Monday, May 5, 2008

Steve Wagh of Lakeside Mediations talks about the Mediation Process

Steve Wagh of Lakeside Mediation talks about the mediation process, how it works, and what drives some to reach a resolution.

Why did you get into mediation?

One of the worst things that can happen to a businessman is to get involved with a lawsuit. Whether it is over IP, partnerships breaking up, an unhappy employee, or changing a CEO, I’ve been through all of this. The first thing you do is go to your business lawyer. He or she tries to help you out by sending some tough demand letter. If that doesn’t work, you go get the “hired guns”; the litigators. Then it will cost $20K to $30K or even $5oK for each round and a year or more of turmoil. A pending lawsuit definitely impacts your business negatively. Suppliers and partners don’t want to get involved with a company when it’s going through litigation because they don’t want to get dragged into it. Win or lose, it can kill your company.

Most litigators admit that even if everything seems to be in their favor, they still run the risk of losing a jury decision. If you lose in court, it’s a disaster. If you win big, it will probably get appealed and stay locked in the courts for another year or so. If you win a monetary judgment, you’ll get only about 50% of the stated amount – the rest goes to the lawyers and court costs.

So I asked my trial lawyer friends how often they actually go through a trial? They said maybe only once a year because 95% to 98% of all their cases settle before their trials begin. Judges are busy and oftentimes demand you first try mediation. From a lawyer’s point of view, mediation doesn’t compete with their business because they’d rather settle earlier than later. A settlement is considered a “win” for their client and them.

So how does one get started in mediation?

There’s a forty hour course one takes to get certified.

How does mediation work?

As the mediator, I’m not the judge or jury or arbitrator. I don’t decide who’s right or wrong. My job is to be totally neutral; working hard with both parties to see if there is any way I can help them come to a fair settlement by the end of the day. Instead of a judge or jury making the win or lose decision for them, this is their chance to work out a reasonable deal between themselves.

I know the fear that one has when faced with the possibility of litigation. Sometimes that helps drive people to work harder on the mediation because they know if this doesn’t work they will have to go through depositions, interrogatories, and expert witness testimonies, and the cost is going to be huge in both money and time.

If we don’t reach a settlement by the end of the day there’s no harm, no foul. Nothing said or done at this mediation can be used later in court. I keep strict confidentiality. I can’t tell the other what each one tells me in confidence, unless they say it’s okay. The fact that you almost reach a settlement or were willing to compromise on some issue can’t be used in court, either. Either party can change their mind at anytime.

How does it work from a practical point of view?

I start with both parties in the same room unless they are so bitter that we have to start by meeting individually. We discuss the ground rules for the mediation and make sure we all know the issues and the stakes. After that, I may or may not break them into smaller groups in different rooms so that they feel comfortable laying all their cards on the table for me. Sometimes they don’t want to talk or don’t know what to talk about so we start off talking about their background or the business. After awhile they start to vent about the issues that are on the table and from there we can move forward. So often they don’t know how the other feels because they haven’t been talking to each other. I get to hear both sides of the story and might be the only one who really sees the whole picture.

Even if they don’t come to a settlement during the mediation, the process usually highlights the history of the conflict and narrows it down to a few key issues that can be addressed in the following week or so.

How are you different from other mediators?

There are many attorney-mediators in Austin because they take mediation class as part of their CLE-continuing legal education requirement. Most mediations are for divorces, car accidents, personal injury or medical malpractice. That requires some level of experience with the legal process. I only handle business disputes where I bring 40 years of understanding and experience. If the parties talk about software development and how one is taking code from the other, I understand what they are talking about. If it’s a CEO or employee issue, or a partnership problem, or a contract issue – I’ve been there. I want to help the same people I’ve worked with for so many years. No one should have to go through unnecessary litigation.

How often is mediation successful?

About 75 to 80% of the mediations resolve.

How much does it cost?

Mediators have different rates. I charge $2K for most full-day mediations, with each party paying half. There’s no other compensation from the process.

What do you find rewarding?

When I take on a case, sometimes it starts out with both parties so very far apart and angry, it seems like they’ll never come together. But by the end of the day they usually do. And then it’s over for them. No more bitterness. No more expense. No more effort. And no more stress. It’s a huge relief. That’s what makes it worth the while.

Best regards,
Hall T.

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