Navigating the Mediation Process PDF - Mediate.com

D I S P U T E R E S O L U T I O N J O U R N A LNavigating The Mediation Process:Overcoming Invisible Barriers toResolutionMediation involves many keyrelationships beyond that of plaintiff anddefendant that could present barriers toresolution. The author identifies someof these relationships, shows how theycan create barriers to a successfulmediation, and offers suggestions forovercoming these barriers.BY BENNETT G. PICKERBennett G. Picker is a partner in the Philadelphia law firm of Stradley, Ronon,Stevens & Young, LLP, where he concentrates his practice in mediation andarbitration. Mr. Picker is a Fellow of both the International Academy of Mediatorsand the American College of Civil Trial Mediators, and serves on the panels of theAmerican Arbitration Association and the CPR International Institute for ConflictPrevention and Resolution. He is also a member of the Executive Committee ofthe American Arbitration Association’s Board of Directors. Mr. Picker is the authorof the “Mediation Practice Guide: A Handbook for Resolving Business Disputes”(2nd edition) published in 2003 by the ABA Section on Dispute Resolution. Mr.Picker’s e-mail address is bpicker@stradley.com.Author’s Note: In order to protect the confidentiality of participants, the anecdotesin this article represent a composite of actual mediations.Most mediation advocates and party representatives, when preparing for mediation,primarily focus on one relationship that significantly impacts resolution—therelationship between plaintiff and defendant. Given their background as trial lawyers,most advocates largely concentrate on the positions of plaintiff and defendant when consideringfacts, rights, obligations, claims, defenses, experts, damages, credibility issues and probableoutcomes. More sophisticated advocates also explore another dimension of the relationshipbetween plaintiff and defendant—their underlying needs and interests, including strategicobjectives, timing, reputation, the potential for restructured relationships and the need to avoidfuture disputes.Reprinted with permission from the Dispute Resolution Journal, vol. 61, no. 3, August-October 2006,a publication of the American Arbitration Association, 335 Madison Avenue, New York, NY 10017-4605,212.716.5800, www.adr.org.

D I S P U T E R E S O L U T I O N J O U R N A Lits outside counsel, and (3) the participants and other“stakeholders” in the dispute. This article highlights theseinvisible barriers and suggests approaches for advocates andmediators to better navigate the mediation process andmaximize the potential for successful outcomes.Relationships Between Representatives ofOne PartyA trial lawyer often pauses in the middle of a negotiation,settlement conference, or mediation, and wonders, “Whyhasn’t the other side made a realistic offer? Don’t theyunderstand their risk?” The question ignores the fact that“they”—those on the other side—frequently do not functionas a cohesive unit with the capacity to either make acollective decision or speak with one voice.For example, in a recent mediation involving an allegedbreach of a long-term supply agreement, the corporateplaintiff’s representatives each entered the process withconsiderably different perspectives on the “ideal outcome”for the company. As the mediator facilitating this dispute, Ispent well over an hour in a private caucus session with theserepresentatives, including the company’s CEO, CFO,general counsel and general manager. After thoroughlyexploring the positions and interests of the parties, we begandiscussing the plaintiff’s response to a proposal made by thedefendant. Initially, the plaintiff’s representatives stood intotal disagreement with each other.The process of mediation, however, involves many more keyrelationships, beyond the primary one of plaintiff anddefendant, which are often invisible to the mediationparticipants and their advocates and frequently presentbarriers to resolution. These relationships include thosebetween: (1) representatives of each party, (2) the client andThe CEO argued that the defendant should pay a large sumof money, readily admitting that the result would directlyaffect the size of the bonus he would receive at the end of theyear. The CFO expressed concern about the timing of anypayment, conscious of maximizing reported earnings in thecurrent year. The general counsel of the company warnedthat everyone in the room represented the “client”—thecompany— and had a duty as fiduciaries to maximizeshareholder value. Accordingly, he argued that since WallStreet values long-term streams of revenue more highly thana one-time payment of cash, the agreement should reflectdifferent pricing terms to allow for an anticipated stream ofrevenue. The general manager who originally determinedthat the defendant breached the contract simply wanted acourt to affirm the breach had occurred and that she hadmade the correct decision.All charts are furnished by the author. Copyright 2006 ©Bennett G. PickerDuring the caucus, I conducted what was, in essence, aninternal mediation with the plaintiff’s representatives to getall of them on the same page. When I finally returned to thedefendant’s room, the other side greeted me with thequestion, “What took them so long? Don’t they understandthe strength of our positions?” Without revealing why the2 AUGUST/OCTOBER 2006

D I S P U T E R E S O L U T I O N J O U R N A Lrepresentatives of the plaintiff had been stuck, I deliveredthe good news of a reasonable counteroffer to thedefendant’s proposal. The negotiation moved forwardbecause crucial communication had been privatelystimulated in one room—among and between therepresentatives of the plaintiff. Even though the CEO hadthe ultimate decision-making power in this dispute, internaldifferences of opinion presented a serious potential barrier toresolution—a barrier invisible to the defendant.Competing in-house concerns common to all largecompanies frequently hinder a corporate party’s ability tocome to a mediation session with a cohesive strategy forsuccess. For example, in a mediation involving an allegedbreach of an asset purchase agreement, a heretofore invisiblearise from unrealistic promises made by counsel about thechance of success at trial. Failing to deliver periodiccommunications about the status of litigation or the risks andcosts involved in continuing the litigation leaves clients illpreparedto make timely decisions on settlement. Making aconscious effort to communicate with and solicit thoughtsfrom clients throughout the life of the dispute will helpmediation advocates better prepare for mediation and moreeffectively represent clients.A major source of the communication breakdown betweenan attorney and client often begins with counsel’s delivery ofbad news to the client, generally concerning the risk ofcomplete or partial loss at trial. In many instances, the clientwill respond by saying, “I thought you were my lawyer. IfCompeting in-house concerns common to all large companiesfrequently hinder a corporate party’s ability to come to amediation session with a cohesive strategy for success.barrier to resolution surfaced during a private caucus whenthe representatives of two company divisions began to argueabout whose budget would “take the hit” for any settlement.Similarly, a mediation involving a product liability claimgot bogged down on the defendant’s side whenrepresentatives tried to internally resolve whether thepayment would come out of the budget of the operatingdivision or the budget of the office of legal counsel. Toobtain the best possible result, the parties’ advocates shouldflag and address these internal issues with their clientsbefore sitting down at the mediation table.Relationships Between ClientRepresentatives and Outside CounselProfessor Gerry Williams, one the nation’s leading scholarsin the field of negotiations, studied the settlement activity ofmore than 20 lawyers over a period of several years.Professor Williams concluded that the principal reasondisputes failed to settle most often stemmed from adisconnect in the relationship between the outside lawyerand the client, rather than from differences between theparties in litigation.you don’t believe in my case, I’ll find myself anotherlawyer,” or something along these lines. At this point,counsel may simply back off and leave the client withunrealistic expectations, rather than taking the hard road andreframing communications more effectively to keep theclient well informed. In a recent mediation, trial counselprivately confided to me at the end of a dispute, “Thank youfor telling my client what I could not say. I really appreciatedyour help.”While it may be difficult to be candid with the client aboutthe weaknesses of its case, I believe that mediation advocatesshould face that task. By helping clients understand theweaknesses as well as the strengths, advocates will leave lessup to chance and ultimately better serve the client's needs.Based on my own experience as a mediator, I agree that theattorney-client relationship merits careful examination inevery mediation. A model relationship between a mediatingparty and its counsel will foster ongoing opencommunication flowing in both directions concerning themanagement of the case. Conflicts in this relationship oftenDISPUTE RESOLUTION JOURNAL 3

D I S P U T E R E S O L U T I O N J O U R N A LIn a number of cases in recent years, I have found thatattorney-client fee agreements create a misalignment ofincentives, which, in turn, create a barrier to settlement.For example, counsel in a complex intellectual propertycase I mediated stated in a private caucus that a proposedsettlement, which his client viewed as favorable, wasunacceptable to him because hiscontingent fee would be too small.His standard practice, which hediscussed with his client at the timeof signing the written fee agreement,included refusing any settlementthat did not give him a triple returnon his invested time. He and Iresolved this problem after a verydifficult private conversation aboutprofessional responsibility.In another recent mediationinvolving a shareholder dispute, theplaintiff refused a very goodsettlement, stating that his goalswere vindication and punishment ofthe other side for its arrogant andunlawful behavior. Usuallyescalating attorneys’ fees deter“billable” clients from pursuingtheir “principles” in protracted litigation. However, whenas in this case, the attorney agreed to a contingent fee, theclient was not faced with the issue of cost when making itsdecision with regard to settlement. We ultimately resolvedthis dispute, too, by helping the client refocus on whethergoing to trial or settling through mediation would betterserve his ultimate goals and objectives.The attorney-clientrelationship meritscareful examinationin every mediation.Conflicts in thisrelationship oftenarise from unrealisticpromises made bycounsel about thechance of successat trial.Many individuals and entities outside the formal circle ofthe dispute often wield influence over the decision makersparticipating in mediation. One obvious example is aninsurance company that provided coverage to thedefendant in the dispute being mediated. The insurancecontract usually gives the insurer control over theresolution of the dispute, so itsparticipation is important, but itmay not wish to participate. Askilled mediator will explore theissue of a carrier’s participationwell before entering mediation.Insurers are not the only non-partieswith an interest in the dispute. Otherpeople outside of the mediationroom may be “stakeholders” in thatthey play an important role in thedecision maker’s own life, andtherefore have an interest in theoutcome of the mediation. Thesepeople include a spouse, relative,partner, or friend, especially onewho happens to be a lawyer,accountant, or other type ofbusiness advisor with a professionalgrasp of the dispute. A decisionmaker may feel pressure from or be persuaded by any ofthese persons, causing another invisible barrier toresolution. In all of these situations, a skilled mediator willprobe during caucus sessions to identify persons who arenot present in the room who may have influence over thedecision maker, and adopt strategies to overcome anypossible barriers.Relationships Between Participants inMediation and Other StakeholdersWhile there are an infinite number of potentialstakeholders who could potentially influence the decisionmakers in a particular mediation, in my experience, theissue of “authority” creates the greatest invisible barrierto resolution. In advance of the mediation, I alwaysdiscuss the need to have persons with full settlementauthority at the mediation. However, parties sometimesbenchmark a zone of settlement in advance of themediation and then send representatives who haveauthority to settle only up to the top end of the zone. Oncein the mediation, the party representatives often recognizethat their side’s evaluation of the case was skewed byselective perception or advocacy bias and that they needmore authority to settle. Most of the time, partyrepresentatives will place a call to a higher-level executivein a company to obtain additional authority; but theproblem is that this person has not been participating in4 AUGUST/OCTOBER 2006

D I S P U T E R E S O L U T I O N J O U R N A Lthe mediation process, and thus will not have the “buy-in”necessary to make an informed decision.Experienced mediators face the challenge of identifying asmany invisible relationships and authority issues as possiblein advance of the mediation, encouraging the parties to havea person with the greatest authority possible in the mediationroom, and resolving issues that invariably occur regardlessof any preventative efforts. In many situations, I have eithercalled higherlevel executives during the course of themediation to involve them in the process, or postponed amediation to include these persons.In some disputes, a party representative in the mediationmay have the necessary authority, but harbors concern abouta higher-level executive criticizing his or her decision tosettle above a figure previously identified in a companymeeting. One company executive candidly remarked that hewould rather blame a judge or jury for making a bad decisionthan shouldering criticism from the executive officers of hiscompany for “conceding too much.”ConclusionTo maximize the opportunity for a successful mediation,both advocates and all party representatives should endeavorto identify all of the potential invisible barriers to settlementwell in advance of the first mediation session. Theadvocates, in particular, should pay extra attention to therelationships among and between the representatives of theclient because there are likely to be private agendas andpolitics at work. Moreover, counsel to the parties and theparty representatives should make every effort to identifythe real client or clients; it is helpful to ask who in thecompany really “owns” the dispute. Then, they can assemblea team to define goals, discuss “authority,” and try to alignthe varying interests and perspectives of the key players.Invisible barriers are difficult for party representatives torecognize and overcome without assistance. A skilledmediator can help the parties identify and overcome thesebarriers.■DISPUTE RESOLUTION JOURNAL 5