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Mediation Is Good For Your Business – Here’s Why

I am always surprised when I read about cases where the dispute seems fairly straightforward, such as an amount of money owing to the plaintiff, but parties didn’t go for mediation, because Singaporean lawyers now have a duty to advise their clients that they should attempt other dispute resolution methods, such as mediation. If a client unreasonably refuses to try mediation, he or she could end up having to compensate the other party for legal costs even if the client wins in the end.

Most of the time, the business owners I have met will tell me that they prefer to “settle” any disputes or disagreements which they encounter, given that starting and maintaining legal proceedings tend to be expensive. Unless there is a large amount of money at stake, or that they feel that they have to maintain a reputation for being principled, these business owners prefer to resolve the matter out of court so that they can carry on with their actual business.

The same business owners also tell me that they try to reach settlement through informal discussions with the other party, before going to trial as a last resort. I always take the opportunity to tell them more about mediation, because I believe that it is both a cost-effective and principled manner (provided it is done in a certain way, which I will describe in future articles) in ending a dispute early, without sacrificing the commercial interests of all parties to the disputes.

Of course, I don’t want to scare people into going into mediation, because it has so many advantages as compared to going to trial. But before I start singing the praises of mediation, I want to take some time to define what mediation is.

Mediation usually means a confidential meeting between disputing parties with the assistance of a neutral third party, and this third party (who is also known as the mediator) will not be involved in later court proceedings. The mediator’s job is to facilitate the meeting and help to craft the settlement agreement if parties can broadly agree on the terms. Parties can jointly choose a mediator, or let an administrative organisation like Singapore Mediation Centre choose one for them. Whatever is said in mediation cannot be disclosed to the court, so that everyone can speak freely in trying to arrive at a solution which benefits all sides.

So why am I happy to recommend mediation to my clients?

  1. You pay much less than you would for bringing the suit to trial. A conservative estimate would be a difference by a factor of at least 5. Of course, this depends on the complexity of your case and the lawyers you chose to hire.
  2. You spend much less time and effort on the dispute on the whole. This also means less stress of having to create a better case for trial by sorting out your documents and finding reliable witnesses, and also waiting to find out whether the judge will rule in your favour. It also frees up time and mental space for you to do what actually matters to you – including running and expanding your business.
  3. You have the opportunity to create an agreement that addresses other issues and concerns, and to create an outcome which the court may not have the power to order. It is more than just compromise or meeting each other in the middle. For example, the court can’t order someone to apologise to you for making defamatory remarks, but mediation gives you the opportunity to raise such concerns and find a way for the other party to recognise that your feelings have been hurt.

And of course, the next thing my clients ask me is “what about the cost?”

Usually, parties will share the cost of a private mediation session, or pay a small fixed fee if the mediation is conducted in the court (about $250.00 at the time of this article). The cost includes the mediator’s fees, as well as rental fees for the meeting room. For private mediation, the cost usually does not exceed $10,000.00 for a single-day session. (Do note that lawyers charge their fees separately for preparation and attendance.)

“That sounds expensive for a one-day event!” you might say. But consider the alternative of going to trial:

  1. You have to spend time with your lawyer to help him or her understand the background facts, and dig up the necessary documents, and gather your witnesses. This is going to be an extended effort because your lawyer very likely needs more information from you as your case progresses. If you are the suing party (also known as the plaintiff), then you have to prepare everything first before your claim is filed. When your claim is filed, your lawyer may have to answer to the defence and a possible counterclaim. This process can take at least 3 months, depending on the complexity of your case.
  2. It is then time to exchange relevant documents. If one party wants more documents to be disclosed, then the lawyers may have to argue for and against such disclosure in court. This discovery process can take another 3 months or more, and the cost highly depends on how hotly contested the relevance of the documents are.
  3. Your witnesses then need to submit written and sworn statements (unlike television shows, the Singaporean court system is all about the paperwork). Another 2 months or so passes by while you pay your lawyer again.
  4. Finally it is time to come to trial! But let the judge check his calendar first, since other suits have come before yours and queuing up is a necessity. If you’re lucky, you may get your trial within 6 months. And the cost of the trial is going to be directly proportionate to the number of days it will take.

So if you are lucky enough to have efficient lawyers who know their work and can give you upfront fixed fees, you might finally get to trial about 18 months later, after paying anywhere from the mid 5-digits to the low 6-digits over time (instead of receiving a huge invoice after all that work is done). And all for an equal probability of winning or losing! Good thing we all deal well with uncertainty and suspense well enough to wait for the outcome of the trial more than a year later (to be clear, I’m being sarcastic here).

Therefore we encourage clients to seriously consider mediation and to spend substantial time to prepare to negotiate at mediation, because we think it better serves the economic interests of a business (as well as its other stakeholders, such as its managers and employees) compared to going for trial in the majority of cases.

However, I often see that most people will not immediately leap at the opportunity to go to mediation with someone which they are at loggerheads with. Stay tuned for our next article, where we discuss methods of bringing people into the mediation process.

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