Cost-efficiency in Mediation

We like spending money on ourselves – to make pleasant gifts, travel to other countries, buy modern gadgets, taste delicious, unusual food. But are we ready to easily give someone everything earned through hard work when we face a conflict? To pay compensation to a dissatisfied employee, release money to a partner, sell part of business? Even having all money of the world, there is a good chance that we are not ready to do this. Will we fight and defend our rights? We will. But if we cannot avoid spending money for dispute resolution, we can at least save them.

◊   How much does it cost to resolve a conflict in court?

When filing a claim to a court, you should be ready for financial expenses. These include payment for legal advice and representation of your interests. Note that you will not only have to pay for the time spent by an attorney in court or at a meeting with you, but, for example, for examinations involving other professionals.

Moreover, the legal proceeding itself is not free of charge. In most cases you will have to pay judicial fees, which depend on the type of claim and the claimant. If a legal entity applies to court, it will have to pay 1.5% of material claims amount limited by a maximum of UAH 616,700. If the initial judgment is appealed, the fee rate will rise to 2.25% and may be up to UAH 925,050, if appealed further in court of cassation – up to 3% with a maximum of UAH 1,233,400). Non-property claims and claims from individual persons are charged smaller amounts.

Court judgment is binding. However, if another party does not execute it voluntarily, you will have to engage a judicial enforcement agent whose work costs 10% of the recovered amount.

In addition, you will need to pay to company employees involved in litigation support. Moreover, it is necessary to take into account cost of resources over time. For example, money that you have not received under a court judgment may eventually become devalued.

◊   Mediation as an alternative to the trial

Unlike the trial, the mediation procedure lasts from several days to several weeks. In this case, principle “time is money” works excellently for you. The less time is spent on dispute resolution, the more finance saving will be. 

If the parties to mediation desire, legal counsels and other experts may join the process. Their assistance is primarily aimed at finding a way to implement the solution, to which the parties have come. Time spent by legal counsels in mediation is less than that spent in court procedures. For the parties this may mean smaller legal fees and thus money saving.

By resorting to mediation, the parties may agree on a deadline to perform the decision and to discuss all the other details. For example, what will be the consequences if one of the parties fails to perform the decision or performs it untimely. 

If the dispute was first forwarded to the court, then the consensus, reached later in the course of mediation, may form the basis of a settlement agreement, and the parties will get half of the judicial fee back.

Conclusions

1.   Mediation, unlike a trial, takes not more than a few weeks, which significantly affects money saving in dispute resolution.

2.   The mediation procedure does not require any judicial fees. Legal fees and company financial resources involved in the case are also reduced.

3.   Mediation allows reaching a settlement agreement in which the parties agree how it will performed.