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Risk Management Bulletin


By June 1, 2013No Comments

Ambrose Bierce’s Devil’s Dictionary defines “litigation” as “a machine that you go into as a pig and come out of as a sausage.” Although litigation is often distasteful, it’s a reality of doing business – and a source of risk that can range from bothersome to devastating. Mediation helps manage this risk by providing some control over the process and outcome of litigation through a voluntary procedure in which a neutral helps the disputing parties resolve their conflict. (Arbitration, in contrast, involves having a third party make a decision that is usually binding).

The mediation process begins with a joint session in which the parties present their positions. The mediator will then meet separately with each party to explore their arguments, learn their need, and help them come to a mutually acceptable agreement.

Mediators report that they settle 85% to 95% of disputes, often within a few hours or at most a day or two. The process works primarily because it places control where it should be – in the hands of the parties involved, bypassing the artificiality, expense, and delays of litigation.

Taking a commercial dispute to trial involves handing over an important business decision to a jury or a judge who might not understand the issues, probably don’t care about them, and certainly have no accountability for the decision. In mediation, the decision makers are the parties themselves.

Risk management in a litigation context involves assessing the risk and the cost of winning or losing. Mediation invariably reduces the exposure to risk and cost – and thus offers the opportunity to create a win-win situation for both parties.

What’s not to like?