No two commercial mediations are the same. However, there are three elements common to most cases:
Legal – in the absence of a consensual settlement, the law will decide the issue.
Commercial – all by definition have a commercial component – usually money.
Emotional – to a greater or lesser extent, where people are involved, emotions will play a part. The dispute may be a business dispute, but businesses are run by people, each of whom has his/her own drivers.
Addressing Emotion Head-On
At the beginning of a mediation, various emotions are often at play. This may be completely understandable given the nature and impact of the dispute with which the parties are involved, and the outcomes at stake.
Parties may arrived stressed or tense, worried, angry, frustrated, impatient, aggressive or defensive – and more.
The mediator needs to recognise these feelings. Understanding what they are and why they exist can be integral to reaching a solution.
Equally, it is not just the mediator who needs to be attuned to these issues.
Each side needs to be aware of where their opponents are coming from. Doing so - dealing with their concerns and their feelings gets you more than halfway to resolving the problem.
If you can acknowledge the concerns of your opponent – which is not the same as agreeing with them – you are likely to help to establish a much better platform from which a settlement may be achieved.
Emotion in Practice
In more or less all of the mediations I handle, at the end of the day the parties would all agree that, at least with the benefit of hindsight, there are things they would and should have done differently.
Therefore it is surprising that when they come to a mediation, at least at the outset, no one is willing to concede that they made mistakes, that they didn’t get it right, or that they are sorry for what has happened.
These mediation examples illustrate this point.
1. Bankruptcy Case
An individual had been made bankrupt upon the petition of a large institutional creditor. This had a devastating effect on the individual, his family, associates and business.
His bankruptcy was subsequently annulled, the court concluding that the petitioner had wrongly failed to present to the court material facts, the disclosure of which would have resulted in no bankruptcy order being made.
The claimant (ex-bankrupt) sought compensation for his losses.
Up until the mediation, the parties’ lawyers showed no signs of being able to agree anything. All issues were on the table and both were in contentious mode.
But, wisely, when the parties came together, face-to-face for the first time, the defendant in an initial joint meeting apologized fully and unreservedly for the mistakes which led to the bankruptcy.
This apology immediately turned the mediation from one where two parties were at daggers drawn to one where the claimant was prepared to talk about the consequences of the mistake in a much more measured way.
Although there remained differences on the quantum of the claim, the sting was taken out of the complaint and a much more favourable basis was established for discussion and eventual resolution of the issues.
2. Franchise Dispute
In a franchise dispute, the franchisee was alleged to have breached the terms of the master franchise in a number of respects.
The issues were complex, fact intensive, confidential and costly. In pre-mediation inter-solicitor correspondence, battle lines had been well and truly drawn.
At the beginning of the day, after meeting with the parties individually, I brought them together for a joint discussion. The CEO of the franchisee immediately spoke to his counterpart, accepting that they had made mistakes.
Rather than beat around the bush, he accepted some degree of responsibility.
This may have been because he recognised the weakness of his case, or for commercial or other reasons. But his open and prompt acceptance of some responsibility made subsequent negotiations about the sum needed to settle the claim significantly easier.
3. Banking Dispute
In a claim by a bank against a guarantor of his companies’ debt and against the companies for repayment of loans made, the bank was met with counterclaims from the guarantor and his companies.
Solicitors had been writing to each other for several months and exchanging more and more aggressive correspondence.
In a joint session at the start of the day, the bank officer attending the mediation immediately spoke directly to the guarantor and apologised for the fact that the bank had failed to deal properly with the defendants who were, and had been for many years, important customers.
This concession made a real impact on how the parties thereafter interacted with each other as they looked for solutions. Discussions were made easier. The anger and frustrations the customer had felt were diminished and a more congenial atmosphere in which to find a solution was found.
For the first time the customer felt he had been listened to - and heard. Someone had at last taken the time to look at the issues from the other sides’ perspective.
Lessons on Managing Emotions
What these cases illustrate is that an understanding of and engagement with the other side's feelings and needs early in the process is a constructive way to seek to reach an acceptable solution.
Of course it is easier to concede points you don’t feel strongly about, or which are of little value to you (but which may be of more value to your opponent), but even when concessions can’t be made, an open recognition of the fact that you may not have done everything right can help.
It shouldn’t be so hard for all sides to start the day with some stated recognition of fault on their part.
The more parties can accept that they may not have done everything right, the more likely the heat can be taken out of the dispute. The more the parties can communicate with each other without a black or white, win or lose binary mentality, the more likely a solution can be found.
Nick Pearson , a past chairman of the ASWM, regularly mediates all types of commercial disputes in the South West and throughout the UK.
For full details see https://www.aswm.org.uk/nick-pearson
The Association of South West Mediators (“ASWM”) is a group of independent mediators based in and around the South West of England. The group’s aims are:
To promote the use of mediation, particularly within the South West region;
To provide a choice of experienced and reliable mediators to those wishing to find a suitable mediator;
To provide professional support to mediators across the region with a wide range of different areas of expertise
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