The Reasons Why Mediation is Preferred for Business Disputes

It's fast, cheap and in your control

By William Wagner | Reviewed by Canaan Suitt, J.D. | Last updated on June 30, 2023 Featuring practical insights from contributing attorneys Mary Patricia Benz and Jerald A. Kessler

Use these links to jump to different sections:

Mediation is a type of alternative dispute resolution (ADR). It’s a relatively simple and straightforward process for resolving business disputes—and that’s precisely the point.

More often than not, according to attorneys who practice this type of law, it’s the best option.

What Makes Mediation Work

“A successful mediation process is one where the parties select a mediator, the parties follow the mediation rules, the counsels show up and do their part, and the representatives of the disputing parties show up and do what they’re supposed to do,” says Mary Patricia Benz, a Chicago-based attorney who has done business mediation since 2011.

“Everyone participates, and at the end of the day or two days or whatever they’ve scheduled, they reach an agreement in principle. Then they write it down and do a term sheet. They may not like all the terms that are part of the agreement, but they are happy because there’s a finality to it. It’s a win-win.”

This is especially true because the parties have avoided the potentially damaging, expensive, and adversarial experience of litigation, all while feeling as if they have had control over the outcome.

“People want to create their own terms of settlement,” says Jerald A. Kessler, an attorney in Libertyville, Illinois, who has mediated more than 2,500 disputes.

“They don’t like having the terms imposed on them by a third party, which is, of course, what happens in the court. There has been research done that says people care as much about the process as the outcome of a conflict. So if they perceive the process was fair and reasonable, they’re willing to accept an outcome they might not have otherwise been all that enthused about.”

Mediation is often the only opportunity to meet face-to-face with the decision-makers on the other side. They see how the decision-maker is talking and thinking. Do they know what they’re talking about? Are they prepared? Are they taking a hard line? Do they have some obvious places where they’re not taking a hard line? All that information is very available, sometimes for the only time in the dispute process.

Mary Patricia Benz

The Types of Business Mediation

Mediation is favorable in many types of business disputes:

  • Disputes with suppliers over timeliness, quantity, quality, and price
  • Family-owned business disputes over work responsibilities, compensation, and succession
  • Disputes regarding shareholder derivatives

“Sometimes the parties just need [a neutral third party] to facilitate a conversation rather than a back-and-forth of, ‘Yes, we will,’ ‘No, we won’t,’” Kessler says. “Mediation keeps it at a conversation level rather than an argument.”

The process allows business partners to drive the decision-making and reach an agreeable resolution.

In addition to being less adversarial, there are several other advantages of mediation over litigation:

Mediation is Relatively Quick

Mediation often takes no more than a day or two. Litigation, in contrast, is time-consuming, lasting months or even years.

Mediation is Cost-Effective

“In litigation, people wear each other down financially until they throw in the towel,” Kessler says.

“Even if you go to court and win, people are still unhappy because they had to go through so much to get there. And if they don’t prevail, they’re even more upset.”

Mediation is Educational

Mediation sessions provide information that might show a party why avoiding litigation is the smart play.

“Mediation is often the only opportunity to meet face-to-face with the decision-makers on the other side,” Benz says. “They see how the decision-maker is talking and thinking. Do they know what they’re talking about? Are they prepared? Are they taking a hard line? Do they have some obvious places where they’re not taking a hard line? All that information is very available, sometimes for the only time in the dispute process.”

You have to be able to figure out what is motivating the different parties and help them identify what their interests really are. Parties often come into a dispute with a big demand, but it might not be what their interest really is. There might be other options that they’re overlooking.

Jerald A. Kessler

Mediation is Individualized

“The parties decide the terms, not the mediator,” Kessler says. “Often the parties are seeking specific solutions [that might not be possible in litigation].”

Mediation is a Better Approach to Conflict Resolution

Mediation helps maintain business relationships, partially because it’s confidential but also because of the lower-key format.

Additionally, says Kessler, mediation “preserves reputations and business-to-business relationships because some companies don’t want to go on record as being an entity that will go to court if there’s a problem.”

Potential Downsides to Mediation

There are, however, instances where mediation isn’t ideal.

Unlike litigation and even arbitration, mediation isn’t legally binding. Consequently, if there isn’t trust and commitment among both parties—say, one side is negotiating in bad faith—a lasting mediation agreement can be put in doubt.

But Kessler notes that parties typically “abide by the terms they’ve reached in mediation because they created the terms themselves.”

What to Look for in a Mediator

Not all mediators are created equal. The best ones have a gift for being unobtrusive and subtle in guiding the parties to an amicable solution.

“They’re good listeners and very creative and quick,” Benz says. “A good mediator will keep the process going. Sometimes if you’ve planned out a path and it goes a different way, you have to be able to switch and see another path.”

Adds Kessler, “You have to be able to figure out what is motivating the different parties and help them identify what their interests really are. Parties often come into a dispute with a big demand, but it might not be what their interest really is. There might be other options that they’re overlooking.”

If you’re considering mediation as an alternative to litigation to resolve your business or employment law dispute, reach out to an attorney with experience in mediation services for legal advice. Search the Super Lawyers directory for an experienced ADR attorney in your area.

For more information about alternative dispute resolution, read our ADR law overview.

Was this helpful?

What do I do next?

Enter your location below to get connected with a qualified attorney today.

State Alternative Dispute Resolution articles

0 suggestions available Use up and down arrow keys to navigate. Touch device users, explore by touch or with swipe gestures.

At Super Lawyers, we know legal issues can be stressful and confusing. We are committed to providing you with reliable legal information in a way that is easy to understand. Our legal resources pages are created by experienced attorney writers and writers that specialize in legal content in consultation with the top attorneys that make our Super Lawyers lists. We strive to present information in a neutral and unbiased way, so that you can make informed decisions based on your legal circumstances.

0 suggestions available Use up and down arrow keys to navigate. Touch device users, explore by touch or with swipe gestures.

Find top lawyers with confidence

The Super Lawyers patented selection process is peer influenced and research driven, selecting the top 5% of attorneys to the Super Lawyers lists each year. We know lawyers and make it easy to connect with them.

Find a lawyer near you