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Avoiding Trouble: How mediation is good for your business

Mediation graphicThe fabric came in shaded. Perhaps there was an extended dock strike. Or maybe the emblems were sewn on the wrong side. These are just some of the horror stories that can cause serious problems in our industry. Since unforeseen events do occur, it’s important to build in as many safeguards as you can. One such precaution that uniform distributors and manufacturers can benefit from is mediation.

Mediation is a powerful business tool. Every uniform distributor and manufacturer should consider putting a mandatory mediation clause in its customer contracts and employment agreements. A simple mediation clause can help reinforce positive relationships with customers and employees and often can save time and money.

Mediation is so effective that there are many jurisdictions around the country making it a requirement before a case can be litigated. Mediation is successful about 85 percent of the time. This high success rate benefits the participants, alleviates the overburdened court system and justifies the growing popularity of mediation.

Sometimes mediation is confused with arbitration. The major distinction between these alternative dispute resolution methods is that, in mediation, a negotiated settlement is facilitated by a neutral party, while in arbitration a third party reviews the case and imposes a decision.

The beauty in mediation stems from each party’s right of self-determination. Mediated cases are not decided by a judge, jury or arbitrator. If successful, the case is settled by the parties themselves.

When your contract or sales agreement with a customer includes a mediation clause, you have the opportunity to resolve a dispute quickly and with minimal disruption to the relationship with your customer.

For example, a local uniform distributor has a dispute with a customer refusing to pay on a substantial order until the order is 100 percent complete. To make matters worse, the customer is threatening to sue and refuses to speak to the distributor. The distributor has delivered 90 percent of the goods, but the missing 10 percent could be delayed for as long as six months. The distributor can’t afford to wait that long to be paid, but he does not want to initiate a lawsuit against the customer. Fortunately, the distributor included the following simple mediation clause in the sales agreement:

Mediation Clause

In the event a dispute shall arise between the parties to this [sale, contract, lease, etc.], the parties agree to participate in at least four hours of mediation in accordance with the mediation procedures of the American Arbitration Association. The parties agree to share equally in the costs of the mediation. The mediation shall be administered by the offices of ____________________.

Mediation involves each side of a dispute sitting down with an impartial person, the mediator, to attempt to reach a voluntary settlement. Mediation involves no formal court procedures or rules of evidence, and the mediator does not have the power to render a binding decision or force an agreement on the parties.

The inclusion of this or a similar clause guarantees the uniform distributor an opportunity to negotiate a solution sooner rather than later with the aid of a professional dispute resolution specialist. Now the angry customer and the distributor have an excellent chance at working things out. Neither party can be sued until after the parties participate in mediation.

The mediation process is very informal. No one is sworn in, no one is deposed. There is no requirement that either party must be represented by an attorney, although it is recommended. Rules of evidence or judicial formalities do not apply. In mediation, what happens is confidential unless otherwise provided for in the law or if both parties want to break privilege, which very rarely occurs. Since what ensues during mediation is confidential, it remains with the parties and even the judge will not know what is said. By contrast, what happens in a courtroom is public; it is available for all to see and read in the public records.

The mediation usually commences with all parties in one room. Each side is asked to explain their position. The mediator will then determine if the parties should be separated for the mediator to privately explore options with each party. The mediator will never discuss anything with the other side unless authorized. As the mediation progresses, the mediator determines when the parties should be together or separated. It is also not unusual for one or both parties to ask for privacy during the process.

Although the mediator acts as an impartial hand, he or she often assumes a devil’s advocate role when meeting with the separated groups. This is not done to conjure discomfort or uneasiness but to ensure that each side is realistic in their analysis. The mediator has no authority to impose a solution. Their role is solely to help craft a solution both parties can live with.

The informality of the process usually means less confrontational behavior and less tension. This is important because usually the goal is to keep your customer. If the mediation is successful, the customer walks away satisfied, the uniform dealer’s reputation remains untarnished, and very little time was wasted in unproductive, expensive legal haggling.

If the mediation was not successful, you now know exactly what you’re up against and have a very good idea of the evidence and of the legal position of your customer. Many times failed mediations lead to future out-of-court settlements as a result of the knowledge gained by both parties at mediation.

It is not unusual for a minor employee grievance to escalate and potentially affect morale in the workplace. A skilled mediator can help address the problem directly, as well as resolve any ancillary issues. If you can salvage your relationship with your employee and address underlying issues or practices that may have undermined it, you will have happier employees, a more productive workplace and a better work environment.

In employee discrimination cases, mediation is also very effective. A professional mediator can help address the frustration and anger of both parties. Since these issues are handled in a confidential and respectful environment, as opposed to the combative environment of a courtroom, the result is likely to save money, time, aggravation and, hopefully, an employee.

You should consider including a mediation clause similar to the one below in your employment agreements.

Mediation

Employer and Employee will make a good faith attempt to resolve any and all claims and disputes by submitting them to mediation in _______________ before resorting to arbitration, litigation or any other dispute resolution procedure. The mediation of any claim or dispute must be conducted in accordance with the then-current American Arbitration Association (“AAA”) national rules for the resolution of employment disputes pertaining to mediation, by a mediator who has had both training and experience as a mediator of general employment and commercial matters. If the parties to this agreement cannot agree on a mediator, then the mediator will be selected by the AAA in accordance with the criteria described in this provision. Within 30 days after the selection of the mediator, Employer and Employee and their respective attorneys will meet with the mediator for one mediation session of at least four hours. If the claim or dispute cannot be settled during such mediation session or mutually agreed continuation of the session, either Employer or Employee may give the mediator and the other party to the claim or dispute written notice declaring the end of the mediation process. All discussions connected with this mediation provision will be confidential and treated as compromise and settlement discussions. Nothing disclosed in such discussions, which is not independently discoverable, may be used for any purpose in any later proceeding.

The resolution of disputes through the courts takes one on a long, expensive and uncertain journey. Even after a judgment is rendered in court, it can still be appealed. Mediation is not successful 100 percent of the time, but the success rate is very high. Even when not successful, mediation is an invaluable tool that gives a unique insight into your opponent’s case that you would never have had otherwise.

David Shulevitz Esq. is founder and senior mediator at Florida Mediations Now! and has been a member of the Florida Bar since 1980. He is former chairman of the NAUMD and is certified by the Florida Supreme Court as a Circuit Civil Court Mediator. Learn more about him and his work at www.floridamediationsnow.com.

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