Why Do So few Mediators Make Any Money?

Now that I have your attention – this is just one of the chapter headings in a new article analysing the market for private mediators in the US by Urška Velikonja, a teaching fellow in Harvard’s Economics Department.

Of course I would be remiss if I did not mention that the very next chapter asks Why do some mediators make so much money?

In any event, it contains much interesting data on the business end of what we do, although Urška surely the footnote has had its day?

Some of the money quotes;

>The vast majority of people who enter the mediation market drop out within two years. Of those who persist, about ten thousand earn $50,000 or more per year from mediation.

>Federal, state and local governments employ around two thousand mediators. Their average annual salaries range from $55,000 for local governments, $57,000 for state governments, and $105,000 for the executive branch of the federal government.

>In California, the median divorce mediator on the court roster charges $300 per hour, and not one charges less than $150 per hour; in Virginia, on the other hand,the median mediator charges less than $125 per hour, and only top 10 percent charge more than $200 per hour.

>Of the few thousand mediators, who are able to mediate full-time, the majority earns $50,000 or less. There are fewer than a thousand mediators and possibly a few hundred, who make a good living, grossing $200,000 or more per year.

>Only a couple dozen or so mediators, primarily former judges practicing with JAMS and a few high-end commercial mediators in markets, where the cost of living and, as a result, mediation fees are high, are able to consistently bill over one million dollars per year.

>Many mediators are “lone rangers.” They like and prefer working on their own, and form partnerships only for practical reasons: so that they do not have to turn away clients when they are sick or go on vacation, so that they can share the costs of administrative staff and marketing, and so that they have someone to socialize with.

>Mediators’ overhead is low (20-25 percent of gross revenues, and no more than 30 percent) and each mediator keeps the majority of the revenues without the need or the incentive to employ junior mediators. As a result, there is virtually no demand for junior mediators…

>The article presents data that income distribution in the market for private mediation in uneven, and suggests that the market is a winner-take-all market, where a few mediators at the top of the pyramid are busy and well-paid, while the vast majority of aspiring mediators is constantly looking for work, yet makes little or no money.

                       

Geoff Sharp

Geoff Sharp is a Commercial Mediator from Wellington, New Zealand. Geoff works in the Asia Pacific region, including New Zealand, Malaysia, Thailand and Pacific Islands. He is a mediator resolving business problems. He is a fellow of the International Academy of Mediators and mediates complex and hotly debated litigation covering… MORE >