Negotiation is a voluntary process by which parties attempt to reach a mutually satisfactory agreement through informal and unstructured discussions. Successful negotiators typically focus on problem solving and trying to satisfy both parties' interests without determining who is right and who is wrong. A neutral third-party is usually not present. Moreover, although participants often employ attorneys trained in problem-solving to represent their interests in negotiation, this is not essential. Negotiation is especially valuable in situations where future interaction between the parties is desirable because negotiation is less confrontational than litigation and helps restore, preserve or strengthen the parties' business relationship.
Mediation is similar in many respects to negotiation.
Both are generally private, voluntary, and informal. The focus in both is on problem-solving rather than on determining who is right and who is wrong, and the parties themselves decide the outcome. In mediation, however, a neutral third party is chosen by agreement to help the parties resolve the dispute. The mediator listens to each side's version of the problem in an informal setting and helps the parties come up with ideas for resolving the dispute. For the most part, the mediator has no authority to impose an outcome on the parties if they fail to reach agreement, and both sides are free to walk away from the process at any time.