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Evaluative mediation and whether to agree to it

by Craig Pollack on 27 Nov 2012

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By Craig Pollack – Head of Litigation, SJ Berwin LLP [1]

By way of introduction, I want to start with an anecdote about my least satisfactory ADR experience in the last year.

It was an Early Neutral Evaluation (“ENE”). It was my first and at my suggestion.

 The dispute was between two significant corporate entities, and was over the top-up consideration due (or not due) to one of the parties following completion of a share purchase agreement. The parties had no interest in litigating or arbitrating the dispute to a judgment or award, since they wanted to continue their essentially positive business relationship. But at the same time, each was convinced about its own construction of the relevant clauses in the SPA.

Since the dispute essentially turned on a matter of construction, I thought that an ENE before a retired judge on the discrete issue could make sense. This was accepted and the parties entered into an ENE agreement which set out the parameters of the process and its non-binding nature. The ENE took the form of a mini-trial over two days. It was preceded by limited disclosure, witness statements and skeleton arguments. At the ENE hearing there was cross-examination of one witness on each side and closing submissions. We had also agreed that the evaluation opinion would need to be in writing.

The reason for my dissatisfaction with the ENE was not (or not only) because our side lost, but because I felt that the process had liberated the evaluator from an essential ingredient that underpins a judge’s or an arbitrator’s decision; namely “answerability/accountability”.

Because it was a non-binding evaluation opinion, because it was not open to appeal (by contrast with a judgment) and because it was not open to peer pressure/review (which to an extent is true of arbitration), the evaluator, I felt, was able to treat the evaluation more lightly.

What he perhaps had not appreciated was that the non-binding nature of his opinion was met by a strong moral imperative on the part of both parties to “live with the result” because of their on-going relationship.

What we received, therefore, was not “rough justice” – which I could have accepted – but “justice lite”, which was wholly unsatisfactory.

This brings into focus some of the issues and risks I want to highlight with respect to evaluative mediations.

Understanding terminology – what do we mean by evaluative mediation?

In the mid-1990s an American academic – Leonard Riskin – introduced the terminology of “evaluative mediation” as distinct from “facilitative mediation”.[2]

The distinguishing features between the two can be summarised broadly as follows:

(1) Evaluative mediation:

This is essentially a mediation in which the mediator is asked and allowed by the parties to express an opinion; whether it be on the merits, settlement or something else.

The key features identified by Riskin were that the mediator was willing:

  • to urge/push parties to accept settlement;
  • to develop and propose the basis for settlement;
  • to predict how the court might decide the case;
  • to assess the strengths and weaknesses of each side’s case; and
  • to educate each party about their own interests.

In summary: in an evaluative mediation, the mediator focuses on the parties legal rights rather than their commercial drivers. The mediator structures the process and directly influences the outcome.

(2) Facilitative mediation

This is where the mediator acts as facilitator to assist the parties in reaching a mutually agreed resolution.

The mediator will:

  • help the parties evaluate proposals and develop positions; and
  • ask open questions about the consequences of not settling; for example, what impact losing the trial might have on them, the costs implications etc.

This approach assumes that the barrier to resolution of complex disputes is the failure of communication between parties - the “dialogue of the deaf” - and that by facilitating communication, the parties will come up with a better, more bespoke solution than any mediator or court could arrive at.

Accordingly, the facilitative mediator does not make recommendations, give his/her own advice or opinion on the merits, or predict what a court would do at trial.

It is sometimes referred to as “pure” mediation and was certainly the prescribed methodology that most mediators were educated to follow when mediation first came into the commercial context in England.

The academic debate

Riskin started a debate not only about the pros and cons of evaluative mediation but, more pointedly, about whether “evaluative mediation” was “mediation” at all.

In a response to Riskin, a fellow academic, Joseph B Stulberg, wrote a paper that essentially concluded that:

“ … only the mediator who adopts a suitably … facilitative orientation is in a position to ground an approach to problem solving … in a manner consistent with consensual decision making ... That vision of consensual decision making and the facilitative role required to support it, should inform the meaning of the term 'mediation' .... and should constitute the standards by which we select and evaluate mediator performance. No persuasive reason exists to accept anything less.” [3]

The academic response to Stulberg’s view can be summarised as follows:

  • there is no such thing as purely facilitative mediation and all mediations require evaluative methods; and
  • in practice, it is a distinction that may not be meaningful because evaluative methods, when properly analysed, are inseparable from facilitative methods.[4]

My perspective

I agree that in practice there is room for both forms of mediation because, in my experience, in complex cases, parties can become frustrated with purely facilitative mediation.

As party representative sometimes you want the mediator to stop being an “umpire”, to engage on the merits and be more forceful in his/her views, whether it is with the other side or so as to help manage your own client’s expectations.

That, though, raises a number of risks for the party representative. I want to highlight some of these as issues to consider before agreeing to an evaluative mediation.

Four Issues to consider before agreeing to an evaluative mediation

(1) Is the mediator a “good enough lawyer”?

This is a serious question and it goes to the choice of mediator.

If you are going to advise your client to agree to an evaluation on the merits you need to ask yourself:

  • Is the mediator someone with the necessary legal analytical skills and gravitas for you to risk putting your case to him/her for an opinion?
  • In an English context, does this militate towards a mediator who is a top QC or a retired judge?
  • If so, are you convinced that such an individual not only possesses the legal skills but also the distinctive – but equally important – mediator skill set?

(2) Preparation and ventilation

Assume you identify such an individual, two further considerations arise: preparation and ventilation.

There are mediators in England who mediate +40 disputes a year; or almost one a week.

Consider this: if you are the party advocate in a multi-million pound dispute on which you and your team have worked for 6-12 months, preparing statements of case, witness statements, experts reports etc, are you willing to risk an evaluation on the merits by a mediator who may have had limited time to read into the case?

Furthermore, are you willing to risk an evaluation where the legal issues have not been fully ventilated and where there has been no cross-examination? If you are looking for a merits based evaluation why not simply choose a method that explores the legal arguments more fully? For example, a med-arb: ie where a failed mediation is followed by an ad hoc arbitration which will enable the merits to be tested more rigorously.

(3) Management of client expectations

Another issue to consider in relation to an evaluative mediation is whether, as party representative, you have prepared the clients sufficiently well for a negative evaluation on the merits of their case.

It could be argued that this is no different to a case that you lose at trial. Maybe so. But with a trial most often the client has the full litigation experience and is in Court to see how the evidence plays out, how the legal arguments develop.

Put another way, you may have a client management issue if the evaluation is perceived to be cursory and at odds with the in-depth analysis of the merits that you had discussed with the client beforehand.

On the other hand, one well known mediator – the late David Shapiro – was known to argue that the major difficulty he encountered with party representatives was their tendency to “fall in love with their own case” and the job of the evaluative mediator was to break up the love affair.

(4) Timing and delivery of the evaluation

Assuming the parties have agreed to an evaluative mediation, when and how should it take place?

In my experience, mediation in complex cases most often works once the issues have been properly amplified, which in an English context generally means not before witness statements have been exchanged.

An evaluation too early in the litigation process is likely to encourage the disappointed party to assume that the mediator did not have sufficient facts to understand its case properly and can lead to that party deciding to continue the litigation regardless.

In terms of delivering the evaluation in the actual mediation, some mediators say this should be done only when all else has failed, and only then with agreement and caution.

Rules of engagement

The commentators [5] make a series of sensible suggestions about how to mitigate some of the risks inherent in an evaluative mediation. These include:

  • ensuring the parties have agreed in advance that an evaluation should be made, and what form it will take (oral or in writing);
  • making it as late as possible in the process after all non-evaluative alternatives have been exhausted;
  • delivering the evaluation in private to each party and wording it in a way that minimises that party’s loss of face;
  • emphasising that it is non-binding; and
  • working with the disappointed party to help devise strategies that do not lead to entrenchment of its prior position after the evaluation.

Conclusion

I will conclude by borrowing a quote Riskin used in his seminal article attributed to Arthur Chaykin of the Sprint Corporation, that summarises why one should approach evaluative mediations cautiously:

“Parties often feel [an evaluation] is what they want, until they get it. Once the “opinion” is given, the parties often feel that the mediator betrayed them … Nevertheless the parties should understand that once they involve a third party and allow that “neutral” to give an opinion on the merits, that determination will almost always have a powerful impact on all further negotiations. After all, how could the 'prevailing party' take much less than what the mediator recommended?” [6]

END

Craig Pollack is Head of Litigation at SJ Berwin. He specialises in complex commercial litigation, multi-jurisdictional disputes, regulatory investigations and financial markets disputes. Craig is also well known as a mediation expert and advocate. His clients include major investment banks, hedge funds, public companies, private equity houses, high net worth individuals and sovereign states.


[1] Adapted from a talk given to the JAMS International conference in London on 17 October 2012 on “Settlement Junkies: Fight ‘em or Feed ‘em? Exposing the Myths, Methods and Clichés of Modern Mediation”.

[2] Understanding Mediator’s Orientations, Strategies and Technique; A guide for the perplexed –
Leonard L. Riskin, Harvard Negotiation Law Review Vol 1:7, p7

[3] Facilitative Versus Evaluative Mediator Orientations: Piercing The “Grid" Lock” – Joseph B Stulberg. Florida State University Law Review [Vol. 24 1997] p985

[4] Mediating the Evaluative – Facilitative Debate: Why both parties are wrong and a proposal for settlement - Kenneth Roberts. Loyola University Chicago Law Journal [Vol. 39 2007] p187.

[5] See, for example, the article on Evaluative Mediation by David Richbell (Westlaw UK)

[6] Ibid: p44

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Craig Pollack

Written by Craig Pollack