Legal/Finance
with Rupert Wright, of Charles Lucas & Marshall
With the current increase in commercial disputes, the process of commercial mediation is often overlooked as a means to solve potential or actual litigation situations. Rupert Wright, a lawyer in Charles Lucas & Marshall’s corporate services team, explains its benefits.
Commercial disputes can prove extremely destructive. Positions become entrenched very quickly and parties, even when they have worked together closely for many years, can make disputes very personal.
My experience is that shareholder disputes, particularly, can have adverse consequences for a company unless both parties resort to commercial mediation at an early stage. In extreme cases a shareholder dispute can cause the closure of a company.
The benefits of mediation are considerable. Once the parties have agreed to mediate, statistically around 85 per cent of cases settle via mediation. It is also cheaper and faster to mediate rather than formally litigate disputes through the courts where cases can take up to 18 months to obtain a full hearing compared to a possible half day hearing before a mediator, which can be arranged at short notice.
Cost savings can be considerable with the cost of using a mediator being as little as £350 per party for a half day hearing, although it is advisable for each party to use their own commercial lawyer to assist them at the mediation meeting.
Mediation can also achieve a mutually acceptable outcome rather than an outright winner or loser so that both parties come away from the meeting with a reasonable outcome. Also, even if the mediation eventually fails, each party comes away with a better understanding of the other party’s position so that resolution in the future can often be achieved.
Mediation can prove very convenient. The court process is often slow and frustrating and full of argument as to procedure, legal rules and point scoring, generally at the expense of both parties. Mediation is private and avoids publicity and is a sensible and commercial way of resolving disputes.
The actual process of mediation is flexible and straightforward. Once an appointment has been arranged with the mediator, both parties submit a brief mediation summary to the mediator so that he is aware of the positions taken by each party. The mediator needs to be fully briefed so that he understands the positions taken by each party so that a sensible outcome can be achieved.
Once each party has given the summary of their position, the mediator usually advises that each party will move to separate rooms and then meets with each party to try and negotiate a sensible outcome which each party can live with.
In summary, commercial mediation must be considered at a very early stage once it is clear that a serious dispute is developing between the parties. Court action often ends up as time consuming and expensive for both parties whereas a mediated settlement can, in many cases, prove to be a successful outcome for both parties.
n For further information contact Rupert Wright at rupert.wright@clmlaw.co.uk or (01635) 521212.
More From: Legal/Finance News Next Story: Supply procedures: where does your company stand? Previous Story: A new structure for charities