Things were about to get ugly fast.
Paperwork had already been drawn up for a wrongful termination lawsuit pitting a former San Diego-area CEO against his privately held former employer. Both sides were bracing for a crush of negative publicity.
ust days before the lawsuit was to be filed a couple of years ago, however, the parties agreed to try and resolve their dispute with the help of an independent third party. Veteran San Diego mediator Lawrence A. Huerta was called in on a Saturday — a Valentine’s Day, no less — to bring both sides together.
It worked. Huerta said the executive was brought back temporarily to help the company through a rough spot, in exchange for what both sides agreed was fair compensation. No one in the local news media ended up the wiser.
Things don’t always work out as amicably. But with greater frequency, San Diego business litigators say, businesses that would otherwise end up in costly court cases are turning to mediation as a speedy alternative offering greater certainty than they can generally expect from a jury trial.
The trend results partly from government budget cuts that have clogged local courts, and partly from rising legal expenses. Local lawyers say that instead of letting a dispute simmer for a year or more, with ever-mounting costs associated with things like expert witnesses, more companies are opting to settle their differences through mediation.
A key benefit is controlled risk: Both sides of a dispute can be assured their perspectives will be taken into account fairly. And unlike what happens in arbitration, either side can choose to back out and go to court if it doesn’t like the result.
“It’s the most enlightened form of dispute resolution there is,” said Huerta, a mediator and arbitrator who estimates he has handled more than 900 cases since starting in mediation about 20 years ago.
In some cases, mediation is an end-game strategy deployed after much legal work has been done, reflecting a deep understanding of the facts in the case. In others, businesses hoping to avoid court head into mediation before a lawsuit has been filed.
Steven Cologne, a business litigator with the San Diego law firm of Higgs Fletcher & Mack, said clients he works with see mediation as attractive because it allows them to manage their legal costs, particularly in cases with jury trials expected to take two weeks or more.
An experienced mediator may charge $10,000 for a single day’s work, with a proposed resolution at the end of that day. By comparison, a single lawyer can cost $5,000 or more for one day in court, not including preparation work that can be extensive.
Mediation can be the right option even for clients confident of their case, he said.
“Sometimes it’s better to take an offer in mediation and not face an uncertainty, because you can never guarantee what’s going to happen in trial,” he said.
There’s another benefit, Cologne said: Executives sitting in on a day of mediation can work on their laptops while the mediator goes from one room to another engaging in “shuttle diplomacy.” Business people are not generally allowed to perform work in a regular court of law.
Needed Skill Sets
Mediation is different for lawyers, too. It requires “a little more finesse,” Cologne said, with a greater emphasis on negotiation as opposed to the outright aggression that usually comes with advocating on a client’s behalf.
“You’re much more accommodating in the interest of getting a deal done,” he said.
Steve Coopersmith, managing attorney at San Diego’s The Coopersmith Law Firm, said lawyers going into mediation also have to be more “attuned” to the personalities of their clients, as well as those of the other party.
“Personalities are really going to drive the result,” he said.
If handled correctly, resolutions can range widely, taking into account not only payments of money but even agreements to change the way business is done.
Coopersmith recalled a case in which two businesses were at odds over the sale of certain inventory. Through mediation, it was decided the dispute could be settled by having one company hand over inventory to another. This surprise solution ended up satisfying both sides, he said.
“You can be creative and you can get a resolution that’s different from simply a dollar amount going forward,” he said.
None of this is to say mediation works in all cases. Sometimes, businesses aware of the risks are willing to essentially place a bet that a trial will go their way, Coopersmith said. Or, he added, one side may refuse to see the reality of the case, or insist on being dishonest.
Even so, he and others agreed mediation is on the rise as a way of resolving disputes.
“It tends to be much more expensive to go to a trial than to try to resolve a case,” he said.
Huerta, the longtime mediator, agreed, adding “you can accomplish so much in a half day to a day of mediation.”
“The legal system is very complex and very expensive,” he said. “People need to have their problems adjudicated or resolved, and this is an opportunity for clients to feel like they get heard and understood, and then (feel) like they’ve made an informed decision and controlled the risk.”