Mediation Pitfalls and Obstacles
A. Introduction
There are times when mediation does not work. Many times, such cases are suitable for referral to arbitration. Other times it is just a matter of picking the right time to implement the process and the failure to work is a matter of timing or preparation rather than a matter of mediation being inappropriate. Finally, there are times when mediation will not work. This column was written to identify the areas where ADR will be frustrating and to help appreciate the areas in which ADR can still work.
1. Procedural Problems.
There are three extremely common procedural reasons reported by practitioners as reasons that mediations deadlocked.
a. 24% of the failed mediations result from a lack of settlement authority. In a survey involving over 150 mediators and a substantial number of sessions, almost one quarter of the failures were the result of a necessary party not attending. Those with authority must attend in order for the process to work.
b. 21% of the failed mediations result from a lack of preparation. Often referred to as a "inadequate discovery," the problems quite commonly reflect a party or a lawyer who does not know enough about their own case to be able to settle the case.
c. A substantial number of mediations fail because of hostile and incompatible lawyers. A mediation session is not the place for an aggressive, hostile and emotional attack on the other party or their attorney. Such attacks cause a substantial number of failed mediations.
2. Special Problems.
a. Where one side is engaged in litigation with the primary intention of bleeding the other side with litigation expenses mediation is not fruitful. In this situation, a mediation session will generally be seen as one more opportunity to impose costs on the opposing party rather than a chance to cut costs and find a better resolution.
It is a primary tenant of mediation that the parties enter it in good faith. Malicious, bad faith litigation is a good example of the kind of bad faith that poisons the chances for success of mediation.
b. Where an uninsured defendant faces catastrophic liquidity problems mediation will often be fruitless. When the result of mediation requires the dissolution, reorganization or bankruptcy of a party, mediation usually does not generate the imminent pressure necessary to resolve the problem.
Note that in the same situation, mediation brought before a catastrophic loss looms can some times resolve some problems as will mediation brought after a judgment is entered in the case. In both cases, mediation serves as a supervised negotiation session where both parties can benefit. Mediation does not fail in such a situation, however it must be timed properly.
C. Most frustrating, is the situation where one side is unable to appreciate the legitimacy or the limits of property rights.
Individuals will differ, but a substantial portion of all intellectual property law litigation is against persons whose infringement is knowing and willful and who refuse to acknowledge property rights.
C. Arbitration
Situations where one side is completely in the wrong, but is pushing arbitration or trial to obtain the benefit of natural compromise often do not result in fruitful mediation. If one side is unwilling to give an inch, and has no legal reason to compromise, non-binding arbitration or mediation have only about a break-even chance of persuading the other side to compromise to save legal costs.
D. Counterpoint
There are times where mediation will work. After all, an 85% overall success rate reflects that there are many times that mediation will and does work.
In specific situations, the success rate is even higher than 85%.
Often, mediation also provides "one last chance" before major expenses are incurred. The general rule is that if negotiation can work, then mediation can make the negotiating process work better. If you are in a situation where negotiation won't work, mediation sometimes provides more of the "won't work" situation. However, mediation often finds creative alternatives that resolve the problems where negotiations have failed.
Even if you are unprepared, lack authority or are unreasonable in the extreme, mediation may help. However, it is best to increase your chances of success by not entering into mediation sessions with these problems.
E. Final Word
ADR is an alternative. It remains an alternative because while it works most of the time, it cannot work all of the time.
However, unless your case fits into one of the special areas detailed above, negotiation, mediation and ADR ought to work for your conflicts just as well as they work for conflicts in every other realm of the law.
Even in areas where most parties would not expect mediation to help, with proper evaluation (which mediation helps to create and improve), mediation often educates the parties and helps them to move forward.
