Stuck In The Middle You're jammed between a court and a hard place. Get free with third-party mediation.

"See you in court!" yells the irate vendor just beforeslamming the door. The botched deal will cost both sides thousandsof dollars to correct, and frustration has erupted into blame andanger. As you reach for the phone to call your lawyer, you thinkabout the past lawsuits you've been embroiled in-hours ofdigging out documents for discovery, months of depositions andmotions, stacks of briefs and counter-briefs, days of tension incourt, thousands of dollars in legal fees, and all for what? Therehas to be a better way.

There is. Alternative dispute resolution (ADR) is growingnationwide, providing individuals and businesses with cheaper,faster ways to resolve disputes. The two major types of ADR arearbi-tration, in which parties hire private judges to decide theircases, and mediation, in which neutral parties help work outsolutions. The number of ADR cases submitted to the AmericanArbitration Association grew from 95,143 in 1998 to 140,188 in1999. Compare those figures to roughly 45,000 cases per year in themid-1980s. The association's case load for mediation grew 17.5percent from 1998 to 1999, reflecting the rate of growth in recentyears.

The growth may be because of increased recognition thatmediation lets the parties involved control outcomes. In litigationand arbitration, outcomes are decided by arbitrators, judges orjuries, whose actions can be unpredictable. Someone wins andsomeone loses.

In many cases, though, what's needed is for the two partiesto bend a little. "Mediation leaves you in control of yoursettlement," says professor Kenneth Kandaras, director of theCenter for Advocacy and Dispute Resolution at John Marshall LawSchool in Chicago. "You leave the mediation only if you'resatisfied." That doesn't mean that sitting down with amediator guarantees you'll get everything you want. Nor does itmean that you simply split the difference. "It pushes bothsides to give up more than they'd like," Kandaras says.But you're the one deciding what to insist on and where you canbend.

"Business people recognize that mediation is a betteralternative," says Toni L. Griffin, vice president forcorporate communications for the American Arbitration Association.Griffin notes that while cases can take years to get through allthe stages of litigation, mediations can literally be scheduled thenext day. In more than 85 percent of the mediation cases filed, shesays, the parties are able to reach settlements-and preserve theirbusiness relationships.

"Once you walk into court, you're finished," saysNaomi Angel, an attorney with McBride, Baker and Coles in Chicagowho represents trade and professional associations. Observing therancor that builds during lawsuits is one thing that led Angel tostart recommending mediation to clients and to seek the trainingneeded to be a mediator herself. Many professional mediators areattorneys or former attorneys looking for more conciliatory ways toresolve problems. "Clients can feel they're still right ina moral sense without the need to be vindicated in court,"Angel says. She acknowledges that people who've had to give uppart of what they wanted in a mediation won't always walk outas buddies, but she says they may still be able to work together inthe future.

Steven C. Bahls, dean of Capital University Law School inColumbus, Ohio, teaches entrepreneurship law. Freelance writer JaneEaster Bahls specializes in business and legal topics.

How It Works

Entrepreneurs do well to consider mediation for employmentproblems, commercial disputes and even negotiation with governmentagencies. Professor Barbara Fick of Notre Dame Law School, whoteaches courses in ADR and labor law, notes that one of the keyadvantages of proposing mediation when you have a dispute with anemployee is the opportunity to retain the employee."You've already put a lot of time and money into trainingthis person," Fick says. "Mediation can help you workthrough the issues, so you get a person who's happy andproductive."

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 timecases go to trial, products in question may have been redesigned ordiscontinued and employees involved may have left. Speedymediations can resolve disputes while they're stillrelevant.

More and more frequently, citizens and businesses are usingmediation to deal with government agencies, too. The AdministrativeDispute Resolution Act, signed into law a decade ago, set out theframework for mediation in disputes with the federal government.State agencies have established similar procedures. ProfessorPhilip Harter of Vermont Law School notes, for example, that whenthere's a problem with a government procurement contract, thenormal procedure is to go through the Federal Board of ContractAppeals. "That's a mysterious, complex process,"Harter says. "But now you can explain the circumstances andtry to work it out through mediation." When governmentagencies propose new rules or are considering controversialpermits, groups of businesses and citizens are now getting into theact from the start by negotiating with the agencies and, if talksreach 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'tagree," says Fick. "Is it that they haven'tformulated the real problem? Is someone digging in his heels? Dothey not know how to negotiate?" When mediators do their jobswell, she says, the parties will have the skills they need to workit out next time.

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

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

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

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

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

Be sure to choose a well-qualified, skilled mediator. Check withthe American Arbitration Association, which posts bios of mediatorson its Web site (www.adr.org); theFederal Mediation and Conciliation Service, which focuses onemployment disputes; private mediation companies; and localindependent mediators. Some states even have certificationprograms. Ask other business owners for recommendations, and askmediators how many cases they've mediated and who can offerreferences. If the other party in your dispute is willing to meetyou 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