Mediation As An Alternative To Litigation

In our complex and diverse society, business and personal disagreements are increasingly resulting in litigation. An average of 20 million lawsuits are filed annually in the United States. Moreover, these suits are becoming more expensive, and the grounds on which they are based are growing more tenuous and more "creative."

For community association residents and their boards of directors, this frequently taken courthouse route to conflict resolution is sometimes counter-productive. The monetary cost is high, and the lingering hard feelings can take a long-term toll on community relations. As the following examples demonstrate, lawsuits can be a costly way to solve problems in community associations:

• A board spent $1 million defending itself against a resident who alleged that a special assessment was too high and inequitably distributed.
• An association resident paid $15,000 in attorney's and court costs arguing over a $500 set of drapes.
• A homeowner lost a court dispute over a fence: but it cost him $40,000 in legal fees. The community association's legal tab was $61,000.

What the numbers don't reveal is the unhappy aftereffects that can result from these lawsuits. At the conclusion of the suit, when the "parties" become just "people" again, they sometimes live on as feuding residents. Good fences may make good neighbors, but litigating over them doesn't. Of course, there are instances in which litigation is the appropriate or only way to settle a dispute. But before this step is taken, the parties should carefully evaluate the situation and explore if a different strategy, such as mediation, might work.

What Mediation Is

Mediation is an informal method of Alternative Dispute Resolution (ADR) that enables people to solve disputes in a cooperative manner without suing. Sometimes confused with arbitration, in which the participants agree that the arbitrator's ruling will result in a binding settlement, mediation is generally non-binding. This leaves parties free to pursue other options, such as litigation, if they are unhappy with the outcome.

Mediation is traditionally handled in face-to-face meetings. However, there is a new form of online arbitration that is being used in situations where two parties have agreed that one owes the other monetary damages. Here's how it works: For a modest fee, an online host facility provides a confidential, password-protected interactive system of negotiating. A sequence of "blind" bidding rounds enables the parties to arrange a settlement without the posturing and bluffing that often accompany face-to-face negotiation.

Types Of Cases That Lend Themselves To Mediation

Most noncriminal matters and issues that don't involve a legal claim can be mediated such as:

• Pet-related problems
• Disputes between neighbors
• Policy issues

Why Mediation Works Well In Communities

Focus on problem solving: Mediation is ideal for handling disputes that take place in a residential setting. They typically involve matters of principal or personal preference. The objective is to resolve disagreements without rancor, not to win a monetary award, get at the "truth" or impose legal rules.

Preserving good relations: The hostile atmosphere and winner-loser result of court cases can ruin community relationships. Mediation can be a win-win situation, resolving disputes in a way that neither party feels abused by the process or victimized by the outcome.

Fast and cost effective: Mediation generally lasts only a few hours or a day, while lawsuits can take months or years. Fees for mediation vary by type of case and who serves as mediator. However, a half-day mediation typically costs each party about $500 - 1% of the typical $50,000 bill for a court battle.

Confidentiality: Nothing said during mediation nor any documents prepared especially for mediation can be used by any party outside the mediation process, or in any litigation or trial. This means the parties in mediation can speak without fear of what they say being used against them later. The ability to speak openly leads to solutions and settlement.

How Mediation Works

Who attends: Each party must be represented by someone authorized to make a decision. Individual parties must be personally present. Corporations, including insurance companies, must have an officer or authorized representative attend.

How to prepare: Both Parties need to think seriously in advance about what solutions, both monetary and non-monetary, would be satisfactory. They should frankly assess the strengths and weaknesses of their own case, prioritize their needs and try to anticipate similar elements of the other side's case. Any relevant documentation or other evidence that would help explain the conflict should be brought to the mediation session.

What Happens During Mediation

Introductions: The mediator, an objective facilitator trained in dispute resolution, introduces everyone, explains the goals and rules and encourages each side to work cooperatively toward a settlement. During the process, the mediator may offer suggestions and point out issues that the parties have overlooked, but the parties themselves resolve the dispute.

Opening statements: Each party tells his or her story about the nature of the dispute, how it has affected him or her and offers some general ideas about how to resolve it. The other party is not allowed to interrupt.

Follow-up discussion: The parties then talk to each other about what they said in their opening statements and try to determine what issues need to be addressed further.

Private caucuses: Each party meets privately with the mediator to discuss the merits of his or her position and explore further ideas for settlement. The mediator may caucus with just one side or both, just once, or several times.

Direct negotiation: After caucuses, the mediator may bring the parties back together to negotiate directly with each other.

Closure: This ends the session. If an agreement is reached, the mediator may recite and write down its main provisions, with the parties listening. The mediator may ask each side to sign the written agreement or to take it to their attorneys for review. The parties have the option of writing up and signing a legally binding agreement.

If no agreement is reached: In this case, the mediator will review what progress has been made and advise all parties of their options, such as meeting again at a later date, going to arbitration or to court.

Mediation Shows a High Success Rate

Studies show that people who agree to mediate disputes are more likely to be satisfied with the outcome than small claims litigants who go to court. The parties themselves resolve the issue, so the settlement suits their needs better than a resolution imposed in court. Statistics show that mediation succeeds in 80% to 85% of cases.

When to Start Mediation

Timing is critical in mediation.  It should begin as early in the dispute as possible after the parties and attorneys have a good grasp of the factual and legal issues. It's best if mediation takes place before the taking of depositions and other expensive steps in the discovery process. In addition, be sure to contact your insurance company before you begin the process.

Conclusion

Mediation is a voluntary method of resolving the types of aesthetic and "quality of life" conflicts that are inevitable in residential communities. Because the parties in mediation determine the result themselves, an outcome acceptable to all parties is assured.

Mediation is informal, confidential, fast and cost effective. Disputes that typically take months or years in court can often be resolved in half a day. If mediation does fail, all other traditional dispute resolution options, including litigation, remain available.

Most importantly, mediation enables disputing parties to "lower the temperature," understand each other's position and point of view, and when the issue is resolved, to go about their lives as good neighbors.

To Learn More

To learn more about mediation, please visit the American Arbitration Association's website at www.adr.org.