  Similarly, individual parties to a dispute may be part of the same family group or may share child-raising responsibilities.  Resolving their differences in a confidential mediation may minimize damage due to strained family relationships and washing previously private dirty linen in a public forum.  The fact that there is no winner or loser in a mediation may enhance the prospects for an eventual reconciliation.  Mediation is far from a perfect solution.  However, where interparty negotiations have not been able to close the gap between the parties’ positions, mediation is a dispute resolution alternative well worth exploring.

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