In Mediation, Timing is Everything – Put the Money Last?

Three recent mediations in three jurisdictions raised some interesting issues.

Each mediation was different. One involved a claim for professional negligence against a firm of solicitors for (allegedly) incorrectly including an occupied building in the sale of a large piece of land. The sellers were unhappy that many years had elapsed since the transaction, a number of them passing while attempts were made in court and elsewhere to rectify the error.

Another involved a large-scale IT project in the Middle East where invoices for a significant amount remained outstanding to a contractor and the “employer” had since assigned the contract to another company. Again the passage of time had magnified the frustration for the claiming party.

The third featured a unique engineering project which seemed to have failed spectacularly. One challenge was how to measure the loss and assess the appropriate means to rectify the problem on the ground, whatever errors may have led to the initial failure. The situation was exacerbated by multiple party involvement and the need for ratification by external constituencies.

Learning?

I found myself pondering the learning from these diverse and rich experiences.  The utter humanity in each was a point to explore. Even the most commercial dispute was heavily influenced by the relationships (or lack of them) at senior levels.  Part of the function of mediation in each matter was to build or restore a level of communication sufficient to enable a modicum of trust to be established on the day – and, in three of the four cases, to enable the principals to engage directly in the final stages of the negotiations.

One or two quotations emphasise the point: “We have never had a forum to say what was said today”; “All I needed was to have that dialogue, I have never been able to talk to [x] as I am to you now”; “The problem was not the sending of the message but not being offered the opportunity to comment on the content”; “In order to have the conversation, we needed all the people here”.

Addressing Money

The other big point was the timing of addressing money claims. Each mediation had financial aspects, whether for the purpose of rectification, as compensation or as debt apparently due. In one, parties and their representatives were content to be guided by me as mediator on the timing.  As a result, the financial talks were relatively straightforward in so far as that is ever so in cases like these. The point was that, with other issues on their minds (how they felt about the other party, the need to understand past events, exchange of new information, risk analyses, and so on), it was more effective for the parties to address these issues in advance of bargaining about money.

In the other matters, one party in each mediation wished to move early to making an offer.  The reasoning was that such an offer would establish whether the other side would be prepared to do a deal or if the gap was too great to bridge.  As one negotiator put it to me: “The sooner we make an offer, the sooner we’ll know whether it is worth staying on, or if we can be on the next plane home.”

That would of course be true but, in my view, the prospect of being on the plane home could be much greater with such an approach. People have many reasons for taking the stance they do, including a disinterest in whether the matter resolves now or later. It does test the mediator’s resolve too – and may be intended to do just that in some instances. It may also put pressure on others in the rooms with foreseeable – and often unforeseen – consequences.

What happened next? In one, I had a frank and direct discussion about what I saw as the risks and benefits of such a strategy. I didn’t need to beat about bushes as the negotiator and I had already formed a mutual respect in the short period since our first meeting. I knew he meant business and he knew I was not a pushover. I said I would be content that we had explored together the risks involved in the strategy proposed and reminded him that, as client, it was his prerogative to make informed choices. We also agreed that I would advise the other party about the process issues which I perceived arose.  That at least was a partial insurance policy. I said I would enjoy seeing if what I predicted would actually happen. I observed that it was all good learning. We explored it all with a lightness of touch.

In fact, the move rather backfired in an unanticipated way but, because the negotiator had prepared himself for a knockback by the other party, we were able to deal with it. And it did indeed require us to go back and explore underlying issues before we finally got to the numbers. When we did, it was a remarkably short process because the necessary prior due diligence had now been done. Indeed, the principals got together privately and completed the deal in a friendly spirit in the late afternoon, earlier than either had predicted first thing in the morning.

In the other mediation, I decided to hold the line. It took some explaining and regular short meetings with one player to reassure that, despite the passage of time on complex technical and quantification issues involving experts, the expenditure of a few extra hours would make the end game much easier, despite the apparently large gap between the parties around financial settlement. And so it turned out. By the time one client’s senior legal adviser was able to sit down privately with the lead client negotiator on the other side and look that person in the eye and say “I can go no further”, all the pieces were in place for the jigsaw to be completed. Intricate and time-consuming it may have seemed (if one day can be described as “time-consuming”, compared to the years of positional negotiation and litigation prior to mediation), but the parties had achieved the result they sought, not only financially but in a host of other ways.

Keep the money to the end,” I often say in negotiation and mediation training. It tends to work in most cases.

The Client as Decision-Maker

The silence was palpable. Saying nothing is hard enough in normal circumstances. It’s doubly hard when sitting alongside the key players in a mediation, watching them inch towards a better understanding of what they need to do to achieve the deal they know they need to get to.

I found myself ostentatiously picking up my water glass and sipping from what little remained of the contents. I looked out of the window. Made eye contact with my assistant, who was watching her first full commercial mediation. Feigned writing some notes. It was so obvious, to me, what they needed to say. But they needed to find the words, not me.

And they did. From a position of complete impasse, they gradually demolished the assumptions which each had made and which had informed their legal advice, spawned two litigations and produced hundreds of pages of forensic accountancy analysis.

Neither had “duped” the other, as one party had earlier suggested. The provisions in the company accounts were nominal and payments recorded there had not in fact been made, contrary to the belief of the other party. They and their respective companies had not each benefited unfairly from the efforts of the other. They agreed that each faced financial ruin if the cases proceeded to the several weeks of trial to which they were heading. The scales fell away as they learned from each other what had actually happened with the contracts. Why hadn’t they talked? Too busy, more urgent things to do. Trust had broken down. They quickly defaulted to seeking legal advice. That advice had included not to talk to the other lest they compromised their positions.

Inexorably, they moved to a solution. But now they were far away from their starting points. They had to bring their colleagues along. And what about the lawyers? I spoke for the first time in a considerable while. Can you recommend to your colleagues what you have tentatively agreed between you? If so, go and speak to your colleagues. I’ll ask the lawyers to join me in the main plenary room while you do that.

An hour later, after further meetings with me privately and then jointly, the clients walked into the plenary room and informed their lawyers (and the forensic accountants) that the deal was done. Relief all round. I knew that the lawyers would be fine with this. I’d got the nod a while ago. The dispute was too difficult to be resolved simply by representatives. They needed their clients to engage.

The return of this kind of autonomy to the clients as decision makers is, I believe, one of the most important contributions that mediation can make. Perhaps too often, clients have tended to defer to legal advisers, and the lawyers, understandably (but perhaps in a rather paternalistic way) have assumed responsibility. But lawyers can confidently let go in situations like this. They, and the mediators, need to liberate the clients.

 

Mediating for the Long Game

In recent weeks, I have had the privilege of mediating and facilitating in different matters with representatives of four governments . On one occasion they were on the same “side”; on another, notionally on different sides. A common theme to emerge was the needs and behaviours of political masters who were not present.

The representatives themselves were very aware of the need to try and build good relationships with their opposite numbers. That required a degree of honesty about the political realities. I could sense that frankness was helpful as it built confidence. It also allowed reflection on what could and couldn’t be done. Critically, the conversations were possible because of the framework of confidentiality which prevailed. And we ate together, which always helps to break the ice.

A good deal of time was spent thinking about “victory speeches”. What were the needs of those outside the room? How could they be addressed? What could be said that would help get any agreements over the line? Paradoxically, of course, the representatives needed to work together to achieve outcomes that would be deliverable. In a sense, they had more in common in this task than they had with their constituents outside the room.

Such cooperation on matters of process builds the kind of goodwill that feeds into substance. Trust is built and understanding enhanced. Us and them becomes “us” for the purpose of the negotiation. There is nothing unusual in this. Sophisticated negotiation often requires this kind of collaboration. That’s where the input of the mediator can be vital to create and sustain the safe space for this to occur, especially when the going gets tough.

The prize is worth the effort, as it was in the matters of which I was part, as those involved made real breakthroughs in the course of a day, avoiding or ending months or even years of deadlock. Often, of course, there would be more work to be done over the months ahead. An important component therefore is agreeing some sort of protocol for future engagement, both in terms of communication and substantive topics.

Equally, it can be important to commit to meeting again, out of the ordinary run of the mill, in order to reflect on progress, address any regression and be accountable both for what has worked well and for that which can be improved. This can be the difficult part as there is a tendency to think it will now all work out fine and that one such engagement should be sufficient. Mediators and facilitators, therefore, have also to be able to encourage a long game, just as much as taking pleasure from the quick fix and instant gratification of “settlement” on the day.

More Reflections on Mediation

 

  • It really is helpful to bring the key players together; in one recent matter, the two senior decision-makers were among the best negotiators I have ever observed. We met regularly throughout the two mediation days to discuss strategy, the involvement of others, the squeeze points and how best to deploy time and resources. This whole collaborative approach paid dividends when the crunch came and they needed to bridge a very significant gap. And then, make use of silence….let them talk it through, touch the void, work out the realities, even if the answer seems obvious to the mediator.
  • Recently, rather than starting with a joint meeting or with one party setting out how they saw their claims, I invited both groups at the outset to prepare the bullet points for the press release they would issue when the mediation concluded. We then got together and brainstormed to reach a commonly agreed framework which I subsequently put into a couple of paragraphs for them to use. More importantly, the exercise identified what was important and showed that the monetary claims were only one aspect among three essential issues, of which a continuing collaborative relationship was also vital. As a result, we were able to prepare, jointly, an imaginative agenda.
  • In another example, as the parties signed the final resolution agreement at midnight, and prompted by a remark by an individual near me, I played a bit of The Winner Takes It All, by Abba, on my iPhone. Taken in isolation, that seems ridiculous. But it worked, when taken as part of a pattern in which we had kept spirits up through a difficult evening of drafting, during which parties’ had engaged in a musical quiz built around identifying a song, its origins and chart placing in 1975. This had helped people to relax at a very tense moment, and it fitted the occasion. I followed up Abba with Wings’ Goodnight Tonight… I then offered a sombre reflection on the contrast between the apparent triviality of the music and the excellent job each person present had done, naming them each individually, and commending them on the outstanding outcome they had achieved. This mixing of lightness of touch, releasing the hormone oxytocin, with the dignity and seriousness of the process (and the adrenalin and cortisol that stress inevitably produces) seems to be important. And finishing on a high note is really worthwhile.
  • Coaching individuals in a mediation about their and others’ behaviour will pay dividends if it helps them see themselves as others see them. Sometimes, that needs to be frank and can only be done if the mediator has built trust and rapport. Being humble and accepting that you may have made a mistake or given a wrong impression helps to aid authenticity, which is essential for us all, mediator and others  Encouraging and supporting the apparently difficult people is vital too. They are only trying their best as they see things. Asking bold, daft laddie questions can be empowering of others if they are struggling. And avoid telling war stories about yourself; that rarely works. But encourage others to share experiences that may be useful to the process.

Some valuable learning points from recent mediations

“What’s been going on in recent mediations”, asked a colleague. “Any highlights?”  (The trouble with doing anything on a regular basis is that you can omit to reflect on the learning from each occasion.)

So, for me, here are some takeaways from the past few weeks:

The value of bringing the principals/decision-makers together for an early conversation. There is usually great benefit in this. If they have met before, this renews that acquaintance in a difficult yet private forum. If they haven’t met, they have an opportunity to get to know each other as individuals, not names on emails or contracts. They set the scene for what is, after all, their day. And, crucially, it provides a set of reference points for later stage negotiations when only they can do what needs to be done. In contrast, on one occasion recently a lawyer was present on his own, without any client representative or other support physically present. What could have been really awkward became an example of effective and courageous lawyering in which the lawyer achieved a balance between presenting his clients’ position and frank exchanges with the other party – and private advice to his client on the telephone.

Involving experts. I’ve had some fascinating examples. On one occasion, we had two experts explain to each other why they differed, in front of one lawyer and one decision-maker for each party who could ask occasional questions, along with the mediator, who could ask some of those “daft laddie” questions that only a mediator can. Much was achieved with this exercise though the loss of control can discomfit the lawyers involved. On another occasion an expert who was an inventor of a high tech application explained to the full assembled crowd what his invention entailed. Some of those present understood. In yet another matter, one expert effectively assumed the role of an independent third party, offering guidance to both parties, by consent, on what they needed to do to help resolve difficult matters of valuation in a final account in a large construction contract.

Bridging the gap. In one matter, after several hours of mediation, only a few thousand pounds separated the parties. But the principals refused to make that final move. Extra value had to be found. That was achieved by a skilful lawyer who recognised that another stakeholder had an interest in the dispute ending. A telephone call secured the final contribution which enabled faces to be saved all round. On another occasion, I sat silent for what seemed like minutes while two key decision-makers looked at each other and tried to work out if the other really meant what they said when they intimated that they could go no further. The gap there was many hundreds of thousands. Gradually, each prompted and probed until they were satisfied that their counterpart was authentic. That gave them scope to reconsider lines of authority with stakeholders outside the room. Here, the money as such was not the defining point. Trust and realism were what mattered.

Preparation in advance. I always try to make sure that the lawyers are working collaboratively beforehand. That may take a number of meetings, emails or telephone calls, to help them jettison some baggage from past dealings or overcome positional starting points. Most however are courteous and professional. Given specific tasks and the goal of helping each other to help their respective clients, and recognising the value of collaborating to gather information, summarise differences, collate essential documents and relay encouraging messages to clients, they move the process forward significantly before the mediation day itself. Just airing differences and potential impediments on the telephone with the mediator present can reduce tension and recalibrate the relationship.