Five points make up the tips of a star, and five points make up the vertices of the inner pentagon - i.e. of the ‘hub’ at the centre - which is where the vertices all converge.
The ‘five points’ in commercial mediation are:
1. Dynamic commercial drivers – i.e. each participant’s (Ps) wants, needs, priorities and reasons.
2. Litigation risk – costs incurred/could be incurred in going to trial and adverse publicity.
3. The price of doing a deal that is enough - i.e. the mediation maths.
4. Existence of common ground.
5. Potential existence of hidden commercial value. By analogy to the famous voiceover slogan for Carlsberg Lager by Orson Welles, broadcast in 1983 – mediation ‘reaches the parts that’ litigation ‘cannot’, i.e. because the court does not have the power to order what the parties can creatively agree to engineer through collaborative negotiation. That is why mediation is probably the best form of dispute resolution in the world where hidden commercial value may exist, which can be jointly exploited for the Ps mutual benefit – see ‘Black Swans’ below.
The alchemy in the mediation of a commercial dispute is to discover what lies at the centre (the ‘Hub’) because that is common ground. The hub is also the zone in which a ‘Black Swan’ may exist.
‘Black Swans are events or pieces of knowledge that sit outside our regular expectations and therefore cannot be predicted.. … There are those things we know … Those are known knowns. There are those things we are certain that exist that we don’t know. … Those are known unknowns
and they are like poker wild cards; you know they’re out there but you don’t know who has them. The most important are those things we don’t know that we don’t know, pieces of information we’ve never imagined that would be game changing if uncovered.. … These unknown unknowns are Black Swans. … Finding and acting on Black Swans mandates a shift in your mindset. It takes negotiation from being a one-dimensional move counter move game of checkers to a three-dimensional game that is more emotional, adaptive, intuitive … and truly effective.’
(‘Never Split The Difference – Negotiating as if your life depended on it’, by Chris Voss (2016).)
A mediator needs to be aware of this concept and the importance of looking not only for what the Ps ‘don’t know’, but also for what the Ps ‘don’t know that they don’t know’. This is the USP of mediation, because no judge has the power to unlock what a trained mediator can help the Ps discover and agree for themselves. That is because mediation is a ‘process’ and not an ‘outcome’ driven method of dispute resolution, which engages and involves imagination of a better future for all.
The golden rule in all mediations is that because mediation is essentially a form of facilitated negotiation, success (however that is measured by each P), depends upon movement and momentum, which requires compromise on all sides, i.e. flexibility, otherwise if the Ps stay in their ‘positional’ trenches the mediation will fail. This requires courage, trust, and realism. Therefore, at some point (and preferably within the first hour of the mediation day), one of the Ps will need to start up the mediation engine by making an offer. The business of ‘doing a deal’ can then get underway—the game is afoot!
In practice, there are only three types of opening offer a P can make:
‘An “unacceptable” offer—that is an offer that is so unreasonably high or low that it will be rejected by the other participant and does not cause them in any way to alter their approach to settlement. At worst it may result in the other participant walking out and ending the process prematurely.
An “acceptable” offer—that is an offer which is so high or low that the other participant will bite your hand off—which means an opportunity to secure a better deal has been lost.
An “interesting” offer—that is an offer which makes the other participant really think. It is unlikely to be accepted but the aim is to make the other side engage with the proposal as a starting point for opening a discussion which can then be worked on to produce an interesting counter-offer, both sides are then fully engaged, and the mediation can progress towards a final settlement’.
(Mark Keeley, solicitor, mediator, partner, private client dispute resolution, and joint head of the private client division at Freeths Solicitors, in a conversation with the author in September 2021).
Before a participant can make an ‘interesting offer’, there has to be reciprocal clarity about the basic ‘mediation maths’, based upon what is being claimed - i.e. legal rights, property and money, and the corresponding commercial value of each component of the claim. If the will to ‘do a deal’ is shared by the Ps , the mediator can help them to narrow and eventually close the gap. The making of an offer is a matter of timing.
In my experience the cut and thrust world of commercial litigation has very little to do with abstract notions of justice, and is actually more about perceptions and calculation. So, unless a party needs a court determination to move forward, then why not do a deal instead? In my experience, there is nearly always a deal to be done.
Carl Islam is a barrister and CMC registered mediator, 1 EC Barristers London
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