Friday, September 22, 2006

"Mediation is a hugely untapped industry"

So wrote my dear friend S who read my blog entry the other day.

Why does he feel this way?

First hand experience with a business dispute. My friend owns a company that purchases debt. His company had a written agreement with a major international telecommunications company to be paid a lump sum for work completed by his client over the course of several months. When the company stated that they would only pay per month, my friend found himself in a dispute.

How could they change the terms? He had meetings with the company, including the CFO, and was told the same thing. He went back with the lawyer and was told the same thing. This contract would be paid on a monthly basis for each month the client performed the task. My friend was so disgusted he was willing to stop doing business with this company, which had in fact been party to his first deal more than 15 months ago.

What he learned from this dispute?
Working from a positional place does not work. Demanding payment without being open to hearing the company's perspective resulted in an impasse that threatened to damage a long-standing and otherwise profitable business relationship. A more informal conversation with the company by someone willing to hear their perspectives and interests, without the presence of a lawyer, resulted in the sharing of some key information. The matter ended up being resolved and the business relationship with the company was preserved.

Now my friend is going to change his Dispute Resolution clauses from using arbitration to using mediation. He's a convert! Way to go S! Spread the word.

Update October 2, 2006 - How can you spread the word if talking about dispute resolution in a blog is considered 'legal advertising?' Read Kathy's posting

Is a Legal Blog Advertising?


Anonymous said...

I just wanted to expound on Kathy's comment re: mediation as an untapped industry. It appears to me that in this part of the world (i.e. East Africa) a large number of commercial disputes end up in court unnecessariy. Compound this with the fact that we dont really have a commercial court system to speak of and the result is a tremendous amount of waste. Court annexation of mediation services has been a long time coming. This is why few people are willing to turn to mediation as a viable alternative. Arbitration clauses are built in to most commercial contracts but the disadvantage is that the parties have no control over who is selected as an arbitrator - and also that the arbitrators decision is binding. So many of us feel a sense of helplessness whenever a dispute ocurrs.

Kathy Vaughan said...

Thanks for your comments. For guidance on model mediation clauses for your contracts, I point you to the following resources below.

From CEDR (Based out of the UK, updated as of 9/18)

From JAMS (Based out of the States)

Best of luck.