March 01, 2015

I Thought We Already Settled That?! 3 Tips for the Successful Mediation of a Dispute

Faegre Baker Daniels partner Brian Clifford authored the following article for the Control System Integrators Association in March 2015.

Back in my October 2012 legal update, I mentioned that formal mediation of an automation-related dispute can be an effective way to keep clear of the courthouse doors. Given the complex nature of many control system integration projects, it is inevitable that a few will have disagreements that arise between the parties that need some “third-party assistance” to be closed-out. These three tips can help you preserve and enforce the terms of a successful mediation:

Put the Agreement in Writing: One of the attractive elements of mediation is its confidentiality. Many jurisdictions have rules that prohibit any communications made in mediation from being disclosed. However, there is usually an exception for a settlement document signed by all parties. Therefore, even if you reach an oral resolution of a claim at mediation, you may not be able to enforce the settlement if it is not in writing. (After all, even the best judge or arbitrator would have a hard time compelling performance of an agreement that he or she cannot hear anything about.) Don’t let the blessing of confidentiality become a later curse.  

Include All Essential Terms in the Written Settlement Agreement: If you (wisely) follow the first tip, you need to know what terms should be in the signed settlement document. The basic settlement terms — often the amount of money to be paid by one party to resolve the claim — are obvious. But don’t ignore other key non-monetary provisions, especially the scope of any release language (including any related indemnity terms); payment deadlines, applicable interest rates and consequences of non-payment or late payment; and the commencement (or termination) of warranty terms. 

This is not to suggest that the settlement document needs to be extensive or complex. It is common for the attorneys assisting in the mediation to prepare the “full” settlement agreement in the days following a successful mediation session. Even a dispute over the ownership of Facebook was determined to have been resolved by a 1+1/3 page mediated settlement agreement. See Facebook, Inc. v. Pac. Nw. Software, Inc., 640 F.3d 1034 (9th Cir. 2011). But all of the terms the parties “really care about” should be included, at least in short-hand (but understandable) form.    

Check the Local Rules: Many jurisdictions have specific procedures and rules that govern mediation sessions and resulting settlement agreements. For example, an agreement governed by the Minnesota Civil Mediation Act must contain specific language in order to be binding. Without the required “magic language,” even a signed, full settlement agreement may not be enforceable if one party has “buyer’s remorse” after it leaves the mediation session.

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