A mediation settlement is an agreement that two feuding parties arrive at during the mediation process. The mediation process can be formal or informal. The settlement agreement once signed, is usually binding.
When two parties have a legal dispute, one party often files a lawsuit against the other. If this occurs, both sides begin preparing a case to present at a trial. Although many lawsuits are filed, the vast majority of legal disputes are settled out-of-court before a trial ever begins.
Mediation is one way in which many disputes are settled out-of-court. Unlike arbitration, which is mandatory and binding in some situations, mediation is a voluntary process. Two disputing people or companies may agree to go to mediation in an attempt to arrive at a mediation settlement in order to save on court costs.
The parties who agree to mediation then meet with each other while a licensed mediator is present. The mediator works with these opposing sides using a variety of negotiation techniques and tactics. The goal of this meeting is to arrive at a mediation settlement that both parties agree to.
Neither party is required to agree on a settlement, and each party can walk away from the table at any time. Generally, however, people are willing to speak to each other and try to find some middle ground. This often works as long as there is not too much divergence between what the plaintiff is hoping for and what the defendant is willing to give.
If the parties are open to discussion, and the mediation process works properly, often they are able to come to an agreement in which the plaintiff receives some compensation. Both the plaintiff and the defendant usually have incentive to settle out of court, as when they resolve their differences in this manner, they get to determine what will happen. If they go to court, a jury decides, which is much riskier for both sides since the plaintiff could end up with nothing or the defendant could end up paying much more than he expected.
When the parties agree, this agreement is a mediation settlement, a binding agreement. The documents are written up and the plaintiff agrees to waive his right to sue the defendant in exchange for the amount of money, or other compensation agreed upon in the mediation settlement. These written legal documents become binding, and neither party can deviate from the mediation settlement agreement once they have signed the documents.