What to Expect During Mediation

Real Estate Law Litigation by Simon Offord, Esq.

A few recent articles have discussed new laws in mediation and situations which oftentimes result in mediation, however we have not discussed what mediation is and the practical implications of it.  Our firm deals with mediation on an extremely regular basis, and clients oftentimes ask what mediation is, who “wins” in mediation, how much does mediation cost, and what they can expect.  This article should answer many of those questions.

One of the more significant misconceptions we encounter about mediation is the thought that someone will “win or lose.”  This runs contrary to the purpose of mediation.  Real estate mediation is intended to be an opportunity for the parties to resolve their dispute(s), on agreed-upon terms.  The mediator does not decide a winner and a loser, but instead, the parties control their own destiny.  The only way a case ends at mediation is if the parties explicitly agree to some sort of settlement.  So, theoretically, if you get a settlement you are happy with, you “win”!  If the parties cannot agree on anything, there is not necessarily a loser, as you will essentially be in the same place you were before the mediation (perhaps with a little less money in your wallet) and likely have a better sense of the other side’s position and the facts and law they believe support such position.

Another common question we get is about the cost of mediation.  This can be very difficult to predict, as there are many factors, including whether it will be a half or full day mediation (or longer), whether the other side will agree to mediation without much arm-twisting, whether the parties to engage in any “discovery” (essentially fact-finding) before the mediation, and how complex the matter is.  That said, one can typically expect to spend at least $5,000.00 for mediation. This includes demanding mediation from the other side, agreeing to a mediator, preparing a mediation brief (which explains your position and the law behind it), having an attorney attend the mediation with you, and the mediator’s fees and costs.  A longer mediation or pre-mediation discovery can certainly double that number.

As to the mediation session itself, it is a completely informal process and there are no set standard practices or rules.  Instead, the mediator can conduct the mediation in whatever fashion he or she believes will get the case settled.

A common real estate law mediation begins with the parties being brought into one room, at which time the mediator will introduce him or herself and cover the ground rules for the session.  The mediator may invite opening comments from each attorney, who may choose to add or state anything they would like or simply confirm that their position is laid out in their brief and they have nothing to add.  The parties can even be asked or volunteer to speak, although this may be discouraged by the mediator depending on the circumstances.  After this opening session, the parties typically are sent back to their own rooms with their counsel.  The mediator will then spend time with each side, getting to understand their position and demands or offers, and then working to bring the parties to a settlement.  How the mediator will do so is up to them, and can include keeping the parties separate and bringing offers and counters to each other, or bringing the parties together to try and bridge the gap.  All that said, as it is an informal setting, the parties have freedom to refuse to do anything and be in control.

If settlement terms are ultimately agreed upon, the parties will then enter into a signed agreement documenting the terms of the settlement.  Ideally, this is a complete and thorough document intending to be a final agreement, but on occasion it is a more skeletal agreement with the final language to be resolved at a later time (ie if there are complex issues or the need for third party involvement).  It is best to document the settlement then and there and get all required signatures before anyone goes home, as not doing so can result in people changing their minds.  If there is no signed agreement documenting the terms, there is no enforceable agreement and thus a chance the settlement breaks down.

If the parties are unable to reach a settlement, the session will end and the parties will go their separate ways.  This does not necessarily mean the case will not settle, as the parties can continue to negotiate post-mediation.  It is not uncommon for the mediator to remain involved and assist in getting to a final agreement.

The last concern we often hear from clients is related to their hesitance to “say the wrong thing” or make an offer that can be used against them later on.  However, this is almost impossible to do and thus is one of the most significant aspects of mediation.  Any settlement offer made at mediation cannot be used against you at a later time.  The purpose of mediation is to settle cases.  If parties were afraid that what they offered or said at mediation could later be used against them, they would be much more reluctant to make any offers.  Thus, the law protects against this, and ensures that any offers made in real estate law mediation cannot be raised by the other party in support of their case.  Moreover, if a party says something to the mediator that they do not want communicated to the other side, they have a right to demand that of the mediator.  Thus, the session is intended to encourage participants to be open with the parties controlling what information is released and what offers are to be made, without fear of repercussions for doing so (note, if some factual issues comes out at mediation, although the other side could not technically say “at mediation didn’t you say X, Y and Z,” the other side could nonetheless discover this information from alternate sources and use it against you.  The same logic does not, however, apply to settlement offers).

Of course, all one can expect from mediation cannot be summarized in a short blog, however the above information should give most readers a better understanding of the process and logistics.

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