Kenneth H. Fox
Hamline University – School of Law
Chapter 5 in ADR in Business: Practice and Issues Across Countries and Cultures, Arnold Ingen-Housz (ed.), Vol. 2, p. 81-116 (2011)
Mediation is commonly characterized as one of several core ‘ADR’ processes. ADR generally refers to ‘Alternative,’ ‘Amicable,’ or ‘Appropriate’ Dispute Resolution, whereas professionals prefer to speak about ADR as ‘Effective’ Dispute Resolution. Regardless of how it is named, there is overall agreement that ADR in general and commercial mediation in particular play a valuable role in business dispute settlement, particularly in the context of potential and pending litigation, Mediation is often defined as ‘assisted’ or ‘facilitated’ negotiation to resolve a dispute through improved communication, better understanding of perspectives and clarifying of issues. The vast majority of literature on mediation focuses on dispute settlement and resolution. However, relatively little attention is paid to the transactional potential of business mediation — ways in which this ADR process can assist parties to build better deals. Similarly, mediation education also takes this stance, as illustrated by role-plays that focus on solving existing disputes, just like negotiation courses rarely offer role-plays in which a neutral third party assists the parties.
In 2008, the American Bar Association (ABA) Section of Dispute Resolution held a live webcast on deal-mediation, during which Michael Leathes (2008) observed as follows:
“Mediation has consequently been pigeon-holed in the public consciousness as (a) an alternative process and (b) something to do with ‘disputes’ and practiced by attorneys. Changing such an established mindset at the superficial level of comprehension is extremely difficult. The perception of the neutral needs to turn itself away from being an ‘alternative’, or just a dispute process, and be recast in new terminology, using more non-lawyer practitioners and conspicuously extended to deals outside the conflict arena.”
Mediation is unquestionably a valuable process to settle disputes. However, the untapped added value of a neutral also may lie in his or her abilities to help parties achieve a better and lasting business deal. This is where we will focus our attention.
In complex international negotiations, multifaceted issues and/or large financial interests are often at stake. Suboptimal results from such negotiations result, at the very least, in missed opportunities, and often in lost or inefficiently allocated time and money. A neutral negotiation professional – what we refer to as a deal-mediator or deal-facilitator — increases the chance of an optimal and sustainable deal for both parties.
In practice, commercial negotiations risk ending with suboptimal outcomes. This may be due to a variety of factors – substantive impediments between the parties, cognitive and strategic barriers between negotiators, lack of negotiation experience of those involved, lack of preparation, miscommunication, conflicting negotiation styles or adhering to positions instead of exploring interests, among others. Many parties work hard to divide value rather than creating more value to share. These authors believe that these potential problems can be overcome effectively in professional deal management by a deal-facilitator.
This chapter examines the opportunities and potential drawbacks of working with a neutral third-party deal-facilitator in complex commercial transactional or international negotiation process and discusses the circumstances and negotiation situations in which neutrals can potentially add the most value. The authors also compare deal-facilitation principles and processes with dispute mediation.