Mediation Costs: Fees and “Flat Rates” and “Per Diem Caps,” Oh My!

On a recent call, a potential customer asked about costs of mediation.  It is a question that comes up all of the time.  I began to feel a bit like a cell-phone sales person, though.

Like most mediation firms, One Mediation’s mediators have different hourly rates that reflect their experience.  On the other hand, One Mediation also has mediators who offer a “per diem” cap on their mediation fees which is somewhat unusual.  Another mediator associated with One Mediation also offers a “flat rate” for her mediation services based upon the value of the dispute. 

All these “pricing programs” can be like sorting through the cell phone plans with unlimited minutes, additional lines, etc.   Don’t panic!

The short story of mediation expenses is pretty simple – there is “Traditional” billing and “Alternate” billing.  Traditional billing involves the parties paying their portion of the mediator’s hourly fee for the time the mediator spends providing them services.  In other words, if the mediation takes three hours and the mediator’s hourly fee is $200, the total bill for all parties will be $600.00 which is evenly split between the parties. 

Sometimes the mediator’s fee is split up differently because the parties have agreed to a different formula.  Additionally, in many settings, one party may agree to pay the entire mediation fee as part of the resolution.  A starting point, however, for mediation costs is to plan on splitting the fees evenly across the parties.

Alternate billing involves things such as “flat rates” and “per diem” caps.  A “flat rate” is a set fee that is paid to a mediator for any and all services rendered in facilitating the mediation of a particular dispute.  A “flat rate” has no correlation to the mediator’s time spent on the dispute.  As such, the parties could mediate for one hour or ten hours, and the rate will be the same.  Generally, flat rate billing is fairly rare.

Another alternate billing format involves “per diem” caps.  In this scenario, a mediator may offer his or her services on an hourly basis up to a certain amount per day.  After that point, any mediation services will not be billed at the hourly rate.  For example, if a mediator’s hourly rate is $200 and his per diem cap is $1,000.00, then a mediation that lasts over five hours will not increase the cost of services provided on that day.  Some mediators are willing to provide such caps, and parties should inquire about them.

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