Non-adversarial Mediation

Richard Hill, July 1995

Copyright 1995 by Richard Hill, 6 chemin du Port-Noir, CH-1207 Geneva, Switzerland. E-mail rhill@batnet.com; phone +41 22 780 8596; FAX +41 22 780 8692. Permission is granted to reproduce and distribute this article by any means, provided that (1) it is not sold for profit or incorporated in works sold for profit; and (2) this paragraph is not removed; and (3) the text of the article is not modified. The laws of Switzerland shall apply to the use of this article. Any disputes arising out of or in connection with such use shall be submitted to binding arbitration in the English language in Geneva, Switzerland under the UNCITRAL rules by a sole arbitrator nominated by the Geneva Chamber of Commerce and Industry. This article is provided for infomational purposes only and does not purport to provide legal advice. No implied or express warranties are provided and the author declines responsibility for any errors of ommission or commission. This is an expanded version of an article that was published in the July 1995 issue of the Dispute Resolution Journal (American Arbitration Association).

"That war is an evil is something that we all know, and it would be pointless to go on cataloguing all the disadvantages involved in it. No one is forced into war by ignorance, nor, if he thinks he will gain from it, is kept out of it by fear. The fact is that one side thinks that the profits to be won outweigh the risks to be incurred, and the other side is ready to face danger rather than accept an immediate loss." Thucydides, circa 400 B.C.

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 litigatation 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.[11]

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 focussed 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 evalute the parties' respective claims than a mediatior 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 evalute 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, prof. 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 agressive 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 underly a particular bargaining position.
Pooling the deep interests of all parties.
Brainstorming potential solutions that meet some or all of those interes ts.
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 outcome of a negotiation that we could accep t?
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 focussing 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.