What Is Mediation and How Does It Work?

What is mediation in a civil lawsuit, and why do courts and attorneys rely on it to resolve disputes? For individuals and businesses involved in California civil litigation, mediation offers a structured opportunity to settle a case without the cost, risk, and public exposure of trial. Whether you are suing or being sued, understanding how mediation works allows you to make informed decisions about leverage, risk, and long-term outcomes.

This guide explains what mediation is, how the process works, when it can occur during a lawsuit, and how it compares to trial and arbitration under California law.

What Is Mediation in Civil Litigation?

Mediation in civil litigation is a confidential settlement process where a neutral third party, called a mediator, helps disputing parties negotiate a resolution. The mediator does not decide the case and does not issue rulings. Instead, the mediator facilitates communication, evaluates risk, and helps the parties reach a voluntary settlement.

Mediation is a form of alternative dispute resolution (ADR) and is commonly used in:

• Business and partnership disputes
• Contract breaches
• Employment claims
• Real estate litigation
• Entertainment and professional services disputes

California strongly encourages mediation as a way to reduce court congestion and promote efficient civil case resolution.

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What Are the Advantages and Disadvantages of Mediation?

Is mediation always the right choice for resolving a lawsuit? While it offers meaningful advantages for many plaintiffs and defendants, it is not appropriate in every dispute. Understanding both the benefits and limitations of mediation helps parties decide whether settlement aligns with their litigation strategy and financial goals.

Advantages of Mediation in Civil Litigation

Reduces Legal Costs

Mediation often resolves disputes faster than trial. Shorter timelines mean fewer billable hours for discovery, motion practice, and trial preparation. For businesses and individuals facing mounting legal fees, it can significantly reduce overall litigation expense.

Reduces Risk and Provides Outcome Control

While trial outcomes are unpredictable, mediation allows parties to manage risk through negotiated compromise rather than gamble on an all-or-nothing verdict. Unlike trial, where a judge or jury imposes a decision, mediating a dispute allows parties to control the result, providing a level of flexibility not available in court judgments.

Settlement terms can be customized to include:

• Payment plans
• Non-monetary concessions
• Business relationship preservation
• Confidentiality protections

Confidential and Private

Court proceedings are public, while mediation remains private. Statements made during sessions cannot be used at trial under California Evidence Code § 1119. In turn, this helps prevents settlement discussions from being used against either party if they are unable to reach an agreement.

Helps Preserve Business and Employment Relationships

In partnership, employment, and contract disputes, mediation may resolve conflicts without permanently destroying professional relationships. If you are in a position in which maintaining relationships is vital to future business operations or endeavors, you should consider discussing settlement agreements before resorting to trial.

Disadvantages of Mediation in a Lawsuit

Does Not Guarantee Settlement

Although mediation often results in settlement, this is not always the case when parties are unable to come to an agreement. Even well-prepared mediation sessions can fail. If no agreement is reached, the case proceeds to trial, meaning parties will continue to incur litigation costs.

May Reveal Strategic Weaknesses

Mediation is confidential, yet parties often disclose aspects of their case theory, damages model, or risk tolerance during the process. This can give opposing parties insight into your litigation strategy, which should be considered when approaching settlement discussions.

Can Delay Inevitable Trial

When a party participates in bad faith or has no intent to settle, mediation may function as a delay tactic. Parties may have reason to postpone trial as a method of increasing the other side’s litigation costs or giving themselves more time to gather evidence and further strengthen their own case.

May Result in Lower Financial Recovery

Settling through mediation often involves compromise from both parties. Plaintiffs may recover less than what they could potentially win at trial, and defendants may pay more than they believe they owe to avoid the uncertainties and expenses involved in litigation.

Less Effective When Legal Precedent or Injunctions Are Needed

Mediating is less effective when a case needs a judge’s decision, not just an agreement. If a legal ruling is needed to clarify what the law means, mediation cannot provide that answer because it does not create binding precedent. Likewise, if one party needs an injunction, which is a court order requiring someone to stop or start certain conduct, a mediator has no power to issue or enforce that order. In these situations, mediation often fails because the solution requires a judge’s authority, not negotiation.

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How Does Mediation Work in a Lawsuit?

Mediation follows a structured sequence of events designed to move a case from dispute to potential resolution. The process typically includes selecting a mediator, exchanging written case summaries, participating in a joint session, and then negotiating through private meetings guided by the mediator. Each stage is intended to narrow issues, test legal and factual positions, and determine whether the case can be resolved without proceeding to trial.

Step 1: Selecting a Neutral Mediator

Parties typically agree on a neutral mediator who has experience in the subject matter of the dispute, such as business litigation or employment law, and does not represent either side. Mediators are often retired judges, senior litigators, or professional mediators with specialized training in dispute resolution.

Step 2: Pre-Mediation Preparation and Risk Assessment

Before the mediation session, each side submits a mediation brief outlining:

• Key facts and legal issues
• Strengths and weaknesses of the case
• Damages or financial exposure
• Prior settlement efforts

This stage involves litigation strategy, including:

• Risk assessment (likelihood of winning or losing)
• Cost-benefit analysis (trial costs versus settlement value)
• Leverage in settlement based on evidence and procedural posture

Step 3: Opening Statements

Most sessions begin with opening statements, where each party explains:

• Their position
• What outcome they seek
• What obstacles exist to settlement

These statements are not evidence and are not binding. Their purpose is to frame the dispute and clarify expectations.

Step 4: Caucus Meetings and Negotiation

After opening statements, the mediator separates the parties into private rooms for caucus meetings. The mediator then moves between parties to:

• Test arguments
• Communicate offers and counteroffers
• Explore creative settlement structures

This stage is where most progress occurs. Mediators often provide reality checks about trial risk, evidentiary problems, and potential damages exposure.

Step 5: Settlement and Written Agreement

If a resolution is reached, the parties draft a written settlement agreement before leaving the mediation session. This document sets out:

• Payment terms
• Release of claims
• Dismissal of the lawsuit
• Confidentiality provisions

Under California Code of Civil Procedure § 664.6, a signed mediation agreement can be legally enforceable if it meets statutory requirements.

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When Does Mediation Occur During a Civil Lawsuit?

During a civil lawsuit, mediation can occur at any point before a judgment is issued, including during trial. In many cases, settlement discussions occur in the early stages of litigation, and can also be court-ordered by the assigned judge as a means of avoiding trial.

Pretrial Mediation

Pretrial mediation often occurs after:

• Discovery has begun
• Key evidence is exchanged
• Depositions are taken

This allows parties to realistically evaluate trial outcomes before incurring major trial preparation costs.

Voluntary Mediation

Voluntary mediation occurs when parties agree to take part in settlement discussions. This often is the case when a party decides that the cost of continued litigation becomes a burden, is eager for a quick resolution, or do not believe that they have the legal standing to succeed in trial. Alternatively, both parties may decide that settlement is necessary to preserve their personal or business relationship.

Court-Ordered Mediation

Some California courts require or strongly encourage court-ordered mediation, especially in business and employment disputes. Under California Code of Civil Procedure § 1775.5, mandatory mediation is applicable when claims do not exceed seventy-five thousand dollars ($75,000), are currently set for trial, and when at least one party has expressed interest in mediation. When mandated, parties are expected to participate in good faith but are not required to settle.

During Trial

Settlement discussions can happen at any point during trial before a judgment is issued, even after jury selection or witness testimony. Courts may pause proceedings for settlement discussions or hold a judicial settlement conference with a judge acting as a settlement facilitator.

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Is Mediation Confidential in California?

Confidential mediation is protected under California Evidence Code § 1119. Statements made during these sessions cannot be used in court and cannot be disclosed. This confidentiality encourages open negotiation without fear of weakening a trial position.

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Mediation vs Trial: Which Is Better?

Mediation allows parties to avoid trial while controlling financial exposure. Trial involves higher litigation costs and limited flexibility in terms of reaching a final verdict. The outcome of trial is unpredictable and determined by the assigned judge or jury, and often takes longer to resolve disputes. However, settling is not always possible and trial may be necessary when:

• One party refuses to negotiate
• Legal precedent is required
• Injunctive relief is needed

See the table below for an outline of the major differences between mediation and trial.

Mediation	Trial
Private and confidential	Public courtroom
Parties control outcome	Judge or jury decides outcome
Faster resolution	Lengthy and unpredictable
Lower legal fees	High litigation costs
Flexible settlements	Limited remedies

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Mediation vs Arbitration: What’s the Difference?

There are several distinctions between mediation and arbitration. To start, the format of arbitration resembles that of a private trial, where a third party, or arbitrator, oversees the arbitration session and issues a judgment that is final and often legally binding. Though the judgment must be officially approved by the court, the right to appeal the judgment can be limited. Arbitration is often stipulated in business contracts, which are legally enforceable. Mediating a dispute, however, is often voluntary and leaves room for parties to compromise on settlement terms. Agreements made in mediation sessions are only legally binding when parties sign a written settlement agreement that meets legal requirements.

The table below outlines the difference between mediation and arbitration in civil court.

Mediation	Arbitration
Voluntary settlement	Binding decision
Mediator facilitates	Arbitrator rules
No winner or loser	One side prevails
Non-binding unless signed	Enforceable award

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What Happens If Mediation Fails?

Mediation does not always result in settlement if parties are unable to compromise. If this happens, then:

• The lawsuit continues
• Discovery and trial preparation resume
• Nothing said in mediation can be used in court

Failure to settle does not harm your legal position but may reveal strategic insights about the opposing side’s case valuation.

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Should I Go to Mediation?

The decision to mediate is dependent on the nature of your case, parties’ willingness to settle, and your specific needs. You should consider mediating a dispute when:

• Trial risk is high
• Litigation expenses outweigh potential recovery
• You need faster resolution
• Reputation or confidentiality matters

Mediation is particularly effective in business litigation and employment disputes where ongoing relationships or financial certainty are important.

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Is Mediation Right for You? Speak With a Civil Litigation Attorney

Mediating, as opposed to going to trial, can protect assets, reduce exposure, and resolve disputes efficiently when approached strategically. At Law Advocate Group, LLP, our Los Angeles civil litigation attorneys help individuals and businesses settle lawsuits involving:

• Business and partnership disputes
• Contract litigation
• Employment disputes
• Personal injury defense

Our attorneys have over 80 years of combined experience helping clients prepare for trial while leveraging mediation to secure favorable outcomes whenever possible. If you are involved in a lawsuit or considering settlement, speak with a local litigation firm that understands both courtroom advocacy and negotiation strategy.

Contact Law Advocate Group, LLP today to schedule a consultation and protect your legal and financial interests throughout Southern California.

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