Private negotiations assisted by a neutral third party.
Mediation is basically a negotiation between disputing people or companies that also includes a neutral third-party, called a mediator. The mediator doesn’t make any decisions about who is right or wrong, but she can help facilitate discussions between feuding parties. She can also help the disputing people find a middle ground.
Mediation is oftentimes voluntary (though sometimes courts, rules, or contracts may require it). If the disputing people can agree to a resolution, a mediation agreement is written and the parties go their separate ways, usually without involving a judge, jury, or the costs associated with filing a lawsuit.