A short primer for in-house lawyers engaged in mediation

Understanding the importance of preparation, contractual obligations and the principles of an effective settlement are some of the key elements for a successful mediation.

For in-house counsel, mediation is an attractive additional dispute resolution method as it allows for flexibility, efficiency and enhanced confidentiality. In-house lawyers engaged in the mediation process must adequately prepare in order to improve the prospects of success, reduce any potential delays and ensure that the chosen mediator and venue are appropriate for the dispute at hand.

The preparation of a well-drafted agreement to mediate is a key starting point. Many agreements of this kind will consist of some standard form content rather than more personalised and specific clauses.

It is important for in-house lawyers to adequately cover the scope and issues to be mediated within the agreement. Issues such as costs and the parties who have the authority to settle the dispute should also be set out within this document.

In-house lawyers must consider carefully the governing law and jurisdiction of the mediation. If a jurisdiction other than the domestic legal system is selected then in-house counsel must conduct adequate research to ensure the jurisdiction in question has the necessary safeguards.

A preliminary form of risk assessment should be undertaken. The object of this exercise is to reveal the strengths and weaknesses of both parties and the interests that are fundamental to the dispute. This process of analysis should also include thinking about the offers and counter offers that are likely to be made during the dispute resolution process including any non-financial elements.

If an agreement is reached at the end of the mediation, the parties should record the terms of the settlement agreement at the time. In house counsel can facilitate achieving real finality by preparing a short-form deed to bring to the mediation. In-house counsel should also consider whether they need to obtain advice from external experts before, or as a contingent term of settlement, in order to clarify any possible tax or business implications of the proposed compromise. Any agreement must have sufficient specificity as well as being realistic and achievable for the parties at hand.

Finally, a mediation is not a failure if the parties do not reach settlement at its conclusion. The process itself has the capacity to provide a valuable opportunity for the parties to engage with and understand the dispute and interests at hand which may lead to an agreement to settle further down the track.

Dominique Hogan-Doran

10 April 2015

Liability limited pursuant to a scheme approved under professional standards legislation (NSW).