The Economic Value of Mediation

According to the CEDR Mediation Audit, 87% of mediations in the United Kingdom were successfully resolved in 2024. At the same time, the number of mediations increased by approximately 24% between 2022 and 2024, rising from 17,000 to 21,000 cases per year. This combination of high success rates and increasing case volume indicates that mediation is not used sporadically in the UK, but is firmly established as a method of resolving disputes in practice.

A different picture emerges in Austria, and in much of Europe more broadly. Here, available data says less about success rates and more about how often mediation is actually used. According to an Austrian study (MEDIAS), nearly three quarters of respondents (76.9%) have experienced conflict situations. Of these, 34.2% turned to lawyers, 21% pursued litigation, and 29.9% sought support through coaching, supervision or therapy. Mediation, by contrast, has only been used by a small proportion of the population (4.7%).

As a result, mediation is used far less frequently in the Austrian context. Disputes are more commonly handled through court proceedings, with the well-known consequences for time and resources. The difference to the United Kingdom, in my view, lies in how mediation is perceived. There, it is treated as a distinct strategic option rather than a preliminary step taken before escalation. In Austria, companies are less likely to consider mediation as economical alternative to litigation. The more relevant question is seldom asked: how long can a business afford to allocate resources to resolving the past instead of restoring its operational capacity? At a certain point, the key issue is no longer exclusively the legal position, but how long the conflict remains economically sustainable.

This article is the first in a series aimed at clarifying the role of mediation as part of a broader conflict strategy. It also draws on comparative perspectives to show how to unlock the full potential of mediation through proper preparation (Part 2) and through a clear understanding of roles, including the function of legal advisors (Part 3) and of the mediator (Part 4).

What can mediation achieve?

A common question is what value a neutral third party can add if they do not make decisions. If the parties have been unable to resolve the dispute themselves, why should a mediator make a difference?

The mediator does not provide a solution. Their role is to structure the process in a way that makes a decision possible. In practice, the issue is rarely the absence of viable options. More often, these options are not developed further because discussions become fixed on positions (instead of interests), arguments are repeated, and the aspects that actually matter for decision-making are no longer clearly identified. The mediator intervenes at this point, refocusing the discussion on what is relevant for reaching a decision.

Process responsibility. In many cases, the difficulty lies not in the substance of the dispute but in how decisions are made under conflict conditions. Information is perceived selectively, parties tend to overestimate their chances of success, and proposals are dismissed simply because they come from the other side. In addition, time and money already invested often make it harder to reconsider the chosen course. These dynamics delay or block decisions, sometimes for months or years. The mediator’s role is to limit distractions, and ensure that the issues relevant to a decision are actually addressed.

Future orientation. Litigation and arbitration focus on reconstructing past events and determining their legal consequences. Mediation takes a different approach. It focuses on what comes next and allows legal, commercial, operational and structural considerations to be addressed together. The economic effect lies in the fact that decision-making processes are not tied up for years but can be redirected to the operational business at an earlier stage. This not only reduces costs but also shortens periods of limited decision-making capacity within the organisation.

Focus on economic issues. The mediator helps to bring the core of the dispute into focus and is not confined to the legal claims or a purely legal assessment. This includes jointly addressing conflict analysis, identifying where a position is not economically sustainable, where assumptions do not hold, or where what is framed as a legal issue in fact reflects an underlying structural or operational problem. How the mediator works depends on the situation. In some cases, the emphasis is on giving the parties space to develop their own thinking. In others, a more active approach is required, for example by testing assumptions, making consequences explicit, or sharpening the parameters relevant for decision-making.

A typical example is a deadlock between shareholders. Court proceedings may clarify the legal position, often only after several years. For the business, however, the more relevant question is different: how can operational capacity be restored in the short term? This question is often not decisive from a legal perspective, but it is central from a commercial one. In mediation, it is addressed directly.

What makes mediation effective?

Effective mediation depends on three factors: preparation, clear role allocation, and the ability to take decisions. These same elements are reflected in international frameworks such as e.g. the VIAC Mediation Rules, the ICSID Mediation Rules and the UNCITRAL Mediation Rules.

In more detail:

Preparation. Parties need to assess not only their legal position, but also the economic implications of different scenarios (i.e. BATNA). What does litigation cost, how long will it tie up resources, and what is the impact of an unresolved conflict on the business? It is equally critical to understand what the dispute is actually about beyond its formal legal framing. In shareholder disputes, the formal issue may be veto rights or governance clauses. In practice, it is often about liability exposure, operational deadlock or liquidity constraints. Without that clarity, discussions tend to focus on legal detail while the underlying drivers of the conflict remain unaddressed.

Role allocation. In litigation and arbitration, the dispute is largely conducted through lawyers. They prepare arguments, present the case and communicate with the opposing side, while the client remains involved but does not lead the process. In mediation, this balance shifts. The parties themselves negotiate, develop options and make decisions at the table. Lawyers remain involved, but their role changes: They provide legal input, assist in the process analysis, assess options and BATNA and advise on consequences, but they usually do not plead on behalf of the client.

This requires a different type of preparation. Instead of focusing on written submissions and evidence, parties need to define negotiation parameters, clarify decision-making authority and agree on how they will coordinate during the process. Who raises which issues? When are breaks needed for internal consultation? How should unexpected proposals be handled? Legal work does not disappear but is still vital, but it is moved forward and used directly in the decision-making process rather than being developed afterwards.

If these roles are not clearly defined in advance, mediation can become ineffective, either because it is unclear who is actually negotiating or because parties and advisors are not aligned in their strategy or expectations. The practical interaction between clients and legal advisors will be addressed in Part 3.

Outcome orientation. In the United Kingdom, mediation is typically approached as a setting in which a resolution is expected to be reached based on prepared proposals and varying options. Parties come to the table ready to engage with concrete scenarios. As a result, around 70% of cases are resolved on the same day.

In Austria, mediation is more often seen as an intermediate side step on the path to litigation. This affects both preparation and negotiation behaviour. Options are explored less rigorously, and decisions are more likely to be postponed. In practice, this leads to longer conflicts, with corresponding increases in cost, uncertainty and operational constraints.

Takeaway

Available data shows that mediation can achieve high success rates. In practice, however, the key question is not whether mediation works, but under what conditions it offers a commercial advantage over litigation or arbitration. This requires a structured assessment of risks and a clear understanding of the available decision-making space. In many cases, this is not primarily a legal question, but a commercial one.

The economic value of mediation therefore lies not only in the process itself, but in how it is prepared and in how effectively existing decision-making space is used before time, cost and positions become further entrenched.

The following parts of this series will examine how this preparation can be structured in practice and how the roles of parties and legal advisors as well as the mediator should be defined.