In my 25 year career as an attorney, there have been very few times that I’ve encountered a legal client who was wildly enthusiastic about litigating a dispute in court. Business people want to do business; they don’t want to litigate.

One of the best ways to avoid litigation is to include a pre-suit mediation provision in your contract.

A pre-suit mediation provision sets forth a mandatory process for mediating a dispute, the applicable procedure, and how the parties will share the mediation costs. This innovative provision has gained increasing popularity over the past few years as more businesses owners take proactive measures to guard against costly litigation.

If the parties to a civil dispute go to court, the judge will require mediation at some point in the litigation process anyway. Why not save the time, effort, and expense of litigation by first attempting pre-suit mediation? Plus, there’s a high likelihood that the dispute will get resolved at the pre-suit mediation stage – most do.

What are the compelling reasons for a pre-suit mediation provision?

1. Cost. As a business person, would you rather (a) initiate and conduct an informal mediation conference within 30 days of a dispute arising, or (b) write the check for a team of attorneys to litigate the dispute over the course of the next year?

2. Speed. In the Pre-suit Mediation provision, the parties can specify the time period in which the mediation conference will be initiated. For example, the parties can specify that the conference will be held within 30 days of a party requesting mediation.

3. Informality. The mediation conference can be held in one of the parties’ offices or in the conference room of the mediator. Contrast one of these informal settings with the formality of an imposing courtroom complete with attorneys, a judge, and jury.

4. The parties control the process. In a mediation conference, the parties are at liberty to tell their stories and negotiate a resolution in an informal, private setting without a judge or rigid rules dictating the process.

5. Confidential. A trial is open to the public. A mediation conference is a private meeting in which the parties are obligated to maintain confidentiality.

6. A trial is about lawyers. A mediation conference is about finding a way for the parties to resolve their dispute on terms that they can live with.

As a matter of course, I encourage my business clients to include a pre-suit mediation provision in their business relationship contracts (i.e., Agency Agreement, Distributorship Agreement, etc.) and specifically in their website Terms and Conditions. Companies that do business over the internet have a compelling reason to proactively avoid litigation in faraway jurisdictions. It’s far preferable to resolve a dispute by implementing the pre-suit mediation process.

What should be included in a pre-suit mediation provision?

1. Define how the mediator shall be chosen.

2. Define what procedure shall apply to the mediation conference.

3. Establish firm timelines for the parties to take action.

4. A statement that the parties shall pay their own attorney’s fees and pay an equal share of the mediator’s fees.

Inclusion of a pre-suit mediation provision in your web-based contracts is one of the most cost-effective ways to reduce your exposure to expensive litigation.

Do your contracts include this innovative provision?

This article is an excerpt from “12 Website Legal Issues for Small Businesses and Entrepreneurs.”

Fred Reilly is an attorney licensed in California, Florida, and as an English Solicitor.

To download a free copy of \”12 Website Legal Issues for Small Businesses and Entrepreneurs\” click on Free Website Legal Issues eBooklet

Fred Reilly is an attorney licensed in California, Florida, and as an English Solicitor.
To download a free copy of \”12 Website Legal Issues for Small Businesses and Entrepreneurs\” visit http://www.attorney-solicitor.com

Author Bio: Fred Reilly is an attorney licensed in California, Florida, and as an English Solicitor.

To download a free copy of \”12 Website Legal Issues for Small Businesses and Entrepreneurs\” click on Free Website Legal Issues eBooklet

Category: Business
Keywords: best internet business practices, pre-suit mediation