The former defence minister is suing Ms Higgins and David Sharaz over social media posts that she says have damaged her reputation.
During a hearing over legal costs on Thursday, a Perth judge said he was concerned about the potential impact a trial could have on the parties as he urged them to mediate.
"We've had a lot of discussions about the financial costs. I'm very mindful of the human costs about this litigation on everybody," Justice Marcus Solomon said.
He promised help from the West Australian Supreme Court to ensure the parties could mediate and told Mr Sharaz's lawyer Jason MacLaurin that it was his preference that his client attend in person.
Senator Reynolds' lawyer Martin Bennett said he would speak to the senator about making time available in her schedule to attend the sessions if they occur.Â
Outside court, Mr Bennett told reporters mediation can sometimes resolve defamation disputes if the defendant agrees to say sorry for their alleged actions.
"Apologies are things that best vindicate reputation, awards of damages are the best the court can do because it can't order the unsuccessful defamer who's lost their defamation case to apologise," he said.
"So vindication of reputation can occur as a process through mediation."
Mr Bennett said Senator Reynolds "is keen to vindicate her reputation".
"This isn't a money claim. It's a reputation restoration claim," he said.
Justice Solomon made his remarks during a hearing for an application brought to the court by Mr Sharaz, who wants Ms Reynolds to provide a substantial security bond worth hundreds of thousands of dollars.
Mr MacLaurin said the senator was suing or threatening to sue multiple people and he was concerned she wouldn't be able to pay his client's legal costs should she lose at trial.
He was critical of Ms Reynolds' case, saying it was weak and the five social media posts it concerned were a "drop in the ocean" considering the vast amount of critical statements made about the senator.
He also said there was no evidence the allegedly defamatory posts had been read but Mr Bennett pointed out Mr Sharaz had 16,700 Twitter followers.
Mr MacLaurin said the case should potentially be heard in the ACT, where the senator is "famous" as a member of the federal parliament - and the law is different and could favour Mr Sharaz's case.
Mr Bennett disagreed, saying Senator Reynolds lived and was elected in WA to represent the state, where she was a member of a political party and her family lived.
"Her closest connections for her reputation is the state of WA and where the greatest harm can occur," he said.
Justice Solomon reserved his decision on the costs application until Friday.
Ms Higgins, who has not yet filed a response to the senator's writ, is accused of posting defamatory material on two occasions on her Instagram and Twitter accounts.
Ms Higgins alleged she was raped in 2019 by Bruce Lehrmann inside the ministerial office of Senator Reynolds, where he also worked as a staffer.
Mr Lehrmann consistently denied the allegation, and his trial in the ACT Supreme Court was derailed by juror misconduct.
Prosecutors decided not to pursue further action, citing concerns of the impact it may have on Ms Higgins' mental health.
