Two North County partners loved their flourishing business — but they had come to hate each other, and Erick Altona, the attorney for one of them, knew he had his work cut out. How could the two separate without smashing up the business? Courts were ill-equipped to deal with their complex professional issues, recalls Altona, let alone the simmering anger that would bubble up occasionally and sabotage a settlement.

The Escondido attorney turned to mediation, a form of dispute resolution designed to get people past their personality conflicts so they can reach a voluntary agreement. The feuding partners held four mediation sessions over the course of two months. "We managed to hammer the issues all out," says Altona. "It let them get on with their lives."

Altona is one of a growing number of attorneys who find that mediation is a practical, effective way to resolve their clients' business disputes. "I’m very committed to mediation as the best alternative to litigation," he says. "Most business relationships are not purely business. There are personalities involved and those needs and obstacles don’t get addressed in court, ever."

Companies have come to agree. In 1997, Cornell University conducted a survey of the corporate counsels of the 1,000 largest U.S.-based corporations, finding that nearly 90 percent of the respondents said mediation saved their companies money. And 81 percent said their corporations used mediation because it provided "a more satisfactory process" than lawsuits.

California's courts also are turning to mediation as a way to clear the logjam of civil lawsuits. Starting Feb. 28, San Diego became one of four California counties chosen for a sweeping mediation experiment. San Diego and Fresno will test a mandatory mediation program, while Contra Costa and Sonoma counties will try voluntary mediation. "The point of the project is to test the benefits of early mediation in civil cases," says Marilyn Laurence, public affairs officer for the San Diego court system.

Under the two-year pilot program, 75 percent of all civil cases filed with the San Diego Superior Court countywide will be selected randomly by computer for mandatory mediation. The remaining 25 percent will serve as a control group.

Although San Diego judges have been able to require mediation for the past five years, they previously were limited to cases under $50,000. The mediation pilot project removes that limit, affecting cases regardless of how much the plaintiff is seeking. Laurence says in recognition that more complicated cases will be going to mediation, the limit on a mediator's pay will be increased from $300 per case to $600. And the rules drafted by Superior Court judges Linda Quinn and Charles R. Hayes call for plaintiff's attorneys to provide mediation information to the defendants at the time a lawsuit is filed.

The pilot project will dramatically increase the number of cases going to mediation. "We’re expecting 2,700 annually under the new program," says Laurence. Funded by the state Office of the Courts, the administrative arm of the California Judicial Council, the program will receive $438,000 — most of it earmarked for mediators' fees — for the first six months of this year and $1.5 million for the fiscal year starting July 1.

Businesses, however, don’t have to file a lawsuit in order to get help from a mediator. A variety of mediation services are available locally to solve contract disputes, workplace conflicts or consumer complaints.

One is the San Diego Mediation Center, a nonprofit organization founded in 1983. It started as a neighborhood agency solving disputes over barking dogs and loud music and evolved into a major mediation service, handling the full range of business and personal conflicts. The center's president, Liz O'Brien, says her organization is conducting about 1,500 mediations a year — and successfully resolving about 75 percent of them. But she's concerned that small businesses don’t turn to mediation often enough, even though mediation is far less costly than protracted litigation. "I think we’re used more by large companies," says O'Brien. "I’ve never understood that. It has not been an easy sell. If it saves you time and money and energy, and allows you to move on, why isn’t it used more?"

In part, that may be because some people harbor misconceptions. They confuse mediation with arbitration, O'Brien says. Unlike arbitration, in which a third party comes up with solutions — and imposes them in binding arbitration — disputants in a mediation have control of the process and work out their own voluntary agreements. The process is flexible and confidential. If mediation doesn’t work, the disputants are free to go to court or settle the dispute some other way.

Another problem, she says, is that some mistakenly believe mediation is "too soft and won’t deal with concrete, serious business issues." In reality, it’s the best way to move past the conflict, she says, especially between parties who may still have to work together or continue to contract with each other. "We are not trying to make people like each other," O'Brien says. "It’s not the goal. We’re not trying to make everybody friends. Our goal is to address the conflict, assist people in the resolution of the conflict so that business can continue, so everybody isn’t mired in the garbage."

The annals of local mediation are full of stories of how seemingly small incidents can balloon into costly litigation unless businesses move quickly to head it off. In one case, Nancy Rick Jones, who mediates for the center, recalled how she guided a restaurant and an unhappy customer away from a legal collision course. The customer had left her wallet on a candy machine in the eatery. When she returned for it, her delight at getting it back evaporated when she found her cash was missing. The restaurant denied that its hostess or any other employee took the money. But money wasn’t the customer's only motivation. She felt the hostess had been rude. Her desire to go to court was so strong that she almost walked away from the mediation table. But after Jones explained in detail the time and money involved in pursuing a lawsuit, the customer sat back down with the restaurant representative and promptly reached an agreement.

Dennis Sharp, an attorney who, along with O'Brien, helped pioneer San Diego’s mediation movement in the 1980s, says it took a while for attorneys to understand they could get something from mediation that they couldn’t get from direct negotiation. A mediator who trains other mediators, Sharp believes the process is particularly useful for business partner dissolutions and employment cases, in which the parties have a long relationship. "What is fueling these disputes is emotion," he says. "They need to deal with these emotions to lower the tension between the parties. You deal with the people issues first, then identify the real needs and concerns."

Since 1985, Sharp has served as regional manager in the San Diego office of the American Arbitration Association, a national nonprofit organization and another trailblazer in out-of-court dispute resolution. He steps aside this month to concentrate on his private business, Sharp Resolutions, which offers mediation training programs for businesses and attorneys. The association has no plan to shrink its San Diego office and has named Steve Anderson, another lawyer, as its new head. If anything, the association, which has been offering mediation and arbitration for the past 75 years, is growing along with the recent wave of enthusiasm for out-of-court dispute resolution. Association spokeswoman Toni Griffin says the number of cases the association handled through its 37 offices nationwide jumped from 98,000 in 1998 to 140,000 last year.

Not all business mediations are handled through big organizations or private attorneys. Other professionals have embraced its strategies, too.

Peter Robben, a debt resolution specialist in Poway, recently took a training course offered by the mediation center. Accustomed to representing debtors backed into a corner, Robben frequently argued that a negotiated settlement with his client would benefit the creditor as well. Any lawsuit could backfire, he would tell the creditors, forcing the debtor to declare bankruptcy. It made sense, he says, to go a step further by learning mediation skills. It’s his hope that, in some instances, he can serve as a neutral nudging both sides to craft an agreement for themselves. He describes mediation as "the much preferred alternative to other forms of conflict resolution."

O'Brien is even more effusive, envisioning a time when future battles of all types will be fought and defused at the mediation table. "Language should be the weapon of the new millennium," she says. "What we are doing now is not working. Language can be so powerful. It can begin to change the we look at our issues."