March 25, 2021

Mediation: Coming Soon to a Computer Near You

For the most part, the transition to oral arguments on motions and other hearings via Zoom or conference call has gone smoothly. However, many trials and evidentiary hearings ground to a halt during the first several months of the pandemic. While some courts have resumed trials by Zoom, there is a backlog of contested matters on many court’s dockets.

As a result of the backlog, the use of mediation has increased over the past year to resolve disputes. The Mediation Panel for the United States Bankruptcy Court for the Eastern District of Michigan has continued to conduct mediations by video conferencing. The panel facilitates resolutions of matters ranging from the dischargeability of debts in consumer cases with impoverished debtors to complex commercial disputes.

Zoom is an attractive platform for mediation. The mediator sets up breakout rooms for each of the parties attending mediation, so the parties may have private discussions with their counsel. The mediator can hop in and out of breakout rooms to perform virtual, shuttle diplomacy in an effort to achieve a settlement.

The benefits of mediation by video conferencing are numerous. Litigants are not required to travel by train, plane or automobile for in-person mediations. Attorney fees may be significantly reduced. With the significant amount of downtime associated with mediation, attorneys and their clients are able to tend to other matters while the mediator is in the breakout room with the opposing party.

Litigants may be more inclined to bring financial advisors or expert witnesses to video mediations. For example, a financial advisor/expert may be instrumental in assisting to prepare a case for mediation in a complex fraudulent conveyance case. But in some circumstances, the parties do not want to pay the financial advisor to travel to and sit through a lengthy mediation session. Zoom mediations permit the financial advisor to hop on and off the mediation, and engage with the mediator as needed.

There are, however, some drawbacks to Zoom mediations. Some parties are more motivated or inclined to settle if they are “locked” in the mediator’s office conference room. Parties mediating remotely are easily distracted, and a party who may be recalcitrant to settle will find it easier to simply log off and end the mediation. Some attorneys need to be in the same room with certain clients to help push them towards settlement.

Mediation by Zoom may not work for every contested matter. However, even when the pandemic subsides, video conference mediations will continue to be used as an effective tool to resolve disputes among businesses and individuals – or between cats and dogs — in an efficient and timely manner.

This article first appeared in the TMA Detroit newsletter. 

Jason W. Bank is the chair of the firm’s Bankruptcy and Restructuring Practice Group. He focuses his practice in the areas of commercial bankruptcy, out-of-court workouts, corporate restructuring and creditors’ rights. Jason has successfully guided numerous businesses through out-of-court restructurings and Chapter 11 reorganizations. He has negotiated resolutions of complex financial issues and debtor-creditor disputes and achieved consensual restructurings while avoiding bankruptcy or litigation.

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Jason W. Bank