How to Examine Potential Costs and Benefits in Mediation
Your job as a mediator is to help the parties involved consider all the upsides and downsides of going to trial and to make the most well-informed decision possible. Your job isn’t to convince them to decide one way or the other.
Situations that are more complex require a deeper cost-benefit analysis, especially if lots of numbers are involved. If you’re working on a litigated case, each party’s attorney usually has an informal decision tree in his head if not necessarily on paper. In all cases, a good cost-benefit analysis answer the following questions:
What’s the monetary value of what’s in dispute, from each party’s perspective? Each party may have an appraisal or at least a number and some reasoning to support its valuation.
How much does each party stand to gain or lose in each possible outcome? Consider litigated and nonlitigated outcomes, and look at the best and worst possible outcomes, as well as everything in between.
What’s the chance of achieving each outcome in terms of a percentage?
How much will each party spend on attorneys, expert witnesses, and other professional services to achieve each outcome?
How much extra will each side spend if the other side files an appeal? Have each party monetize the cost of appeal and retrial in the event the appellant is successful on appeal.
A cost-benefit analysis with or without a decision tree provides a party with a clearer picture of what the client stands to lose or gain from each possible outcome. It enables the client to make a well-informed decision and often reveals that mediation is preferable to litigation.