In recent years, the field of commercial mediation has seen significant evolution. As businesses adapt to complex legal landscapes, their approach to dispute resolution has also become increasingly sophisticated.
Commercial clients today are looking for mediation strategies that provide flexibility, cost-efficiency, and effective outcomes, aligning well with their overall dispute resolution strategies.
What does this mean for businesses and legal practitioners?
Traditionally, in-house legal teams would often pass disputes on to external law firms, relinquishing much of their involvement. However, the role of in-house counsel has changed dramatically. Today, in-house legal teams are more engaged in the entire process—from managing disputes to considering various resolution options.
Companies are more proactive about mediation. In-house counsel now plays a critical role, sometimes participating directly in mediations without external counsel. This growing involvement reflects an overall shift toward a more hands-on approach, where the in-house team is responsible not only for dispute strategy but also for exploring resolution options like mediation, especially as a precursor to more formal litigation or arbitration.
Both in-house and external counsel are now using a diverse toolkit to handle disputes. This toolkit includes mediation, arbitration, and litigation, frequently used in combination—a concept often referred to as "mixed-mode" dispute resolution.
Parties can utilise these different methods simultaneously, such as having a mediator and arbitrator working in parallel. This approach allows the flexibility to transition between processes, depending on how the dispute evolves.
Mixed-mode dispute resolution is gaining traction as it avoids the perception of mediation as a sign of weakness. By having mediation as a built-in part of the dispute resolution process, parties are encouraged to consider it without stigma, and it can be more easily integrated into a wider strategic approach.
A critical question often asked is whether there is a "right" time to mediate? In practice, there's no definitive answer that covers all disputes, but there is a growing understanding that mediation can be beneficial at various stages of the litigation process, including early on.
Mediation at the outset can help parties avoid the need for prolonged litigation by providing an opportunity for open dialogue before positions become entrenched.
There is also a trend in certain industries toward mediating before formal claims are filed. This can be a way to test the waters and see if a resolution is feasible without going through lengthy and costly litigation steps. However, mediation can still be valuable later, such as just before a trial, to reassess the strengths and weaknesses of each party's case and potentially avoid an unpredictable court decision.
In practice, parties need to feel assured that they have the capability to mediate and to reach a resolution. For many, that will still be a significant way into the litigation process (often it is at the time of the Case Management Conference). However, what we are seeing is parties making active decisions as to when to mediate and generally, there is a trend towards mediating earlier than in previous years.
Preparation for mediation has also evolved, reflecting a more sophisticated approach. Now, mediators and parties are heavily involved in pre-mediation discussions, often long before the mediation session itself.
Parties today are engaging deeply with the mediation process, discussing how to make the best use of their time, which participants to involve and topics to consider, and even preparing draft settlement agreements in advance.
This level of preparation allows for a more structured and effective mediation session, with both sides coming in with clear objectives and an understanding of possible outcomes.
Another significant change in mediation preparation is the use of technology. There have been instances of parties using AI tools to help determine their settlement ranges and analyse different scenarios. This kind of data-driven approach can enable parties to develop a more informed strategy, considering factors beyond just the prospects of success in litigation.
An important factor when using any tool of this kind is that ultimately it is a tool (rather than the decision maker) and that parties still need to be able to consider effectively their options and remember the human factor of mediation and decision making.
By focusing on a broader range of considerations, such as commercial relationships and reputational risks, parties can aim for an outcome that balances legal, financial, and business interests. This approach not only improves the chances of a successful mediation but also helps parties to understand the real value of settling versus litigating.
Many Commercial clients today are no longer simply looking for a mediator to step in and resolve disputes in a traditional one-day model. Instead, parties are looking at commercial mediation as a multi-day process and with greater emphasis on preparation. The trend is toward early mediation, with parties being more open and thoughtful in in their approach.
With in-house counsel taking on a more active role and companies embracing the flexibility of mixed-mode dispute resolution, mediation is evolving into a more powerful tool for commercial dispute resolution. The sophistication in preparation, aided by technology, is reshaping how disputes are handled and resolved.