When San Diego attorney Edward Kolker was asked to step in and mediate a business dispute, the stakes already were high. A Southern California manufacturer had sued its distributor, which, in turn, countersued. With both sides frozen in conflict, not much was getting distributed. "The business result was that everybody was losing," Kolker recalls.     He helped the two sides explore their differences, overcome the poor communications that led to the litigation and amend the distributor's contract to make it work. Such happy endings have encouraged a growing number of businesses to seek mediation to help solve disputes ranging from the breakdown of contracts between companies to employee grievances.     "There's almost zero risk from mediation," says Kolker. "The worst thing is that you find you can’t settle the case at that point in time. But even in the worst case, the parties are educated on all the issues and the strengths and weaknesses of each party's case, and they have independent wisdom on the dispute. The best thing is the case settles and the parties can get on with their lives. The financial and emotional drain stops."     Advocates of mediation say this form of alternative dispute resolution enjoys a high success rate because a neutral mediator helps the disputing parties reach their own solutions. They must voluntarily agree to the terms of a settlement. In contrast, arbitration allows a third party to hear each side and decide on a solution — and in binding arbitration, impose a solution. Mediation leaves fewer scars than adversarial legal action, and, proponents say, it can actually help heal bad feelings. Kolker says after disputes are resolved, some companies continue doing business with each other on amicable terms.

Attorney and mediator Edward Kolker.

    An increasing number of skilled mediators are available to companies, ranging from private attorneys like Kolker who specialize in mediation to agencies set up exclusively to resolve disputes outside of the courtroom. A major for-profit service for resolving disputes is JAMS/Endispute, a company that uses 360 former judges and experienced attorneys as mediators and arbitrators across the country. It has 200 employees in 25 offices, including one in San Diego, where 32 retired judges and attorneys are available to help settle disputes. The company was founded 20 years ago by retired Orange County Superior Court Judge H. Warren Knight, who says that during his eight years on the bench, he saw the courts' caseloads — and the backlog of unresolved litigation — pile up.
    "When I started Judicial Arbitration and Mediation Services in January 1979, it was just me and my assistant, Maggie, who helped me run the business," recalls Knight. "We were in a little room on Fourth Street in Santa Ana. I think the first client didn’t show until about mid-month. My gross income for 1979 was $13,000, and my bills and payroll were $50,000."
    But the company took off, and by 1994 had offices in California, New York, Texas and Washington state. That year, JAMS merged with Endispute Inc., an alternative dispute resolution company on the East Coast. JAMS/Endispute also absorbed a San Francisco-based mediation service, the Bates-Edwards Group in 1994. Currently, JAMS/Endispute boasts that it is the largest for-profit service for alternative dispute resolution in the United States.

Don Fobian, head of the EEOC program, and Betty McManus, an experienced mediator, both work out of the San Diego Mediation Center.

In San Diego, businesses also can find help in solving their disputes through a local nonprofit organization, the San Diego Mediation Center. The center has handled more than 17,000 cases since it was founded in 1983, starting with neighborhood disputes and branching out into conflicts affecting businesses, homeowners associations, consumers and merchants, landlords and tenants, professional groups, divorcing couples and even motorists with parking ticket disputes.     In the fiscal year ended June 30, 1998, the center's 210 trained hearing officers performed 1,193 mediations, reaching agreement in 80 percent of the cases. The compliance rate for those agreements was 85 percent, the center reports. Because successful mediation reduced litigation, the center estimates in the last fiscal year alone its programs saved San Diego courts $3.4 million in direct costs. The center also does its part to train more mediators through its educational programs. Last year, 600 mediators-in-training enrolled in the center's classes in the United States and Europe.     In dealing with businesses, the mediation center is increasing its focus on workplace disputes and equal employment opportunity complaints.

"Workplace conflict is a fact of life in the '90s," says Betty McManus, the center's public relations coordinator. "How many times have we heard about workplace disputes that have grown into expensive, acrimonious lawsuits or, worse, tragic violence? Discrimination, sexual harassment, employee relations. . . all these are very typical issues that can lead to expensive litigation if there is no effective early de-escalation of the conflict."
    McManus says early intervention through mediation can create "a fire wall" against outbreaks of employee violence in the workplace. "It prevents something from escalating to the flash point," she notes. The center is taking part in a federal government effort to resolve more employee discrimination complaints through mediation. During the past two years, under a soft pilot program, the Equal Employment Opportunity Commission began referring some of its workplace disputes to the center. Of 11 referred cases in which both parties agreed to mediation, eight were resolved, and another scheduled a second mediation session.
    In one case, an African-American worker, terminated during his probation period with a company, filed an EEOC complaint. He alleged his training was inferior to the training given a white co-worker. After mediation, the company agreed to pay him for his entire probation period and state in its records that he resigned. The company avoided costly litigation, and the worker, who had found another job, went away satisfied.
    Currently, the EEOC is expanding its mediation efforts. By the end of fiscal 2000, the agency hopes to be using mediation to resolve about 10,000 cases a year nationwide. Its $279 million budget for fiscal 1999 includes $13 million to hire internal and external mediators, conduct training and distribute information. The week of Feb. 22 was designated National Mediation Week to focus attention on the EEOC's stepped-up campaign.
    As part of the EEOC effort, the San Diego Mediation Center is signing a contract with the EEOC this month to handle more of the discrimination cases filed with the agency. Disputing parties who previously paid $300 for a four- to five-hour mediation session will now get the service for free. Under the terms of the contract, the EEOC will reimburse the center for the mediation services. Don Fobian, who's in charge of the EEOC program at the mediation center, says the EEOC will refer cases for mediation soon after employees file their complaints, increasing the odds that their employers will agree.
    During the pilot stage, the cases came to the center well along in the process, he said, and many employers refused to mediate. "If you get the employer early, they haven't invested the time and emotion in filing responses to the employee's complaint," Fobian notes. Douglas Herrera, the EEOC manager overseeing the commission's mediation effort in Los Angeles and San Diego, agrees that convincing employers to mediate is the biggest challenge. Herrera says his office routinely offers mediation services — both in writing and with a follow-up telephone call — to an employer as soon as an employee files a complaint with the EEOC.
    Of the employees filing complaints with the EEOC, 85 percent to 90 percent agree to mediation. But Herrera adds that in his EEOC district, only 36 percent of the employers are willing to mediate — and that is the highest percentage of any of the EEOC's alternative dispute resolution programs. Since mediation is voluntary, it can’t happen unless both sides agree.

The employers are reluctant despite the fact that 75 percent of the EEOC complaints going to mediation are resolved, saving the employer an estimated $25,000 to prepare a formal response to an EEOC complaint and more than $125,000 if the case turns into a lawsuit. Herrera says mediation saves time as well as money. Currently, the EEOC's mediations begin within 30 days of the filing of an EEOC complaint, and these cases must be finished within 120 days.     The EEOC's new mediation contracts set a "quick turnaround" goal of 45 days to wrap up a case. If a contractor, such as the San Diego Mediation Center, isn’t finished by the 45-day deadline, the complaint will go back to the EEOC for a traditional investigation. The standard EEOC investigation of an employee complaint is supposed to be finished within 180 days, but has been averaging 235 days because of large caseloads and limited staff.     Not that mediation is a panacea. In order to work well, says Jose J. Dennis, an EEOC mediator in San Diego, the attorneys representing employees need to come to the table with realistic demands. Too often, he says, a complainant with a weak case will demand money, causing the employer to balk at a settlement. "The demands for money should be commensurate to the (legal) exposure and liability," Dennis says.     Some companies and organizations — converts to the mediation message — no longer wait for their unhappy employees to file complaints with state or federal anti-discrimination agencies. They have adopted their own internal dispute resolution programs. Among them are TRW, Chevron, Bechtel and the U.S. Postal Service.     Another is Solar Turbines, which with nearly 3,300 workers is one of San Diego’s largest private-sector employers.

Tony Torres of Solar Turbines says his company prefers mediation.

Tony Torres, Solar's manager for equal opportunity and human resources programs, says mediation can help prevent employee misunderstandings from festering into major disputes. When an employee files a complaint with the EEOC, he says, Solar Turbines is willing to go to mediation rather than pursue the lengthier investigative process.
    "We can turn this into a real win-win situation," Torres says.