Does Mediation Really Help Save Money?
Credit: @alexandermils
Many people hear that mediation can be a fraction of the cost of going to court and are skeptical, or may not understand how that could be possible. While there are certainly some situations where mediation makes less sense, there are many more reasons that support the use of mediation in a wide range of scenarios.
Mediation can definitely save money. Not all types of litigation are equal in pace, complexity, discovery needs, etc. However, it is not uncommon for regular civil cases in active litigation to produce monthly invoices between $5k-$10k+ at times. Costs can severely increase when there is alot to request of the other party or the court, or to respond to things coming from the opposing party; It all adds up very quickly. It is likely—at least in California—that the parties will be ordered to attempt mediation at least once or twice in some fashion before setting a trial date. So, there’s really no harm in trying once there is enough information to go off of for the parties. Mediation prices vary greatly, however, most parties are able to resolve all or nearly all of their disputes in a matter of a day or over a couple of days by comparison.
With an average success rate at around 85%, mediation is probably worth trying, even relatively early on, as success there could mean that litigation stops entirely or at least partially. I say partially because often when there are multiple issues to resolve, there are some that are more likely to be resolved successfully than others. At a minimum, mediation can be used as a tool to help hone in on the most central issues to the parties, as well as potentially dispose of some of the issues for the court to resolve later—should the parties not reach a full agreement. Although, in my experience, once there is significant momentum on a few topics, the parties tend to discuss and negotiate the more difficult topics better than at the start and can often find a full resolution.
There are some scenarios where paying for a private mediator probably doesn't make much sense. In scenarios where the monetary amount sought is less than $10k, it would probably be ideal to try and self resolve the issue or make smaller claims. Where the relief sought is financial, you must always be conscious of how much you’ve put into the dispute, regardless of the potential to collect attorney fees and costs later. I often have people ask themselves, “If the party you’re seeking money from wasn’t good about paying to the point of defending a lawsuit, would a judgment really change anything?” T
The unfortunate reality is that many things having to do with another party’s finances can affect the outcome of the entire case; disappearance, evasion, bankruptcy, death, etc., can all have profound effects on ability to seek relief. In many cases, parties can be left empty handed or end up having to share roughly 50% of any amount a judgment collector is able to obtain. A good rule is to not expend anything that would place you in trouble if you never got reimbursed. If you are going to dip into your pocket to make one expenditure though, mediation would probably still provide you with the best value to benefit ratio of all other options.
Where mediation can be utilized, there is a high probability of stopping the bleeding for all parties by helping them reach an agreement that they come up with individually after lengthy discussion, are likely to honor, and can file a dismissal where there is a lawsuit involved. So, while mediation may not make the most financial sense in rare situations, it is likely to be a great benefit in nearly all others.