Stuck In The Middle

How It Works

Entrepreneurs do well to consider mediation for employment problems, commercial disputes and even negotiation with government agencies. Professor Barbara Fick of Notre Dame Law School, who teaches courses in ADR and labor law, notes that one of the key advantages of proposing mediation when you have a dispute with an employee is the opportunity to retain the employee. "You've already put a lot of time and money into training this person," Fick says. "Mediation can help you work through the issues, so you get a person who's happy and productive."

Prompt resolutions can make a difference in commercial cases. Lee Goodman, a professional mediator and arbitrator in Northbrook, Illinois, notes that business cycles are so short that by the time cases go to trial, products in question may have been redesigned or discontinued and employees involved may have left. Speedy mediations can resolve disputes while they're still relevant.

More and more frequently, citizens and businesses are using mediation to deal with government agencies, too. The Administrative Dispute Resolution Act, signed into law a decade ago, set out the framework for mediation in disputes with the federal government. State agencies have established similar procedures. Professor Philip Harter of Vermont Law School notes, for example, that when there's a problem with a government procurement contract, the normal procedure is to go through the Federal Board of Contract Appeals. "That's a mysterious, complex process," Harter says. "But now you can explain the circumstances and try to work it out through mediation." When government agencies propose new rules or are considering controversial permits, groups of businesses and citizens are now getting into the act from the start by negotiating with the agencies and, if talks reach impasses, moving to mediation.

Starting with negotiation makes sense for nearly all disputes. It's only when talks break down that you need mediators. "A good mediator focuses on why these people can't agree," says Fick. "Is it that they haven't formulated the real problem? Is someone digging in his heels? Do they not know how to negotiate?" When mediators do their jobs well, she says, the parties will have the skills they need to work it out next time.

In cases involving businesses, mediation participants must have the authority to make decisions on behalf of the companies. For smaller disputes and those in which people are still willing to talk to each other, mediators may sit down with people from both sides and simply help them talk things out. For bigger problems, each side is normally represented by an attorney, who helps gather documents, prepare the client and submit a premediation statement.

In a typical scenario, after opening statements by attorneys, the two parties typically adjourn to separate rooms. The mediator talks with one group, then the other, back and forth until they reach a resolution. While the conversation in each caucus is confidential, the mediator may ask permission to tell the other side what was said. When the parties reach an agreement that everyone can live with, the attorneys draft a preliminary agreement that both parties sign.

All this does cost money, whether you reach a resolution or not-maybe $100 to $250 per hour for the mediator's time and skill, or $800 to $1,000 per day. "Not every problem can be mediated, and some aren't worth the money," Fick says. But if the issue is escalating into a lawsuit, mediation costs are pocket change compared to court costs.

Fick also raises the question of public policy. "I think there's a problem when you privatize civil justice," she says. If major court cases involving discrimination, defective products and other matters of principle or precedent were quietly mediated, the public wouldn't be able to benefit from the court decisions or the changing laws that often follow. Then there's the question of abandoning the civil justice system because of the time and expense it involves. "If no one uses the public system, maybe we should fix the system," she says.

Maybe so, but people want alternatives in the meantime. One option is to draw up agreements that submit disputes to mediation, and if that doesn't work, to arbitration. The threat of third parties deciding issues can move both parties to work harder on compromises.

Be sure to choose a well-qualified, skilled mediator. Check with the American Arbitration Association, which posts bios of mediators on its Web site (www.adr.org); the Federal Mediation and Conciliation Service, which focuses on employment disputes; private mediation companies; and local independent mediators. Some states even have certification programs. Ask other business owners for recommendations, and ask mediators how many cases they've mediated and who can offer references. If the other party in your dispute is willing to meet you at the mediator's office rather than see you in court, chances are, you'll both be better off.


Contact Sources

  • American Arbitration Association, (800) 778-7879, www.adr.org
  • Center for Advocacy and Dispute Resolution, (312) 987-1421, 7kandara@jmls.edu
  • Lee Goodman, (847)559-9525
  • McBride, Baker & Coles, (312) 715-5788, angel@mbc.com
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This article was originally published in the November 2000 print edition of Entrepreneur with the headline: Stuck In The Middle.

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