I am absolutely surprised
that you have left this incredibly important and significant decision
to the court. …I have always thought that this decision,
in the end, was a business decision. Judge James R. Spencer
in NTP v. RIM (patent case involving technology used in the BlackBerry
communication device), New York Times, February 25, 2006.
Litigation is the common choice
for formal dispute resolution in the U.S. It allows a party to obtain
an imposed solution to a legal dispute from a court or administrative
agency. The term alternative dispute resolution (“ADR”)
refers to a range of non-litigation methods for resolving disputes.
ADR includes mediation, arbitration and neutral evaluation.
In recent years, mediation has become
an important method for resolving business litigation and concluding
important commercial transactions. The use of mediation in these
situations is driven by its own inherent advantages and by the disadvantages
of litigation in the modern business environment.
Advantages of Mediation
Mediation is a form of facilitated
negotiation. The parties enter into the process voluntarily, accept
the procedures to be followed and freely agree to any settlement.
The legal and other costs of mediation are far less than those of
litigation, the time needed to reach a solution is much shorter
and there is a better chance of preserving commercial relationships.
In addition, a mediated settlement can be crafted to meet the individual
needs of the parties, and the entire process is confidential. If
mediation fails, little is lost because original positions are preserved.
Mediation in Business Transactions
In most circumstances, business
litigation serves as a structure within which the parties, sooner
or later, conduct a negotiation. Over 90% of all litigated cases
end with a negotiated settlement rather than a court or agency decision,
and mediation is a widely accepted method of reaching those agreements.
It is not surprising, therefore, that mediation brings similar benefits
to many negotiations outside of litigation. For example, transactions
of all kinds may become adversarial and parties may act strategically,
allow themselves to be driven by emotion or miss opportunities to
create mutual advantage. Deal-making, like litigation, may drag
on for extended periods of time and become inordinately complex
and costly. Transactions may fail because of a lost market window,
a misjudgment by one of the parties or other avoidable factors.
By involving a skilled neutral, mediation or another ADR tool can
help eliminate barriers to agreement, identify common ground, reduce
expenses and accelerate any negotiation.
Disadvantages of Litigation
Commercial litigation has become
increasingly complex, expensive and burdensome for all parties regardless
of the merits of their legal positions. With the lean staffing now
found in most organizations, staff time spent on litigation is taken
directly from operational functions. Companies also recognize that
hard-fought litigation can damage business and personal relationships
that might have future value. In addition, since court proceedings
and court documents are normally public, most details of a litigated
dispute are readily available to the media and to competitors. Finally,
a court judgment or an agency decision is a blunt instrument that
is seldom tailored to the individual needs of the parties. For all
of these reasons, in most cases extended litigation is a poor choice
for business and other organizations.
Therefore, in litigated disputes,
as well as important transactions, mediation meets the needs of
any organization that wants to devote its resources to productive
opportunities and conclude its projects quickly and efficiently
Technology Neutrals does not provide
legal representation or legal advice.
© Technology Neutrals 2007
