Allowing direct discussions between parties, when mediating a commercial case, can be an intimidating—and tricky—proposition. But it is effective when allowed . . . despite obvious concerns.
Here are four concerns, about direct discussions between mediating parties, based on four goals of mediation:
- The first goal is to assure that each party fully understands the other party’s arguments—how is the mediator to do that in direct discussions?
- A second goal is to avoid grandstanding by opposing attorneys—how is the mediator to do that in direct discussions?
- A third goal is to assure that everyone engages in discussions respectfully and without rancor—how is the mediator to do that in direct discussions?
- A fourth goal is to effectively transition into negotiations, once each party fully understands the other’s arguments—how is the mediator to manage that in direct discussions?
An Analogy
In answering such how-to questions, consider this:
- Have you ever chaired a meeting (with several—or many—people participating) that has a goal of achieving a group decision on a disputed subject?
Mediating in joint session is a lot like doing that—and requires the same experiences and skill set to do so effectively.
Here are practical ways for a mediator to achieve the four goals identified above.
Goal One: Understanding the Other Party’s Arguments
One of the biggest problems in negotiating anything in any context is this: parties don’t listen to or understand opposing arguments.
This is particularly true in mediation, whether in joint session or caucus:
- parties are focused exclusively on advancing their own arguments; and
- they rarely listen to opposing arguments—even when it is the mediator who repeats those arguments to them.
Here’s a remedy: begin the mediation by asking each party to explain the other side’s arguments, and have the opposing party confirm the explanation’s accuracy.
Here’s what such discussions might look like in a hypothetical commercial mediation between Large Business and competing Small Business:
Mediator: Large Business, tell us one thing that Small Business thinks is important in this dispute?
Large Business: Small Business thinks we are trying to steal their customers.
Mediator: Small Business, is that correct?
Small Business: Yes.
Mediator: Small Business, tell us one thing that Large Business thinks is important in this dispute?
Small Business: Large Business thinks it is doing ordinary business things and doing nothing wrong.
Mediator: Large Business, is that correct?
Large Business: Yes . . . but more importantly, we think Small Business is trying to blame us for its own inadequacies and problems.
Mediator: Small Business, could you restate your answer to incorporate what Large Business added just now?
Small Business: Large Business thinks it is doing nothing wrong and that we are trying to blame them for our own problems.
Mediator: Large Business, is that an accurate explanation of your position?
Large Business: Yes.
Mediator: Ok. Large Business, tell us another thing that Small Business thinks is important?
[This continues until all arguments of each party are discussed in detail and fully understood by the other party.]
Such an approach may seem hokey. And initial grumblings are common, like: “Oh, this is great . . . starting out by making everyone mad . . . this will never work.”
But such an approach, when pursued with persistence in a mediation, is surprisingly effective at achieving a full and clear understanding by each party of the other party’s arguments.
And . . . it’s common, during such discussions, for parties to gain new realizations and insights on what the other side is thinking—and these new realizations and insights often provide a breakthrough toward settlement.
Goal Two: Avoiding Attorney Grandstanding
One of the main reasons attorneys and mediators avoid direct discussions between parties in mediating commercial cases is this: to avoid attorneys trying to upstage each other. This is a legitimate and real concern.
But there is a simple remedy for this concern: in the discussions described above, the mediator can require that the parties do the talking, not the attorneys.
I’ve heard many expressions of doubt, from those who have never experienced it, on the effectiveness of such a remedy. But it works. Think of it this way:
- What attorney wants to be explaining the other side’s position in front of the other side—that’s no way to grandstand;
- Most attorneys are relieved by this approach—because it removes the performance pressure from their shoulders; and
- Extensive confidentiality provisions for mediation remove many of the normal hesitancies regarding group discussions like these.
Goal Three: Assuring Respectful Discussions
This is a universal concern in direct discussion mediations. It’s easy to see how emotions might get out of hand . . . or one person tries to belittle another . . . or someone speaks in a scornful or derisive manner.
It is the job / duty of the mediator to assure respectful discussions and that such things don’t happen.
And the reality is that such a duty is not difficult to meet. It starts by setting expectations early with an opening statement something like this:
- “There is only one rule today, and that’s this: We will all treat each other with respect. If we can’t do that, the mediation will end immediately.”
Then, in early discussions noted above, the mediator has to stay on top of things like this:
- “No. No. No. You have to describe their position straight-up—just like they would. You can’t throw in a snide comment or tone of derision. Now, try that again.”
My experience is that people will comply with the respect requirement, because they hope to achieve a settlement.
It’s possible, every now and then, for someone to have an emotional blow-up within the mediation. But such events are rare. And it’s my experience that such events, (i) are a sign of frustration over a weak position and an inability to gain traction, and (ii) rarely move the needle for anyone.
Goal Four: Transitioning From Discussion of Arguments to Negotiations
Once each party has achieved a full understanding of opposing arguments, the mediation session needs to transition into a negotiations mode.
Accomplishing that transition is not difficult. The mediator simply says, “Now that we understand each other, how are we going to settle this?” . . . and then waits for someone to speak up. Someone always does.
During negotiations, all offers are made in direct communications between the parties. While the parties may caucus from time to time, they do so to evaluate and make decisions on negotiation strategies and offers to be made. But all offers are made directly to the other side. That way, all can see, and make their own judgments on, the attitude and demeanor of the others—and they don’t need to rely on the mediator’s judgment on this.
The dynamics of the mediation, at this point, are interesting:
- The parties have already engaged in direct discussions on the issues at hand, and those discussions progress naturally into the negotiation phase;
- Thus far in the mediation, the mediator has been able to keep an entirely neutral and non-evaluative posture, and that neutrality continues on into the negotiation phase; and
- The mediator has little-to-no evaluative responsibility for “pounding on” the parties, since they are in direct discussions and can speak for themselves and make evaluations on their own behalf.
Works Well:
–In Bankruptcy Disputes
This approach works especially well in mediating bankruptcy disputes.
Business bankruptcy attorneys, for example, are good at settling disputes. That’s because consensual resolutions to most bankruptcy problems are essential: (i) a struggling business does not have the luxury of engaging in drawn out litigation, and (ii) every constituent in the bankruptcy case has a common interest of maximizing value (i.e., you can’t fight over who gets valuable assets when that value is squandered).
The direct discussion approach takes advantage of and maximizes the negotiating strength of bankruptcy attorneys.
–In Two-Party and Multi-Party Disputes
This approach works well in both two-party and multi-party mediations.
One additional point is especially important in multi-party mediations with direct discussions: the mediator does not need to be present for the parties to negotiate with each other. That’s because the goal is to achieve a settlement—not mediator control.
Conclusion
The very idea of direct discussions between mediating parties often brings a sense of fear to the parties and their attorneys. After all, who wants to spend time chatting with an opponent?
But those who have experienced a direct discussion session, like that described above, can testify that the fear is overblown and that the benefits are real.
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