Mediation for Small Businesses

Mediation is cheaper, faster, and more amicable than taking adispute to court.

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Small businesses may benefit tremendously from using mediation -- rather than litigation -- to resolve conflicts. Small business owners are just as likely as major corporations to run into conflict with neighboring businesses, employees, customers, vendors, or with their own business partners, yet unlike corporations, small business often lack public relations, human resources, and legal departments to help them deal with these conflicts.

It is often overwhelming for a small business to come up with the time, money, and expertise to cope with a relatively minor dispute through legal means. What's more, unless the situation is resolved amicably, the leftover hostility could affect a small business owner's quality of life -- it can be unpleasant to bump up against an unfriendly party on a day-to-day basis.

Mediation is an efficient and effective way to resolve disputes and build community among small business people and their customers and neighbors.

The Mediation Alternative

Mediation offers another way to resolve conflict -- one that can help you and the other party come to a genuine understanding and find a resolution that addresses both of your needs and interests. In mediation, a neutral third person -- the mediator -- meets with parties who are having a conflict to help them try to work it out together. Because you and the other party make the agreement together, you are both more likely to keep it. Also, the process of working things out in mediation is an experience you and the other party can draw upon if you run into problems again in the future.

For more on mediation, see Nolo's Mediation Resource Center.

Costs of Mediation

Mediation is usually much less expensive than hiring a lawyer. Community mediation centers offer low-cost services, and even if you hire a private mediator who charges by the hour, you'll be sharing the cost with the other party instead of paying a lawyer on your own. Mediation also works more quickly -- it usually only lasts a few hours, compared to the many hours a lawyer would spend preparing your case and arguing with the other side.

Finding a Mediator

If you think you might want to mediate a dispute, the first step is to find a mediator or mediation service. Lots of places have community mediation centers that use volunteer mediators and offer very low-cost mediation services. Look in your local phone book under "mediation" or "conflict resolution." That's also where you'll find private mediators. Some mediators are lawyers, so you can also look under "attorneys" if you want to use a lawyer-mediator.

If you belong to a small business association like a chamber of commerce or the Better Business Bureau, check to see whether they have a mediation program tailored to small businesses -- many of them do.

For more on finding a good mediator, see Mediation FAQ.

The Results of Mediation

The vast majority of mediations result in a settlement. If your mediation is successful, you'll leave with a signed agreement or, at the very least, a signed memorandum setting out what you and the other party have agreed to. You have the choice of making the agreement enforceable in court or not -- many people want to be able to ask a judge to enforce the settlement in the future if the other party doesn't live up to the agreement.

If you don't reach a resolution in mediation, you haven't lost anything. If nothing else, you've probably learned a lot about how the other person sees the problem. You still have the option of taking legal action if that's what you feel you need to do.

If you are ready to use mediation, or just want to learn more about it, read Nolo's eBook Mediate, Don't Litigate, by Peter Lovenheim and Lisa Guerin.

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