Commercial disputes: mediation or litigation?

Posted on May 25, 2017 by Jeremy Frost

Commercial disputes can cover a wide range of areas – within a company between shareholders or directors, with clients and suppliers over payments or contract terms, or insolvency related disputes. And the list goes on!

Mediation or liquidation?

Mediation is an effective and flexible way of resolving disputes without the need to go to court. It involves an independent third party - a mediator - who helps both sides come to an agreement.

The alternative is litigation, either by raising a claim yourself or by instructing a solicitor to raise the claim on your behalf. This action is designed to end in court, a process which is often stressful, confrontational and expensive. It also tends to result in a win/lose outcome.

Win-win

Mediation, on the other hand, is more about finding an agreement. It will almost certainly involve a degree of compromise by both parties, but, unlike court action, if the parties can reach an agreement then both should get something out of it, creating a far higher degree of certainty of resolution than with litigation.

Faster route to resolution

Another benefit of mediation is that it is a fast process. The mediation will normally take place in a day and can be arranged as soon as the parties decide to go down this route – no waiting for a court date!

The mediator is completely neutral and will focus on the issues at hand, understanding each party’s position, sharing that understanding with the other party, taking away the emotion and moving them towards an agreement. This all normally happens within the one day mediation session.

Cost effective

It is also far more cost-effective than litigation, as there is just a fee for the mediation which will be agreed in advance by the mediator. Whilst all mediators will have their own fee structure, the average industry starting point is around £2,000, assuming the agreement can be reached within a day.

There is, of course, no guarantee that the parties will reach an agreement during mediation, in which case the matter may still end up in court. The judge will check to see whether parties have attempted to reach a settlement through mediation or another form of dispute resolution, before allowing the case to go to trial. The fact that mediation has already been tried should mean there are no further delays in setting a date.

How to choose a mediator

Mediation requires skill, legal and commercial expertise and an understanding of each party’s state of mind and motivation. You should always select a mediator who is trained and qualified. CEDR is the main accrediting body for mediators. 

In summary, (read more here) choose a mediator who:

  • Has first-hand experience and understanding of the topics in dispute  
  • Is pragmatic and looks at the whole issue such as the ramifications on other matters
  • Creates trust – the mediator is neutral and impartial, but it is still good to find someone that you feel you can trust within the confines of the mediation process

Jeremy Frost CEDR

Jeremy Frost is a CEDR-certified mediator, and a practising insolvency practitioner with over twenty years’ experience. He brings together all these skills to find resolution, particularly in contentious cases, working throughout the UK. Jeremy specialises in business-related mediation, including:

  • Commercial
  • Debt-related
  • Organisational and internal disputes
  • Insolvency-related matters

With over 20 years' experience in insolvency, Jeremy has seen it all and understands the challenges and issues of business owners and individuals alike and looks to mediate and find solutions to problems. He works with all sizes and types of companies, from smaller owner-managed businesses to large multi-franchise operations and professional practices.

He also has exceptional legal, tax and financial knowledge, working on a daily basis with solicitors, HMRC and banks, which he brings to bear in mediation.

In his role as a licensed insolvency practitioner, Jeremy is the managing director of Frost Group, a Fellow of R3 and a court appointed receiver. His starting point is always to see whether the business can be saved.

To find out more

You can contact Jeremy on 0845 260 0101 or by email.