WHY MEDIATION WORKS WHEN NEGOTIATIONS FAIL
(Article courtesy of the San Diego Daily Transcript Law Journal,
Volume 1, No. 3, October 19, 1998)
Recently, I served as a mediator in a dispute between two former partners in a business venture gone bad. The parties had attempted to resolve their dispute on numerous occasions but to no avail. By the time of the mediation, the parties had spent substantial amounts of money on attorneys, emotions were running high, and the parties distrusted one another so much and perceived themselves to be so far apart that the chances of any settlement seemed unlikely. Nevertheless, after one day of mediation, the dispute was settled. So why is it that mediation works when direct negotiations have failed?
Having mediated over 1,500 disputes, I have observed six basic reasons why mediation works when prior negotiations fail.
1. Effective negotiations have never really occurred in the first place. Effective negotiations require that the people issues be separated from the problem. I have often observed that the parties perceive the other side as being unreasonable and are suspicious of their desire to reach a settlement. As a result, the real problem is all but ignored and what is characterized as negotiation is really a series of personal attacks questioning the credibility, good faith and reasonableness of the other party. These negotiation sessions are often characterized by hard bargaining, unrealistic proposals and other tactics which only emphasize the differences between the parties. As a result, the parties become more defensive and entrenched in their positions, and refuse to make concessions. No common ground can be found in that environment. During mediation, the mediator controls the communication process so that unproductive discussions are avoided. When communications are skillfully directed by the mediator, the focus of the negotiations will gradually shift from the emotional issues to a constructive resolution of the real problem at hand.
2. Mediation works when the ultimate decision makers sit at the bargaining table with the sole purpose of resolving their dispute. Many prior negotiations take place between parties who do not have the authority to make the settlement decision. For example, this is often the case when negotiations are with middle-management people who believe that their job is dependent upon looking strong in the eyes of their superiors. In a perfect mediation scenario, the CEO or another person with ultimate decision making authority is present. When this happens, settlement become almost a certainty.
3. During a mediation, the parties have the opportunity to hear directly from the opposition and in turn, are given the opportunity to directly educate and influence them. These direct communications allow for both sides to fully understand the other parties' position and to eliminate misconceptions. Often, I hear parties comment that they have heard something for the first time and now understand where the other party is coming from. As a result, a mediation session provides each side with a more realistic view of the opposing position, allowing for the consideration of settlement proposals that otherwise would have been rejected as being "off the wall."
4. Mediation allows each side to "test market" a settlement proposal by privately conveying the proposal to the mediator. During the course of mediation, the mediator will often meet privately with the parties to confidentially discuss settlement proposals . Even if not authorized to convey a proposal to the other party, the mediator is able to determine whether the parties are in the same "ballpark" and whether or not a proposal is likely to be accepted by the other party. This allows each side to fully explore settlement options without negotiating against themselves, otherwise know as the "he who speaks first loses" method of negotiation. Everyone fears that any reasonable settlement proposal will be rejected by the other party and will then become the starting point for the next round of negotiations. This problem is eliminated in the mediation process.
5. Mediation offers each party a realistic look at their case and the result they are likely to achieve in court. As the parties become clear on what they can "realistically" expect to achieve absent a settlement, their positions on settlement often become more reasonable and flexible.
6. Mediation assists the parties in developing options for settlement. The more options that are developed, the greater the chances of success. In court, the only option available is normally an award of money damages. When engaged in a negotiation battle, the parties are likely to overlook creative settlement options that involve other types of consideration. It is the mediator's job to help identify and expand the menu of options so that less obvious solutions and alternatives can be explored. By pointing out the advantages of these suggestions and comparing them to the result that might be obtained in court, the mediator can often open the parties' eyes to the benefits of a solution which they have not seen before.
Notwithstanding the failure of prior negotiation efforts by the parties, the mediator's task is to reduce mistrust and emotional barriers and assist the parties to focus on the real issues involved in the dispute. The mediator can then assist the parties to explore realistic options for settlement and can recommend a negotiation strategy designed to achieve a settlement that meets their needs. In the hands of an experienced mediator, settlements can be achieved over 80% of the time, even if prior protracted negotiations have been a total failure.
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