Using mediation to negotiate contracts

June 8, 2015
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It now appears to be accepted by the vast majority of professionals that mediation is a cheap, quick and effective way to settle disputes. I have long held the view that this process could also be applied to the negotiation of contracts.

One area where I have seen this work is in lease renewals under the Landlord & Tenant Act 1954. Whilst, technically, the parties could be said to be litigating if proceedings have been issued, they are actually negotiating the terms of a new lease.

Clients often complain that lease renewals take on a life of their own and can end up with substantial costs being spent. This can be due to transactional lawyers toing and froing about the terms of the lease, valuers arguing over the rent and litigators trying to keep the court process at bay.

Would it not be sensible for the client to get together with its transactional lawyer and rental valuer in a room for one day and negotiate with the other side with the assistance of a mediator?

As well as saving time in getting deals done, this could also lead to fewer disputes in the future. If the client is present whilst the negotiations are happening there is less scope for misunderstanding. Everyone’s focus will be on the matter at the same time. As the negotiations progress the lawyers can work through the different options and ramifications with their client and adapt any drafting accordingly.

Mediation could also be used for other common forms of agreement, eg development agreements, sales and purchases, and the wider scope of general commercial contracts. It could also be used to negotiate s106 agreements, which are often a significant source of delay in the planning process.

The property Mediators have a specific fee structure where the one-day mediation model is not appropriate for the negotiations of the transaction. Details can be found here.

Jacqui Joyce – an earlier version of this article first appeared in Estates Gazette


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