Year after year polls taken of business decision makers reveal CPA’s to be the most trusted advisors of the majority of businesses polled.  When considering the panoply of advisors to business: CPA’s, attorneys, insurance advisors, technology consultants, actuaries, etc., and the services thus provided, it is of little surprise that CPA’s hold such status with their clients. Given that virtually all business activity finds its way into a business’ financial statements, whether the nature of the CPA’s engagement relates to attest or tax, the CPA’s understanding and insight into its business client runs deeper, and is more holistic, than is true of most any other service provider.  This special client insight positions the CPA to provide counsel to business clients about business issues beyond merely how to account properly for any particular matter at hand. For many a business client, here is where the real value lies, as these polls suggest.

One area of potential value-add opportunity which is commonly overlooked, or shied away from, by CPA’s is in the area of providing business counsel to clients involved in litigation.  The idea is not that the CPA should assume the role of dispute resolution manager, or otherwise usurp any of the responsibilities of the client’s legal counsel; rather, the idea is that CPA’s recognize their unique ability to provide business counsel by encouraging the client to consider, with legal counsel, as part of the litigation strategy, the possibility of pursuing mediation as an alternative to litigating through the courts. Where such intervention is successful, the CPA will have contributed greatly to saving the client the cost and business distraction of protracted litigation.  In order to provide such counsel effectively, however, the CPA must first understand what mediation is – what it is not – and why mediation as an alternative dispute resolution method is not more widely considered.

Mediation is a non-binding negotiation between disputing parties, assisted by a neutral, independent person, typically a lawyer trained in the process, referred to as a ‘Mediator’.  Unlike in the case of judge, jury, or arbitrator, a Mediator does not impose a decision on the parties; rather, any settlement is consensual as between the disputants.  The Mediator represents neither party. S/He serves simply as facilitator and typically conducts private, individual sessions with each of the disputing parties in order to understand perspectives and explore whether there may be common ground for mutually agreeable resolution. What is discussed in private caucus with the Mediator remains confidential, unless the Mediator is given permission to share certain information with the opposing party in the interest of settlement. Think Henry Kissinger and Shuttle Diplomacy.

The parties may, additionally, have their counsel present during the mediation.  The process is much shorter and much less expensive than traditional litigation.  Also, unlike litigation which occurs in a public arena, mediation is private; and, the parties, protected by statute and agreement, do not have to fear publicity concerning their dispute, or that information divulged confidentially to the Mediator might be used against them.  This confidential, non-combative, process also allows for the possibility of continued relationship between the parties where desired, such as in the case of disputing family members, business partners, and/or in connection with the breakup of professional service firms.

Though there are certain cases which do not lend themselves to mediation, and other instances where there can be strategic or tactical reasons why conventional litigation may be optimal for a particular client situation, many, if not most, legal disputes do lend themselves to mediation.  Even when mediation does not lead to complete resolution, given the exorbitant economic and emotional costs of litigation, the parties often leave the process with the comfort of knowledge that litigation through the courts was unavoidable.

The case for mediation becomes even more profound when one considers that government surveys suggest that approximately 97% of civil cases are settled or dismissed without a trial.  Stated differently, approximately 97% of the time parties to a law suit spend their money and time preparing for an event which will not happen.  If the practical reality is that the overwhelming majority of law suits will settle at some point anyway, why then is mediation not the gold standard for the resolution of disputes, either before litigation is commenced, or shortly thereafter before great cost to the parties?

The answer has more to do with our culture than with our lawyers.

From a very human point of view, many plaintiffs who commence litigation do so in the belief that they have suffered an injustice; and, the combative act of filing a complaint provides the plaintiff with the temporary satisfaction of just retribution.  But this is illusion.  The good feeling the plaintiff experiences at the start is typically short-lived.  At some point soon the litigation takes on an onerous life of its own, rendering both parties victim. As Confucius warned, [b]efore you embark on a journey of revenge, dig two graves.

The practice of law in the 21st century has become a fragmented affair.  Specialties abound.   Look at the web site of any major law firm in the country and it is likely that the lay reader will see specialties listed which are not readily understood.  The days of the avuncular advisor, one who will provide general counsel not tied to his or her specialty, are all but gone.  This reality makes the CPA’s role as trusted advisor all the more relevant.  Young lawyers are called upon to quickly identify what type of law they wish to practice upon joining a firm.  Those associates who find their way into the litigation departments of large firms have modeled for them a particular path to dispute resolution, and that path is paved with court filings, rules of procedure, of evidence, discovery strategies and trial technique.  Young associates who become adept at traveling this path are rewarded with partnership opportunity. They, in turn, will train new young associates. And the modeling of trial skills as dispute resolution process continues.

This systemic default to litigation is not the result of a breach of ethics on the part of practicing lawyers.  For the litigator there is a process that has been learned, is reliable, is socially and culturally respected, and works.  And, remember, it was the client who sought out the lawyer.  The lawyer does what s/he has been trained to do.  It is a matter of knowledge, habit and human nature.  In fact, there is great dignity to the practice.  Think Gregory Peck in To Kill a Mockingbird.

But what of client experience?

Our system of civil justice is generally considered to be among the best in the world.  The thesis of this article is not to denigrate that system, nor to minimize the value of being represented by a skilled litigator; rather, just as patients are well advised to refrain from totally abdicating their care to the surgeon without active, informed participation; so too, disputants are well advised to consider mediation, with counsel, as a possible dispute resolution option, either as alternative to, or as part of, the litigation plan.

The CPA is uniquely positioned in this dynamic to raise consideration of the mediation alternative. The process begins by simply educating the client, and then encouraging the educated client to confer with counsel.

The CPA’s role as trusted advisor is, perhaps, the most effective way to promote change to the inertia of our present system; as, it is the public, through client demand, not the bar, as has been shown, which will change the present culture.

In 1850, in notes for a law lecture, Abraham Lincoln wrote:

Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser — in fees, expenses, and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good man.

Perhaps Lincoln should have made his address to a gathering of CPA candidates.

George Bukuras a mediator and family business advisor
Founder, Milestone Business Advisors, LLC
Independent advisor at Narva & Company