The question "do we go to court or do we settle" is almost always decided by feelings: a sense of grievance calls for court, exhaustion calls for a deal. I suggest we do the sums instead.
What the cost of litigation is made up of
Court fee. For monetary claims it is calculated on the amount, and if you win it is recovered from the defendant — provided he is solvent.
Representation. Usually a fixed sum per instance plus a possible percentage. It is recoverable on a reasonableness basis, which means partially.
Expert evidence. In disputes about quality, about the value of a business or about real estate, this is the main item of expenditure and the main source of delay. A repeat expert report doubles both.
Time. First instance takes three to six months, appeal two or three, cassation another two. Eighteen months to an enforceable judgment is a normal timeframe for a dispute of average complexity.
Enforcement. A judgment is not the same as money. Enforcement proceedings add months, and where there are no assets they produce nothing at all.
The hidden part. The director's attention, the accounts department's time, a frozen relationship with the counterparty, reputational costs if the dispute is public.
What the cost of mediation is made up of
The mediator's fee, usually split between the parties. Time: one to three sessions of two to four hours. Preparing the documents — the agreement and, where needed, notarial certification.
That is all. This is exactly why a comparison in money almost always favours mediation — the real question is a different one: is a deal achievable at all.
Where mediation works
A partnership conflict where the parties are bound to keep meeting each other afterwards. A court will determine the shareholdings, but it will not restore the ability to run the company.
A family dispute involving children. Arrangements for contact agreed by the parents are complied with; those imposed by a court often are not.
A dispute with a counterparty whose relationship is worth more than the amount in dispute. A major client, a sole supplier, the landlord of good premises.
An inheritance dispute between relatives, where what is at stake is not only property.
An employment conflict with a key employee, where both sides have an interest in parting quietly.
Where it does not work
Where one party needs a court judgment precisely as such: to write off a debt, for the insurer, for the tax authorities, to account to its own shareholders.
Where the dispute is about a right rather than about money: who owns the asset, whether the contract is valid.
Where one of the parties is playing for time and using the talks as a way of putting things off.
Where the breach is obvious and there is a notary's writ of execution or an incontestable document — it is simpler to enforce.
And where the parties are substantially unequal in strength and the weaker one does not understand its rights: the deal will be unfair and will fall apart later.
What force the deal has
A mediated settlement agreement is a civil-law transaction. If it is breached you will have to go to court, but now on that agreement, which is simpler than the original dispute.
A mediated settlement agreement certified by a notary has the force of an enforcement document: with it you go straight to the bailiff, bypassing the court. That is the key argument in favour of the notarial form.
If the dispute is already before a court, the deal is recorded as a settlement agreement and approved by a court ruling — which has the same force as a judgment.
A simple calculation for the comparison
Take the amount in dispute and multiply it by the probability of winning as your lawyer honestly assesses it, not optimistically. Subtract the irrecoverable part of the costs. Discount it for time: money in eighteen months is worth less than money today. Multiply by the probability of actually recovering from this particular debtor.
Compare the resulting figure with the sum you would be prepared to settle at today. In my practice the gap usually does not favour litigation — and that is precisely why most cases end in an agreement, only two years later.
I set out how pricing works in my first reply, before any work begins.
I provide legal services through the company Kovalev & Partners LLC — kovalev.moscow. As a mediator I do not advise one individual party to a dispute: my role is to help the parties reach agreement.
