When asked this question over lunch last week, I thought it worth elaborating on the answer I gave between mouthfuls of veal Milanese, zucchini fritti and roast potatoes.
The short answer, of course, is that mediation isn’t simply about compromise. For businesses facing disputes, mediation is all about understanding and controlling litigation risk. The best way of mitigating litigation risk, it goes without saying, is to settle the matter quickly and informally outside the court system.
And indeed, the overwhelming majority of disputes are settled in precisely this way, including, sometimes literally, at the doors of the court.
However, when conflict arises and cannot be resolved between parties by ignoring it, talking about it, or threatening each other, we are culturally conditioned to seek “an umpire” to make a decision. The umpire – be it a judge, adjudicator, or arbitrator – will, like their sporting brethren, consider what has happened between the parties before making a decision. (And where the facts cannot be clearly established, their decision may well be wrong.)
Returning to the question, though, let’s consider what a “good case” looks like. A lot depends upon where you are sitting. There might be an entertaining book – or at the very least a future blog post – chronicling how the vicissitudes and unpredictability of litigation has undone the dreams of lawyers and their clients. Back in the 1970s, General Motors, Ford and Chrysler offered my friend the late David Shapiro $300m to settle an antitrust case. He turned it down confident of a $1bn judgment at trial. Having made plans to buy his own air force and a private island, he found that the court didn’t see things as he did. And nor did the Seventh Circuit Court of Appeals. On another occasion, he had to step down as trial attorney because he’d heard the judge didn’t like fat lawyers. (Shapiro and assistant Leslie Rubin had previously earned the moniker Fatman & Rubin). More prosaically, experts change their minds, witnesses begin to squint under pressure and look shifty and untrustworthy, or the judge sides with one side because of an apparently shared sexual problem i.
It is a chastening moment in a lawyer’s life when they lose a case they were certain of winning. And some go on to make a habit of it. Litigation, lawyers know, is an unpredictable business.
It is also inefficient. Cases that go to judgment in court, as mentioned above, are incredibly rare. Nevertheless, convention dictates that lawyers prepare cases for the improbably rare eventuality that they will be contested in court. One downside to this approach is that cases will likely settle on terms which could have been agreed months or years previously.
Supposing the matters doesn’t settle and a trial date is set. Steps-of-the-court settlements are commonplace, saddling clients with barristers’ brief fees, solicitors’ fees, and all the detailed and costly preparation for an event that will never happen. Starting a trial is also no guarantee of finishing one, let alone victory. Trials are often abandoned part way through with clients learning only that the risks of losing are too great.
Taking matters a step further, you may finish the trial, and you may win. Trying to enforce a judgment against a company or individual who, for a myriad of reasons cannot pay, tends to dampen victory celebrations somewhat. A meaningless victory of this kind invariably carries invisible costs measured in illness, strained relationships and lost opportunities.
The reasons companies generally avoid going to law were neatly summarised by Andrew Aclandii back in 1990, and remain pertinent today:
- It [the law] is slow in a world which works faster and faster
- The outcome is unpredictable
- It can be ruinously expensive
- Where different protagonists are arguing about many interlocking issues, it may prove impossible to reach any conclusion which actually resolves the situation
- It can destroy relationships…when those involved need to co-operate as business partners
- It is public: there is the business of being “dragged through the courts” with all the attendant stress, inconvenience and perhaps bad publicity
- There are many disputes which turn not on points of law, but on the dynamics of personal relationships
Mediation on the other hand works because it provides a structural framework for the negotiation process. Finer minds than mineiii have set out the advantages of mediation, over principal-to-principal negotiation as follows:
The mediator can assist in the establishment and maintenance of negotiation guidelines, in providing structure and momentum, in improving the communication process, in imparting problem-solving techniques to the parties and in confronting the parties with the consequences of non-settlement. The mediation process and mediator techniques tend to moderate extreme behaviour, to facilitate creative option generation and to promote more efficient and productive problem solving than is the case in unassisted negotiations. In these ways mediation differs qualitatively from other negotiations.
The above is perhaps what I might have said had the veal not been so good, and my greed so great. These are some of the reasons you might mediate a “good” case. Food for thought, I hope.
i William Wood, QC – anecdote related at CMC debate, 2012
ii Acland, Andrew Floyer, A Sudden Outbreak of Common Sense: Managing Conflict Through Mediation, Hutchinson Business Books (1990), at p.9
iii Boulle & Nesic, Mediation: Principles, Process, Practice, Reed Elsevier (UK) Ltd. (2001), at p.78