AZ Business Mediation – Words That Can Save You Thousands

Litigation costs companies thousands to millions of dollars a year.  Businesses that are sued or initiate litigation end up spending excessive funds on attorneys, experts, employee time away from work, and monetary judgments (if the company loses).  Businesses also risk damaging their reputations with a public law suit.

One excellent way to avoid the risk and cost of litigation is to include a mediation provision in contracts with employees and other businesses.  A mediation clause sets forth that the parties will attend mediation prior to instigating any litigation.  Where an estimated 88 percent of all mediations end in a successful resolution of the dispute (which can be binding on the parties at the parties’ request), contracting to attend mediation is a very smart move.

Mediation is a process where parties, with the assistance of a mediator, reach their own agreements in a confidential and informal environment.  Mediation serves to protect privacy, repair relationships where appropriate and help parties reach what may be creative resolutions that courts cannot enter.  Further, mediation is risk free.  The participants choose the outcome.  In court, there is always the risk that a party may lose and be subject to an unfavorable order.

Many businesses include arbitration provisions in their contracts.  There are good reasons to try mediation even before arbitration.  Arbitration is like a mini-trial, and it can still be time consuming and expensive.  The parties pay for the arbitrator’s time.  Where there is an arbitration panel, the parties pay for multiple arbitrators’ time.  Witnesses and documentary evidence are still used.  At the end of the process, there is generally a winner and a loser, and relationships are forever damaged.  If mediation is unsuccessful, many mediators can also serve as the arbitrator to issue a decision.

The following is a sample mediation provision to include in a contract:

Party X and Party Y agree to mediate any dispute or claim arising out of or relating to this Contract.  All mediation costs shall be paid equally by the parties.  In the event that mediation does not resolve all disputes or claims, the unresolved disputes or claims shall be submitted for arbitration.

Alona M. Gottfried is a mediator and attorney in Arizona.  If you have questions about mediation, she can be reached at: 480-998-1500 or alona(at)sglawaz.com.  This is a general interest article only and is not intended to be legal advice.  See a legal professional before making legal decisions.

Simmons & Gottfried, PLLC
8160 E. Butherus Dr., Suite #7
Scottsdale, AZ 85260

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