It is erroneous to believe, as some people do, that information disseminated in respect of the practice and procedures of mediation are meant for individual or family use only. It is agreed that mediation is a relatively new process and that many are yet to come to grasp with it. That notwithstanding, the seeming apathy of some corporate organizations in respect of mediation programmes leaves much to be desired. Elsewhere around the globe, smart companies are making more money mediating their issues and staving off litigations and accompanying costs, through In-house mediation programmes they have in place.
Since we learn from the stories of others, I have this week decided to share the experiences of corporates who have literarily found gold setting up in-house mediation programs and staying out of litigation. The excerpts are culled from a publication of the Harvard Negotiation Law Review.
Hear this: “We decided that we wanted to regain control of our money, of our documents, of our reputation and of our time,” said Andrew Byers, overseer of The Toro Company’s mediation programme, regarding why The Toro Company of
Bloomington, MN implemented a mediation programme to settle their in-house and customer disputes as an alternative to litigation. ‘In-house ADR programs and policies, specifically mediation, enhance corporations’ business relationships, save valuable time, and offer significant cost savings in comparison to traditional litigation…
The stark reality in today’s world of commerce as indicated in the words of those who should know is that ’Mediation offers disputants important advantages over litigation and even arbitration. The American Arbitration Association reported that more than 85% of all disputes that went to mediation resulted in a settlement. A 2003 AAA study concluded that a “stream of evidence has long suggested that there is a real business value to the rapid, comparative inexpensive, and easily accessed alternative to the judicial system that ADR represents.….
‘In the past few years, companies have been recognizing this value and implementing programmes to take advantage of it. Many companies have formed Conflict Management Programmes or Corporate ADR Programmes that make use of mediation; some exclusively incorporate mediation. For example, during the Y2K scare, a dozen multinational corporations including Bank Of America Corp., General Mills Inc., Phillip Morris USA, The Coca-Cola Co., Bell South Corporation, and the United Parcel Service of America Inc., in conjunction with the persuasive efforts of CPR Institute for Dispute Resolution, agreed to use mediation instead of litigation to settle disputes arising out of Y2K computer glitches…
In-house corporate mediation programmes can yield big returns. For example, the Toro Company, a manufacturer of professional and homeowner outdoor maintenance machinery, reported that “it had not been involved in a jury trial nor had any discovery of its documents since 1994” because of its mediation approach to conflict management. Before Toro Co. implemented its in-house ADR programme in 1992, the cost of the average litigation file to Toro Co. was more than $47,200. Throughout the 1980s, Toro Co. “prepared for trial six to eight times annually, and won 82 percent of the cases that went to verdict”… “but it was at great expense to the Toro Co.” Specifically, “the average verdict or settlement [for Toro Co.] was nearly $68,400.
After implementation of its ADR programme, the 905 claims resolved between 1992 and 2000 were settled for an average of $20,250–and 95 percent of these settled within four months. A significant ancillary benefit to Toro Co. was that during each of the programme’s first three years, the company’s insurance premium dropped by $1.9 million.” Toro Co. litigation director, Andrew Beyers concluded.
Another ancillary benefit Toro Co. receives is that they now have the ability to actually budget their legal fees in advance. There are no ad hoc legal fees billed after or during litigation because Toro Co. pays its mediation counsel a flat fee at the beginning of the year based on how many matters the company expects to assign in a year period.
Toro believes that their mediation programme works best for them largely because the company has more control than it would in traditional litigation. According to Byers, “We can control our money, our engineers’ time, and our documents.…
Once you’re in front of a jury, you’re stuck with what happens.”
Toro is not the only company to have found success with an in-house ADR programme. Financial services company Wells Fargo modified its deposit and bank- card contracts to provide a mechanism for using mediation, among other ADR avenues, in customers’ disputes. ADR is used to handle disputes from consumer complaints about credit-card late fees to cases involving swindling by small- company bookkeepers.’’
Discerning Nigerian corporations may wish to exploit the benefit of In-house ADR programmes and policies to save costs and enhance corporate reputation. These are established when an organization sets up an ADR department and puts in place a three tier alternative dispute resolution clause in all of its contracts. A typical sample clause would read that in the event of any dispute, difference or claim arising out of or in connection with the contract, the parties shall meet in good faith for negotiations in an effort to resolve the dispute amicably. That if negotiations fail, the dispute be referred to a Mediation Service Provider and if mediation fails, the matter be referred to arbitration.