Settlement is especially likely when, deep down, one or both parties want to arrive at a solution that is at least minimally acceptable to the other party. This is particularly common in disputes between neighbors or small business people who work in the same area and really don't want the dispute to fester.

Mediation has other benefits, too. According to a study by the National Center for State Courts, people who agree to mediate their cases are more likely to be satisfied with the outcome than small claims litigants who go directly to court. One big reason for this is that people who agree to a mediated settlement are more likely to pay up than people who lose at trial.

Mediation isn't a good idea in every case. If you are determined to get every penny you are asking for, and you don't have an ongoing relationship with the other party, it can make more sense to bypass mediation and go directly to small claims court (except in places where mediation is mandatory).

For example, let's say you moved out of your apartment and left it undamaged and spotless, but the manager made up a bogus reason to avoid refunding your $1,500 deposit. You could well decide that proposing mediation is a waste of time, because you are pretty sure that in court you'll win the entire $1,500, plus a $500 penalty, as provided by your state's rental deposit law.

If you do want to mediate, how can you get a reluctant opponent to the table if mediation isn't mandatory? Mediators can help with that, too. Typically, as soon as you notify a local court-sponsored or community mediation program that you would like to try mediation, someone from the mediation program will contact the other party and try to arrange a mediation session. They have lots of practice at convincing reluctant people to sit down at the bargaining table.

If you're the one being sued, or you've received a letter threatening suit, should you ask for mediation? The answer is almost always a resounding yes, particularly if you have a defense to all or part of the plaintiff's claim, or you believe that the plaintiff is asking for too much. You really don't have anything to lose.