A step-by-step guide
to civil mediation
Civil and legal disputes are common and can cover many areas, including
- Financial, disputed wills and debt
- Property, landlord/tenant and disputes with neighbours
- Personal injury, medical accidents
- Intellectual property and copyright
Mediation is a well-recognised route to solving workplace disputes. The mediator is an independent and neutral person who speaks to the people involved in confidence and helps them find a way forward that works for them.
To illustrate the process we present a case-report, based on a true case, which demonstrates how the process works. Names and some details have been altered.
The people in dispute
Vicky and Clive
Vicky and Clive established Victoria James Creatives (VJC) twenty years ago. The company, creates logos and branding in the food industry and has been very successful. They each own 50% of the company.
In the last two years Clive has been increasingly absent from work, and six months ago he told Vicky that he wanted to quit the business to take early retirement at the age of 50. Vicky wanted to continue without him, and was willing in principle to buy his share of the business, but they could not agree on a valuation or terms for the sale.
Vicky suspected that Clive was now retiring but was working for another company, and the atmosphere at work was increasingly tetchy. Both of them had approached solicitors and had spreadsheets with figures supporting their (different) positions.
Clive’s solicitors thought that mediation might offer a quick route to solving the matter, and Vicky agreed to try.
Choosing a mediator
Clive contacted several mediators before he found one that he was happy with. He was not overly-concerned with their fees or their location but he wanted someone he clicked with and who understood his case. He recommended two possible mediators to Vicky and she made the final selection.
Preparation for the mediation
Clive had valued the company at almost twice the figure Vicky had proposed. He insisted that he was paid this amount, over a three year period. If he was not paid this amount he said he would apply to the court to have the business wound up. Under the terms of the original partnership agreement then this was an option. Vicky had placed a much lower value on the company and took the view that without Clive’s expertise and business sense then the company would struggle to survive.
Arranging the venue
Clive and Vicky both agreed that it would be inappropriate to hold the mediation at their office. Vicky’s solicitors offered to make some rooms at their own offices available, provided that the costs of the rooms were shared. Clive was reluctant to agree to this at first because he felt he would be on ‘away territory’, but eventually he agreed.
A preliminary phone call
Both parties sent their legal bundles to the mediator, who then had a thirty minute phone call with each of them. During this phone call they explained to each of them how the process of mediation works. Clive and Vicky found it extremely reassuring to speak to them. The mediator emphasised that if the mediation were unsuccessful then it could be abandoned, that they still had the option of going to court, and that they would both remain in control at all times. The mediator also had a brief phone call with each of the solicitors.
The mediator felt that the process would take a full day.
Signing the mediation agreement
Vicky and Clive both signed a Mediation Agreement – a binding legal document – before the day of the mediation. There were several key points in the agreement.
- The mediation is confidential.
- Anything that is said in the mediation is ‘without prejudice’. This means that any offers or preconditions that either of them makes during the course of the mediation is only valid if the mediation is successful. If the mediation does not end in agreement then any figures or offers that had been mentioned during the day would no longer be valid or relevant.
- The mediator was independent and was unable to give legal, financial or contractual advice to either party.
Understanding the implications of the mediation agreement is crucial. You can download a sample mediation agreement here.
Vicky and Clive’s solicitors would attend the mediation. Each of them also signed a confidentiality declaration.
The day of the mediation
Vicky and Clive, together with their solicitors, attended at the start of the day and met with the mediator. It was the first time that the two solicitors had met one another.
Each of them presented their figures, summarised their positions and put forward their plans.
After an hour together, the mediator decided it was time to hold separate meetings with the parties. He spent 45 minutes alone with Vicky and her solicitor, then 45 minutes with Clive and his. Surprisingly, it seemed as though they were moving together on a figure. Both seemed willing to compromise, and they quickly moved closer together. The mediator thought he would be able to conclude the matter by lunchtime.
But when the two parties were a hair’s-breadth from reaching a settlement, Clive threw a huge spanner into the works. He told the mediator that he was, indeed, working in a new company and that he had approached clients they had been pitching for to work with him in the new agency. He had not told this to Vicky yet (though she had her suspicions).
Clive asked the mediator to give Vicky this information. She was furious when she heard it, and claimed that the figures she had calculated were based on the assumption that the company would have won those clients.
Lunch was cold and awkward.
An agreement was reached
During the afternoon the mediator shuttled between the two partners and eventually an agreement was reached. Neither of the two were completely happy, but they both felt it was the best that they could get under the circumstances.
They agreed a way to value the company. The situation with the new clients was not fully resolved. Vicky felt that with her creative talents she could win them over to the company without Clive. Clive thought that his business skills would convince them to sign with him. In the end they agreed that each of them would pitch separately and that they would let the clients decide.
The two solicitors drafted a Mediation Agreement which covered all these points. Clive and Vicky shook hands.
The matter was solved by 6pm that evening.
Finding a custom solution
Both the parties knew that they would need to compromise. A lifetime of working together meant that they understood each other’s perspective and they knew the way their partner would react.
In the end, neither of them were completely happy with the outcome. But each of them was equally unhappy and, paradoxically, they knew the other partner was unhappy too. Mediation is rarely win-win (if it was then the parties would have solved it themselves).
Reaching a solution that both parties are equally comfortable with is the goal. The mediator was able to help both of them set their priorities so that each of them, in their own way, could move forward.
The alternative to mediation would have been winding up the business and an unpleasant time in court. Both of them would have lost; but they could have lost considerably more.