Who Pays For Mediation Costs

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Posted by: Sep 01, 2023

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Mediation can be a fantastic, cost-effective alternative to litigation if facing a contentious business issue. This is particularly true if you must maintain a relationship with the other party going forward. The cost of mediation can vary depending on the specific circumstances and the mediation process chosen. You may still wonder, do both parties have to pay for mediation? The answer is that the cost is often shared between the parties involved, but the parties can structure the cost differently based on the facts of their dispute.

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At The Curley Law Firm, we focus our practice on helping Texas business owners understand their options when handling disputes. We have helped thousands of Texans handle business conflicts in a speedy and cost-effective manner. Read on to learn more about mediation costs and ways the cost can be split between the parties. If you have any questions, don’t hesitate to contact us today.

Common Ways Costs of Mediation Are Divided

Mediation is a more flexible process than litigation. The division of costs is usually left up to the parties. Three common ways to decide who pays for mediation are as follows.

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Shared Cost Mediation

In many mediations, both parties typically share the cost of the mediator’s fees equally or in some agreed-upon proportion. This is often the fairest way to distribute the expense and encourages both parties to participate in good faith.

This arrangement is typically set out at the start of the relationship between the parties long before any dispute arises. That way, when a problem does occur, the parties are not left asking who is responsible for the cost of mediation. Instead, the contract establishes a straightforward process, and the parties know what to expect.

Party Responsible Mediation

Sometimes, one party may agree to cover the entire cost of mediation as part of negotiations or to facilitate the process. This can be a strategic decision made by one of the parties to demonstrate commitment to resolving the dispute. It can be a decision made during the conflict, or, in some cases, one party will even agree to pay to mediate any dispute at the start of the business relationship.

Court-Ordered Mediation

A court may order mediation as part of a legal proceeding, such as a divorce or civil lawsuit. This issue typically arises after the case has been submitted to litigation and the parties have spent their time and money trying to resolve it in court.

In cases of court-ordered mediation, the issue of who pays for mediation is left up to the court. The court will usually specify how the mediation costs will be divided. Sometimes, depending on the nature of your dispute, the court is legally required to split or impose costs on one party. Be sure to speak to an experienced business dispute lawyer as soon as possible if your case is headed to court-ordered mediation.

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Mediation Clauses in Contracts

As we mentioned, some contracts, particularly in business or commercial agreements, may include a mediation clause specifying who is responsible for the cost of mediation if a dispute arises. Such clauses are negotiated and agreed upon by the parties in advance.

A skilled business lawyer at The Curley Law Firm can help you interpret your contract and determine what, if anything, you have to pay to mediate your business dispute. We can also help guide you through the mediation process.

Insurance Coverage

In some instances, insurance policies may cover the cost of mediation, such as in disputes involving liability insurance. Depending on the issue in dispute, the insurance company may cover the mediation expenses on behalf of one or both parties.

Pro Bono or Low-Cost Mediation Services

There are situations where mediation services are available at a reduced cost or even for free, especially in cases involving low-income individuals or certain types of disputes. Community organizations, legal clinics, or government agencies may provide these services.

As experienced mediators, The Curley Law Firm can help you identify these services and determine whether your dispute may qualify for assistance. Additionally, we have worked with hundreds of mediators throughout Texas and the U.S. and can help you handle your mediation cost-effectively.

The cost of mediation can vary widely based on factors such as the complexity of the dispute, the mediator’s experience, and the location of the mediation. Before proceeding, a skilled mediation attorney can help you get information about the fees and payment arrangements with the mediator or mediation service provider.

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Talk to The Curley Law Firm About Your Mediation Today

Typically, business disputes can be resolved without a trip to the courthouse, and mediation is a terrific alternative to litigation. An experienced business dispute attorney at The Curley Law Firm can help resolve disputes quickly so owners can get back to what they do best: running the business.

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