In the world of commercial real estate, disputes between landlords and tenants sometimes occur where direct communication is not leading to a solution. These conflicts can arise from various issues, such as lease terms, maintenance responsibilities, rent adjustments, or property use. While most people believe that litigation is go-to method for resolving such disputes, many leases state that litigation must not proceed until an Alternative Dispute Resolution method has been tried. One of these ADRs is mediation.
Mediation is increasingly being recognized as a valuable alternative, offering numerous benefits over the adversarial approach of the courtroom with the result of a solution worked out between the parties and not decided by either judge or jury. A good example, (tongue-in-cheek) of the mediation process is often shown in the HBO series Sopranos. Here, the mafia members call it a “sit-down” with the result of monies being exchanged or fined upon a violating member. The law frowns upon any other Soprano method of “resolution” besides the exchange of funds or duties. So no worries there…
Understanding Mediation
Mediation is a form of alternative dispute resolution (ADR) where a neutral third party, the mediator, facilitates negotiations between the disputing parties to help them reach a mutually acceptable solution. Unlike a judge or arbitrator, a mediator does not impose a decision. Instead, they guide the parties toward a consensus, fostering communication and understanding. Texas, and particularly the Dallas-Fort Worth area, has a plethora of experienced mediators, some being former District and County judges whose experience with civil litigation has been a decade or more.
Benefits of Mediation in Commercial Lease Disputes
- Cost-Effective: Litigation can be expensive, involving attorney fees, court costs, and other expenses. Mediation typically costs significantly less, as it usually requires fewer billable hours from legal professionals and eliminates many procedural expenses associated with court cases. The mediator’s fees, ranging from $300.00 per side half day to $2100.00 per side full day must be paid by each party before the mediation date.
- Time-Saving: Court cases can drag on for months or even years. Mediation, on the other hand, can often be arranged quickly and resolved in a matter of days or weeks. This swift resolution allows both parties to return to their business operations without prolonged disruption.
- Confidentiality: Court proceedings are public, and the details of the dispute can become part of the public record. Mediation sessions are private, and the discussions and agreements reached are confidential. This confidentiality can be particularly important in commercial disputes, where sensitive business information is often at stake.
- Control Over Outcome: In mediation, the parties retain control over the resolution of their dispute. They are not bound by a third party’s decision, as they would be in litigation or arbitration. This control allows for more creative and flexible solutions that can address the specific needs and interests of both parties. Here, the adage is settlement equals certainty.
- Preservation of Relationships: Commercial lease disputes often occur between parties who have an ongoing business relationship. Mediation’s collaborative nature helps maintain and even strengthen these relationships by fostering mutual respect and understanding. This can be crucial for landlords and tenants who wish to continue their lease agreement amicably.
- Customizable Process: Mediation is highly adaptable to the needs of the parties involved. The process can be tailored to the specific context of the dispute, allowing for more relevant and efficient resolution strategies.
The Mediation Process
The mediation process typically involves several stages:
- Initiation: One party proposes mediation, and if the other party agrees, they jointly select a mediator. The mediator should be experienced in commercial real estate and familiar with the relevant laws and regulations.
- Preparation: The mediator gathers information from both parties to understand the dispute’s context. This may involve reviewing lease agreements, correspondence, and other pertinent documents.
- Mediation Sessions: During the mediation sessions, the mediator facilitates discussions between the parties. They encourage open communication, help clarify misunderstandings, and explore potential solutions. The mediator may hold joint sessions with both parties or separate sessions (caucuses) with each party to discuss issues privately.
- Negotiation and Agreement: As discussions progress, the parties work towards a mutually acceptable agreement. The mediator helps them draft a written settlement agreement that outlines the terms of their resolution. Once signed, this agreement is binding and enforceable.
- Follow-Up: The mediator may follow up with the parties to ensure compliance with the agreement and address any residual issues.
Preserve Business Relationships with Sprigg-Novak Law Firm
Mediation offers a practical, efficient, and effective means of resolving commercial lease disputes. By prioritizing communication, confidentiality, and collaboration, mediation can save time and money while preserving business relationships. As commercial real estate continues to evolve, mediation will likely play an increasingly vital role in dispute resolution, benefiting landlords and tenants alike. The attorneys at Sprigg-Novak law have participated in dozens of mediation sessions, and are well-versed at supporting their client position in these forums. Contact Sprigg-Novak Law today at 214-216-1667 should you find yourself in a position needing a mediated settlement for your commercial lease
