I have spent the better part of my career litigating business disputes in the Delaware Court of Chancery, the Delaware Superior Court, and the United States Bankruptcy Court for the District of Delaware. Over the course of that work, one of the things I have come to appreciate most is the mediation process.
As a Delaware Superior Court Certified Mediator and a mediator on the United States Bankruptcy Court for the District of Delaware’s Mediators List, who has handled corporate, commercial, and bankruptcy disputes, I have seen mediation work from every angle—and I find that when it is approached with proper preparation and commitment, it can produce outcomes that litigation often cannot. This post discusses why I believe mediation deserves serious consideration in business disputes, and outlines the practical steps that I have found—both from the perspective of a mediator and counsel—lead to successful resolutions.
The Limits of Litigation
To be clear, litigation remains essential in many contexts. When a party requires injunctive relief, when fiduciary duties have been egregiously breached, or when a dissolution proceeding demands judicial oversight, there is no substitute for the courtroom.
However, litigation carries costs that extend well beyond legal fees. Discovery is frequently invasive and time-consuming. The timeline is largely outside the parties’ control. Perhaps most significantly, the adversarial process tends to harden positions rather than resolve the underlying business problems that gave rise to the dispute. In shareholder disputes, partnership disagreements, and other corporate governance conflicts, the core issue is often a fractured relationship between business partners or co-owners—and a judicial ruling, no matter how well-reasoned, rarely repairs that relationship or addresses the full range of interests at stake.
Why Mediation Works
Mediation succeeds because it fundamentally changes the dynamic of a dispute. Rather than two sides advancing competing positions through the court system, the parties engage with a neutral who can facilitate dialogue, test assumptions, and help each side understand the other’s perspective. I find that shift in perspective is often the single most important catalyst in moving entrenched parties toward resolution.
Mediation also affords the parties a degree of control and creativity that litigation does not. A court’s remedial authority is bounded by the claims and defenses before it. In mediation, by contrast, the parties can craft resolutions that account for business realities, tax considerations, ongoing relationships, and other interests that fall outside the scope of a judicial proceeding. In the “business divorce” context—where partners or co-owners are unwinding a venture—I have found this flexibility to be particularly valuable, because these disputes almost always involve interests that no court order can fully address.
The Disputes That Benefit Most from Mediation
Certain categories of business disputes are particularly well-suited for mediation. Shareholder and partnership disputes are a prime example. These matters frequently involve parties who need to separate economic interests and disentangle governance arrangements, and where creative deal structures—buyouts, structured payments, non-compete arrangements—can produce outcomes superior to binary judicial rulings. Dissolution proceedings under the Delaware General Corporation Law and the Delaware LLC Act similarly benefit from mediation, because the parties often share an interest in preserving enterprise value rather than watching it erode through prolonged litigation.
Bankruptcy disputes represent another area where mediation can be highly effective. Disputes over preference actions, adequate assurance under Section 366, lease assumptions and assignments, and contested claims can often be resolved more efficiently through mediation than through contested motions and adversary proceedings—particularly where the estate’s limited resources make protracted litigation a poor use of creditor recoveries.
Steps to a Successful Mediation
Mediation is not simply a matter of showing up and hoping for the best. The mediations that succeed—and that produce resolutions the parties can live with—share certain characteristics in their preparation and execution. Below are the steps that I have found to be most important, both as an advocate representing clients in mediation and as a mediator facilitating the process.
Selecting the right mediator. The choice of mediator matters enormously. Parties should look for a mediator with substantive expertise in the relevant area of law—someone who understands how Delaware courts analyze the claims at issue, who can assess the realistic range of outcomes at trial, and who can engage credibly with the legal and business arguments on both sides. In my experience mediating Court of Chancery and bankruptcy disputes, the sessions that produce results are those in which the mediator can offer a candid, informed evaluation of each side’s litigation risk. A mediator who lacks subject-matter familiarity may struggle to move parties off entrenched positions, because those parties will not trust the mediator’s assessment of their case. Conversely, a mediator who has litigated the same types of claims at issue—fiduciary duty disputes, governance conflicts, preference actions, contested dissolutions—can speak to the parties with a credibility that facilitates movement.
Timing the mediation appropriately. Timing is critical. Mediation conducted too early—before the parties have a clear picture of the facts and the legal landscape—may be premature and unlikely to succeed. Mediation conducted too late—after years of contentious litigation have calcified positions—can also be difficult. What I like to see is mediation scheduled after initial discovery has provided both sides with enough information to make informed assessments of risk, but before trial preparation costs have escalated to the point where the parties feel compelled to “see it through.” In my experience, that window is where the process has the greatest chance of success.
Preparing thorough mediation submissions. The quality of pre-mediation submissions directly affects the quality of the session. Each party should prepare a concise but substantive mediation statement that outlines the key facts, the applicable legal standards, the strengths and vulnerabilities of each side’s position, and—critically—the party’s underlying business interests and objectives. A confidential submission to the mediator, separate from the shared brief, can be particularly useful for candid discussions of settlement ranges and priorities. Speaking from the mediator’s perspective, I review these submissions carefully and come into the session prepared to engage substantively with the issues from the outset. The parties’ investment in thorough submissions is repaid many times over during the session itself.
Sending decision-makers to the table. One of the most common reasons mediations fail is the absence of individuals with actual settlement authority. I find it essential that the people at the table have the ability to make binding decisions. When a party’s representative needs to “call back to the office” for approval, momentum is lost and the process stalls. I like to confirm in advance of the session that principals or officers with full authority will attend, either in person or with immediate availability, so the session can capitalize on any progress that is made.
Approaching the process with genuine openness. Mediation requires a willingness to listen and to reassess. Parties who approach mediation as a litigation exercise—using the session to posture for trial rather than to explore resolution—rarely achieve productive results. The most successful mediations occur when both sides arrive prepared to hear candid feedback about their positions, to understand the other side’s perspective, and to think creatively about solutions that address the interests of all parties. As a mediator, I find that being direct with the parties about where their arguments are strong and where they face genuine risk is often what breaks the logjam. That candor is not always comfortable, but it is what the parties need to make informed decisions about settlement.
Memorializing the agreement before leaving. When the parties reach a resolution, I find it critical to reduce the material terms to writing before the session concludes. A signed term sheet or memorandum of understanding—even if a more comprehensive agreement will follow—prevents the backsliding that can occur when parties return to their respective corners and begin second-guessing the deal. I like to keep the parties in the room until the essential terms are documented, and I encourage counsel to come prepared with template settlement language for the type of dispute at issue.
Mediation is not a concession of weakness—it is a strategic decision to pursue a controlled outcome. I have seen it resolve disputes that seemed intractable, and I have found that the combination of preparation, candor, and a willingness to look beyond legal positions to the underlying business interests is what makes the difference. The difference, in my experience, is almost always in the preparation and the willingness of the parties to engage with the process honestly. When those elements are present, the results speak for themselves.