The Conventional Wisdom Gets It Backwards
The standard advice goes something like this: try mediation first, and only litigate if it fails. That sequence sounds sensible, and sometimes it is. But in practice, many commercial disputes resolve faster and on better terms when mediation happens after proceedings have commenced, not before.
Understanding why that is, and how to position yourself to take advantage of it, is worth thinking through carefully before your next dispute escalates.
What Changes Once Proceedings Are on Foot
Before a statement of claim is filed, the parties often have asymmetric information. Each side knows its own case well, but the other side's position, documents, and vulnerabilities are largely unknown. That uncertainty gives both sides reasons to overestimate their position. Optimism bias is real, and it keeps people apart at the negotiating table.
Once proceedings commence, several things shift:
- Pleadings define the issues. Vague grievances become specific legal claims. Both sides now see what is actually in dispute.
- Discovery produces documents. Evidence that one party assumed was in their favour sometimes tells a more complicated story once the other side's records are in the mix.
- Costs begin to accumulate. Once solicitors' fees and court fees are real and mounting, commercial pragmatism sharpens on both sides.
- Schedules become real. A trial date on the horizon concentrates minds in a way that an abstract threat of litigation never does.
None of this is an argument for rushing to court. It is an argument that litigation and mediation are not simply alternatives, they can work in sequence, with each stage creating the conditions for the other to succeed.
When Early Mediation Does Make Sense
There are disputes where mediating early is the right call, and you should know what those look like.
Early mediation tends to work well when:
- The relationship between the parties has genuine ongoing value and both sides want to preserve it
- The facts are largely agreed and the dispute is about how a contract should be interpreted
- There is an obvious commercial middle ground that both sides can see but neither wants to propose first
- Speed matters more than leverage, for instance where a project is stalling and every week of deadlock costs real money
In those situations, waiting for proceedings to provide information and pressure may simply waste time and goodwill that cannot be recovered.
The Question to Ask Before You Decide
The most useful question is not "should we mediate or litigate?" It is: what information does the other side need to receive before they will negotiate seriously?
If the answer is "none, they already know what we know," early mediation is worth attempting. If the answer is "they need to see what our documents actually show" or "they need to understand the costs exposure they are facing," then commencing proceedings first, or at least completing some targeted disclosure, may produce a better mediation outcome than going in cold.
A Note on Court-Ordered Mediation
Queensland courts routinely order parties to mediate at various points during proceedings. That mechanism exists for a reason. Judges understand that a mediation conducted after the issues are defined and some evidence exchanged tends to be more productive than one conducted in the early stages of a dispute when neither side has tested its position.
Being ordered to mediate is not a sign that your case is weak. It is often an opportunity dressed up as an obligation.
Getting the Sequencing Right
There is no formula that works for every dispute. The right moment to mediate depends on the nature of the claims, the personalities involved, the documents in play, and what each party genuinely needs to walk away satisfied. That assessment is part of the strategic advice your lawyers should be giving you from the outset, not an afterthought once things have gone wrong.
If you are weighing up how to handle a commercial dispute and want a clear-eyed view of when and how mediation might fit into your approach, we are happy to have that conversation. Reach out to the BA Legal team to arrange an initial consultation.