So, how does mediation work in a lawsuit and is legal mediation a better route?

Avoiding Litigation Through Court-Sponsored Mediation Programs

The answer is “sometimes,” according to a comprehensive study of court-affiliated mediation programs by Roselle L. Wissler of Arizona State University’s College of Law in Tempe. Settlement rates in these programs varied widely, ranging from 27% to 63%. In some programs, the percentage of settlements was higher than in nonmediated cases; in other programs, there was no difference.

Several other studies have indicated higher compliance with mediated agreements than with court orders (though they found no significant difference between mediated agreements and privately negotiated settlements).

How Does Mediation Work in a Lawsuit – Transaction Cost

Surprisingly, there isn’t a significant difference in transaction costs between litigated cases and those mediated through the courts. That may reflect the frequency of cases settled “on the courthouse steps,” after lawyers have already engaged in costly pretrial discovery and maneuvering. In spite of the cost, studies also show high participant satisfaction with court-sponsored mediation. Depending on the program, 5% to 43% of litigants also report that the process helped them improve their relationship with the other parties.

An important lesson for managers (and their lawyers) is that not all lawsuit mediation is created equal. When court programs are poorly funded, mediation can become just another bureaucratic hoop to jump through to get to court. Other jurisdictions commit serious resources to mediation; they also intervene earlier, before disputants paint one another into corners. In short, the biggest benefits of mediation come early, when those involved are spared the time and expense of protracted litigation.

The mixed results for legal mediation programs reveal only part of the picture, of course. Disputants may be best served by actively pursuing a settlement on their own, perhaps with the aid of a private mediator, before a suit is ever filed.