Mediation Services
Dispute Resolution
Danny Gelb Mediation Services
6 Tautari Street, Orakei, Auckland
Ph 0800 HELP ME (0800 4357 63)

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Cost Efficiency of Mediation

 

Why is a successful mediation cost efficient?

There are a number of reasons. The time, in which a conclusion of a dispute or conflict is reached, is far quicker. The likelihood of a party appealing or taking further action after a mediation settlement has been agreed is highly remote. You never have to pay for the privilege of going to court to appear in front of a Judge. The time lawyers spend on your matter is highly reduced. Research and investigative work done in preparing for a mediation, is far less intensive than if you have to go to trial. Here, at mediate.co.nz, our fees for mediation services vary depending on your situation. It is best to contact us so we can discuss your situation to see where it fits into our scale of fees. We set aside a certain amount of time each month for community “pro bono” work too.

 

Time involved with mediation.

The age old saying of “time is money” rings very true. Once a decision is made to mediate a matter, the process can be very quick. A mediator could be booked for a date as quickly as within a week, and it should not take any longer than a month. This is much faster than how long it takes to get in front of a Judge and most civil cases involve a number of appearances before a Judge, prior to a decision being awarded. In comparison, most successful mediations happen within a one day mediation.

 

Taking Further Action is less likely with mediation

A risk of any litigation is that the other party may appeal the decision. This, again, can further fritter away any award given by the Judge by involving more lawyers’ time and additional court costs. In a successful mediation, both parties are in agreement with the outcome of the dispute or conflict so, in theory, there is nothing to appeal or challenge. The matter is put to bed and the parties can get on with more productive aspects of their lives.

 

Going to court is an alternative if mediation fails

What is your “Best Alternative To a Negotiated Agreement” (BATNA)? That is, if you can’t negotiate a settlement in mediation with the other party, what is your fallback position? Usually, it is either to do nothing or to head off to court.

 

How much does it cost to go to court? Of course, it depends on the complexity of the matter at hand, and who or whom is representing you. Figures bounced around the public arena range from $20,000 to $50,000. Yes, but if you win, don’t you get covered for any costs? Well, first of all you have to win. Normally the stronger you think your case is, the stronger the other party thinks their case is (otherwise you would not be there in the first place). There is no certainty in going to court. Some lawyers state that they think you have a very good case and the other side does not have a show. Ask that lawyer then, to give you a guarantee to that effect. If you win 100% of what you are after (very rare) and get awarded costs as per a court schedule, then you will be doing very well to get somewhere near 50% of your actual costs back.

 

Say your dispute equates to a value of $35,000. Best case scenario is, you spend $20,000 in legal and other fees and 12 to 18 months of your life trying to get it (no one’s time is worth nothing so let’s call it $5,000 worth) and you get awarded your full amount plus $10,000 costs. So, that is $35,000 minus $20,000 minus $5,000 plus $10,000 which results in you being $15,000 better off. However, that depends on whether the losing party is still around to pay, and has not gone into liquidation or the like, during the lengthy time it took to get this result. The worst case scenario is, you spend $20,000 on legal and other fees, $5,000 on your own time, and you have the Judge decide against and have you pay the other side $10,000 of their costs. So, that is $0 minus $20,000 minus $5,000 minus $10,000 which equates to a net cost of $35,000 worse off than before you instigated the litigation process. Added to this is the emotional toll you will suffer having sustained such a loss for no gain.

 

The Disputes Tribunal has had its limit increased to $15,000 recently. For the above scenario or any figure less, forget the District Court and go straight to the Disputes Tribunal. That is unless you wish to attempt to preserve the relationship between you and the disputing party or you believe that, in the right controlled environment, you may do better than the $15,000 limit of the Disputes Tribunal, in mediation.

 

Let's now say your dispute equates to a value of $100,000. Best case scenario is, you spend $30,000 on legal and other fees and 12 to 18 months of your life trying to get it (let’s, again, call this $5,000 worth) and you get awarded your full amount plus $12,000 costs. So,that is $100,000 minus $30,000 minus $5,000 plus $12,000 which results in you being $77,000 better off. Once again, that is only if the losing party is still around to pay, and has not gone into liquidation or the like, during the lengthy time it took to get this result. The worst case scenario is, you spend $30,000 on legal and other fees, $5,000 on your own time, you have the Judge decide against you and have you pay other side $12,000 of their costs. So, that is $0 minus $30,000 minus $5,000 minus $12,000 which equates to a net cost of $47,000 worse off than before you instigated the litigation process. Added to this, of course, is the emotional toll you will suffer having sustained such a loss for no gain.

 

In mediation, the mediator could get both parties to look at this $100,000 dispute pragmatically. The total legal bill for both sides, should it not settle at mediation and go to court, will be around $60,000. Now, rather than burning this amount in legal and other fees, we apply it to the dispute at hand. Our $100,000 dispute is now down to a $40,000 dispute. We are already over half way there. Now the mediator can address the remaining $40,000. This $40,000 becomes the problem the parties need to work together to resolve. The mediator shifts the focus of the parties away from each other to what other ideas can be generated to addresses each side's issues in order to meet their long term interests. It is incredible what results can come from this.

 

Lawyer's role in mediation

Lawyers are a very important part of our society. It is no easy path to become a lawyer. The barriers to entry are quite high. Accordingly, their fees reflect this and you generally get what you pay for. If you go to court they are a must, as the saying “a man who represents himself has a fool for a client” is so true. Lawyers have an important role in mediation. They are there to advise their client and, in conjunction with the other party’s lawyers, to write up the settlement agreement at the conclusion of the successful mediation. However, far less time will be spent, overall, by your legal representatives in getting to a successful mediation compared to running a full trail via the courts.