Author: Olena Bilozor, mediator, partner
Mediators and Lawyers — Compete or Cooperate?
It is difficult to find a Ukrainian lawyer who has not yet heard of mediation, namely negotiations where the parties to a dispute attempt to reach an ami cable settlement of their dispute with the assistance of a neutral mediator. In the meantime, still few tried it. Ukrainian legalprofessionals tend to treat mediation as a service that competes against litigation. Nevertheless, in foreign jurisdictions where the mediation has found its place as a dispute resolution alternative, law firms and mediation agencies are the best partners.
The question arises — what benefit can mediators bring to lawyers to turn them from competing to partnering?
Mediators Can Take the Hard Job
If there is a dispute between a lawyer’s client and its business partner, lawyers are often asked to engage in negotiations. Such negotiations usually come down to a harsh battle of legal arguments. The reason for this lies in the lawyer’s role — to defend his/her client based on the client’s legal rights. Lawyers acknowledge that when they repre sent their client in negotiation, they are torn between the desire to achieve a reasonable solution and the risk to be seen by the client as a lawyer having little guts to defend the client’s position.
In mediation, the negotiations by the parties are managed by a mediator who is an expert in communications. The principal role of the mediator is to facilitate communication between the parties with the aim of helping them to achieve a voluntary resolution to their dispute. The mediator does not represent either of parties in the negotiations and has no commercial or other interest in the dispute.
It is proven that the presence of a mediator in dispute settlement gives the parties a number of advantages. Thus, the mediator helps the parties to:
— increase their level of trust, which adds up to a willingness to cooperate and exchange all necessary information to reach a resolution
— identify interests and explore options available for conflict resolution
— regulate involvement of the parties in the process and stimulate the search for solutions
— overcome the impasse caused by conflicting positions and leading to a failure in direct negotiations
— overcome a power imbalance to avoid agreeing to disadvantageous solution under pressure
— secure an exchange of sensitive information just as to advance the resolution of the dispute.
All the above mediator functions help to facilitate a settlement of the case and relieve the lawyer from the responsibility to handle the other party’s emotions and negotiating strategies.
Legal Argument vs Real Interests
It is not only enhanced communication that brings many cases to resolution in mediation. Another reason is that in mediation parties are not restricted by the subject of the dispute or any legal arguments. They can also raise other questions related to their deal or relationships. Such issues and solutions that are reached often go beyond the legal merits underlying the litigation case.
Unlike in mediation, when lawyers get a case, they must find a way to force the otherparty to stick to the initial arrangement. Moreover, potential solutions must be constructed on solid legal grounds. Otherwise, no winning judgement is possible. Unfortunately, the “legal” approach significantly narrows potential solutions. It goes without saying that the other party will resist such a resolution because, for various reasons, the arrangement stopped being attractive.
Within the mediation procedure the parties explore all positions and create a way to resolve issues based on mutual interests and economic benefits behind the initial positions. This opens the way for reliable decisions with a high rate of performance. By way of illustration, a survey carried out by CEDR (Centre for Effective Dispute Resolution, UK) suggests that the overall success rate of mediation is 89%; and the proportion of cases that achieve settlement on the day of mediation is 74%.
Lawyer’s Roles in Mediation
As noted above, mediators neither represent their clients nor provide them legal advice. In the meantime, solutions to a client’s problems demand legal knowledge to assess what is both practicable and beneficial for each party. This requires different attitude from advisors than in litigation or arbitration. The approaches that help in court, the defense of the client’s legal position and competition with the opponent, do not help much in mediation. In order to find a solution that satisfies both parties, the advisor needs to collaborate with the other side and the mediator.
In addition, the lawyer is the one who introduces the mediation to the client. In particular, at the preparatory stage, the advisor helps the client choose a method of dispute settlement that is adequate to the client’s interests and informs the client about the structure and features of the mediation process. Then the legal advisor assists in selection of a mediator by the client or, depending on his or her powers, chooses the mediator.
The success of mediation also depends on how carefully the client is prepared formediation. The counsel should explore the client’s interests and factual data of the case, help the client evaluate their alternatives and, most likely, scenarios. In the mediation process, the advisor helps to clarify legal issues in order to assess the feasibility of the options for resolving the conflict. Furthermore, after mediation, the lawyer prepares the necessary legal documents to implement the achieved resolution.
International and Multiparty Transactions at Stake
Many Ukrainian companies expand their business overseas. International transactions that accompany this process are usually of high interest to legal professionals. However, it is not rare that businesses involved in international trade face disputes with their foreign partners. To settle such disputes the parties usually turn to international arbitration. The arbitral award resulting from arbitration requires further recognition in a foreign jurisdiction and enforcement through the infrastructure available in a particular country. These processes can drag on for years and make arbitration an expensive and time-consuming process.
Thus, business needs to have mechanisms that help build successful economical networking and effectively overcome difficulties such as destructive and unresolved conflicts with foreign partners. In other countries mediation proved to be such a mechanism, enabling dispute resolution in a short period of time.
Following the occurrence of disputes, parties can find it difficult to negotiate due to cross-cultural differences. To eliminate such difficulties, the parties may enlist several mediators from the different countries where the companies are based.
Another type of dispute that can hardly be resolved in litigation are disputes in multi-party transactions. This is when various parties working on one business project are tied by a number of agreements, each having different parties. Litigation in such disputes can easily slow down a business project. Thus, mediation is the only alternative that enables solutions with every party to be efficiently negotiated.
Voluntary or Mandatory
Sometimes, lawyers propose litigation to resolve the dispute because litigation ends with a mandatory judgment that must be enforced.
In this context, mediation can also be used in Ukraine, even if the solutions reached go beyond the initial claims. The Commercial Procedural Code and Civil Procedural Code have since 2018 allowed parties to a claim to agree on a settlement agreement that can go beyond the claim and be made mandatory by a court.
With regard to international mediation, Ukraine recently signed the United Nations Convention on International Settlement Agreements Resulting from Mediation, in which it undertook to enforce international settlement agreements resulting from mediation. Following adoption of the necessary national legislation, the convention will come into full force for Ukraine.
Mediation is a more flexible process than litigation or arbitration. In contrast to arbitration or litigation, where the parties are subject to various procedural regulations, mediation does not depend on any mandatory procedural requirements; hence the parties can set up the mediation as soon as a situation requires and hold it as long as they see a room to settle.
If for any reason the case wasn’t settled via mediation, the parties are always free to turn to any other ways of dispute resolution practices, such as litigation or arbitration.
Since Ukrainian law firms care about their reputation, they fight to retain their image as innovative and solution-oriented advisors.
Indeed, clients address lawyers to get only the result, namely the solution of their problem in the quickest and cheapest way. Of course, if the client’s best alternative is to litigate, then the client may be willing to pay extra fees to get a court judgement. In all other cases, from a client’s perspective, the best lawyer is a lawyer who’s able to propose the most efficient solution, one that takes the least time and effort.
The lawyer who engages a mediator to resolve a case shows respect to the client’s time and resources. In the UK and the US, for example, clients rarely get in touch with mediators. It is the lawyer’s job to choose a mediator and arrange the process.
To conclude, mediation can work well for the benefit of the client-attorney relationship and help clients to get more effective solutions for their disputes.