Accountants and Mediation

Accountants usually have long-term relationships with their clients and often see them through various stages of life. However, when the client is going through a difficult dispute, the resolution is often left to others, most often lawyers.

There is no reason why an accountant cannot assist clients further by advising them to try mediation to resolve conflict. Mediation is cheaper and faster than litigation and helps to preserve relationships. Furthermore, the accountant can be involved throughout the process and in this way see their client through the difficulties, the result of which should be a further strengthening of the relationship.

A recent survey of small and medium enterprises (SMEs) by the Australian Business and Family Enterprise Ombudsman (ABFEO) found that 22% had been involved in a dispute in the previous 5 years with almost 9 out of 10 disputes being business-to-business. Of the disputes that followed formal pathways (litigation):

• 50% of the respondents considered that the amount of time and effort required was unreasonable;
• The average cost of the process was $130,000; and
• 2 out of every 3 relationships ended.

More details may be found at http://www.jadr.com.au/costs-and-causes-of-business-disputes/ and the report may be found at http://www.jadr.com.au/wp-content/uploads/2018/12/Access-to-Justice-report.pdf

Compared to litigation mediation is much more effective, much less time consuming and much less costly. The Eighth Mediation Audit – 2018 by the Centre for Effective Dispute Resolution (CEDR) found:

• Settlement Rate for Mediation is 74% on the day and 15% in the weeks following (Total 89% success rate); and
• Average duration of mediation – 7 hours preparation, 7.5 hours on the day and 2 hours follow up.

With such a success rate, much lower investment of time and effort and a cost significantly lower than that of litigation, recommending mediation to clients as a means of resolving disputes will be valuable advice, and they will certainly appreciate it.

As previously mentioned, the accountant can be involved with recommending mediation, in helping the client to prepare for mediation and in the mediation process itself. By assisting clients to resolve conflicts quickly, at significantly lower cost than going though litigation, and with the possibility of preserving business, family or other relationships, the accountant has provided a valuable and much appreciated service.

If you are an accountant with a client going through a dispute, yourself in dispute with a client or partner, contact us for an obligation free discussion. We believe we can help.