At a recent conference in Milan, held at the University of Milano-Bicocca University, on M&A and dispute resolution, mediation was a hot topic. Panellists discussed a number of areas ranging from mandatory mediation to arbitrating M&A disputes.
One of the key issues discussed was that of caucusing, a process in which the mediator speaks to the parties separately and privately during a mediation, away from the main meeting room. Caucusing is often combined with a joint session where both parties are present. However, some mediators prefer to keep both parties separate for the whole duration of the mediation, performing what is termed as “shuttle diplomacy”.
The “Southern California model”
In the US, some mediators use what they refer to as the “California model”, or the “Southern California model” as many Californians will refer to it, which consists of solely using caucuses.
There is a notable trend throughout the US towards greater use of caucuses and less time, if any, spent in joint session. Data from a 2015 survey of JAMS neutrals in the US (in which 76% of JAMS’s 300-plus neutrals responded), showed a decline in the use of joint sessions, especially on the West Coast. According to the survey, almost 70% of respondents from the East Coast continue to use joint sessions, in stark contrast to only 23% in Southern California where mediators tend to favour a caucus-only approach.
Those who use a caucus-only model will note that the purpose of such an approach is not to hear lawyers talk but to find out what exactly the parties want, and to do so in a safe space where neither party will feel intimidated. But is this approach really beneficial to the parties? How can they effectively consolidate and resolve an issue if they don’t come face to face during the process? Despite these concerns, a growing number of mediators acquiesce to demands to abandon joint sessions and consider such an approach effective.
Germany and the joint session
In contrast to the California model, in German court-ordered mediation, the mediating judge needs the permission of both parties to hold a private session/caucus. This takes the power away from the mediator to control the structure of the process and places it in the hands of the parties. In practice, a mediation will usually take place solely within a joint session, pressing parties to lay everything out on the table - much like in a courtroom. The advantage of this model is that there is little room for suspicion to grow between the parties and it encourages direct communication.
German judges will order mediation, which in turn will be conducted by a different judge - who has no decision-making power and is acting as a mediator throughout. Note that German judges will not meditate the same cases they adjudicate. This established model comes with an expected degree of rigidity in the courts, but this model has also arguably influenced German mediation culture as a whole. Many German mediators tend to keep the parties together throughout the mediation process, however in commercial mediation, the use of the caucus is increasing.
Progress with flexibility
But which approach is best? As is so often the case, the most obvious answer is ‘it depends’ - on the type of dispute, the parties and, of course, on the mediator.
The rising popularity of mediation has resulted in a push for greater harmonisation and regulation from the dispute resolution community. While demand for more regulation, especially in terms of standard setting and quality assurance, is generally a welcome development, particularly on the user side, this can also lead to less flexibility - a feature of mediation which makes it so attractive to parties.
Speaking on the topic, Michael McIlwrath, Chief Litigation Counsel at Baker Hughes, a GE Company, pointed out that to rely solely on caucuses can potentially have disastrous results especially when taken to extremes. If parties are locked into a rigid lockstep process, it can become difficult to move forward in the mediation. He also stressed the importance of flexibility, noting that ultimately mediation is for the party - they pay for it, they “own” the process and should retain some say in what format that process will take.
McIlwrath added that it is vital not to become too focused on a particular process. It is important to assess what the needs of a particular dispute are and to find a process that is adaptable enough to provide for a solution to that particular situation. This is why certain disputes will often wind up in mediation in the first place.
The benefit of going through a consensual process such as mediation, is that the mediator can tailor the process to meet the needs of parties. Without this kind of flexibility, the nature of mediation along with its appeal will begin to resemble the very structures it is trying to move away from.