Mediation: What Makes the Difference?

Two different mediations. Each with a completely different subject matter. Different cities. Different months. Different lawyers. One involving a construction contract, the other financial services.

Each reached a stage in negotiations where one party offered an amount, x, and the other party sought an amount, y.  Remarkably, the amounts x and y were the same figure in each mediation and thus the difference between x and y was also the same.  That difference, in the overall scheme of things, was relatively small, significantly less than 10% of the principal sums. Neither claiming party had a specific need to achieve y. There was an emotional component present for both. The paying party was on each occasion funded by an insurer. 

At the end of each mediation, the parties’ principals, the clients, met together in an atmosphere of mutual respect and thanked each other for the attempts made to resolve a difficult and long-running matter. The negotiations were, largely, conducted in a spirit of openness and apparent good faith. 

And yet….in one mediation, the parties reached an agreement and, in the other, they did not. What was the reason for these different outcomes?

As ever, there is no one answer. One might ask what had happened, if anything, during the day in each case to trigger or prime a certain response? I couldn’t detect reactive devaluation. Each party seemed to accept that the other was doing its best. Optimism bias, perhaps, but over such a relatively small difference? Could that really cause a deal to be lost, or a bridge not to be built, when the ongoing court costs would soon exceed the difference? 

Possibly the endowment effect: one has so much invested in one’s own view of value, that objectivity is hard to achieve.  But what about risk aversion? In each case, there was real risk on the facts and good reason to settle. And the bird in the hand theory (“carpe diem”) seemed really important, perhaps especially in the case which did not resolve, so that discounting possible future value to achieve present certainty appeared to be a rational thing to do. And yes, costs had been incurred so that the sunk cost fallacy may have had an impact but everyone was also realistic about future cost escalation. This was the time to reach agreement if possible.

There was one factor which may have been material. In one case, the lawyer was quite proactive in carrying out a pragmatic risk assessment and in helping the client to be realistic too. Expectations were managed and any tendency to exaggerate or inflate was resisted. Concessions were offered in order to expedite the negotiations. In the other matter, the lawyer seemed more reactive and willing to leave decisions with the client. There may well have been a different dynamic in that room, a different client-lawyer relationship and expectation – and of course I was not privy to discussions which occurred while I was not present. 

Further, my own relationship with the claiming parties was marginally different. My attempts to test reality and check understanding of risk were received in slightly different ways, one welcoming, another less so. When combined with the different approach of the lawyers, that may have created a sense of pressure by the mediator in one matter, which may in turn have created resistance. It is difficult to do other than speculate.

And my sense was that insurer attitudes were quite different. In one case the insurer was personally present. In the other, the insurer was on the end of a telephone. Might that have made a difference? 

Incidentally, in the case which did not settle, I subsequently suggested (carefully) that the parties might split the difference but (obviously) only if both wished to do so. To my surprise, that I should even make such a suggestion was met with disapproval by both. Perhaps directing their ire at the mediator would galvanise them. Funnily enough, on my desk that evening, I discovered the book “Never Split the Difference” by Chris Voss. Point made.

Some Tips for Mediating….

A number of recent mediations have reaffirmed some essentials which I share here in the hope that they might be helpful to others:

It’s not all about the money. Mr A had a very substantial claim against a bank, of which he was a long-standing customer, running into hundreds of thousands of pounds Sterling, most of his life savings. When I asked him, early on, what he needed from the mediation day, he replied “I’d like them to apologise”. The bank’s advice was that it had done everything it could and that it had no legal liability. A familiar situation. However, the bank’s representatives found a way, authentically, to convey their deep regret that Mr A had experienced losses. They said they would do everything they could to ensure it would not happen again.

Mr A was very pleased with what was said. The matter settled for a modest sum overall. The Bank and Mr A conducted the final stage of the negotiations themselves, with support from advisers. Both parties left the mediation process satisfied with the outcome.

When wheels have come off, re-engage the key players. Day two of mediation was designed to build on day one several weeks earlier. However, the parties (employer and contractors in a large construction project) had not made the expected progress. In private initial meetings, one party expressed frustration and a feeling of lack of respect being shown by the other party – and a desire to conclude the process and proceed with litigation.

The engagement between the mediation days had been at a level below the key players. When the principals came together in a private meeting with me, they were able to hear from each other about their mutual frustration with what had happened. They agreed that they needed to oversee the process.

Much progress was then made in joint meetings in which the subordinates addressed the main issues under the watchful eye of the principals. The less senior people (including professional advisers) behaved in a different way with each other as they explored why they had not made progress, where the difficulties lay, and what needed to be done to make faster progress. The most senior people watched, asked questions, summarised, and provided guidance and leadership. The parties probably achieved more in half a day than for several months.

Get under the surface. In a long-running claim worth many tens of millions, the decision-makers appeared to have reached the end of the road. In an effort to find a way forward, we spent four hours going through my ‘Questions for a Difficult Meeting’ questionnaire. The parties prepared privately first and then, meeting together, they alternated in giving their responses.

The nature of the questions is such that they needed to dig deeper to look for answers. This opened up new levels of understanding about pressures, outside constituencies, alternative courses of action, changed realities and validation required for amounts sought. It led to a further discussion about possible settlement figures.

Ask questions. Similarly, in a difficult mediation involving two very senior directors in a company, impasse had been reached. Or so it seemed. But the more questions I asked, about their own ambitions, what others would say about them, how they might have contributed, what they might change or do themselves to make a difference, what questions they needed to ask, what pressures each was under, what they might be missing, and so on, the more they could see for themselves what needed to happen.

I am a great believer in party autonomy. Questions, used well, compel people to take responsibility.

Use a worked example. Many of us struggle with figures. Few of us really get to the bottom of what the numbers are telling us – or might tell us if we understood them. In a mediation involving a business partnership in which property was being divided up in a separation, the lawyers had spent several hours trying to explain what it all meant.

Eventually we got the flip chart sheets up and the parties themselves began to map it all out. It wasn’t easy as there were so many variables around land valuations, compulsory purchase possibilities and development proposals. And the taxation aspects were uncertain. However, for over an hour, we worked it through.

One of the parties was moved to say: “The figures are so much easier to understand than the lawyers’ words”!! Enough said. A satisfactory deal was done.

Encourage forward-looking momentum. When the going gets tough, maintain a process and be clear what that is – and try to ensure that the parties continue to commit to it. It has been said (by Deepak Malhotra in his excellent ‘Negotiating the Impossible’): “Stay at the table even after failed negotiations – if you are not at the table, you are on the menu”.

The job of the mediator is to (a) try to offer the best possible process for the circumstances; (b) keep in touch with and support parties even when there seems to be an impasse and (c) be prepared for a window of opportunity to open up, perhaps unexpectedly. Keep looking for it. In my experience, it often does. And we rediscover that most people, whoever they are, wish to resolve their disputes by agreement.

Provide food. Continuing with the idea of eating, it is encouraging to have endorsement of the value of bringing all the participants in a mediation together to share food. I do this whenever I can, with everyone meeting for breakfast after my initial private meetings. A buffet lunch can also be useful where people can choose to linger and chat if they wish.

I find it is useful to explain why I am doing this and I can now provide academic support that it works: see ‘Shared Plates, Shared Minds: Consuming From a Shared Plate Promotes Cooperation’ by Woolley and Fishbach, Association for Psychological Science 2019.

A similar point is made here about the important role of glucose levels in decision-making.

So that will be pizzas all round for the early evening final push for resolution! It is all food for thought…

Never Give Up: Persevering in Mediation

 

“If you had not held us back that evening, the deal would not have been done.”

 “Thank you and I wish you well.”

In this post, I return to a familiar theme for mediators and for lawyers acting for clients in mediation: perseverance.

The first of the two quotations above comes from a participant in a mediation spread over four days and nearly one year. It was a complex matter involving many parties and some difficult issues. Towards the evening on day four, a proposal from the claimants was met with a lower counter by the defendants. The parties had laboured hard and the claimants felt that they had gone as far as they could go with the process. Or at least some of them did. Two principals left the building along with leading counsel.

That might have marked the end of the mediation. However, I had a sense that there was more to play for. I expressed my frustration with the situation, spoke with those who remained and suggested a further meeting, one to one, involving one of the claimants’ key advisers and his opposite number. “Let’s give it a go” was the sentiment. I knew that each were keen to find a resolution and that they respected each other. No lawyers were present.

In that meeting, things were said and options were explored that resulted, three weeks later, in a comprehensive deal settling all matters. Only because they went that extra mile. And, perhaps, in hindsight, it was helpful that the others had left early.  They provided the space for someone to step forward who could bring about a change in the pattern.

In the second quotation are the words of the chief executive of a large supplier of services to the public sector. He spoke these words at 9.45 in the morning, less than one hour after the start of the mediation. Breaking with convention, and with the agreement of all concerned, I had arranged to start the mediation with a meeting of the two principals on their own. All of the legal and technical stuff had been well covered by the lawyers in the paperwork: the principals had met previously and they knew each other.

The purpose of the meeting was to explore whether either party would be prepared to move from an earlier stalemate. In a friendly and frank conversation, one explained to the other that, with further inquiries carried out and substantial further costs incurred, he was in fact not even able to start at the previous point. His counterpart responded that, in that event, there was no point in continuing. He departed the meeting with the words set out above.

Four hours later, the parties’ lawyers were drafting a settlement agreement. What had happened? We didn’t accept things at face value. We stuck at it. By “we”, I mean myself and the two principals, supported by their teams. We continued to explore, to dig deeper, to try to understand what was really going on and what each needed. We reminded ourselves of the cost of the alternatives to a settlement. It was a classic piece of positional bargaining in one respect, each trying to find out how far the other would actually go – or give. But without the structure and safety of mediation and a mediator with whom to talk frankly and confidentially, it is unlikely that the principals would have had the ability to reach an outcome. The lawyers supported them well throughout.

One of Scotland’s lesser known music groups was a band known as Pilot. They had a lovely little song entitled “Never Give Up”. It remains one of my favourites – and an inspiration in my work.

Mediation and Cups of Tea

“If only we’d had this conversation over a cup of tea fifteen years ago.” The client expressed frustration at the time which had passed, during which she and her opposite numbers had spent hundreds of thousands of pounds in litigation. That had got them no nearer to solving the underlying problem about which a court action had been raised all those years ago.

Now at mediation, remarkably this was the first occasion the clients had met during that period. Three different court actions, with a fourth pending, had left them financially impoverished and deeply angry at the legal system.

The (fairly recently instructed) lawyers at the mediation could only acknowledge the shocking nature of the situation. There was no rational explanation. Things had got out of hand. That of course had led to the well known problem of sunk costs – and who bears them. There was a possible route to pursue recovery of some of these but it would take that fourth litigation to open that up. Meantime, the real practical issue on the ground still needed to be addressed.

A “cup of tea policy” seems a rather quaint notion. But as a metaphor for meaningful negotiations it works well. Negotiating over a cuppa eases the tension. There is choreography in it too. Mediators can set up these moments well in order to make the very best of the opportunity.

Much more poignantly, the idea of a “cup of tea policy” was proposed at a mediation seminar in Edinburgh last week by Jo Berry, daughter of the murdered British MP Sir Anthony Berry, as an antidote to violence in political conflicts. She did so while sitting next to Patrick Magee, the one time IRA member who planted the bomb which killed her father at the Conservative Party conference in 1984. For seventeen years they have been speaking together about what it takes to overcome hatred and violence and consider healing and reconciliation. The key point they made, though, was the need for real understanding of the “other side”. Conversation over a real or metaphorical cup of tea can help achieve that.

“I did not understand where you were coming from.” “We felt misunderstood, demonised, not heard properly.” “Their political allegiance meant they couldn’t see beyond the uniforms…” “Your lawyers didn’t even try to make contact to find out what we really needed.”

Political malfunction and legal malfunction are not that far apart. For lawyers representing clients in claims handling and dispute resolution, whether in negotiation or mediation, it is critical to make – and take – time to listen and understand as well as to explain and be understood. For mediators, enabling that to happen is one of our primary roles. We must not underestimate its importance.

Mediation: a cricketing metaphor

Recently, I was ruminating about analogies between cricket and mediation. Cricket is a much-loved sport in Scotland. Sadly, nowadays, changes in the climate mean that cricket in my home country is more often affected by summer rain and damp conditions than a generation ago. Its future is less certain as a result.

I have always been a cricket fan. Ever since England played the West Indies in 1969, and the great Gary Sobers was still in his prime. When I was in my early teens, I was coached by a kind, talented West Indian professional called Noel Robinson. He played a few seasons for my home cricket club, Stirling County. I learned to bat properly. My cover drive had such a flourish that, in my first year at university, I was selected high up the batting order for the first XI after impressing at practice in the nets. It did not take long, however, for my fear of really fast bowling to be exposed. The 2nd XI soon beckoned.

But it was in defensive play that I excelled, both on the front foot and the back. I practised for hours. I could bat for ages. My schoolmates would be frustrated as I ground away in those 20 over games, collecting singles and accumulating runs at a snail’s pace. 39 not out seemed to be my badge of honour. That England legend, Geoffrey Boycott, famed for persevering at the crease, was my role model.

Unlike many sports, for an individual batsman one mistake is all it takes to end participation in the game. A mistake that may result from a moment’s inattention. Or a rush of blood to the head. A split second of indecision. A distracting thought. Conversely, sharpened focus, a micro-second’s pause, a determination not to let the overall circumstances get in the way of giving complete attention to the next moment, blotting out an earlier near miss – all these promote longevity and continuation in the game.

For a batsman, stroke selection at the critical moment is what it is all about. I recall hearing that the distinction between an average opening batsman (the example given was one Nick Compton, who never quite established himself as an England player) and Alastair Cook (the most successful opener of all time for England) is a tiny fraction of a second. Cook takes that little bit longer before committing himself to his stroke. He takes just a little more time to process, sub-consciously, the bowler’s action. That makes all the difference. How much of that is practice, how much is intuition and how much is personality, I don’t know. But this does makes you think.

In mediation, we operate with a mixture of spontaneity, flair, caution and discernment. Often, how we react in the moment makes all the difference. We need to be able to take risks sometimes, or we’d never move the process on. On the other hand, over-playing our own role, letting the ego prevail, can be fatal. It’s such a question of balance. Usually, of course, our errors are not decisive. The ball metaphorically drifts past the wicket into the safe hands of the wicket-keeper without snicking the bat or striking a wicket. It can be touch and go at times. We are all human, error prone.

What then sets apart a really effective mediator from the average? For me, it has to include an ability to focus on the process regardless of the outcome, an ability to operate with consummate skill in the moment, knowing that, paradoxically, this will enhance the prospect of a successful result. It has to include a willingness to practice skills, never assuming mastery, with humility about the reality of our role and its importance. I would add awareness of one’s own personality and psychology, and of those triggers which might set off a chain of events leading to unhelpful loss of confidence during mediation. It’s about standing back, surveying the field, viewing where the mediation players have positioned themselves, trying to work out where the opportunities lie for getting past unhelpful defences, picking the moment to drive towards a breakthrough.

And being brave enough to allow that extra momentary, fractional pause. A little more time before responding, a little more time to elicit – and hear – an answer and to process the real meaning. Concentration, even when tired at the end of a long day (remember that Alastair Cook once batted for 836 minutes in a crucial match, albeit over two days). An ability to stay engaged, raising your performance when all seems lost and, as with so many of the best sportspeople, seeing unexpected things in one’s peripheral vision that others would often miss.

A few seasons ago, my Scottish mediation business, Core Solutions, sponsored the Scotland cricket team. Our billboard carried the eye-catching slogan: “Mediation – There Are No Boundaries”. That nicely summed up our adventurous hopes for what we were doing. Mature reflection might suggest that recognition of boundaries is actually necessary too. In cricket, a draw is often seen as an unsatisfactory outcome for both sides, but it can also represent a realistic equilibrium when two well-matched sides have done their best.

In mediation, a negotiated agreement may also seem unsatisfactory if your objective has been victory. However, as we know so well, the optimum result in mediation may be both parties leaving with a sense of dissatisfaction – but knowing that, with this match finally over, a whole new game can start the following day, on a new wicket with fresh opportunity and renewed optimism.