Heather Macklin | Epiphany Law

In business, it’s common for disputes to arise. Developing cost effective strategies for dispute resolution is critical for achieving a healthy bottom line. Because employers and business owners generally seek to avoid litigation (it is time consuming, expensive and emotionally draining), mediation has become more common. The below summary compares the differences between mediation and litigation and provides insights as to why the popularity of mediation is on the rise.

Employers and Business Owners understand

Litigation – Refers to a formal process that uses either state or federal court to resolve the dispute. To determine the court, you must examine the claim(s) asserted, the amount at issue and where the parties reside. Though you filed your claim with the court, the judge may require the parties attempt to resolve the dispute through mediation.

Mediation – Refers to an informal and confidential process that uses a neutral third-party, the mediator, to help the parties discuss their differences and consider potential solutions to those differences. If the parties cannot reach an agreement “that both parties can live with,” you still have the right to file a claim with the appropriate court to have a judge or jury determine the outcome of your case.

Where is the process held?

Litigation – Hearings are held telephonically or in the court room.

Mediation – You and the other party determine if the mediation is held at your counsel’s office, opposing counsel’s office, the courthouse, the mediator’s office, or even virtually. Depending upon the mediator’s and/or the parties’ preferences, the parties may be placed in the same room or in separate rooms. If in separate rooms, the mediator will walk between the rooms and present each party’s positions, thoughts and arguments to the other party.

Are the conversations confidential?

Litigation – Correspondence is not confidential and can be used as evidence at a hearing unless the correspondence is related to negotiations between both parties’ counsel to resolve the dispute.

Mediation – Correspondence and evidence presented during a mediation session is confidential and cannot be used by the other party as evidence at a hearing. The mediator cannot be called to testify and will maintain the confidentiality of everything learned through the mediation.

What is the length of the process?

Litigation – The litigation process typically takes 2-3 years to reach a court judgment. The case may extend beyond 3 years if multiple motions are filed and depending on how complicated the claims are.

Mediation – The mediation process typically takes less than a year, and can sometimes be resolved within weeks. It often depends on the mediator chosen and schedules of all involved. Sometimes, you may attend multiple mediation sessions if both parties are continuing to progress towards a resolution.

Who determines the outcome?

Litigation – Judge or Jury. Besides presenting your case, the outcome is completely out of your hands and in the hands of the judge or jury.

Mediation – You. The mediator does not tell you who is right or wrong. The mediator does not render a decision. The Mediator is there to guide the conversation between you and the other party. Ultimately, you are the one presenting, crafting and responding to potential solutions. You are the one making the decision to accept or decline a solution. The outcome of the mediation is in your hands.

What is the potential outcome?

Litigation – The judge or jury determines a winner and a loser. The judge or jury determines the damages owed to the winner based on claims presented, case law and statutes.

Mediation – Both parties are winners. The parties, of their own accord, mutually decide to end the dispute and accept an outcome that both can live with at the end of the day.

What will the process cost?

Litigation – Below are conservative estimates of costs expected to reach a court judgment in Wisconsin courts. The costs will vary depending on the complexity of your claims and/or the dispute itself. For instance, if your case requires expert witnesses, you will pay more than the estimated costs. Also, the opposing party and/or counsel may cause your counsel to have to submit motions and briefs, which will increase your costs above the estimated costs. Remember, though, that you and the opposing party may settle the dispute prior to receiving a court judgment.

Court Filed in	Represented by Counsel	Costs
Small Claims	Yes	Filing Fees plus $5,000
Small Claims	No	Filing Fees
Large Claims	Yes	Filing Fees plus $25,000 – $50,000
Large Claims	No	Filing Fees
Federal Claims	Yes	Filing Fees plus $30,000 – $60,000

**Wisconsin and Federal Courts require companies be represented by counsel in Large Claims.

Mediation – Mediators usually charge between $250 – $350 per hour. If your case requires knowledge of a unique field or industry, the mediator may charge more than $350 per hour.

What about receiving my legal fees?

Litigation – Whether you receive legal fees depends on statutes, contract language and the discretion of the judge. If statutory or contract language allows the winning party to receive legal fees, the judge will determine the reasonable legal fees that the losing party will pay. The table below shows what you will receive if the judge awards legal fees.

Court Filed in	Legal Fees
Small Claims	$150 if judgment in favor; $300 if represented at trial and judgment in favor
Large Claims	Reasonable fees – depends on contract and/or statutory language
Federal Claims	Reasonable fees – depends on contract and/or statutory language

Mediation – Whether you receive legal fees depends on the other party’s willingness to agree to pay your legal fees. Most likely, the other party will not explicitly agree to pay your legal fees.

How do I locate a mediator?

The state bar association has a list of mediators who can be contacted for an appointment. However, it is advisable to work with your attorney first to determine if mediation is right for your case. Your attorney will spend time investigating and selecting the right mediator for your case.

Would you like to learn more about mediation? Contact us here. Epiphany Law Partner Heather Macklin is an accredited mediator with over 20 years of litigation and dispute resolution experience.

The construction industry faces unique challenges. Disputes over quality, timing and non-payment are common between project owners and contractors. But, the good news is there are several strategies your company can use to avoid costly lawsuits. Review the list below to learn how you can protect your construction company.

1 – Clear Communication is Key

If you want to avoid disputes with clients, employees and competitors, good communication is essential. You should always take time to clarify expectations and make a habit of doing the following.

Never over promise.
Keep the promises that you make. However, if you cannot keep your promise for some reason, let the person know. Offer a plan on how you will resolve the issue and make it right. Call first, then follow up with an email detailing the agreed-upon terms to resolve the issues.
Don’t avoid difficult situations or conversations. Avoidance is more likely to cause the problem to escalate.
Evaluate how your tone may be perceived. And remember that email or text messages can make it difficult to effectively convey your desired tone.
Don’t be afraid to swallow your pride. Doing so could help you resolve an issue before it becomes a legal matter.
Evaluate and enforce best practices regarding how your employees should communicate.

2 – Make Documentation a Priority – especially when it comes to change orders

To help protect yourself and your business, take time to document important communications and commitments. A few best practice tips for keeping appropriate documentation:

Don’t do handshake deals. All contracts should be committed to writing – even if it’s a simply one-page agreement setting forth the most basic terms, like price, scope and timing. In particular, when dealing with change orders, it is especially important to get everyone’s approval in writing.
Be sure to have key customer contracts reviewed by counsel, in order to help you understand the relevant provisions. It is also best to hire legal counsel for, at a minimum, reviewing and/or drafting of custom deal contracts, settlement agreements, employee handbooks, document retention policies, sexual harassment policies, and non-compete agreements.
Be sure to have counsel review your company’s standard contracts every 2 to 3 years.
Save only what is important, such as contracts, loan documents, key documents underlying contracts and relevant negotiations, proof of payment, calendars, and tax information.

Important note – If you are anticipating business litigation, you must implement a litigation hold (also known as a preservation order or hold order). Once you know of the existence of a dispute or even a potential dispute, save all information. The loss of relevant evidence because of failure to institute a litigation hold can result in negative sanctions against you by the Court in any related litigation.

3 – Protect Yourself: Review your insurance, business formation and employee classifications regularly.

Insurance isn’t a popular topic of conversation, but it is an important aspect of risk mitigation especially in the construction industry. Review the following points to help ensure your business is accurately covered.

Make sure that all current policies are correct and appropriate for your organization.
Investigate your options with multiple brokers.
Determine if the insurance company you are working with focuses on your niche business needs. Are they industry-specific to you?
Understand your potential need for multiple types of policies, including general commercial liability, errors and omissions, auto, property, workers comp, product liability, and other riders/endorsements.
Understand the obligations you owe to your insurance company, such as notice requirements, providing documents and cooperating fully in any investigation. Don’t settle with the other side without first getting your insurance company involved if you expect your insurance company to contribute funds toward the settlement.

Business Formation – Occasionally, business owners are surprised to learn their business structure is not aligned with their type of work. To help minimize liability, you should engage counsel to help determine the appropriate corporate entity for your business. You will also want to keep corporate records, annual reports and minutes if your business formation requires it. Make sure to follow all the formalities of your business structure in order to ensure protection from personal liability. And don’t commingle funds or use the company bank accounts as your personal piggy bank!

Employee classifications and wage issues – The Fair Labor Standards Act and the US Department of Labor (DOL) have established strict criteria for determining how your employees must be paid. On January 1, 2020 the DOL announced an updated overtime and salary level threshold. It’s important your company stays up-to-date and adheres to all labor laws. Unfortunately, many employers (especially in the construction industry) haven’t correctly classified their independent contractors and employees or are engaging in “banking” of hours that directly violates the overtime laws. Often employees are thought to be exempt from receiving overtime pay when they actually should have non-exempt status and be paid 1.5 times for any overtime hours earned each week. Payroll errors can lead to potential lawsuits (including class actions) from either past or present employees.

To learn more about business litigation and how you can proactively protect your construction business, you can contact us here or call us at 920-996-000.

Tag: Heather Macklin

Litigation vs. Mediation