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When Can Mediation Be Less and More Expensive Than Litigation?

Posted: Friday, 4 January 2019 @ 13:43

With respect to litigation costs the assertion by the mediation industry that mediation presents costs savings by comparison with full blown litigation costs is based on the assumption that the mediation will be successful.  

On the negative side,  mediation can be costly due to the following:  

Mediation is become more sophisticated in the hands of lawyer representatives. To get the most out of the mediation process, representatives should approach mediation in the same way as a preparation for trial such as with a pre-mediation conference. This can include preparation of a case summary. As a consequence the costs of the mediation can be high.  

The level of physical time of the mediation.  Even mediations which start early in the morning may not finish until the late in the evening.  

There will be hidden costs connected with the mediation for management such as time spent away from the office.   

As with arbitrations, the parties may be contributing to the cost of the venue and the mediator.  

There may be ancillary costs which could be payable to the mediation provider or the mediator such as costs of catering and photocopying.      

However, mediations can be cheaper than litigation and the flexibility of the process is why costs savings can be achieved:  

The speed of the process restricts the level of chargeable time.  

The absence of formal structure means that the parties are free to choose the procedure, including the level of formality.  

As the mediation is not a trial or a tribunal, evidence, disclosure and documents are substantially are reduced and can be removed.  

There are no costs associated with the delivery of a judgement or an appeal or a remedy hearing.

All these are variables which the client and the lawyer need to consider prior to agreeing to mediation. It is a risk. It is quite useful(if time and cost are not a factor) for the client and the lawyer to weigh these options up together prior to agreeing to mediation.