The Alternative to Trial

In recent years, there has been a real emphasis on “alternative dispute resolution” or ADR, for short.  ADR includes (among other things) mediation, arbitration or mediation/arbitration.

Mediation is a process where a mediator tries to negotiate a resolution between the parties.  The mediator is not interested in coming to the “right” resolution – their only focus is to try to get the parties to achieve a common ground.  Mediation is pointless if the parties will not compromise their position to reach settlement.

Arbitration is where an arbitrator hears argument (with or without evidence) from each side and makes a decision.  Depending on the authority given to the arbitrator, the arbitrator could choose one side’s position over the other or come to a decision that is not what either party was seeking.

Mediation/arbitration is a hybrid process which starts as a mediation and, if the mediation does not produce a resolution, the mediator becomes an arbitrator and will create the resolution.  The advantage to this hybrid process is that you get a chance to make your own deal, but you have the additional pressure that if you do not, the case will be decided that very day.  That kind of pressure can be very effective.

Some jurisdictions, including Toronto, have mandatory mediation as part of the litigation process.  Accordingly, it is important to be familiar with the process and know when (or when not to) use it.  Even if your matter in not in the Toronto courts, it is important to assess whether to suggest voluntary ADR to the opposite party. 

We are starting to hear rumblings that mandatory mediation is coming to the rest of the province.  For the most part, I think that is a good thing.  Why? 

Let’s start with the compelling statistic:  well north of 95% of all civil lawsuits settle before trial.  That does not count the many more disputes that are settled before a lawsuit is even started.  So, your reality is that you are very, VERY, likely to settle your case.  You wouldn’t go to a casino and drop thousands of dollars on a bet where you had less than a 5% chance of winning.  So, don’t bet on your case going to trial – bet on it settling.

That brings me to the second point.  The earlier you settle, the less money you will have spent on legal fees going down the litigation road.  The more the parties go down that road, the more entrenched they are in their legal positions and the further apart they are in dollars. 

That brings me to the clincher:  it is very likely that the best deal you are going to get is the deal you are presented with at mediation.  It is often the case that the parties continue to litigate and, when the matter does eventually settle, the net result of that later settlement is no better than, and often worse than, the deal you rejected at mediation.

Of course, mediation does not always work.  One of my maxims of negotiation is that you cannot reason with unreasonable people.  (Seems obvious, by definition…)  That also means that you should not negotiate against unreasonable positions.  By that, I mean that if the other side is taking a completely ludicrous position and you are miles apart, there may be no benefit to mediation.  A mediator will be struggling to bridge the gap between two parties who are worlds apart.  If you do end up making a deal, it may well be a bad deal.  In that case, you may be better off with arbitration or mediation/arbitration. 

Another disadvantage to mandatory mediation is that one or more parties may only be there because they HAVE to.  The presumption of voluntary mediation is that the parties are prepared to try to settle.  There are occasions where mandatory mediation fails because a party does not want to settle at all. 

There are also times when mediation takes place TOO early in the process.  Sometimes, a party is not yet ready (mentally) to settle.  Sometimes, I don’t want to have mediation until the parties have disclosed all relevant documents, because I am convinced that documentary disclosure is going to force a party to disclose weaknesses in their case.  Sometimes, I won’t want to have mediation until I have had a chance to question the other party under oath, because I am convinced that I will be able to sufficiently weaker their case to make our negotiating position that much stronger.

The real advantage to ADR is being able to choose your mediator/arbiter.  The parties can generally agree on the person, which allows you to choose someone who has expertise in the subject-matter of your litigation.  Given that you don’t get to choose your judge when you use the courts, this is a huge benefit.

I recall participating in arbitration over a commercial leasing issue.  We chose one of the most highly regarded lawyers in Ontario in the field to conduct the arbitration.  I can say without reservation that it was an excellent process.  What would have been a one-month trial with at least a dozen witnesses (plus at least four experts) was reduced to a one-and-a-half day arbitration without witnesses and with few documents.  When we concluded (before a decision was reached), both I and my client agreed that we had a fair hearing and, regardless of the result, we were very happy with the process.

If you are ever involved in a dispute, you should always consider if ADR is an appropriate option.  Discuss it with your counsel and choose the method of ADR that is best suited to your case and most likely to result in a fair process.