March 29, 1996, Geneva, Switzerland
Presenting a Case
by Rupert Bondy,
Legal Counsel, SmithKline Beecham Plc
(Brentford, United Kingdom)
The focus of this paper will be on the conduct of the mediation itself. The emphasis will be practical more than theoretical, from the perspective of a participant seeking to achieve settlement of a dispute on the best possible terms, including avoided future costs and uncertainties. The issue is how to make the best use of the mediation, which may be the last and best opportunity to resolve the dispute before incurring the very significant costs of a formal trial or arbitration and before relations between the parties deteriorate to a point where a negotiated resolution, even one which seems plainly advantageous to all parties, becomes impossible. I should start by making the usual disclaimer that all views expressed are my own and do not necessarily represent those of SmithKline Beecham Plc. For convenience, I also use the masculine pronoun only.
As a preliminary matter it is worth drawing two distinctions. The first is between consensual and mandatory mediation. While my focus will be on the mediation itself, my assumption is that the mediation is consensual in the sense that the parties have agreed, after the dispute has arisen, to attempt to resolve the dispute by mediation. The dynamic is likely to be very different in a mandatory mediation, for example where mediation is a court-ordered step which the parties to litigation are required to undertake prior to a trial, or where it is contractually required in the dispute resolution provisions of an agreement (often negotiated between different representatives of the parties than those responsible for the conduct of the dispute). Where a mediation is mandatory, there is a significantly greater risk that it is a mere formality, in the sense that the parties simply go through the motions because they have to, without any real commitment to attempting to reach a resolution.
A consensual mediation begins with at least some shared sense that the parties will attempt in good faith to reach a settlement, an important psychological premise which gives impetus to the mediation process itself. However, this is not to ignore the distance that may exist between the parties: even in consensual mediation, the parties can be far apart, defending entrenched positions without any real middle ground. In these circumstances, the attitude of the parties in agreeing to mediation may well be:
- were pessimistic but its worth a try;
- at least we should learn something about the other sides case;
- we dont need to give anything away about our own case;
- bottom line: there should be nothing to lose.
It is in precisely this situation that it is critical to exploit the small opening created by the parties agreement to the mediation, leveraging this minimal cooperation to try to reach a settlement of the dispute itself.
The second distinction is between two types of dispute: on the one hand, a dispute confined to how much money damages, if any, should be paid in respect of a past incident between parties who have no continuing relationship (for example, most personal injury claims); on the other hand, a dispute about the terms of an on-going relationship between parties with every incentive to preserve that relationship at some level of cooperation and goodwill (for example, rights under a joint venture agreement). In the first situation the room for manoeuvre in a mediation may appear to be less, in the sense that there seems less opportunity for shaping a creative solution in which the opposing sides all feel that they are winners. The literature on negotiation and dispute resolution often contrast "creating value" with "claiming value". Negotiation of a business arrangement may enable the parties to a better result than either could have reached individually, creating value, or, in simpler terms, increasing the size of the pie. The difficulty, having created value, is how to apportion the incremental value created between competing claimants, but at least there is a larger pie to divide up.
Where the dispute is simply about money damages, for example a personal injury claim, mediation may seem to be a zero sum game in which gain to one party must inevitably mean loss to another. While this may seem more intractable terrain for a successful mediation, there should still be opportunities. First, the avoided future costs from a successful mediation should by themselves mean that the game is not zero sum. Second, the avoidance of the uncertainty generally inherent in the trial process (particularly where juries are involved) should have a value for both parties. Finally, the opportunities for cooperation (and hence value creation) outside the sphere of the dispute, may turn out to be greater than initially apparent. For example, the pharmaceutical industry is a relatively small world and, while parties to a dispute may believe they have nothing in common save for the dispute itself, this often proves incorrect, and both parties can help each other on matters unrelated to the dispute at little or no cost to themselves. Thinking laterally about other ingredients which may be thrown into the mediation pot to assist reaching a settlement is an important aspect of the process to which I will return below.
All of this is by way of background to a discussion of how to approach a mediation which I assume to be a consensual mediation of a dispute that appears to involve simply a claim for money for a past event, but in which there may be opportunities for the parties to introduce matters strictly unrelated to the dispute itself in negotiating a resolution to the dispute.
Typically, the first substantive stage in the mediation, after introductions have been made and the parties have signed a mediation agreement, is for each party to make short opening remarks in full session, to be followed by caucus meetings. This immediately raises the question of the target audience for the opening remarks: to whom should you be addressing yourself for the greatest impact on the outcome of the mediation?
WHOM TO ADDRESS: TARGET AUDIENCES AND CONSTITUENCIES
The cast of characters in a mediation is likely to be quite diverse. At the centre is the mediator himself. There will also be a team representing each party. This may well include a senior executive who has had little historical involvement in the dispute itself or in the event or transaction which gave rise to the dispute, but who is a senior representative of the relevant party to the dispute and who holds ultimate authority to settle. There may also be a manager who has had day to day responsibility for the conduct of the dispute and who may or may not have been involved in the event or transaction which gave rise to the dispute. In addition, each party is likely to include its lawyer, internal and/or external. Finally, the parties may well bring their experts, for example scientific or accounting experts, who would testify on their behalf as independent experts at trial. Many disputes turn on the expert evidence adduced by each party and the expert is often an important member of the case team. While there are many variations on a theme and a particular mediation may be attended by a much larger or smaller group of players, the above is a fairly generic selection.
Given this diverse collection, there is immediately an issue as to the level at which your remarks should be pitched and to whom in particular they should be aimed. While much will depend on your judgement of the individuals involved in each case, it is worth making a few comments about each category of participant.
There is a great temptation to treat the mediator as an adjudicator and to direct your remarks almost exclusively to him. Given that mediation is still relatively unusual, there can be a tendency to view the mediation as an arbitration. Of course, this is to misunderstand the nature of mediation and the role of the mediator as a facilitator of a negotiated settlement rather than an adjudicator. However, the instinct to play advocate to the mediators judge seems to be a powerful one.
This potential confusion should not obscure the fact that the mediator remains an important audience in the mediation. Not least, this is because much of the communication between the parties during the mediation is effected exclusively through the mediator in caucus sessions. Accordingly, it is essential at the very least that you properly convey to the mediator any message that you want communicated to the other side and that the mediator understands the positions you are adopting in the mediation. If messages going backwards and forwards are garbled, then it is unlikely that there will ever be a meeting of the minds for settlement purposes.
In addition, it is likely that you will seek not just the mediators understanding of your positions, but his support for them. While he may not have power to bind the parties, there is clearly some potential for him to persuade and influence, and if he offers an independent view of the merits of the case, this is likely to carry some weight ("if we cant convince the mediator, how will we be able to convince the judge/jury?"). To an extent this persuasion and influence factor will depend on the nature of the mediator. Looking at archetypes at opposite ends of the spectrum, there is the bully and the psychoanalyst: while mediators are trained to facilitate rather than adjudicate, some mediators will remain temperamentally inclined to make their own (sometimes rapid) judgement of the merits of the case and then to urge that judgement quite forcefully on the parties. Other mediators are more self-effacing: in the nature of classical psychoanalysts, they are more likely to answer a question with a question or respond to a statement by summarising it than they are to offer their own conclusions. Particularly with the former type, there will be a strong impulse to try to enlist his support early on, starting with the opening remarks.
The Other Side
Given the consensual nature of mediation, the other team are clearly a critical audience, but there will be issues about the appropriate focus within that team.
The Senior Executive
This is likely to be the person making the final decision on any settlement. It is quite likely that he has had little involvement to date beyond periodic briefings from his own side about the progress of the case. As such he should have less of a stake and less emotional or personal involvement in the case than other members of his team. The mediation is often the first opportunity you have had for any direct contact with him and is likely to be the first occasion on which he gives sustained attention and focus to the case: sitting in a mediation continuously for a couple of days is very different from receiving occasional briefing papers and attending review meetings.
This means that it is essential to deliver a clear and preferably succinct message to this participant, exploiting fully the opportunity to educate him on what you see as the significant issues and strengths of your case and, more aggressively, perhaps to shake his faith in what his own side are telling him about the strengths of their case. The issue is to cut through the detail to the major points of the case. It is also important to bear in mind that, if this person suspects at any point that you are withholding information or playing tricks, your credibility will be destroyed, along with the prospects for a successful outcome to the mediation.
The Responsible Manager
This person in many ways drives the case as the senior executive will rely on his detailed knowledge to ensure that their side is not fundamentally misled about the case by your sides presentation of it. The senior executive will look to the responsible manager for guidance in making a decision and will often seek his "buy-in" to a decision. As such he is an important audience. The issue here is often that this person has lost perspective on the case: he is too immersed in the detail and may also feel personally exposed if he was involved in the matter which gave rise to the dispute ("did I miss something in the original transaction?").
Finally, the dispute itself may have become somewhat emotional and personal. In this case it is important to avoid simple repetition of stale and familiar arguments, getting away from the detail and personalities of the case to a more bottom line perspective.
Often the lawyer knows as much or more of the detail of the case than the responsible manager. The difficulty here may be that the lawyers background in adversarial litigation and unfamiliarity (and perhaps distrust) of the mediation process impedes the progress of the mediation from relatively entrenched initial positions to a more cooperative search for a mutually satisfactory settlement. Deflecting any move in this direction will be important to keep the mediation on track.
As stated, the case may turn upon expert evidence: was this step in the development process obvious so as not to be patentable? Did the accounts show a true and fair view of the financial condition of the business? Would a reasonably competent doctor have diagnosed malaria rather than influenza? The experts for each side, while theoretically independent, are often an integral part of the case team and if they can be persuaded of the force of your arguments, this may significantly affect the other sides overall assessment of the case.
Your own side
It is worth mentioning that this may well be the first time that the senior executive on your own team has devoted any substantial amount of time to the case. If he is making a final decision on your side over any settlement, your presentation must be convincing for him as well as for the other side.
These are general remarks and the circumstances of a particular case may clearly be very different. For example, the responsible manager and lawyer on the other side may be sympathetic to your arguments but totally unable to convince the senior executive for their side that their case is much worse than he wants and demands. However, two general principles should remain valid in most cases. First, there will be a number of different participants in the mediation with differing degrees of knowledge of and involvement in the underlying dispute and with potentially very different expectations of the mediation itself. All of these participants are likely to have some bearing on the outcome of the case and hence the interests and circumstances of each of them must be recognised and accommodated or addressed in formulating your mediation strategy.
Second, that strategy will depend on your judgement of the particular circumstances of each case, especially your best view of the dynamics of persuasion, influence and, put crudely, power between the various participants. In certain cases it may become clear that their is a strong minded lawyer on the other side and that effectively any recommendation he makes will be followed. In other cases their may be a strong willed mediator with similar influence. It may appear that the other side is not a team at all and that the senior executive effectively ignores his own people. Such factors will be important in determining the way in which you present your own case. Among other things, they will affect internal "casting" decisions about who on your own team should play what role in the course of the mediation.
WHAT TO SAY: CASE STUDY OF A STANDARD MEDIATION
The cast of characters having assembled, the mediation begins. As a vehicle to discuss the various strategies that can be adopted, it is worth charting the course of a standard mediation, dividing it into the following stages:
- Opening statements
- Caucusing: posturing and digging in
- Towards a common framework
- Offer and counter-offer
- Splitting the difference: getting to the bottom line
- Settlement agreement
We can then consider strategies for a more effective approach to mediation.
These may do little more than restate the positions set out in the pre-mediation submissions. There will typically be expressions of good intentions with regard to entering the mediation in an open mind and a spirit of compromise, and the statements may even include certain concessions from the positions adopted in the formal dispute/litigation. However, these are typically more token than substantial and rarely represent a real paradigm shift by either party in the approach taken to the dispute. If the parties expect to end up somewhere in the middle, they are reluctant to depart significantly from an extreme position as their starting point. Borrowing from the literature on negotiation, this stage can be characterised as "positional" rather than "principled" in the approach of the parties. Each side also wants to signal to the mediator the confidence they have in their case and their willingness, if necessary to take a tough stand and revert to formal litigation.
In addition, if there has been a certain amount of acrimony and injured feeling on both sides, there may be a psychological and emotional purpose served by each party stating its position in fairly strong terms: getting things off their chests in the mediation even if they do not have their day in court. Even in commercial disputes between large organisations this can play a role where a relatively small number of individuals have had intimate involvement in the matter and a sense of grievance has developed over time. In these circumstances, matters can sound worse than they really are at the end of the opening remarks.
Caucusing: posturing and digging in
The opening remarks are generally followed by caucus sessions between the parties and the mediator. In the early stages this often involves the parties simply reiterating their initial positions, engaging in advocacy towards the mediator and, through him, the other party and disclosing perhaps limited additional information that tends to support the disclosing partys own position. There is also a tendency to be almost unwilling to listen to and give weight to the other sides arguments.
One of the issues that the parties frequently consider at this and later stages is how much to tell the mediator and how much to permit the mediator to relay to the other party. Coupled with this may also be a question of whether effectively to dissemble before the mediator, conveying to him a position you may not in fact hold in the hope that he will accept this as your true position and present it as such to the other party. For example, you may tell the mediator that you are confident that your position on a particular issue is legally watertight even when in fact you view your position on this issue as weak. This would be in the expectation of the mediator relaying this to the other party and their concluding that they will have to give up more on this issue if they are to reach a settlement. Alternatively, you may tell the mediator that you believe your position is weak but go on to ask him to convey to the other side your conviction that your position is an extremely strong one.
The same issues may arise later in the litigation. For example, you may have agreed internally that your "bottom line" for settling the case as the defendant is $10 million but you tell the mediator that your bottom line is $5 million in the expectation that he will present this to the other side as an insight into your internal deliberations, leading them to conclude that if the mediation is to be successful they must accept $5 million as the most they will get. Alternatively, you tell the mediator that your bottom line is $10 million but you request him not to inform the other side of this or, more aggressively, to inform the other side that your bottom line is $5 million.
Aside from the ethical issues this raises for the mediator, there are questions about the efficacy of stratagems like these. However, there seem to be powerful psychological impulses towards adopting them, particularly where there is a suspicion that the other side are doing the same.
The culmination of these initial sessions is often a stalemate: the parties often blaming each other for an unwillingness to move from entrenched positions and telling themselves that they have tried in good faith to make progress but have been frustrated by the unreasonableness of the other side. At this point there is great pessimism that the mediation will have a successful outcome and the discouraged parties retreat to consider their positions.
Towards a common framework
The negotiation literature discusses various strategies for breaking out of an impasse. There is often an impetus to try to resolve the impasse as the parties reassess their position in the light of what they have learned from the other party in the initial sessions, however little that may seem to be. Each side typically gives at least some additional credit to the other partys position, and the "best alternative to a negotiated agreement" seems at least marginally less attractive than it did originally.
One of the more effective strategies for breaking out of an impasse in these circumstances is to take one of the fundamental assumptions that divides the parties and to recast your own case on the basis of the other partys fundamental premise rather than on the basis of your own premise. If you can do this and make the argument "even if I accept your premise, what follows from that is X not, as you allege, Y" this paradigm shift may disarm the other party and produce sufficient common ground on the basis of which to negotiate towards a settlement. The principle is to articulate and accommodate the other sides position, but then to overlay your own perspective and argument.
The above is by way of example only, to illustrate how one or both parties can somehow shift position or convince the other party to shift position such that there is sufficient common ground for the mediation to proceed and to enter a new phase of negotiation.
Offer and counter-offer
Assuming that the parties manage to reach this common ground, one of the parties may then make a formal offer to settle the dispute on terms that reflect the common ground as well, obviously, as taking account of the areas of disagreement between the parties. This is often the first sign to the other party that the breakthrough described in the previous section has been reached. While the offer may be unacceptable, it may at least signal modified expectations that encourage the belief that it will be possible to strike a deal. The expectation will be that the offer does not represent the other partys final position, but rather the new floor or ceiling from which they are negotiating. A signal is then sent to the other party in the form of a counter-offer which, while again likely to be unacceptable in itself, may indicate that the distance between the parties is no longer unmanageably large: in effect, the parties recognise that they are "in the ball-park".
Splitting the difference: getting to the bottom line
Once the parties have reached this point, the only real question is whether the final figure will be closer to the offer or to the counter-offer. At this stage, a principled discussion of the merits of the various issues in the case often takes a back-seat to a more basic form of haggling: in effect, the parties work backwards from the figures they propose, seeking to justify a particular figure by reference to an argument that a particular claim is worth, say, 40% not 60% of the gross amount claimed, rather than working towards the final figure from first principles. The tempo of the mediation can also change: on the one hand there can be a sudden acceleration towards the finishing post; on the other hand one of the parties may need a final period of soul searching to reconcile itself to coming out of the mediation with significantly less than it expected.
Assuming the previous stage has resulted in agreement on a particular figure, the settlement agreement should pose few problems. Indeed, in the UK it may be no more than a letter of a couple of paragraphs. Where the dispute relates to an ongoing relationship and the settlement includes new terms for that relationship, the documentation of those terms may be a somewhat more onerous process, but it is unlikely that it will cause the mediation to fail at this stage.
PRINCIPLES FOR A MORE STRATEGIC APPROACH TO MEDIATION
The process described above involves a good deal of posturing and other examples of what is (critically) referred to in the literature as positional rather than principled negotiation. The question is how far it is possible to get beyond this to a more principled and strategic approach to the mediation. The obstacle usually referred to is that it is hard to do this unilaterally - i.e. if the other party is not as enlightened as you about negotiation principles. Whatever the truth of this (and the literature discusses various strategies for addressing the other sides unwillingness to cooperate in a principled negotiation), there are a number of principles which should remain valid irrespective of the other sides approach to the mediation.
The importance of advance preparation may seem too obvious to mention. However, a party may go into a mediation without having carried out substantial preparation on the basis that they are simply going in to learn what they can about the other sides case and will either settle on exactly the terms they want (so there is no need for any preparation) or they will not settle at all (they can do further work after the mediation). This immediately raises the risk that you will lose the opportunity to settle on terms somewhat less favourable than you originally hoped for but which you would view as highly advantageous if you were appropriately prepared. Because you are uncertain of the facts you will be afraid to move from an entrenched position in case you give too much away.
In addition, you will be at a constant disadvantage in being unable to respond to the other sides points and there will be a sense throughout the mediation that you are being reactive and unable to exercise any form of control. To have ready and definitive answers to questions which arise during the mediation confers a significant benefit and, in short, the importance of being well prepared cannot be overstressed.
Listening to the other side
As important as what you say in the mediation is a willingness to listen to what the other side are saying. While parties often go into mediation on the basis that at the very least they will learn something about the other sides case, there can be a surprising unwillingness to pay proper attention, as if to do so would somehow amount to an admission. Listening first of all means that you will learn about the other sides case, which can only be an advantage. It will also enable you to talk to the other side on their terms, in the sense of presenting your case to them in terms of their own assumptions and premises, as discussed further below. At a minimum, even if the mediation is unsuccessful, it will be helpful for the future conduct of the dispute to have a better understanding of the other sides position (or, if you do not accept that the other side are being entirely candid about their position, to have a sense of what they see as the most advantageous way for them of presenting their position).
Educating the other side
In presenting a case there is a temptation simply to assert your position and demand that it be accepted as the correct one. It is likely to be more effective to go into the mediation on the basis that it is an opportunity for each side to educate the other side about its position in the hope that this will produce a better understanding leading to some common ground. Creating a framework of information exchange and mutual learning can be a less threatening and confrontational start to the mediation than immediately adopting a more adversarial negotiation stance. Building on this foundation of cooperation rather than confrontation may lead more naturally to a good faith settlement negotiation.
Parties are often reluctant to enter into this process of education if it involves disclosing either a point that they regard as a "secret weapon" in their favour which they believe they can use to ambush the other side later in the litigation or a "smoking gun" that undermines their position. As regards the former, any dismay caused to the other side by learning of such a point is likely to be just as effective in the mediation as at trial or some other time later on in the litigation, and hence there is often little benefit in withholding it at the mediation itself. The latter point is more difficult, although smoking guns are relatively rare and the raw information is often already available to the other side, even if they have not yet completed the analysis to determine that the information creates a point in their favour. A judgement must be made about the inevitability of the information (or the significance of the information) becoming apparent at some point, and the advantages and disadvantages of releasing it yourself now (when you may have some control over how the point is presented and interpreted) as opposed to mandatory disclosure later.
Presenting to the other side on their own terms
Once the other sides perspective on the case has been understood through the mutual education process described above, it will be worth trying to recast your own case in terms of their perspective: "even if you are right about the fundamental basis of the case, what follows is X not Y". To shift to the other sides paradigm in presenting your own case may be highly effective in creating a common framework in which to negotiate a resolution. At the very least it signals a willingness to see the case through their eyes and to analyse it accordingly.
Clearly this is easier in some situations than others: in an extreme case it may mean that the other sides case has to be accepted wholesale, but this is relatively unusual and more often there is scope to adopt one or more of the other sides premises without conceding that your own case is fundamentally worse than it was originally presented as being.
By presenting your case in the other sides terms you may also make it easier for them to reconcile themselves to an outcome that they are leaning towards anyway but are having difficulty in justifying to themselves.
In short, it is worth doing everything possible to make the decision you are looking for easier rather than harder for the other party to come to.
Look for win/win opportunities
Prospects for a successful mediation may be significantly enhanced by generating ideas for mutual gain, including matters outside the scope of the dispute. For example, where a party defending a patent infringement claim has other patents which are of no value except to the claimant party, if the defending party is willing to include a licence of those patents in the scope of a settlement then both parties may end up better off than if the two matters were kept entirely separate.
Both in preparation for and in the course of the mediation it will be worth trying to think creatively about possibilities for introducing matters which are apparently extraneous to the dispute itself into the scope of the settlement negotiation. It may be that nothing emerges from this process of brainstorming, but it is always valuable to look for such win/win opportunities.