If you are in a disagreement with a supplier or customer, mediation is a valuable step toward resolution. An obvious advantage is that it avoids the extended time frame and high cost of a court case; even more, its goal is to solve the problem, unlike a court of law where the thrust is to determine which party is in the wrong. With mediation, there is a chance that the business owner can regain a reasonable relationship with the other party.

The mediator cannot force a decision; he or she can only encourage a resolution to be made between the opposing parties. If an agreement has been made at the end of a mediation session, the two parties can go ahead and sign a contract or take the decision to a lawyer for review. If an agreement is not reached, going to court remains an option. Most mediations do result in a settlement, however.

How does mediation work?

The mediator who meets with you and the other party will most likely have had training in resolving conflicts. The amount of training varies, which is why it is important to find a mediator you are comfortable with before you start the process.

Even though mediation is informal compared to a court proceeding, a process has been developed that should lead to an outcome that satisfies both parties. There are six stages to the process:

  • Stage 1: Mediator's opening statement, where the mediator makes introductions, explains the process and encourages everyone to be cooperative.
  • Stage 2: Disputants' opening statements, in which each party describes his or her concerns and the other party is not allowed to interrupt.
  • Stage 3: Joint discussion, in which the focus is on defining the issues that need to be resolved.
  • Stage 4: Private caucuses, the heart of the mediation. The mediator spends time with each party individually, sometimes alternating with the other, as aspects of the situation are reviewed and new solutions may emerge.
  • Stage 5: Joint negotiation, where the parties meet together for direct negotiation.
  • Stage 6: Closure, the end of the mediation. At this point, a written summary is created by the mediator. An agreement may or may not have been reached.

Can mediation be used to resolve any kind of disagreement?

Mediation only works when both parties agree to the process, and it has historically been used to resolve disputes that involve small business issues such as contracts, leases and employment.

It does not work well if one party wants to use legal precedents or is looking for a large payment for some kind of wrongdoing. Mediation is not designed for many types of criminal cases.

Why would I want to use mediation rather than go to court?

Besides the advantages of lower cost and quicker resolution, you are not bound by legal precedent or a judge's biases. Also, because mediation does not use the highly structured procedures that a court does, there is an opportunity to present all sides of the situation.

In mediation, you and the opposing party will work out a solution to your own dispute. Unless you freely agree, there will be no final resolution. And, although any kind of business dispute is likely to cause some personal tension, it is a more relaxed, friendlier process than a more formal legal situation.