How do I prepare for a commercial mediation?

Although the mediation process is facilitated by a mediator, a successful settlement can only come about with the full participation of the parties. Preparation is therefore key to getting the most out of the process.

There are a range of practical, legal and strategic considerations to bear in mind and there will obviously be case specific issues to address. However, some of the points that will be relevant to preparations required for most mediations, include:

1. Who do you want your mediator to be?

As parties are free to agree a mediator between themselves it is important to consider the type of expertise you would like your mediator to have. For example, would you like the mediator to be someone with legal knowledge or someone with technical expertise in a particular sector relevant to the dispute? If the parties cannot agree on a mediator an alternative approach would be to consider asking a mediation centre, trade or regulatory association to make the appointment.

2. Choose a suitable venue

It is usually the responsibility of the parties to agree a venue to hold the mediation. A neutral venue is usually the best environment to make both parties comfortable and open to settlement. However, you may wish to consider using your legal representative’s office to save any potential venue costs and to ensure all the facilities and amenities required to make the process run smoothly are in place.

3. Do you want the mediation to be virtual or in person?

In our experience, an in person mediation is usually preferable for creating an environment and climate that lends itself to collaborative settlement negotiations. However, virtual mediations can be an effective alternative should the dispute have an international element where the logistics make an in person meeting impractical, or if there are other reasons that make it difficult, or undesirable for the parties to attend in person.

4. Who will attend?

It is crucial to ensure that those attending have the proper internal authority to reach a binding settlement. Who else might need to be present? Is there someone in your business who has particular knowledge that may be required, or someone who has knowledge of an element of the dispute which will be vital to the settlement discussions? Is there someone in your business who makes good decisions and does not crumble under pressure? It would also be worth thinking about whether any expert or accountancy/tax advisors should attend.

5. Agree a timetable suitable for all parties

The timetable should include dates that the key documents should be prepared and exchanged by (see the next two points below), as well as the date of the mediation itself. Mediation can take place at any stage in a dispute, before litigation is commenced, or in parallel if proceedings are already afoot. If a claim has been issued with the court, you will need to consider when in the process it would make sense to mediate, or to propose a mediation. For example, will going through the disclosure process help inform the parties’ positions and allow more effective and constrictive negotiations to take place?

6. Mediation bundle

A mediation bundle should be prepared and the content will need to be agreed by the parties. The bundle will include a selection of key documents, including without prejudice correspondence between the parties, which are circulated in advance to enable the mediator to understand who the parties are and the key points of the dispute, including any settlement discussions which have taken place, in advance of the mediation, and to facilitate discussion and the resolution of issues on the day. However, it is important to strike an appropriate balance; how much evidence really needs to be included? It is better to avoid including material that is unlikely to have a material bearing on the settlement discussions to avoid losing sight of the fact that the process is not intended to amount to a trial of the issues

If a joint bundle is agreed, each party may also produce a bundle of confidential material to the mediator. For example, it might assist to share opinions or other privileged documents that will aid the mediator in their preparations and understanding of your case and the context for your settlement stance.

7. Position statement

The parties will usually be expected to exchange and provide to the mediator with a position statement, which is a brief summary of a party’s case and settlement position. The aim of the document is to explain to the mediator the main issues and the background to any settlement discussions. Your position statement will also be shared with the other party, therefore it can be a useful tactical document to let them know your views and help parties clarify what the other party hopes to achieve from the mediation. The level of detail to be included in the position statement is a matter of judgement; you do not want to lose sight of the main issue due to a regurgitation of unnecessary facts or information. Although the legal and factual background are important, the position statement should focus less on the legal arguments and more on what the parties are looking to get out of the mediation and their key interests (see below). The tone also needs to strike an appropriate balance between advancing your case, and the cooperative nature of the process.

8. Identify your key interests

The financial aspects of the dispute will usually be central. However, there may be other important considerations related to time, reputation, confidentiality, business relationships or unique factors for the parties or their business. Think about how your strategy can support these interests and what position you will take in the mediation in line with these interests. Making your interests clear to the mediator and the other party may also help them to understand your perspective and aid discussions.

9. Discuss your offer parameters (top and bottom)

Coming to a mediation prepared with your top and bottom offer will put you in a better position to consider any offers put forward by the other party. Are there any outside the box ways in which your offers could be structured. It does not necessarily need to be just about money, what will make commercial sense for you and / or your business.  Be prepared to make the first offer, as long as this is a reasonable offer it can help set the tone for the mediation and should not (in most cases and depending on the presentation) be viewed as a sign of weakness. Think also about how an offer (if financial) will be paid. Does there need to be a payment plan in place and, if so, consider including this in your offer at an early stage as that may influence the other party’s decision as to whether to accept an offer. If not, negotiations may break down at a later stage of the mediation when a settlement agreement is being drawn up.

10. What are your litigation prospects and estimated costs?

You need to understand what your chances of successfully arguing your case are, and how much it will cost to do so should the dispute not be resolved by mediation. This will of course be a consideration when you are assessing whether it is commercially beneficial to mediate in the first place, but it can also be a useful factor in your assessment of the settlement parameters. If you have good prospects of success you may want to consider pitching your top offer at a higher level, and if you have lower prospects of success you may have to be prepared to make some additional concessions. Your legal team can give you an assessment to ensure you are in a fully informed position.

11. Conduct an alternatives analysis

Aligned to the previous point, what are your best, worst and most likely alternatives to a negotiated settlement, and are there any other options? How this analysis helps inform your decisions and offer parameters will depend on your appetite for risk. This approach is likely to be encouraged by a mediator during the mediation process and so preparing for these discussions can make you feel more comfortable when inevitably raised during the mediation.

12. Make sure everything is in place

Be aware of any potential obstacles to the deals you are considering putting forward at the mediation and look to resolve what you can reasonably anticipate might arise in advance. For example, do you need any third party consents, do you need to arrange funding to pay the other side for offers made over a certain value? If so, ensure everything is arranged before you arrive and come to the mediation with proof of the steps put in place.

13. Know your case

Make sure you read the documents, know your case and where the papers are that support your position; by the same token, try to walk in the shoes of your opponent and anticipate what lines of argument or negotiating strategy might be used, and how you will respond to them.

Ensuring you are prepared for your mediation is key to getting the most out of the process, and maximising your changes of securing a negotiated settlement. Our Dispute Resolution team has experience of advising clients on all aspects of the commercial mediation process. Please contact us if you would like to discuss any of the issues raised.