The one thing you need to know about early mediation is that it saves boat loads of money!

In the last several years as part of my legal practice, I have seen a number of fee petitions submitted to the arbitrator or judge relating to business and employment disputes, including FINRA arbitration. The fee petitions are submitted on behalf of the prevailing party seeking an award of attorney fees and costs. Those fee petitions have ranged from $175,000-$400,000. And that is only for one party to the litigation.

Many people ask how litigation costs could be that expensive. Many attorneys in this town have an hourly rates that range between $250-$750 per hour. Now, compare that hourly rate to the amount of time it takes to resolve a dispute through initial pleadings, discovery, motions, and then arbitration/trial. You can imagine how litigation would take an attorney at least 300 hours to resolve the dispute. After all, my recent siding project took six men working 10 hours per day over one week to complete that work (about 420 labor hours). With those hourly rates, it is easy to see how the cost of litigation will reach hundreds of thousands of dollars per side. Sometimes there is a tendency to believe that the parties need to participate in discovery before entering into mediation.

I have found over the years that many commercial disputes involve a certain amount of documentation that each party already has in their possession that is necessary for understanding the various arguments. It’s not necessary to spend money on the attorneys in depositions before everyone really understands the positions. For example, in FINRA disputes, the customer new account form and monthly statements are generally the core of the dispute. In other commercial matters, the written contract and related documents will give the parties a good idea about their dispute. It is not necessary to spend tens of thousands of dollars conducting discovery through attorneys in order to be ready for dispute resolution.

In my mediation work recently, I have seen parties use early mediation effectively. The attorneys that selected early mediation save their clients substantial amount of money. I make a point at the end of each mediation to remind these clients that their attorneys have served them better than they will ever realize having avoided protracted and expensive litigation. Forget the lawyer jokes about fees; these attorneys did well by using early mediation to save their client some significant costs.

The second thing you need to know about early mediation in business and employment disputes is that the parties will be much happier.