Tuesday, May 27, 2014

The business of mediation

An article in the spring issue of the ABA's Dispute Resolution magazine (Maurits Barendrect and Christopher Honeyman) sets out some daunting statistics on the overall size of the market for ADR services in this country. The number they throw out is $500 million in billings annually. That sounds like quite a lot, but it includes arbitration as well as mediation. And in comparison to the market for legal services, the ADR market is still minuscule, approximately equal to the annual billings of the 50th largest U.S. law firm. Moreover, the top two commercial providers, the AAA and JAMS, account for more than two thirds of this market.

For someone hoping to make a living, or even a partial living, as a mediator, these statistics tell us that it's a difficult field in which to succeed. Unless an aspiring mediator already has a broad reputation (as for example, with some distinguished retiring judges), or an established list of referral sources, it generally takes years to start building any kind of viable mediation practice. It's a small and crowded field.

All is not lost, however. For one reason, the market for ADR services appears to be growing substantially. While the use of mediation and other ADR processes has become much more prevalent over the years, the public is still only dimly aware of these means of obtaining satisfaction in conflict. Greater public awareness of the benefits of mediation will likely expand the market. Also, as the authors of the Dispute Resolution article point out, wherever there is some push from the court system or the legislature toward mediation, the market can expand dramatically, as happened for example, when Italy instituted mandatory mediation of civil cases.

In contrast, the market for legal services in general appears to be shrinking. So however dim the prospects seem for finding work as a mediator, we can at least expect that the demand for mediators will continue to increase (perhaps not as fast as the number of people trying to enter the market, but increasing nevertheless), as opposed to the legal profession as a whole, where technology and other factors have been reducing the demand for lawyers.

It's also important to remember that becoming a professional mediator of litigated disputes is not the only career path for those who wish to put their mediation training to good use. Mediation skills can be applied in a wide variety of contexts. In fact, in dealing with almost any inter-personal situation, it's helpful to know how to listen, how to empathize, how to negotiate. Whether in their place of employment, or in business negotiations, or in resolving conflict among family members, people who have studied mediation and negotiation are likely to use those skills every day in whatever situation they find themselves. In my own litigation practice, I find myself using mediation techniques constantly, both as a result of my training and experience as a professional mediator, and as a result of changes in the practices of litigation that emphasize the negotiated resolution of most cases.

The Dispute Resolution magazine article paints mediation as a disruptive business. I wasn't sure what that meant until I read another article this week about the difficulties Microsoft has been having breaking into the market for tablets and smartphones. Because Microsoft built its business on designing operating systems and software for PCs, they have a tendency to try to make every new system work like a PC. But the newer portable devices aren't meant to work like PCs. They lack a lot of the capabilities of a PC, but they greatly simplify the tasks they are good at performing. That's what makes them a disruptive technology. So according to Microsoft's critics, unless Microsoft abandons its efforts to cram the Windows operating system, and Microsoft Office software into its tablets and smartphones, the company is going to have difficulty adapting to these new technologies.

Mediation lacks a lot of the infrastructure--rules, forms, procedures, rights--that characterizes litigation. Litigation can thus be analogized to the PC business, and mediation represents a new, disruptive technology. Mediation is not going to up-end the traditional model of conflict resolution as quickly as happens in the tech field--and after all, those traditional dispute resolution processes have been around for several thousand years--but it is slowly transforming the practice of law, and finding other new applications. If we think of the "mediation business" in a broad sense, to encompass the incorporation of conflict resolution skills in a variety of contexts, an awful lot of people are succeeding in the field--far more than the number who make a living as professional neutrals. And the field is still expanding.

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