What does mediation cost - and what do you get for it?

25 Basics of mediation (4)

The fourth article deals with the cost of mediation. This is an almost confusing area and - as is so often the case - depends on many factors. In general, however, the following can be said:

1. costs of mediation

Sometimes the parties involved in a conflict are faced with the decision of whether they want to settle their conflict in court or with the help of a mediator or mediatrix. In both cases, third parties are involved in resolving the conflict, which means that costs are incurred for this reason alone.

The following section deals with the costs that are regularly incurred in the course of mediation. However, I will not go into a comparison with the costs of handling a conflict in court. This could be explained in more detail in a separate blog article if required.

The Costs in a mediation can be divided into two categories:

• Costs of the mediator and
• other costs (expenses).

Other costs may arise, for example, if the mediator provides the premises or hotel costs are incurred. This is particularly the case in larger mediation processes, for example between companies that often settle their disputes in seminar centres, hotel and conference rooms or similar. In such "organisational mediation processes", such costs are incurred directly by the parties (such as travel, accommodation and meals for the mediator, etc.).

The costs of the mediator are then regularly invoiced by the mediator. It is not uncommon (in larger proceedings) for advances to be required or demanded.

Although there are now also organisations internal mediatorswho work as employees and therefore do not invoice, but these are not considered below. The mediator shall charge his costs on the basis of the joint Fee agreement resp. -Agreement in the invoice.

Here, 12 practitioners reveal what they do with their mediation training at work.

2. fee agreement

„He who pays, decides “ This principle also applies to mediation. Therefore, in mediation proceedings, the costs of the mediator are generally borne by the parties to the conflict. in equal parts is assumed. This means that if there are two parties to the conflict, the costs of the mediator would have to be borne equally.

In most cases, the mediating parties are liable to the mediator as Joint and several debtor, which means that the mediator could demand the full fee from each party (i.e. 100%, even if only once of course!), but internally the parties are then obliged to pay half of the fee. This ensures that the mediator receives his (hopefully well-earned) fee in full.

The fee agreement is freely negotiable.

In principle, it makes no difference whether the mediator is a tax consultant, psychologist, architect or lawyer in his or her basic profession or whether he or she does not practise any profession at all but is a student, (adult) pupil or trainee lawyer.

However, lawyers are not allowed to charge according to "their" scale of fees. The Lawyers' Fees Act provides for a scale of fees for legal services – such as mediation – to which the lawyer (in consultation with the mediating parties!) does not have to adhere. The provisions of the lawyer's scale of fees can also be waived in their entirety.

It is advisable that the fee agreement is set out in writing.

The written form serves to relieve the personal and mental burden on all participants (note-taking function!), to clarify the joint working alliance (who is working for what and why? What are our contributions to the work?) and in the event that evidence is needed later, should a dispute arise between the mediator and the other participants.

If no express agreement on the fee is made and therefore not agreed in writing, it shall apply to all parties involved, § 612 BGB to note!

Remuneration is deemed to have been tacitly agreed if the service can only be expected in return for remuneration under the circumstances. Sometimes the mediator can demand money even if money has not been expressly discussed. Consequently, for the lawyer-mediator § Section 612 (2) BGB apply. His qualification as a mediator and any criteria according to § 14 RVG should then form the basis of assessment. So if you don't want to pay for the services of a mediator, you should clearly state this in advance.

3. costs of the mediator

The mediator's costs can also be divided into two areas. On the one hand, there is the fee for his mediation work (in the case of lawyers, the fees) and, on the other hand, his expenses.

The Expenses of a mediator These include travelling expenses, office costs (postage, telephone, etc.) and VAT, which must be paid regularly (exception: small businesses within the meaning of the German VAT Act). § 19 UStG). Costs for the premises, snacks and drinks are also possible, provided they are not directly included in the fee, which should be the rule.

It is rare, but quite conceivable, that the mediator will also cover any costs for experts and other specialised advice, which he will then charge as expenses. This must be taken into account and, of course, agreed with the parties in advance. Cost surprises should be avoided. But as I said, this does not happen very often.

The mediator's fee is usually, and quite rightly, the largest item that the mediating parties have to pay (in equal shares). However, mediators' fees vary greatly in practice.

It can be invoiced in hourly rates, daily rates or also according to lump sums.

Lump sums are probably unusual, but can be found, for example, in the mass business of legal expenses insurers.

People with legal expenses insurance are increasingly being offered the option of mediation before they are granted legal assistance. These mediators are usually compensated with lump sums per mediation case.

The hourly and daily rates depend on the mediator's qualifications and the type of mediation in question. The range can therefore hardly be quantified in concrete terms, but hourly fees of between €25 and €500 are certainly possible. Mediators often charge hourly fees of between €100 and €150, while experienced mediators charge between €180 and €350 for commercial mediations. Corresponding daily rates can then be "extrapolated" accordingly.

In most cases, the working time for preparation and post-processing is included in the hourly rates - which explains the level of certain fee rates. However, it is also not unusual for these hours to be shown separately so that they are stated transparently in the fee agreement or in the subsequent invoice.

 - In my office When determining the fee, we differentiate between those involved in the conflict making enquiries as private individuals or in their role as professionals, whereby in the latter case it is usual for the organisation to bear the costs. In these cases, we again differentiate between primarily non-profit and primarily commercially operating organisations due to our own socio-political responsibility. -

4. special case: costs of the closing agreement

If a final agreement is reached, it is not uncommon - at least for lawyer-mediators - to issue a so-called Settlement fee to demand. This is considered a kind of extra fee (over and above the hourly rate) because the dispute could be settled.

That is none so-called success fee, which would be inadmissible for lawyer mediators at least because this settlement fee does not remunerate the enforcement of a subjective right. The settlement fee, which for lawyer-mediators is based on section 1000 of the RVG, represents a fee for the fact that the mediating parties have obtained a pecuniary advantage through the agreement as such.

The hourly fee, on the other hand, relates solely to the "mediation" service provided by the mediator, even if the mediating parties were unable to reach an agreement. However, if they reach an agreement, they receive a (quantifiable) value that is not covered by the hourly fee.

Whether the mediator will charge this settlement fee should be clear to all parties from the outset.

In addition, in the case of a lawyer-mediator, the mediating parties can appoint a so-called mediator. Lawyer settlement conclude an agreement. This legal institution generally increases the credibility and stability of a legally effective agreement between the parties. Keyword: enforceability.

5. conclusion

It should have become clear that the complexity of a conflict has an impact on the complexity of the - prior! - mediation agreement, including the fee agreement.

It can also be said that the right mediator can be found for "every budget" and "every level of ambition".

And it was also my intention to show that the question of costs is also the question of the value of conflict resolution. The assessment of the costs also depends on the level of suffering caused by the conflict. The more distressing the situation is, the greater the value of reliable conflict resolution. This has an impact on the assessment of the mediation costs, i.e. how expensive they are estimated to be.

Finally, a question for you: On what factors do you think the price you would be willing to pay for mediation depends? On the training of the mediator? The nature of the conflict? The area in which the conflict intervenes/extends? The degree of escalation? I can imagine that there are many personal differences here.