Mediation safeguards confidentiality. Unless the parties agree otherwise, statements made in mediation are considered confidential settlement negotiations and protected from disclosure. Such confidentiality allows the company to protect its reputation in the eyes of customers and investors, who might react negatively to the dramatic picture of the company's Y2K exposure presented in litigation. In other high-tech disputes, confidentiality may be important for additional reasons. Its use might avoid disclosure of trade secrets, such as technical formulas or customer lists, or prevent disclosure of sensitive business information at an unfavorable time, such as just before an initial public offering or announcement of an acquisition.
Mediation minimizes risk.
Litigation is risky due to the uncertainty of the outcome, which is especially true when, as in Y2K disputes, there is no legal precedent. The first Y2K suit was filed in mid-1997, and no Y2K case has been decided yet. Mediation, unlike most arbitration, does not render a binding decision. A mediator facilitates resolution by the parties, so there is no agreement unless all the parties accept it. And litigation can still be pursued if the parties do not reach agreement.