Monday, April 27, 2009

Can both sides win in a zero-sum game?

Mediators will sometimes tell the parties that the measure of whether a proposed settlement is fair is that it should make both sides equally unhappy. In other words, a party accepting less (or paying more) than they think they should is supposed to be consoled by the fact that the other side feels exactly the same way. I think this is a very negative way of looking at settlement. I tell the parties in a mediation exactly the opposite. I tell them that if they think they will be better off rejecting the settlement and taking their case to trial, by all means they should do that. No one should accept a settlement that makes them worse off than the alternative. But it is hardly ever the case that both sides are better off going to trial, which means that at least one side almost always is making a serious mistake by rejecting settlement. (Here is a summary of an economic study published in the Journal of Empirical Legal Studies demonstrating the extent of such errors.) More often than most people expect, and even in hindsight, both sides are often worse off taking a case to trial rather than accepting a reasonable settlement offer.

What people need to appreciate in a settlement negotiation are the true costs and risks of the alternative to a negotiated resolution. Once they understand those costs and risks, they should feel that a reasonable settlement will actually make them better off than taking their case to trial. It is true that a settlement may represent a worse result than the best possible outcome at trial, but no one can count on the best possible outcome 100% of the time. In the vast majority of cases, if the best possible outcome is discounted by the probabilities of other possible outcomes, and if the savings in costs, attorneys' fees as well as the stress and distraction of continued litigation are figured in, the resulting value should be one that makes both sides better off than the alternative.

Friday, April 24, 2009

Solution-Focused Mediation

The resolution of conflict generally starts by looking backward. The parties bring their conflict to a neutral authority, whether a judge, arbitrator or mediator, providing the information necessary to allow someone to sort out who was right and who was wrong, who should pay and how much. Some practitioners in the mediation field are suggesting that mediation should be a more forward-looking process, and need not be as focused as it frequently is on the details of the conflict. When mediation instead asks the parties to think about how their lives might be better without the conflict, or about what aspects of their relationship are positive, then it can truly present an alternative way of resolving a dispute.

I heard a talk at a Southern California Mediation Association conference by a Dutch mediator Fredrike Bannink, who practices a more solution-focused method. Although she allows the parties an opportunity to say what they feel needs to be said about the underlying causes of the dispute, she concentrates on strategies that might work to resolve and prevent conflicts. Rather than asking the parties to argue their positions, she asks them questions like, What are your hopes? What difference would it make if the conflict could be resolved? What strategies are working for you? What would be the next steps to solving this problem?

Bannink illustrated her method by asking two members of the audience to role-play a divorcing couple fighting about the usual custody and property issues. She asked the pretend husband how he would rate his relationship with his wife on a scale of 1 to 10, and he gave it a 4. Many people would react to this statement by asking about all the reasons he felt the relationship was so flawed. But Bannink asked a different question: "What makes up the four?" In other words, why is it a four when it could have been a one or a two? This forced the husband to talk about feelings he had in common with his wife, such as how much they both loved their kids. Then the mediator could build on the positive aspects of the parties' relationship to attempt to create an agreement.

This method may be a bit more difficult to apply in the situation where the parties want nothing further to do with each other after the dispute ends. But even in that situation, there may be an opportunity to explore the positive aspects of the parties' past relationship that could form a basis for a future agreement. There is also almost always an opportunity to ask the parties to imagine what it would be like to put the conflict behind them, which is a way of asking them to focus on the solution rather than the problem that got the parties to mediation.

Wednesday, April 22, 2009

Empowering the Attorneys

Some mediators view the parties' attorneys as an obstacle to achieving a settlement. I do not find that approach constructive. While attorneys may seem to have a vested interest in preventing settlement, more often the attorneys are just trying to get the best possible result for their clients. Attorneys also generally recognize that settlement is more likely to achieve the best result for their clients than taking on the risks and costs of trial. Most attorneys are pretty cautious, and most do not like to lose. That means that the attorneys are generally well aware that there is a good chance they will not be able to get as favorable a result at trial as their client is hoping for. Also from a purely self-interested point of view, attorneys often recognize that unduly prolonging a case could jeopardize their fees, or at least their future business relationship with the client.

So when acting as a mediator, I count on the parties' attorneys to act as a constructive part of the settlement process. I rely on the attorneys' assessments of the strengths of their own case as a tool to help both sides assess the actual value of their case. I will often tell the parties that they should listen to their own lawyer's evaluation of their chances at trial, and suggest that they ask their own lawyer how much it is going to cost to go to trial. Then I might suggest that they consider the other sides' assessment of what will occur at trial, which their own attorney will generally agree has at least some basis in the realm of possibility. Sometimes the parties will then ask me what I think their chances are, and I generally respond that I agree with the collective wisdom of the other attorneys. In this way, everyone is working toward the same end, which is trying to find a resolution of the dispute that leaves both parties at least as well off as they would be by continuing to bear the costs and risks of the trial process.

Tuesday, April 14, 2009

Empowering the Mediator

A lot of mediators will start off a mediation with the disclaimer that, unlike a judge, they have no power to decide the case. They are merely there to help facilitate a resolution. This strikes me as an unhelpful way to begin the proceedings. It seems better to remind the parties of all of the benefits of mediation that they cannot obtain in court. For example, mediation can provide an opportunity to make arguments directly to the opposing parties, as opposed to making arguments to a neutral party like a judge. Mediation also empowers the parties to craft their own solution to the dispute, rather than placing them at the mercy of a judge. Mediation makes parties the masters of their own fate.

As to the mediator's powers, I like to remind parties that a mediator has some amazing powers that judges only wish they had. For example, a mediator is allowed to conduct ex parte communications with the parties, which is generally forbidden in court and in arbitration. A mediator is also allowed to keep information confidential from the other party. A mediator is allowed to consider information that a judge could never consider because it is not relevant or admissible evidence. Anything that the parties and the mediator consider important can be discussed in mediation. By telling the parties that we can do things in mediation that can never be dreamt of in court, we start the mediation off on a positive note, and make the parties more receptive to making the most out of the process.

(illustration from RIPL research group at Arizona State University-they seem to be studying math, not the kind of mediation I know anything about)