What Happens at a Commercial, Business or Real Estate Mediation?

Disputes may be mediated at any stage and at any time.  Sometimes, parties to a dispute choose mediation long before the fight is escalated to litigation.  There is also court-annexed mediation, where disputes that are already the subject of a law suit are referred to a mediator.  Charles Newman is an Alternative Dispute Resolution specialist in more than one court, but one way to get a sense of how business mediation works is to learn about ADR in New York State Supreme Court’s Commercial Division in Manhattan.  (Only high value business cases are heard in the Commercial Division.)

Commercial Division Judges may assign a case to mediation, or the lawyers may request mediation.  The Court’s staff assigns a mediator.  Within a day or two, Mr. Newman has an introductory conference call with the lawyers to talk about expectations and procedure.  A date is chosen for the first mediation session, usually just two or three weeks later at the lawyers’ and clients’ convenience.  The lawyers separately prepare a simple memo setting forth the nature of the claims, the best way they see to resolving the case, and the obstacles to settlement.  Mr. Newman encourages the lawyers to draft the memo with their clients.  He asks that the clients and lawyers use that time to think thoroughly about what the client really would need to feel successful in the litigation, and to systematically analyze (sometimes for the first time) the true strengths and weaknesses of the other side’s case — and of their own.  After those memos, Mr. Newman normally has a one-on-one telephone call with each lawyer to probe more deeply into specifics and get candid insights about how mediation can help that lawyer and his client.

The mediation session is normally held in a law office conference room.  Mr. Newman’s strong preference is that the clients take lead roles in the conversations.  The lawyers are very active, but in a way that supports the client’s own expression of what he or she finds important and wants to stress.  The lawyers are as important in mediation as they are in the rest of the case, but they are supporting their client’s business discussion, not simply advocating an aggressive legalistic position.  The lawyer in mediation is frequently more a sounding board than a mouthpiece.

Do the parties and lawyers all meet together (in “joint session”), or does the mediator shuttle between the parties in separate rooms (in “caucuses”)?  Mr. Newman’s preference in Commercial Division cases is to meet jointly as much as possible, for reasons he’ll be happy to explain.  Sometimes, however, parties feel more comfortable speaking privately with the mediator, especially at first.  Mr. Newman follows the parties’ lead on joint versus caucus discussions.

When there is a Commercial Division mediation, the parties are required to participate for a minimum of four hours.  (The process is still voluntary, though, because they don’t have to agree to anything.)  Sometimes cases resolve in less than four hours.  Sometimes sessions can go on much longer, and sometimes additional sessions are scheduled.  The timing of each case is different, but every case has this in common: after the four hours, no one is still in mediation unless he or she finds it useful and wishes to continue.