Alternative Dispute Resolution

HOW MEDIATION WORKS AND WHY EARLY RESOLUTION MATTERS

 

While few clients want to end up in court, disputes often escalate despite early efforts to resolve them. In Australia, courts increasingly encourage or require mediation to help parties reach a resolution before trial. Still, many disputes settle only at the eleventh hour—just before or during the final hearing—when legal costs and risks become too high to ignore.

In this episode, Fiona discusses:

• why most disputes settle before reaching final hearing
• how court-ordered mediation works in Australian jurisdictions
• the impact of timing on the success of mediation
• differences between court-appointed and private mediators
• the emotional and financial costs of unresolved disputes

 

VIDEO SCRIPT

I’ve been working in dispute resolution for over 30 years.  In that time, I don’t think I’ve ever had a client who wanted to run a court case, certainly not be a defendant in one, but for many reasons disputes and clients often end up in court, even when parties have been willing and tried hard to negotiate a resolution to avoid proceedings.

 

In my experience, it can be popular to blame the lawyers for being the barriers to settling a case out of court, but it’s rarely that straight forward.  In commercial disputes just as family disputes, both sides get entrenched in their positions and there are often deep emotions in the background driving decisions. This can make it difficult to reach a resolution which is acceptable to both sides (or all sides if there are more than two parties).

 

Most courts in Australia these days are reasonably proactive in making parties explore settlement using alternative dispute resolution before the proceedings reach the final hearing.  This is usually done by requiring or strongly encouraging the parties to attend a court ordered mediation.  The type of matter and the court in which the matter is listed will affect when during the proceedings the court will do this.  In some jurisdictions mediation is voluntary but strongly encouraged, in others such as family law and wills and estate claims, it is compulsory.

 

It is often the case that the court will wait until all of the evidence has been finalised before making an order that the parties attend mediation.  This is particularly the case in commercial matters. It is important that when the whole case is laid out before the parties and a party has a full grasp of the strengths and weaknesses of its case, it’s more likely that the proceedings will resolve.  Whether that is because parties have a better understanding of their weaknesses or whether the risk of losing control of the outcome has become more real, or it’s just nerves, it depends on the case.  One difficulty with waiting until then is that by that stage, all parties have incurred substantial legal costs.  The legal costs in Australia are typically much higher than the legal costs in Europe. This changes the whole economics of the dispute which then becomes a hurdle itself to reaching a resolution.

 

In some jurisdictions, notably family provision in other estate claims in NSW, a mediation is ordered early in the proceedings before substantial money has been spent on preparing the evidence and the assets of the estate have been depleted by the legal costs.

 

Sometimes this approach is successful but again, very often the emotional undercurrents that usually come with estate disputes, prevent the parties reaching an agreement until shortly before the hearing.  By this time of course the family has been completely torn apart, never to be repaired and the legal costs have depleted the estate considerably.

 

When a court orders a mediation, it can either be conducted by a court appointed mediator or a private mediator.  As with anything, the quality of mediator varies.  Court appointed mediators are very cost effective but have limited time to dedicate to getting a resolution and you don’t have a choice of mediator.  A private mediator can cost a lot more, but you have control over the mediator, and they will usually have a whole day dedicated to assisting the parties to find a resolution, even sitting late into the evening if the parties look close to settling.  I try to engage a private mediator who will be proactive in helping the parties reality check the merits of their case.  The benefits to both sides of a reality check is one reason why retired judges and senior counsel are often popular (if expensive) choices for mediators – they bring the gravitas and experience to the negotiations necessary for the reality check to have an impact.

 

The reality is that in the end most disputes settle out of court.  It is nearly always better to settle a dispute and to settle a dispute as early as possible.  It is certainly worth attempting to settle before taking the irreversible step of commencing proceedings.  However, it takes two to negotiate.  You can’t settle without both parties at the table.  Sometimes that doesn’t happen until the morning of the final hearing, or even during it.  Without that, a court adjudication could be the only solution if you can’t live with the status quo.