The Case for Voluntary Pre-Litigation Mediation

At the time I completed my last mediation blog of last year, 2021: The Year in ADR – Noteworthy Court Decisions About Not Going to Court.  What to Watch for in 2022, I didn’t realize I was witnessing a what-to-watch-for trend in 2022 that I can now report on: Voluntary Pre-Litigation Mediation (“VPLM”).

Since December 2021, I have conducted four VPLMs as a mediator in unrelated disputes in which no court proceeding had been commenced (but litigation was the next step if there was no settlement).

These mediations are “voluntary” in the sense that no contractual provision (ADR clause) required mediation, and no legislation or regulations required it at the stage when counsel agreed to hold it (prior to the commencement of proceedings).

In the first two recent VPLMs that I mediated, mediation would have become mandatory under R. 24.1 of the Rules of Civil Procedure prior to setting the actions down for trial had an action been commenced. In the third, mediation may or may not have been mandatory (depending on the claimant’s choice of forum). In the fourth one, mediation would not have been mandatory and there was no established “voluntary mediation culture” (where it is common to mediate even if it is not mandatory) within the jurisdiction and practice area in question.

I am pleased to report that all four of these VPLMs settled.

As a lawyer, I have championed VPLM for years – and, as a mediator, I’m pleased that other lawyers are seeing its value.

If you are interested in learning more, here is a VPLM primer:

Benefits

1. Maximization of the cost savings of mediation, as compared to litigation.

2. Potentially escaping the court delays that have become common during the pandemic.

3. Avoiding the phenomenon of parties becoming more deeply entrenched in their positions because of litigation, most often due to the sunk cost fallacy (“our tendency to follow through on an endeavour if we have already invested time, effort or money into it, whether or not the current costs outweigh the benefits” Source: The Decision Lab).

4. Maintaining privacy.

5. Obtaining an early neutral evaluation from the mediator.

6. If a settlement of all issues cannot be achieved, it is possible to settle some issues and have a sneak preview of the motivations of the opposing party and the personalities you will be dealing with in the litigation. Disputes where VPLM benefits can be maximized include any one or more of the following situations:

• Where the cost of litigating, or even arbitrating, far outweighs the potential benefits for both sides.

• Where all sides are represented by co-operative counsel who can agree on a fulsome enough exchange of documents prior to mediation.

• If mediation will not become mandatory under the Rules of Civil Procedure (or under the rules of procedure of a tribunal in a non-court matter) should proceedings be commenced.

• If one or more sides will not be paying legal fees, or the legal fees are below market rates.

• Where the claimant has various choices of forum if it were to start legal proceedings.

• Where one side is prepared to pay all mediator fees if the other side(s) is/are financially challenged or impecunious, or for any other relevant reason.

• The parties agree to—or are potentially open to—med-arb so that, if they cannot settle at mediation, then the mediator becomes the arbitrator. However, med-arb and VPLMs are not synonymous, and my recent VPLMs were not part of a med-arb process.

Additional Considerations

1. The mediation agreement needs to be broad or narrow enough to capture the issues to be mediated since it won’t refer to a court or tribunal file number.

2. The issues should be clearly defined prior to the mediation. While draft pleadings are usually not necessary, and can increase expenses and further inflame tensions, there should at least be a demand letter and a detailed reply.

3. The claimant should avoid commencing proceedings between the time VPLM is agreed upon and the mediation date, or else success at mediation can be jeopardized if such proceedings are unexpected. The sole exception should be to avoid a limitation period running out. However, note that a simple agreement between counsel to mediate can suspend the running of certain limitation periods. See Sandro Steel Fabrication Ltd. Chiesa, 2013 ONCA 434.

4. The parties can agree in advance that, should the VPLM not result in a full settlement, the VPLM fulfills their mandatory mediation for R. 24.1 or 75.1 purposes. However, this typically requires a consent order at a later date exempting the parties from mandatory mediation. That said, one factor the court is to consider on a motion for such an order is “whether the parties have already engaged in a form of dispute resolution, and, in the interests of reducing cost and delay, they ought not to be required to repeat the effort” (see (G.) v. H. (C.D.) (2000), 50 O.R. (3d) 82 (S.C.J.)). In some cases, though, a second mediation, held after proceedings are commenced, may be beneficial in the end depending on timing. Also, remote mediations these days can take many forms.

5. Counsel and parties should be aware that the Commercial Mediation Act, 2010 might apply to their VPLM.

For more information about VPLMs, or to book another type of mediation, or a med-arb, please visit my website.

This blog is for educational purposes only and is not intended as legal or other advice.