Trials are about finding fault. They essentially determine who is right and who is wrong. On the other hand, a mediation focuses on understanding the positions of both sides, discovering information and inventing solutions. A mediation is conducted in a spirit of cooperation and collaboration, rather than in fierce competition.
Mediation can be a very productive way to reach a mutually agreeable resolution in which all parties and counsel will play an active part. Reaching a settlement at mediation can give a party a sense of ownership over the result and perhaps, greater satisfaction with the result than with a court decision. In my experience, parties find the mediation process less stressful and more satisfying than the litigation process.
It is essential for each party to conduct an assessment of the cost/benefit of going forward with the litigation versus settling at mediation. Both sides to a lawsuit should be concerned about the potential costs of litigation. A plaintiff in an action may remain without the anticipated reward of a judgment for a substantial period of time and may face a limited cash flow. If so, the risks and costs of continuing the litigation may outweigh the potential benefits. A plaintiff can and should never ignore the fact that if unsuccessful in the action, there could be serious cost consequences. Similarly, defendants are often wary of incurring substantial legal fees to defend a lawsuit. In many cases, liability is not at issue, but just the amount of damages. Sometimes, the costs of defending an action can be greater than the ultimate award or settlement payable to the plaintiff.
Also, a plaintiff may be focused on other factors which go beyond a financial pay-out. A lot of emotion is tied up in litigation and a plaintiff is often unable to view the matter of settlement as a straight business transaction. Through a lawsuit, a plaintiff often wants to have an opportunity to be heard by the defendant, the chance to be vindicated and to address the impact that the defendant’s actions have had on the plaintiff's life, health, family and overall well-being.
It is important to keep in mind that the mediation may be a very anxiety-provoking and emotional step for a party. Parties often have a very hard time putting aside their feelings of unfairness of what happened to them. A corporate party may also be driven by the desire not to create a “precedent” with the case. No matter which side of the fence you are sitting on, litigation is based on personal and professional relationships, some of which may have long histories and emotional, human components.
Even if you are not successful at settling a case at mediation, you will likely have narrowed the issues, filled in some factual and evidentiary gaps and partially prepared yourself for examinations for discovery or a trial. You will also have had an opportunity to informally assess one or more of the opponent's witnesses. You may also walk away from an unsuccessful mediation with a better understanding of the risks and weaknesses in the case which can possibly lead to future settlement discussions.