Are you a legal professional who assumes that, regardless of outcome, the parties to a dispute always split the cost of the mediator 50/50? Or, do you assume, that, if the case settles at mediation, the defendant pays 100% of the mediator’s fees?
Your answer may depend on the jurisdiction where you practise, the type of dispute (or, “area of practice”), and local custom. However, you might be surprised to learn that there is no Ontario law that requires one party to pay another party’s share of the mediator’s fee absent an agreement to the contrary, or a statute or regulation giving the court the discretion to make such an order (for example, a costs order under R. 57 of the Rules of Civil Procedure).
Instead, the law enshrines the “50/50 rule” (everyone pays their own way). For example, see s. 4 (2) of O. Reg 451/98 governing mandatory mediations under R. 24.
It is for this reason, and because an equal sharing of fees reflects a mediator’s impartiality, that most mediators’ mediation agreements, and contractual provisions requiring mediation of a dispute, reflect the 50/50 rule.
Of course, customs and practices can vary.
For example, I have conducted several pre-litigation mediations, or non-mandatory mediation during litigation, where one side agreed to pay the 100% of the mediator’s fee in advance and regardless of outcome. In most of these cases, one party had no or low income.
It is also commonplace—but by no means universal—that, if a settlement is reached, the defendant in various types of civil disputes in Ontario will agree to pay 100% of the mediator’s fees/invoice as a settlement term. Yet I sometimes meet defendants or defence counsel who will never agree to this settlement term in any dispute, or they won’t agree to it in a particular dispute. This can often come to the shock to opposing counsel who assumed their client would not have to pay for the mediator if they settled.
There are also situations in which the plaintiff’s counsel does not seek 100% of the mediator’s bill as a term of settlement because they are unaccustomed to asking for it for various reasons.
Given the above, here are some practice tips to keep in mind the next time you hire a mediator and attend a mediation:
- Going into a mediation, assume a 50/50 split of mediator fees unless the parties later agree otherwise.
- The past behaviour of an opposing party or opposing counsel when it comes to fees is not necessarily indicative of—or relevant to—what they will do at any particular mediation. Also, who requested the mediation, or the mediator in question, is also irrelevant.
- When participating in a mediation involving counsel from a different province (or even a different part of Ontario) or a practice area that is new to you, try to find out about customs of which you may not be aware—and you can always ask the mediator.
- If you act for a plaintiff who wants the defendant to pay 100% of the mediator’s fee as a term of settlement, think carefully about when in the negotiation you want to include this term in your settlement offers. In some cases, including the term early will ensure that it finds its way into the eventual minutes of settlement. Yet in other cases, this can lead to its instant rejection by the defendant. That defendant may then never agree at a later stage of the negotiation to pay 100% of the mediator’s fee (yet they might have agreed to it if the plaintiff included the term much later in the negotiation as an impasse breaker). If in doubt, speak to the mediator about what they think is the best approach to take.
- If you represent the defendant and your position is that your client will never pay 100% of the mediator’s fees as a settlement term, then it is best to convey this position to the other side as early as possible to other side to set expectations early. Keep in mind though that on a party-and-party assessment of costs, the full mediator fee for a mandatory mediation is an assessable disbursement—even if the mediator charges more than roster rate (a.k.a. tariff). See: Pavlov The New Zealand and Australian Lamb Company Limited, 2022 ONCA 655.
- If your client is agreeing to pay 100% of the mediator’s fees—whether before or at the end of a mediation—avoid stating in the minutes of settlement that your client will pay “the full costs of the mediation” or “100% of the mediation costs” (or words to that effect). “Costs” can be misinterpreted by the other side, and the court, as including that side’s legal fees relating to the mediation and not just the mediator’s fees. Instead, avoid use of the word “costs” and go with “X’s share of the mediator’s fees” or “100% of the mediator’s invoice”, and then specify the mediation date in question.
- Understand that the mediator’s mediation agreement may provide, as mine does, that, in lieu of a retainer, you or your firm are jointly and severally responsible for paying your client’s share of the mediator’s fees. This will usually apply even if, as a term of settlement, one side agrees to pay 100% of the mediator’s fees, but then fails to live up to their obligation (which is rare, but it happens).
- Always get a retainer from your client for at least their share of the mediator’s fee (and any other mediation-related disbursements) in advance of the mediation.
- While “who pays the mediator?” is an important question, there are other important considerations when it comes to mediator’s fees. You need to be aware of the following when you are hiring a mediator and before settling a case with them:
- How does the mediator charge for their time? Do they have a flat fee for a half-day or full-day or an hourly rate only with a daily minimum?
- If they charge a flat fee, how many hours (including both mediation time and prep) are included and when do overtime charges begin?
- Does the mediator charge extra for in-person mediations. Many mediators do now that virtual mediation has become the norm.
- How does a prospective mediator’s fees compare with other mediators of equal experience and expertise?
- Are you personally responsible for paying your client’s share of the mediator’s bill if your client or the opposing party doesn’t pay it, and can you avoid this by paying a retainer in advance?
- Does the mediator require a retainer in all situations?
- Does the mediator charge cancellation or rescheduling fees, when, and how much?
- Remember the mediation big picture: regardless of who pays the mediator in the end, mediation can save your client legal fees, other litigation expenses, lost earnings, and, finally, time (the one thing we can never get recover).
If you are a lawyer or paralegal looking to hire a mediator or arbitrator for your civil dispute – including employment law, business disputes, estate litigation, insurance matters, and construction law – I have been a neutral for over a decade. I conduct employment mediations and arbitrations via videoconference, in-person, and in a hybrid format.
This blog is for educational purposes only and is not intended as legal or other professional advice.