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FEATURE

Cost Effectiveness of Mediation

he costs of commercial, business and employment litigation continue to spiral out of control. The need to review emails, text messages and social media has only worsened the problem. For cases between $50,000 and $200,000, resolving disputes through litigation may be more expensive than the case is worth. Mediation presents a cost effective alternative in these cases, particularly when used before litigation or immediately after a lawsuit is filed. Of course, cases involving less than $50,000 can be resolved cost effectively in magisterial district courts and arbitration. In magisterial district courts, civil disputes $12,000 or less are resolved in trials that prohibit discovery, are scheduled less than 60 days after filing, and require a decision within five days after trial. Court arbitrations take place no less than nine months after appeal from district court or initial filing. While discovery is permitted prior to the arbitration hearing, generally parties engage in only limited discovery before the arbitration hearing. Rules of evidence are relaxed: parties may admit certain documents like hospital and doctors’ reports, expert reports and bills, if provided to all parties at least twenty days before the arbitration. A hearing generally takes a few hours and arbitrators file the award immediately afterward. In contrast, at the Court of Common Pleas, parties generally proceed with full-­blown discovery limited only by the judge’s scheduling order. Electronic discovery particularly drives up costs. One deposition might cost as much as a few thousand dollars including court reporter, transcript and attorney fees. With the addition of multiple depositions, litigation seeking damages in the $50,000 to $200,000 range may cost too much to be worthwhile for parties and lawyers. Mediation offers a remedy. In mediation proceedings, parties may disclose the

12 | Winter 2014-15

full facts of their case to each other and the mediator, and explore the possibilities of settlement in a confidential atmosphere guaranteed in most situations by Pennsylvania law (28 Pa. C.S. 5549) and a written confidentiality agreement. An evaluative mediator can bridge the gap by critically viewing each party’s case and claim for damages, and offer a proposed settlement number based on experience about how the case might be viewed by a judge or jury. Other cases might require a different approach, facilitative mediation. This kind of mediation might be appropriate where redress through damages might not be enough. For example, it might be appropriate where parties have business or personal relationships that they wish to preserve. Here the mediator assists the parties in finding their own solutions, rather than suggesting them. The mediation generally begins by a joint session with the parties. At the outset, each party shares their accounts of the dispute. Then, separate sessions with the mediator allow each party to tell their story more freely. By shuttling back and forth between the parties, areas of common ground, objective criteria to use as a basis of settlement, and the parties’ interest start to crystallize. By honoring both parties’ interests, this kind of settlement permits both parties to maintain important personal and business ties. Facilitative mediation is applicable to many areas. A supplier dispute with a car dealership can be resolved with barely ruffled fur, preserving their business relationship. A commercial landlord-­tenant dispute might be resolved prior to or at the beginning of litigation, preserving the possibility of future contractual relations. A businessperson with a dispute that might scare off investors or sour a pending business deal might be expeditiously resolved. Workplace disputes where feelings and interests are aired and resolved might save both parties’ jobs

and potentially avoid court or the EEOC. Mediation between family members in an estate dispute might allow parties to air childhood grievances and avoid decades of acrimony. The Equal Employment Opportunity Commission (“EEOC”) boasts great success in mediation. Conducted by staff and volunteer mediators, EEOC’s statistics demonstrate at least a 70% success rate in resolving cases since 2005. http://www.eeoc.gov/eeoc/mediation/ mediation_stats.cfm. Requiring a confidentiality and mediation agreement signed by all in attendance, the EEOC mediator elicits both parties’ accounts in a joint session. By sharing their accounts both jointly with the opposing party and individually with the mediator, each party finds validation. As the mediator shuttles back and forth, areas of agreement emerge. Breaking down damages to individual categories and providing concrete undisputed numbers assist the process. Parties can find areas of agreement in individual categories of damages while creatively offering other options to resolve the matter. Non-­monetary relief such as apologies, reinstatement and neutral job references push forward settlement. Since the process is non-­ adversarial and the mediator maintains the proceedings’ civility, as the parties achieve small agreements, they gain confidence in the mediator and in the process and are willing to create more options. Mediation offers an affordable means of resolving disputes. It can drastically curtail costs pre-­litigation and in the early stages of litigation in commercial, business and employment cases. Hon. Stephanie H. Klein (Ret.) served as Magisterial District Judge in Media District Court for 18 years. She is a mediator and arbitrator in Delaware County.

Delco re:View Winter 2014-15  

Delco re:View is the official publication of the Delaware County Bar Association. For membership, visit www.DelcoBar.org. To advertise in D...

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