This form mediation clause provides first for direct negotiations between the principals, which if unsuccessful, requires mediation. Items in red are negotiable between the parties. Clauses encourage parties to employ a TALK FIRST philosophy instead of a fight first one.
In the event that any dispute arising out of or relating to this agreement, or the breach thereof, the parties agree to first attempt resolution through direct negotiations between representatives of the parties involved, followed by direct negotiations between executives with decision-making authority who are at a higher level than the personnel involved in the dispute.
To initiate a negotiation, a party shall give the other party written notice of any dispute not resolved in the normal course of business. Within [30][1] days after delivery of the notice, the executives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.
If the dispute has not been resolved by negotiation as provided herein within [45] days after delivery of the initial notice of negotiation, [or if the parties failed to meet within] 20 [days,] the parties shall endeavor to settle the dispute by mediation under the CPR Mediation Procedure[2] [currently in effect OR in effect on the date of this Agreement], [provided, however, that if one party fails to participate as provided herein, the other party can initiate mediation prior to the expiration of the] 45 [days.]
The parties have selected [insert name] [See below for methods of selecting a mediator] as the mediator in any such dispute, and [he][she] has agreed to serve in that capacity and to be available on reasonable notice. If [insert named mediator] becomes unwilling or unable to serve, the parties have selected [insert name] as the alternate mediator. If neither person is willing or able to serve, the parties will agree on a substitute with the assistance of CPR. Unless otherwise agreed, the parties will select a mediator from the CPR Panels of Distinguished Neutrals.
Methods of choosing the Mediator. Although the mediation field does not uniformly agree, most mediation participants prefer that the mediator have experience in the subject matter and in the mediation process. Mediator types fall into two general categories: not naming a specific mediator and naming a specific mediator.
Each party may select two that meet the criterion, and if overlap they’ve selected a mediator. If no overlap, the parties can flip a coin, or a third person a third person selects only whether the selected mediator’s last name is closest to “Z”, or the party with the youngest pet chooses from papers with their names on them. You get the idea.
- No specific mediator named.
- A. Pick a mediator by naming an organization that administers the process, i.e. American Arbitration Association https://www.adr.org/Clauses, or for high value matter, The International Institute of Conflict Prevention and Resolution (CPR) https://www.cpradr.org/. Those organizations will name one or more mediators who have been pre-screened for competence. The disadvantage is that the process adds to the cost of the matter. Note that each of these organizations have their own preferred clauses.
- B. Pick a mediator by naming a specific pre-screened panel of mediators i.e. National Academy of Distinguished Neutrals https://nadn.org/maine; any relevant court panel if pre-screening involved. An advantage is that there is security in knowing that the mediator is qualified. Other organizations host panels of mediators that do not have a rigorous pre-screening process, including many court panels, Mediate.com panel, etc.
- Each party may select no more than two from the panel, and if overlap, they’ve selected a mediator. If no overlap, the parties can flip a coin, or a third person selects from the choices, or a third person selects only whether the selected mediator’s last name is closest to “Z”, or the party with the youngest pet chooses from papers with their names on them. You get the idea.
- C. Pick a mediator by identifying standards for mediator qualifications beyond just the no conflicts term. For example, mediation and legal practice experience in commercial contracts, in cannabis, in lending, real property, etc. Include this criterion in the contract clause. Each party picks no more than two mediators.
2. The contract may name a specific mediator with provision for a successor if the first is unable or unwilling to serve.
[1] Time periods can vary depending upon the time sensitive nature of the matter.
[2] It is helpful for the parties to select a mediation procedure during the contracting period rather than deferring until the matter is in dispute. The mediation procedure provided by the non-profit, the International Institute of Conflict Prevention and Resolution (CPR) contains balanced customary mediation procedures. The parties should read the procedures before incorporating them in your contract clause. I paste them on the following page for ease of reference. One issue may arise in reviewing these procedures depending upon the amount in controversy and the sophistication of the parties: consider whether the parties want to insist that counsel be included in the process, see 3(f). Of course, the parties can incorporate the actual procedures into the clause. See https://www.cpradr.org/resource-center/rules/mediation/cpr-mediation-procedure for the CPR procedures.