Richard Hill, July 1995
Abstract
There are as many different
styles of mediation as there are mediators, and each style can be effective.
Some styles are based on very specific techniques and require particular skills.
This paper explores the features of a class of styles that is based on a
non-adversarial model, and it outlines the ways in which mediation can be used
to reduce the cost of resolving conflicts.
Why Mediation?
Thucydides' words apply
equally well to business disputes that degenerate into fiercely contested,
expensive, and prolonged lawsuits. All parties know that such legal proceedings
have disadvantages, but are willing to engage in them because they believe that
the ultimate outcome will outweigh all the disadvantages. In many cases, the
parties are correct to pursue disputes to their ultimate conclusions in court;
in other cases, however, alternative dispute resolution mechanisms, in
particular mediation, may be better alternatives.
In many situations, disputing
parties can find negotiated solutions that benefit each party more than
the best possible outcome of litigation: the American Arbitration Association
reported that, in 1993, it registered 3075 requests for mediation; of these,
1136 were settled, 151 were closed, 293 were withdrawn, 644 were pending, and
851 were in some other status at the end of the year. Real business situations
are rarely zero-sum games like chess or territorial wars: by cooperating,
business partners can expand their markets and reap mutual benefits. Imagine how
many goals a football team could score if it could persuade the other team to
cooperate!
It is sometimes implied that
mediation can only be used before the beginning of court or arbitration
proceedings, as a last-ditch phase of negotiations. This is not correct. While
mediation can, at times, help to resolve disputes before they are litigated,
mediation is often used to resolve them during the course of litigation, before
the final award is rendered. Indeed, mediation can also be used at the early
stages of arbitration to help negotiate Terms of Reference, to resolve disputes
regarding procedures, and to narrow differences between party-appointed expert
witnesses.
Just as in sports and most
other walks of life, negotiation and mediation are activities that benefit from
study, practice, and application of appropriate techniques. Effective
negotiation techniques are well known, and beyond the scope of this paper.
Effective mediation techniques are perhaps not so well known, and will be
briefly described later in this paper.
When Should Mediation Be Used?
In many business situations,
the monetary awards sought in litigation are actually proxies for other issues,
just as in divorce cases battles over child custody are often proxies for
emotional issues that can't be mentioned in court. For example, a licensee might
actually want an extension to other products of a cancelled license, but ask for
monetary compensation for the cancellation.
Court proceedings are
eminently sensible in the following cases:
-
When a plaintiff wishes to
pass a message to other potential defendants. The classic example is the owner
of an intellectual property right who vigorously prosecutes any known
infringers, in order to discourage any potential future infringers.
-
When a defendant wishes to
pass a message to other potential plaintiffs. The classic example is a large
corporation that vigorously defends against product liability claims, in order
to discourage future claims.
Parties may often feel that
court proceedings are the only solution when the dispute arises in a zero-sum
situation: there is a fixed-size "cake" to divide up, and each party would
rather have a bigger slice than a smaller slice. Such situations arise, for
example, in case of bankruptcy or in case of cancellation of a licensing
agreement. However, it must not be forgotten that the legal fees associated with
court proceedings reduce the size of "the cake", in some cases very
significantly. So, even in a zero-sum situation, it might be better to rely on a
dispute-resolution mechanism that is less expensive than litigation or
arbitration. Mediation proceedings typically last only a few days and costs are
very small compared to the costs of litigation or arbitration.
Mediation is eminently
sensible in the following cases:
-
When the parties can
benefit by continuing to do business together after the dispute is resolved.
-
When one of the parties
wishes to maintain or to enhance its public reputation as a good business
partner.
-
When the cost of litigation
or arbitration will be high.
-
When the dispute centers
around complex factual issues. Factual issues can often be better appreciated
by business people familiar with the industry than by lawyers or judges.
-
When neither party requires
a determination of legal issues. If a determination is required, arbitration
or conventional court proceedings are appropriate. However, in some cases,
lawyers do not agree on the correct legal analysis (just as their clients
often do not agree on the factual issues) but are willing to allow a mediator
to help them find a compromise position that is mutually acceptable.
Based on the list above, it
seems clear that mediation can be helpful during an arbitration
proceeding in the following situations:
-
during negotiations on
Terms of Reference;
-
during negotiations on
procedural issues;
-
to narrow the differences
between party-appointed experts;
-
to reduce the complexity of
the case by agreeing certain issues, while leaving others for the
determination of the arbitral tribunal.
Obstacles to Mediation
Mediation is very popular in
certain industries and in certain countries, notably in the USA and in the far
East. Why is mediation less popular elsewhere? There are several factors, but
lack of familiarity with mediation techniques, and lack of trained mediators are
probably among the most important factors. Many European lawyers are not aware
of the fact that there are specific mediation techniques and regard mediation as
just an extra expense, which will lead nowhere.
This belief is in some cases
reinforced by experiences with court-mandated mediation in certain European
countries. Often, such mediations are empty pro-forma exercises during
which at least one party makes no effort to reach a settlement. Indeed, under
the rules of most jurisdictions, parties need not attend the mediation session,
and lawyers often send their most junior clerks to the session, with
instructions to do nothing more than restate the parties' position. Of course
this is not mediation as it is understood in the modern context of alternate
dispute resolution, but it will take time for the differences to become widely
appreciated.
What are the Characteristics of Effective
Mediations?
Most experienced businessmen
know that if you ask three lawyers for an opinion, you will get six answers / at
least if you asked good lawyers. Mediation involves people, and the interactions
between people. Like most fields that involve people, there is no single "best"
way to do things or to get results. Just as there are many different effective
management styles, so there are many different effective mediation styles.
However, no mediation can be effective without the following:
-
The presence of party
representatives with the authority to negotiate a settlement. Contrast this to
so-called mediation procedures where parties are represented exclusively by
external counsel.
-
The willingness of the
parties to find a solution outside the courtroom. Sometimes, only one party is
keen on mediation at the outset, and must "sell" to the other party the
benefits of mediation. In many cases, a neutral mediation institution is in
the best position to convince the parties that mediation is worth trying.
Most mediators will do at
least three things during the proceedings:
-
Facilitate: assist the
parties to find a negotiated solution. The mediator acts as a midwife, helping
the negotiated solution to see the light of day.
-
Evaluate: give an objective
opinion regarding the reasonableness of each parties' position. Depending on
the mediator's style and the dynamics of the mediation, such evaluations might
be given privately to each party, or openly to all parties.
-
"De-conflict": change the
frame of reference of the dispute from a zero-sum, "I win, you lose" situation
to a positive-sum, "I win, you win" situation.
The last point is the one
that fundamentally distinguishes certain styles of mediation, which can be
called "non-adversarial mediation", from other styles. The distinction is
particularly sharp with respect to non-binding arbitration, a form of mediation
that is frequently practiced in Europe (and often referred to as conciliation).
A non-adversarial mediator will not, in general, come up with a compromise
proposal and then attempt to sell it to the parties. The non-adversarial
mediator tries to help the parties themselves to find imaginative / often
unforeseen / alternatives for resolving the dispute.
The remainder of this paper
explores some key features of non-adversarial mediation.
Facilitating
Facilitation ranges from
trivial activities, such as arranging meeting times and places, to very subtle
activities such as isolating disputed points on which agreement will be hard to
reach from points on which agreement can be easily reached, and convincing the
parties to tackle the hard issues last. The main behaviors that can be observed
in skilled non-adversarial mediators are:
-
Listening, reading body
language, sensing moods, and being aware of emotional issues that are not
explicitly mentioned.
-
Drawing a distinction
between questions for clarification and substantive comments.
-
Breaking disputes into
manageable chunks, and resolving each chunk separately.
-
Postponing discussion of
very tough issues to late in the mediation session. Once the parties have
started agreeing on simple issues, an atmosphere of trust will begin to grow,
and agreement on difficult issues will become easier.
-
Being fair and impartial:
making sure everyone has a chance to express their views.
-
Keeping the discussion
focused on the issues.
-
Restating points in
appropriate language to help each party understand t he other's point of
view.
-
Encouraging the parties to
explore changes in the shape of an emerging consensus.
-
Restating in neutral
language those points on which the parties appear t o agree. Verifying that
they do in fact agree.
-
Insisting that any
agreements be captured in writing before the negotiation session ends.
-
Using humor to bring people
together and defuse tense situations.
Many (in fact probably most)
mediators also use a technique known as caucusing: private meetings with the
parties. There are many reasons why caucuses can be effective; however, a
non-adversarial mediator will wish to do more than merely to convey one party's
negotiating stance to the other party. That is, "shuttle-diplomacy" is not
characteristic of non-adversarial mediation. We return to this topic in the
section on "de-conflicting" below.
Evaluating
The mediator plays an
important role as an objective third party, whose opinion on the merits of one
party's position can significantly affect that party's negotiating stance. If a
party can't convince a mediator of the justice of its cause, what chance will it
have in front of an arbitrator or a judge?
If the dispute involves
complex points of law, a mediator who is a learned lawyer will be better able to
evaluate the parties' respective claims than a mediator who is not a lawyer.
However, it is relatively unusual for such disputes to be mediated. More
commonly, the dispute hinges on differing interpretations of complex facts, so a
mediator who is familiar with the business practices of the parties' industry
can do much to convince a party to moderate its demands. Even if there are legal
issues, a skilled mediator should be able to encourage each party's lawyer to
realistically evaluate the other party's arguments, and to moderate his
or her own party's demands if there is some validity to the other party's
position.
Some mediators act almost
like arbitrators: they determine what would be a fair settlement in their mind,
and then attempt to convince the parties to accept that settlement. This
approach works well for some mediators and some situations.
In contrast, the
non-adversarial mediator will more often suggest to the parties that they
propose alternate settlements, than him- or herself suggesting a settlement.
Such suggestions can be made in private caucuses, or, if appropriate, in plenary
sessions with all parties. It takes a great deal of skill and experience to
judge what suggestions to make, when to make them, and where to make them (that
is, in private or in public).
De-Conflicting
The key feature of
non-adversarial mediation is the belief that settlements should be brought forth
from within by the parties themselves, not imposed on them from the outside.
This is akin to Michaelangelo's approach to sculpting: he claimed to do nothing
more than to free the figure that he saw imprisoned in the block of marble,
although the situation is more dynamic in mediation and the agreement that
finally emerges may be surprisingly different from the one the parties and the
mediator first imagined.
During a recent mediation
seminar, Professor Robert Mnookin demonstrated rather convincingly the
disadvantages of caucuses for a non-adversarial approach:
-
What can the mediator do
with confidential information given by one part y? It might help the mediator
to craft a compromise solution, but proposing solutions is typical of
mediators that act as non-binding arbitrators, not of non-adversarial
mediators.
-
Any information given to
the mediator but not the other party deprives at least one-third of the
available brainpower of information that can be used to construct an
imaginative, "win-win" solution to the dispute, thus making a solution harder
to find.
In a non-adversarial
approach, the only justifications for caucuses are:
-
In multi-party disputes, to
avoid wasting the time of parties not concerned with a particular issue; the
particular issue can be discussed only among those who are interested in it.
-
In two-party disputes, to
help one party to prepare arguments that will be convincing to the other
party.
This last point is
fundamental, so it is worth restating. The key behavior of parties in
non-adversarial mediation is that they seek to convince the other party
of the mutual benefit of their requests, rather than seeking to convince
the mediator of the justice of their cause.
This behavior is unusual for
lawyers without mediation experience, because lawyers are trained to do just the
opposite. Lawyers typically draft arguments based on the absolute frame of
reference provided by the law. These arguments attempt to be objective, in the
sense that they refer to supposedly provable facts and to supposedly clear
interpretations of the law. They typically do not refer to the financial
positions of the parties, or to the future sales or profits that might disappear
or arise depending on the resolution of the dispute.
The behavior of parties in
non-adversarial mediation is typical of skilled negotiators. They often draft
arguments based on the relative frame of reference provided by what is known
about the parties. These arguments attempt to be subjective, in the sense that
they refer to the individual circumstances of each party's business position:
current sales and costs, future sales prospects, likely future costs, and so
forth.
Non-adversarial behavior can
be quite difficult to elicit at some stages of a dispute. In general, parties
are more amenable to engage in non-adversarial behavior at the very beginning of
a dispute, or some time after their respective counsels have drafted positions
and briefed them on the merits of their positions. It is difficult to switch to
non-adversarial behavior when one is actively collecting data (whether regarding
the facts or the law) that will be used to prepare a brief detailing one's
position.
More generally, parties in a
mediation session often start by engaging in more-or-less aggressive adversarial
posturing (as do experienced negotiators). It is the mediator's job to
facilitate the transition from "I win, you lose" bargaining to "I win, you win"
negotiations. Among the tools of the trade for facilitating this transition
are:
-
Probing for the deep
interests that underlie a particular bargaining position.
-
Pooling the deep interests
of all parties.
-
Brainstorming potential
solutions that meet some or all of those interests.
-
Evaluating those potential
solutions.
In order to encourage parties
to engage in non-adversarial behavior during a mediation session, mediators who
practice non-adversarial mediation will typically encourage the parties to
answer the following questions before coming to the mediation session:
-
If we win, how much do we
win? Include the amount of the award plus any increases (or decreases) in
profits arising from potential future sales.
-
If we lose, how much do we
lose? Include the amount of the award plus a ny increases (or decreases) in
profits arising from potential future sales.
-
What are our estimated
legal fees if we go to arbitration or to court? What are the costs of appeals
likely to be?
-
What are our chances of
winning if we go to arbitration or to court?
-
What is the least
favorable, acceptable outcome of a negotiation?
-
What is the best possible
outcome we could expect from a negotiation?
-
What are our strong points,
in fact, in law, in commercial bargaining power?
-
What are our weak
points, in fact, in law, in commercial bargaining power?
-
What are their
strong points, in fact, in law, in commercial bargaining power?
-
What are their weak
points, in fact, in law, in commercial bargaining power?
-
What do they want?
-
What might they accept
instead?
-
What can we give them?
-
What argument will convince
them?
-
This is our offer to them:
-
The features of our offer
are:
-
The benefits to us
of our offer are:
-
The benefits to them
of our offer are:
What Does It Take to Be a Good Mediator?
A good mediator must be
impartial and a skilled listener. Listening might appear to some a trivial skill
that everyone has, but this is not the case. Successful major multi-national
companies spend significant amounts of time training their people in listening
skills: these involve actively focusing on what the other person is saying,
asking probing questions to elicit further information, and paraphrasing what
the other person has said in order to make sure it has been heard correctly. Few
people are naturally skilled listeners and most people improve significantly
with training and practice.
Business experience and
knowledge of the industry in which the parties are active are very helpful. They
ensure that the mediator speaks the same language as the parties and will be
perceived by the parties as being worth listening to. Knowledge of facilitation,
negotiation, and mediation techniques are also helpful, as is experience in
decomposing problems, summarizing positions, and knowing when to call for breaks
in the discussions.
The ability to imagine new
shapes for a compromise is critical. Suppose that two people are having
difficulty deciding how to divide the top of a table between themselves. An
imaginative mediator might point out that perhaps they should consider how to
divide the legs of the table also, and it may turn out that one party has a
clear preference for the legs, and is willing to let the other party have more
of the top in exchange for the legs.
Last, but probably most
important, is the seemingly obvious point that a person must be willing to act
as a mediator. Anyone who has acted in this capacity well knows that it is a
high stress, intensive activity / extremely rewarding when a compromise is
reached, but extremely frustrating when dead-ends seem to be in sight.
Nerve-wracking negotiating sessions, individual caucuses, or pauses; and
sleepless nights are by no means uncommon. Acting as a mediator requires real
courage, self-confidence, and stamina.
