Wednesday, February 29, 2012

The End of Negotiation

Consider the situation where parties in a formerly close relationship (e.g., friends, business partners, relatives) have seen that relationship threatened by an unpaid debt or some other form of injury. To what extent should a mediated resolution of such a dispute try to repair the relationship as opposed to simply helping the parties obtain the best deal they can negotiate to compensate for the claimed harm? 

 The legal system cannot solve this kind of problem very well. Courts only decide whether one party is required to pay the money, or not. If a mediation only tries to short circuit the court process by assessing which side is likely to prevail in court, that may not entirely satisfy the parties' needs either. Neither can the kind of negotiation in which each side simply tries to best the other side with clever negotiating tactics, as for example using the common tactic of playing low ball offers against full price demands.

What if we try to reduce the time spent arguing about the parties' legal positions, and also reduce the time spent going back and forth negotiating a settlement amount? What should we do instead? In several situations like this recently,  I spent a considerable amount of time with each side simply trying to persuade them to talk to each other directly, which they had not done for some time, and setting up a safe environment for doing that. I also tried to find out from each side what they wanted to hear from the other side. In one case, the party who was most reluctant to engage in that kind of dialogue (in this case, the lender) was nevertheless quite clear about what he wanted from his [partner/friend/relative]: an acknowledgement of wrongdoing, an apology, and a plan to fix it. I seized on this framework, and told the borrower he had to address each of these concerns. What do you regret? What are you sorry for? And what's the best you can do to make it better? As long as he did that, I told him he was also free to express whatever he was disappointed in from his former partner.

Next I raised the idea of having this one on one meeting outside of the presence of the attorneys, but I assured both attorneys beforehand that we were not going to agree to, or even discuss, the outlines of any kind of settlement without their full participation. The purpose of the meeting was only to allow the parties to express their disappointments and regrets to each other. I then brought the two estranged parties into a room, and made sure they both understood and agreed that when one was speaking, the other was not to respond in any way until given permission to say his piece. My only role in the dialogue was to ask questions to make sure I understood, and the other side understood, exactly what each one wanted to tell the other. It turned out that it did not take very long to cover what they both wanted to say. I thanked both parties for participating, and told them I did not expect that we would magically solve all their lingering resentments in one meeting. I'm not a therapist. But at least they had started a dialogue that I hope would lead to a better relationship. As to the dispute that we had come to resolve, I told them that their attorneys would take care of negotiating the resolution of that, and that I expected they would both agree to the terms we reached. By this time, I had enough confidence in both parties, and both parties' attorneys, that we would be able to accomplish that.

Then I brought the attorneys into a different room, and we hammered out a deal in about 10 minutes. The actual negotiation of the settlement number and terms probably took about a minute of that time. The attorneys then explained the deal to their respective clients, and both signed on. What took some time was to write it up, which the attorneys proceeded to do without much input from me. Now, if you're going to do a deal in this manner, you have to have some confidence that neither party is going to take advantage of the situation, and I did in this case have that confidence. This deal turned out to be easy to negotiate because both attorneys made an effort to be fair to the other side, as well as their own client. (In my view at least, that doesn't violate the attorneys' duties of zealous representation of their clients' interests, because their clients' primary interests consisted of resolving the dispute, moving on with their lives, and restoring their relationship with the other side. To serve those interests, you have to be fair to the other side, just as you would in making a business deal that involves an ongoing relationship.)

Mediation training puts a lot of emphasis on the art of negotiation. But at least in the situation where it might be important to restore an important personal relationship, as opposed to the cases in which the parties want nothing more from each other in the future other than the payment of a sum of money from one to the other, I would challenge the idea that a mediation should focus primarily on negotiating the resolution of the dispute. If we see mediation primarily as a negotiation, we might be curing only the symptom, instead of the underlying problem. And if we don't deal with the problem, then resolving the dispute doesn't accomplish very much, because the parties are just going to find something else to have a dispute about down the road. If, on the other hand, we can use mediation to help the parties address their larger problems, then it serves a much more important purpose than simply resolving the dispute at hand. The dispute can be seen merely as an obstacle the parties both need to put behind them so they can get on to more productive concerns.

Another problem with spending all our time on negotiating is that the parties may end up no more satisfied by resolving their dispute through a process of negotiation than they would by presenting it to a court or arbitrator. If parties go to court, they expect the judge is going to tell them who is right and who is wrong, who has to pay and how much. And they have to live with that result. If they choose to resolve their dispute by mediation, they should get something more than the feeling that the dispute has been resolved through some complicated and tricky bargaining game, in which the skills of their respective negotiating teams determined the result. If the parties understand the process simply as a negotiation game, the resulting number may appear more arbitrary and unfair than whatever a judge might come up with. If the parties view a negotiation as an adversarial process that each side is trying to "win," then both are likely to be dissatisfied with the result. Neither will feel that they have "won," and the negotiated resolution will not even begin to resolve the underlying problem.

If instead we try to deal with some of the underlying people problems, the parties are going to be a lot less invested in achieving the maximum that each side came in asking for, and the result is going to seem more fair to both sides. The dispute should recede somewhat in significance, and become easier to resolve. Ideally, in that kind of negotiation, each side is going to want to give the other side more than they are asking for, and feel less entitled to their own demands. Think of the kind of negotiations that parties in good marriages or other kinds of friendly partnerships have: In those negotiations, each tries to persuade the other to take a larger share.  One says, "Here, you take a larger slice of the (literal or figurative) pie. You deserve it" "No," the other responds,  "I insist that you have the bigger piece." Those are the kinds of negotiations we strive for, and we don't expect to see them very often in an adversarial mediation. But if we concentrate more on removing some of the obstacles to a good relationship, and lessening the suspicion and distrust the parties have for each other when they walk into a mediation, we might find that the dispute can be resolved seemingly without having to "negotiate" at all.

(photo from Alpha Male blog)

Thursday, February 16, 2012

Court Funding

I heard LA Superior Court Presiding Judge Lee Edmon speak at a County Bar Association lunch recently about the current dire state of court funding. Due to the state budget crunch, the state legislature began drastically slashing the courts' budget several years ago, but the courts have managed to avoid the worst effects of these cuts by diverting capital funds and reserve funds to current operations. The bad news this year is that those funds are nearly depleted, and the courts are now faced with coping with the full implications of greatly reduced levels of court funding. Unless the bar is able to organize a successful campaign to restore prior levels of funding, we are faced with prospect of substantial delays in the resolution of court proceedings, especially civil cases.

I happened to be sitting with a couple of other mediators listening to this talk, and could tell from their reaction and comments that we had mixed feelings. Of course we all want to make sure litigants continue to have access to the courts, and we hate to see justice delayed, when people have a pressing need for resolution of their disputes. Let me make clear that I personally support higher levels of funding for the court system. On the other hand, mediators tend to see the courts as a bloated, cumbersome alternative to the more enlightened form of dispute resolution we offer. Mediators would like to think they can resolve more cases faster, cheaper and better than the courts can.

Can mediation save the state money? Mediators do sometimes save litigants money, but  mainly for legal bills, not as much in court costs. On the other hand, if I can help parties avoid filing an expensive motion, that will relieve a burden on the court system, and if I can settle an entire case, that might help the parties avoid an expensive trial. Still I think it's a dangerous idea to think that we can rely on alternative dispute resolution to help the state deal with budget shortfalls. For one reason, mediation functions best in a symbiotic relationship with the court system. The press of cases moving through the courts also helps move cases through alternative dispute resolution. If court delays increase due to funding shortfalls, that is likely to slow down the pace of all other forms of resolution as well. For another reason, the future of dispute resolution that many mediators imagine, while including a greatly increased role for alternative dispute resolution, is not necessarily going to be a cheaper system to operate. It's just going to operate differently.  I don't think we want to encourage the use of mediation just to save money, whether it can do that or not. We want to encourage the use of mediation to increase satisfaction with the system of dispute resolution.

(SEIU photo)

UPDATE (3/20/12):  A longer version of this post has been published in the March issue of ADR Times.

Sunday, February 5, 2012

When to Negotiate

Anyone who has still been following budget negotiations in Congress has no doubt noticed that they have reached another interesting stage.  Recall that last summer Congress struck a deal in which Republicans agreed to go along with raising the debt ceiling, in exchange for appointing a super committee to come up with additional debt reduction measures. The deal was that if the super-committee could not agree on such measures, then automatic spending cuts, that were designed to be unpalatable to both sides, would take effect. Well, of course in November the super-committee failed to agree (because Democrats insisted that revenue enhancements be part of the mix, and Republicans refused to consider that), and now Congress is faced with the prospect of automatic spending cuts (a process called sequestration) that neither side especially likes. Republican leaders now suggests we can avoid the automatic cuts to the Defense Department by instituting additional pay freezes and reductions for federal employees. Democrats charge that Republicans are reneging on the deal they made last summer.

So here's a question for mediators and negotiators. Should the administration and the Congressional Democrats embark on a new series of budget negotiations based on this Republican proposal, or do they hold firm and refuse to negotiate, allowing these unpopular defense cuts to take effect? (I'm not asking which choice represents a better policy; I'm raising a pure question of negotiating strategy. So you just have to assume that if you are advising the Democrats, you are against additional cuts to the federal budget and for raising taxes on the rich, and if you are advising the Republicans, you are against cutting defense, against any kind of tax increase, and for finding additional cuts somewhere else.)

Mediators are prone to advise that seeking a negotiated solution to conflict through a process of interest-based bargaining is always the best course of action. But thinking back to Robert Mnookin's book Bargaining with the Devil, which I discussed in a previous post, a book that suggests that maybe negotiation is not always the solution, we have to consider that in this particular political conflict, this might be a time when both sides decide--and should decide--that it is in their best interests to fight. Mnookin gives some examples from history, such as whether the Allies should have negotiated with the Nazis, or whether Natan Sharansky should have negotiated with the Soviet government, in both cases concluding that it might have been better to fight. He also recounts examples of negotiations in which he was personally involved. For example, Mnookin helped train members and management of the San Francisco Symphony Orchestra in a newer style of interest-based bargaining that made their contract negotiations the smoothest and least acrimonious ever. Interestingly, however, several years after this highly successful negotiation, the parties reverted to a much more traditional style of labor negotiations characterized by threats, demands and a higher level of hostility. Apparently, the union was just much more comfortable treating management as an adversary rather than as a cooperative bargaining partner.

In politics, as is so often the case with labor negotiations, we are dealing with perpetual conflict, and parties whose raison d'etre consists of struggle against a competing ideology or goal. Even though it seems desirable to get those parties to work together for the common good, we have to accept that most of the time, they would rather try to defeat each other. My guess is that in the current budget negotiations, both sides are going to conclude that this is not a good time to work together to try to reach a consensus solution, even though the public might very well prefer some kind of compromise such as sparing some of the defense cuts in exchange for closing some tax loopholes. This time, both Democrats and Republicans would  probably rather fight. 

What is different in 2012 from 2011? For one thing, of course, it is an election year. That is never considered a good time to make nice with your adversaries, even when the public says they are disgusted with Congress's inability to work together to get things done. For another, the threat of the government running up against the debt ceiling is not hanging over the parties' heads in the same way. And both parties have to answer to their respective bases of supporters that were upset with both parties for the protracted series of negotiations last summer that resulted in a compromise solution that neither side liked very much. Moreover, both sides are dug into positions that would cause them to lose face if they backed down. President Obama has already said he is not going to rescue Congress from this jam. The Republicans in Congress have taken a pledge not to increase taxes. That means the president and the Senate Democrats will probably hold firm this time, insisting that either the defense cuts take effect, or the Republicans go along with some revenue increases. The Republicans can probably be counted on to refuse to agree to anything that sounds like a tax increase.

And then what? Both parties will take their positions to the voters this fall, hoping for increased numbers and a change in the balance of power, but more likely being forced to return to a slightly-reconstituted divided government again. Then maybe next year it will be time to deal.