Mediation is Litigation’s Heineken. It reaches the Parties other ADR processes cannot reach. Like when risks are involved, such as unwelcome reputational issues, third party satellite issues, or wrecked business relationships. Or when available legal remedies are unlikely to get you the result you want, where and when you want it, net of costs.

For international business disputes, mediation also offers litigators, dealmakers, GC’s and transactional lawyers the ability to act BEFORE issues escalate or relationships deteriorate, and

• create tailormade solutions that no judge or arbitrator would even be able to award, and
• reset and improve core relationships.

In a sense, mediation is ‘beyond’ law, enabling parties to step away from a dispute and offering a safe environment in which to bridge gaps and resolve issues there and then.

And it works for:

• international business disputes, which can be complicated by national or cultural differences
• disputes where key business relationships are at stake, including Supply Chain / Procurement /Licensing & Distribution/Franchising
• partnership, founder and shareholder disputes, where respective contributions or interests may have shifted over time
• ‘David & Goliath’ disputes, e.g. between a bank / financial institution and a small business owner, or insurer and an individual, possibly involving disparities over objectives, expectations or resources
• disputes where people have divergent values or perspectives. Or where anyone’s primary concerns are not financial, but social. Or creative, like in the art or entertainment worlds
• business related disputes between family members or in family businesses, where personal interests and emotional triggers may be complicating factors
• where anyone feels unfairly treated, taken advantage of, or lied to; where people are ‘talking past each other’; or where egos are involved, or
• difficult conversations where having someone who can help people navigate sensitivities safely and work through issues constructively could be invaluable.

So why don’t people use mediation more?

• Lack of awareness: Outside the litigation world, people often don’t know what it is, let alone how effective it is: Including me, back when I was an in-house lawyer. When someone first suggested mediation to me, it struck me as implausible and slightly insulting. The “What do you think I do?” factor. Whereas now I think

‘What have you got to lose? If it stops wars, it can certainly stop a business dispute.’

• Uncertainty of a binding decision: Except, provided everyone wants it, how about this for a quick, inexpensive solution? Mediate but on the agreed understanding that if no binding settlement is reached within 3 weeks of the mediation, a pre-agreed third party arbitrator promptly issues a binding determination based on the papers submitted to the mediator (but without knowing what happened at the mediation).

So you get all the benefits that mediation offers, plus the added certainty of a ruling – all inside a 6 week window.

Accepting his Oscar for Oppenheimer, Cillian Murphy dedicated his award ‘To the Peacemakers everywhere’. Do you think, just maybe, he meant commercial dispute peacemakers too? I am not suggesting mediation is always the answer, or making a plea to ‘help us help Cilian’, but unless you and your client are pretty confident that litigation or arbitration is going to deliver the best answer for them, why not – to subvert the old ice-cream van refrain ‘Buy me and stop one’.

*This article was written for London International Disputes Week

This month’s briefing on Partnership, Family Business and Private Client disputes explores how mediation can be invaluable for helping people resolve business issues and avoid protracted legal disputes.

Rather than confront conflict, people tend to avoid it, or avoid each other, until something snaps. When it does, fallings out can be serious, and they have a habit of doing so over the holidays. Come January, people invariably return, resolved to start the year afresh, take back control of their life, and jettison an unsatisfactory relationship. Or, more positively, end a rift.

Outside the litigation world, people rarely know about mediation, let alone how helpful it can be when issues flare up – especially where relationships are involved – precisely because unlike other forms of dispute resolution, you don’t need to wait until the damage has been done. Instead, mediation allows people to settle issues safely, inexpensively and confidentially without destroying themselves, their family or their business, and maybe even salvage a relationship. In a sense, it can be like marriage guidance, only for business issues.

Mediation is also worth using where…

1 People have different ideas about how a business should be run. Or who should run it.

2 People are worried about how change may affect them. Like plans concerning the future of the business, succession, or shareholdings, or because of a death, divorce, or family rift.

3 People have competing needs or interests, especially financial ones. Or interests that conflict with what the business needs.

4 A rift is becoming personal. Where close relationships are involved, commercial issues can easily be complicated by how someone feels or behaves. Or exacerbated by past altercations, unresolved misunderstandings, or conflicting hopes. In a family business or private client context, the real issues may be to do with the family, possibly even triggered by events going back to childhood. (Don’t under-estimate who didn’t get the red shiny bicycle).

5 A rift between founder/owner and colleagues or family members. Or competitive siblings. Or the treatment of family versus non-family members.

6 Inter-generational issues need addressing. In a family business, the younger generation may want control sooner than the older generation is prepared to relinquish it. Or vice-versa.

7 To stop conversations descending into the usual arguments, or prevent a potentially awkward conversation going off half-cocked.

8 Where you think people might benefit from bringing in someone independent to knock heads together and get them back on track.

If you have any thoughts or questions about whether a mediation could help someone, please contact me in confidence.

STEP’s Handbook ‘Business Families and Family Businesses’, a comprehensive guide for practitioners who advise business families and their professional advisers. Published by Globe Law and Business. Andrew co-wrote the chapter ‘Dealing with Conflict’ with Mark Lindley of Boodle Hatfield.

Partnerships and family businesses often face the same challenges other businesses face but, because a different sort of personal relationship exists in a partnership or a family business, different considerations apply, especially when things go wrong.

There’s a quintessential difference. In a business dispute there may be a relationship at stake. In a partnership or a family business, it is always at stake – and the same is invariably true with private client disputes.

That means that even a straightforward commercial dispute is likely to involve an additional layer of complication. The dispute may be about business or legal issues but it can often also be about something else too, even when it isn’t immediately apparent. It might also be about who the people are, how they feel affected, and possibly even how they have experienced things previously.

While litigation can often be the best way forward, the courts aren’t good at dealing with relationships. If you want to minimise damage to the business or the individuals involved, both the problems and the people probably need sorting. Crucially, what neuroscience teaches us is that when feelings are running high in a conflict, those emotional aspects need to be dealt with before one can make serious progress with logic or legal reasoning. Otherwise it is like telling someone to calm down when they are angry. And as ineffective.

Where relationship issues or changing circumstances are part of the problem, mediation can help partners, shareholders and family members resolve their business differences early on – before the damage has been done – and salvage the business relationships – before it is too late. It also offers the ability to create tailor-made flexible solutions that suit them and their business. I am not suggesting that a mediation is just for Christmas, but with the holidays and year ends approaching, now might be a good time for clients to take stock of an existing conflict, resolve it and put it behind them for the new year.

In my next briefing, I will explore how we can reshape mediation to suit clients better. In my December pre-holiday briefing, I will explain how to deal with issues as they flare up so that they don’t escalate into full-blown legal disputes.

My blog coincides with publication of the Step Handbook: ‘Business Families and Family Businesses’, a comprehensive guide for practitioners who advise business families and their advisers. I co-wrote the section ‘Dealing with Conflict’ with Mark Lindley of Boodle Hatfield.

https://www.globelawandbusiness.com/books/business-families-and-family-businesses-the-step-handbook-for-advisers-second-edition

I get told this a lot in mediations. By both parties, sometimes.

Isn’t it strange though how we can be so adept at spotting the limitations of someone else’s argument, but myopic about our own position. We think of ourselves as rational animals – especially us lawyers – yet when it comes to changing our mind, we are constrained. Why is that?

1 Confirmation bias. Firstly, we give greater credence to evidence that confirms our hypotheses than we do to something that disputes it. That’s because, according to neuroscientists, when someone confirms what we already believe, we get a dopamine rush, like we do when we eat chocolate or fall in love. And when you write something down, it apparently makes it even harder to change your mind.

According to Channel 4 News’ undercover investigation, Cambridge Analytica claimed that its campaign won the US presidency for Donald Trump. Explaining the secret of its success (and its creative ‘Defeat Crooked Hillary’ campaign), CA’s managing director, Mark Turnbull said:

‘It’s no good fighting an election campaign on the facts because actually it’s all about emotion. The big mistake that political parties make is that they attempt to win the argument rather than locating the emotional centre of the issue, or the concern, and speaking directly to that’.

2 Cognitive dissonance. If someone challenges what we believe, our instinct is to look for ways of neutering that challenge. The greater the discrepancy, i.e. the more it threatens our beliefs, the harder we find it to acknowledge that we may be wrong. And the more we seek to prove our confirmation bias *. Similarly, and I will revisit this in a future blog, when we do something wrong and are confronted about this with evidence, instead of changing our point of view, we tend to justify it even more tenaciously.

And they say litigation is polarising!

Do you agree? Or is that because you already knew this?

* One way to unlock this intransigence, is to get the person to rethink their assumptions and look at the situation differently, for instance, by asking them something like, ‘Have you ever seen a situation where the opposite was true?’. This blog was inspired by Tim Adams’ excellent essay ‘On the one hand’ (Observer: 25.02.18). In it, he explains why people find it so hard to change their mind on big issues like gun control.

What do you do when you have a dispute and the real problem is that the other side won’t stop litigating? Your client wants to stop the dispute, but ‘they’ won’t let them. And your client is manacled to them.

Well, try mediating it.

If the parties don’t trust each other, they probably aren’t listening to each other either. But they will listen to your mediator, so use your mediator as the bridge to get the other side to see things differently.

If the issues have already been aired, rehashing them again in a joint session may only alienate. So get the mediator to ask questions instead. To help people put together the missing pieces, and see things from a different perspective. Or to change the dynamics, say by drawing up on a whiteboard the bones of the settlement agreement, so that people can see just how few outstanding pieces they need to settle the dispute.

Like it or not, it isn’t what you say. It’s what they hear.

So let them hear it from someone else. Maybe that way, they’ll listen

.

You don’t have to agree with what someone says. Or back down either. But if you want to disagree effectively, ‘Don’t raise your voice. Improve your argument’*. Concentrate on the content and be as specific as you can.

1 Don’t let feelings cloud your judgement

Take a step back and think about two things:

• What’s the best way of explaining the weaknesses of their argument as clearly and persuasively as possible

• What’s the best way of doing so without either of you becoming angry, defensive or resentful

In other words, attack the problem, not the person. Look for common ground. If you are open to them being better off too, you are more likely to build trust.

2 Don’t hide behind email

Do it face-to face. Because, when people meet, things happen.

3 Don’t fret. Hire a mediator

If managing the meeting yourself feels daunting, or you don’t feel confident about the prospects of resolving the problem, hire a professional mediator to manage the process and help sort it.

4 Don’t just lead with the facts. Let them talk

Show them you are listening. Acknowledge any emotions and identify the issues. Then dig deeper. Find out what they want, and find out why they want it. Discover what their emotional driver is, and you can create more options.

5 Watch the body language

Look for clues about how they feel and respond accordingly. Remember to watch your body language too.

6 Don’t be combative. Be good-humoured

Apparently, people are six times more likely to get a deal with someone they like. Don’t let them feel they are getting hammered. Better still, where you can, express what you want in terms of what they need.

Finally, don’t let it linger. If it escalates, it will get worse.

* Desmond Tutu. This blog was inspired by a recent article written by Daniel Goleman, author of ‘Emotional Intelligence’, for Korn Ferry. https://www.kornferry.com/institute/how-to-disagree-well

Lord Justice Jackson recently delivered a clear message to parties who play for time when agreeing to mediate.

‘In a case where mediation is obviously appropriate, it behoves both parties to get on with it. If one party frustrates the process by dragging its feet for no good reason, that will merit a costs sanction’. *

Jackson’s judgment extends the message sent by the Court of Appeal in PGF II **, that ‘to remain silent in the face of offer to mediate is, absent exceptional circumstances, unreasonable conduct meriting a costs sanction, even in cases where mediation is likely to succeed’.

This ruling is another reminder that the courts expectantly litigants to be proactive and engage constructively with one another during proceedings, and to properly explore the potential to mediate a dispute.

I find there is often a few months delay between the parties formally agreeing to mediate and actually getting to the table. This ruling is designed to make litigants think twice about using logistical “difficulties” cynically as a delaying tactic.

What it means: Avoiding mediation is no longer an option. Parties cannot refuse to mediate, ignore requests to mediate, or pay lip service to an agreement to do so. If they do, cost penalties are likely to be imposed.

‘Resolve any Dispute in a Day’: Thursday, 18 May: Finally, I have three places left for next Thursday’s round-table workshop, explaining how to broker deals, prevent disputes escalating, or settle just about any dispute on the right terms. If you or a colleague would like details, please let me know.

* Thakkar -v- Patel [2017] EWCA Civ 117
** PGF II SA v OMFS [2013] EWCA Civ 1288

Click on this.  Familiar, isn’t it?

I drew it while reading Sarah Barclay’s excellent study about paediatric services[1]. It shows how conflicts escalate and pinpoints warning signs. Looking at the diagram, I was struck by three things:

1. In contractual disputes, you often see a ‘chain of pain’ like this. Possibly, also complicated where people are communicating by email. Not face to face.

2. Our views tend to be amplified by the illusion that we are right and the other person, deluded. As George Carlin said ‘Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?’

3. If the protagonists can’t resolve matters, this is the likely continuum. Then, somewhere along the line something boils over or someone reaches for a litigator and the conflict mutates again.

So why is it relevant?

Because it shows two other things too: - 

a) How much more is often at stake. Whether it is a boardroom dispute or a band dispute, an inheritance claim or a contractual one, it is also about financial issues, relationships, egos and reputations. Not things the courts are particularly good at dealing with.

b) How much easier resolving things can be if you know how to intervene early enough. Less expensive and destructive too.  Think of it as business marriage guidance. With someone who can listen – to the words but also the gaps in between – and who can help everyone sort things out there and then.

So that you get off the chain before it escalates. Or better still, avoid it completely.

Negotiating is like making sausages. It is not an attractive process and it is best done in private. If you hit an impasse, find a new option. If need be, invent one. Momentum can be key. Here are 10 possibilities worth considering (culled from Jonathan Powell’s book ‘Talking to Terrorists’). But be careful. They can backfire.

1 Break bread. Preferably, before you meet and not just to talk about the dispute.  You may see things – or each other – differently.  I have even known it to work and make the formal meeting redundant

2 Have a Plan B. Henry Kissinger though used to advise against doing so. Or at least telling your negotiators in advance

3 Find an ambiguous form of words on which everyone can agree while they wait for something to change. Lawyers hate this one. Sooner or later ambiguity becomes destructive. Short-term though, it allows people to interpret the words the way they want

4 Link things. Tie progress on one issue to progress on another but again, long term, this can jam up negotiations

5 Set a deadline – Arbitrary deadlines can be risky but ‘hot-housing’ can be invaluable

6 Lose your temper. But only deliberately. And at the right time

7 Walk out. With one caveat. John Major walked out after Ian Paisley called him a liar and refused to withdraw the smear.  Paisley then staged a sit-in. Unfortunately for Major, the meeting had been taking place in the Cabinet Room at Number 10

8 Consider sunrise & sunset clauses. Where you are up against an issue of fundamental importance to one party that is unacceptable to another, enshrine that issue in the agreement but defer its implementation until that party has met the necessary conditions for transition

9 Trust, but verify. It is precisely because you don’t trust each other that you need to have an agreement. Only implementation creates trust

10 Keep your agreement as simple as a set of home appliance instructions. In fact, keep it simpler

Finally, sell your agreement aggressively. Especially with your own side. As Gerry Adams said, the hardest negotiations are always the ones ‘with your own band’