What is the difference between mediation and litigation in business?

With all of the relationships involved in running a business, it is very likely that business owners and managers will become embroiled in a dispute of some form. Suppliers or buyers may claim a breach of contract, employees may feel they were treated unfairly or fired unfairly, or shareholders and executives may disagree on how a company should be run. Parties to the disagreement in these situations have a number of options for attempting to settle their differences, including litigation, mediation, and arbitration.

Litigation is the process of resolving a legal disagreement. In the litigation process, both parties are required to appear in court, either with legal counsel or unrepresented (in pro per). The judge will hear both sides of the case on any issue that neither party can agree upon and will then deliver a judgment regarding how the issues will be resolved. This option can be costly and time-consuming, particularly if two attorneys are needed. This process typically takes a year or more to complete, compounding the costs and fees.

Litigation can be further drawn-out by witness testimony, uncovering evidence, and depositions. Due to how drawn-out and expensive the procedure may end up being, litigation is frequently not the method of choice for resolving disputes.

On the other hand, mediation is an alternative method that can be applied to resolve conflicts outside of a court of law. The goal of mediation is to assist both sides in reaching a compromise. Mediation can potentially appease both parties, which is essential for keeping professional relationships, unlike litigation, which leaves a clear winner and loser. When neither side is suing the other, their relationship is more likely to remain positive. Mediation is significantly less costly and time-consuming than going to court, making it a popular alternative to litigation.