By Katharine M. Nohr, JD
Movies and television legal shows give the impression that disputes are resolved in dramatic courtroom battles. The reality is that most litigants, insurance companies, and businesses prefer not to put the power of resolving lawsuits in the hands of judges or juries but would rather seek a settlement before trial. Most judges assigned to cases will hold settlement conferences in an effort to work with both parties to try to come to a settlement agreement. However, judges’ time is often limited and not all judges have the skills to effectively mediate cases. This is where trained mediators come in.
As Esports grows, lawsuits are becoming more prevalent. A former employee filed a lawsuit against Riot Games and its CEO, a Court of Appeals considered the U.S. Government’s WeChat ban appeal, and Epic Games filed lawsuits against Apple and Google in the UK and Australia over Fortnite. Law firms with Esports sections and specialties are emerging and insurance companies are offering policies insuring against Esports risks. Increased litigation adds to the cost of doing business in all business sectors. Even if the risk is covered by insurance and the policy requires the insurer to provide a defense (pay attorneys to represent you and/or your business) and indemnify you (pay any judgement or settlement), the cost will be passed on to you through higher premiums.
Litigating a case can cost tens of thousands to hundreds of thousands of dollars and can take years to conclude. Complying with discovery demands can take a significant amount of time and stakeholders will likely experience stress from the uncertainty of the outcome. Despite the downside, individuals and companies often seek resolution of conflict through litigation with the hope of remedying a wrong or seeking a favorable ruling on a dispute. They may be seeking an injunction (asking the court to order another party to cease an action) or damages, including monies to make them whole, compensation for emotional distress, and even punitive damages that are usually not covered by insurance.
Are there alternatives to Litigation?
Alternative Dispute Resolution (“ADR”) refers to means of resolving disputes or litigation without the need to go to court. These methods can be used during the traditional litigation process in order to resolve the case early or can be used instead of litigation. ADR includes mediation, arbitration, negotiation and collaborative law. Mediation, the focus of this article, is where both parties choose a neutral person or panel to assist them in coming to an agreed upon resolution. A mediator can also be court appointed.
Why mediation in Esports?
- Reputations can be preserved. Even though Esports is global, it is a relatively small community including high profile stakeholders and the need to preserve reputations. Because of this, the advantages of mediation are particularly important to the space. Mediation is confidential (unless the parties agree otherwise). Unlike court proceedings, the actual mediation process and the mediation agreement can be kept confidential.
- Mediation is less costly than traditional litigation. The time commitment required by the attorneys and parties is significantly reduced. Other costs that are typically high, such as those for expert witnesses, court reporters, subpoenaed documents, and support staff will likely be reduced or eliminated. Mediation costs are also much more predictable than the cost of trial, allowing parties and insurers to budget for such costs.
- Increased control of the outcome. The downside of trial is that the parties are essentially putting the power of the outcome of their case into the hands of the judge and jury. Mediation gives the parties greater control over the resolution of the dispute. They negotiate an outcome that they are willing to accept and the chance of dissatisfaction of the result is minimized.
- Mediation is generally voluntary, allowing either party to withdraw at any time.
- Convenience. Another advantage of mediation is that it is more convenient than trial. Each party can weigh in on scheduling and the venue. Now, mediation can be done virtually with the parties and mediator appearing from distant locations by Zoom, or another platform. This further reduces the cost. During the proceeding, the mediator will meet with each party in turn privately in order to hear their positions and work with them to effectuate a settlement.
- Speed. The outcome of mediation is significantly faster than litigation. It can be used early on in a dispute—even before a party files a lawsuit. Oftentimes, mediation can resolve a case in a matter of hours or in a day. A dispute may not be resolved during the first session. However, it can open up channels of communications and allow the parties to exchange offers over time. Such offers and negotiations will provide parties with information that may ultimately lead to settlement.
- Preserve business relationships. One of the most significant benefits of mediation in the Esports industry is its use in allowing the parties to preserve their business relationships. It allows the parties to effectively communicate with each other to attain a mutually agreed upon resolution. Such resolution may include a path for the parties to continue to work together successfully in the future. Sometimes, a resolution will not be monetary, but consist of an apology or a promise to cease a harmful action. While litigation can result in verbal attacks against each other, mediation seeks conciliation.
How do Parties enter into mediation?
If there’s a contractual provision requiring mediation, then the parties must adhere to this requirement. If not, a party can propose mediation to the other party. If they both agree, then the process of agreeing to a mediator begins. Usually, the parties will agree to split the cost of mediation. The mediator will usually hold a pre-mediation conference in order to schedule the date and venue. If both parties are represented by counsel, the mediator will usually require the attorneys to submit pre-mediation statements with exhibits for review before the mediation. This allows the mediator to understand each party’s position and the likely outcome at trial.
What are the disadvantages of mediation?
- An unwilling party. Although there are many advantages to mediation, it is not always the best means to proceed. Sometimes, a party will not agree to participate. If so, the potential for a resolution is significantly reduced. A court may order the party to participate, but this may not ensure a successful mediation.
- Need to establish precedent. There are cases where a party wishes to establish a legal precedent and can only do this by proceeding to court.
- Decision-Maker is not available. In order to successfully mediate a case, the decision-makers or those with authority for each party need to be available and willing to negotiate. If they are not, the case is not likely to settle.
- Mediation may not be cost effective in a particular case. This might occur when the amount at issue is minimal or when the likelihood of the parties actually achieving a settlement is low. In this case, the parties may pay for mediation, but end up in court anyway.
Can mediation be used even if there isn’t a lawsuit?
Yes. If there is a dispute and the parties to the dispute feel that they might be able to resolve the dispute with the help of a neutral third party, they can agree on mediation before filing a lawsuit.
How Can Esports businesses use mediation?
Disputes between any stakeholder in Esports may wish to go to mediation, rather than wait until a party files a lawsuit. Or, if a lawsuit has already been filed, mediation may be selected as a means of putting a quick end to litigation. Esports publishers, casinos, and companies may also consider mediation to address inter-company issues. A skilled mediator can assist with creating a company mediation policy as well as serve as a neutral to assist in resolving disputes.
Mediation provisions in contracts
If you want to avoid costly litigation, make sure your contracts contain a mediation provision. When negotiating contracts, it’s a good idea to talk with your attorney about including such a provision. When reviewing contracts prepared by others, look for a mediation agreement. If there is none, consider asking that it be included.
Choose the Right Mediator for Your Esports Dispute
In order to successfully mediate your Esports dispute, you’ll want to select an experienced mediator who understands the issues unique to Esports. There are many skilled mediators available, but if they have to Google “Esports” or have very little knowledge of the legal issues, roles, relationships, and history, you may be spending additional and unnecessary time educating the mediator.
In short, your Esports organization can save significant time and money by mediating disputes. Consider this option as an alternative to litigation.
Katharine M. Nohr, Esq. is an Esports mediator, arbitrator, attorney, and former Judge. She’s the author of Managing Risk in Sport and Recreation: The Essential Guide for Loss Prevention (2009 Human Kinetics), and is the host of ThinkTech Hawaii talk show, “The Wide World of Esports” and was awarded ThinkTech Hawaii Host of the Year in December of 2021. Ms. Nohr is available to serve as a virtual mediator for your Esports dispute.