By Kathleen Gregus

As discussed by Phoebe Goldig in a previous Justice Innovation Blog post, mediation can be a very effective alternative to courtroom litigation. By way of summary, mediation operates as a process in which individuals or groups in both personal and professional capacities may resolve disputes outside of formal court litigation. In mediation, a mediator acting as a neutral third party assists disputing parties come to a workable solution constructed by them. Critically, settlements or decisions are not imposed on the parties by a mediator. Rather, the role of a mediator is to facilitate communication and negotiation, enabling parties to understand each other’s interests and goals. Resolution through mediation, therefore, is grounded in mutual agreement and understanding.

Benefits of mediation often cited include the potential for saved litigation costs, faster resolution of an issue, and confidentiality. Critically, depending on the nature of the dispute and the context from which it arose, one of the most significant benefits of mediation as an alternative form of dispute resolution is that it allows flexibility with regard to the design of the process. This flexibility enables a significant degree of customization to facilitate effective dispute resolution in accordance with industry-specific demands and issues.

Consider for example a dispute arising out of the construction context involving a claim for damages under $25,000 by a homeowner against a contractor whose work was seriously defective. A dispute of this nature would proceed through Small Claims Court if the parties sought resolution through formal litigation in accordance with the Rules of the Small Claims Court. Likely, this dispute in the context of Small Claims Court would be heard by a Judge with little to no knowledge of the nature of the work completed by the contractor, the applicable practical industry standards, or the particular nature of relevant contracts involved. In this type of situation, a judge would likely have to rely on evidence provided by experts related to the nature of the defects at issue, standards of work completed, the extent of the harm caused by the defective or incomplete work, and pragmatic solutions common in the specific industry context. In short, before a decision could be rendered by a judge in this kind of situation, a significant degree of time and resources would inevitably have to be spent in order to ensure they obtain an adequate level of understanding of industry standards and the nature of the defects involved.

Reflecting on this type of scenario demonstrates how enabling parties to structure the dispute resolution process in the context of mediation can in turn lead to the beneficial outcomes alluded to above including time and cost savings. Parties participating in mediation have the option to choose a neutral third-party mediator with specific industry knowledge and eliminate the need to produce and rely on highly expensive expert evidence. For example, parties may choose a mediator with extensive experience practicing construction law, and a superior ability to understand project details, materials used, defects present in completed work, payment schedules and delays. Selecting mediators with particular expertise is beneficial not just in a construction or trades context but in other industry-specific situations dealing for example with labour unions, insurance companies, environmental regulation or advocacy groups, or public-private partnerships, negotiations and disputes.

Further, there is no certainty with regard to the decision a court may impose on parties who have engaged in a formal litigation process. In situations where disputes are influenced significantly by the nuances of a particular industry, there is a risk even after substantial expert evidence is provided that a solution imposed by a court may fail to align with industry norms or may be unsuccessful inadequately addressing the parties’ issue. Selecting a mediator with particular industry knowledge and experience can dramatically increase the efficiency of dispute resolution, allowing the parties to come to a mutually advantageous solution capable of enabling parties to reach their personal and business goals.

Finally, selecting a mediator with industry-specific knowledge may be extremely valuable as they may possess a far superior understanding of the nuances of the relationships involved. Consider again the construction dispute example alluded to above and the unique nature of the relationship between the homeowner and contractor. It is likely that in a situation like the one discussed above, the dispute between the parties will have arisen after the project was ‘completed’. It is likely therefore that an owner would have already hired another contractor to redo the defective work at issue by the time parties initiate dispute resolution. In this case, a homeowner may choose to proceed directly to litigation, despite the potentially higher legal costs and delay, because their singular goal is to recover and enforce the payment of damages. However, if a dispute arises during the completion of a project rather than upon completion, parties may place a significantly higher weight on ensuring that pursuing the resolution of their dispute does not result in the complete breakdown of their relationship.

In this context, mediation may be more advantageous because it may allow the parties to maintain a good relationship, resolve a dispute collaboratively, and proceed with the completion of a project. Concerns related to the preservation of parties’ relationship may be relevant in a similar way in for example employment or internal business contexts and may be a serious reason why individuals choose to pursue dispute resolution outside the adversarial court process. Again, selecting a mediator who is familiar with the specific nature of the relationship involved in the dispute, and the industries they operate within can be extremely valuable in ensuring the relationships are maintained and that parties are able to achieve their goals efficiently and comprehensively.

Thus, it is undeniable that the flexibility afforded to parties engaging in mediation to design the process and select a mediator with particular industry expertise is a uniquely valuable feature not possible in the context of courtroom litigation. Given that parties are not precluded from pursuing further litigation if mediation is not successful, there is little reason not to try mediation first.