Most times after a long and intensive mediation session when there is no settlement at the end of the day, it is hard for a professional mediator not to feel a sense of disappointment.
In most normal mediations, parties may well share that sense of disappointment in the ‘failure’ of the day.
So, what is most likely to cause failure? And how can you reduce this likelihood or deal best with its consequences?
Here are, for me, the most prominent five reasons why mediations fail and crucially how to avoid them.
- Inadequate Preparation
- The Wrong Team
- Clients who are Blind to their Risks in Litigation
- Overconfident Advisers and Experts
- Tactical Failures and Glass Half-Full
It is well known in negotiation studies that business parties often do less than they should to prepare for a negotiation.
There should be much less excuse for this in attending a formal mediation, but alas it is still not uncommon for parties to have failed to prepare and therefore prepared to fail – particularly in cases with large corporations or public bodies where accountability is diffuse.
The result is that such parties are more likely to need one of their lawyers to repeat the outline of previous documentation exchanged with the other side, and need longer in private sessions to inform themselves about what the other team are saying and how they should react to it – or even take time to investigate what their own team’s knowledge base is.
This is of course also part of the value of a mediation day, but its downside is that a lot of time is used up in one team ‘getting its act together’, and this can be a factor in the other team’s principals getting frustrated with the process and more ready to depart.
Very often the problem is compounded because proposals and reactions to proposals from that party are not sufficiently informed to be workable for negotiation purposes as they have misunderstood issues which someone in their team should have been on top of.
For an advisor, the remedy for such situations is to encourage their clients to have a rehearsal session before the mediation at least.
For the mediator, they may need to normalise the experience with the prepared party by sharing experiences of similar cases where results were eventually achieved.
Or they can spend more time on the preparatory stage with each party if the parties are not tied to a one-day model (one of the incidental benefits of COVID-19 mediation experience).
Or they can focus on joint ‘education’ sessions in the early part of the mediation while helping the ill-prepared party save face and find effective negotiation approaches. As a last resort, mediators should aim to create enough sense of positive momentum to help all sides feel that another day’s effort or follow up work is justified, allowing real bargaining offers on the back of better information.
The Wrong Team
The second major source of failure is often a subset of the first.
Negotiations usually work when there is a good chemistry between the negotiators.
Of course, mediators cannot usually choose who comes to a mediation, but once they know the teams, they can make judgments as to which team members might be most constructive if brought together for sub-group discussions.
In many mediations there may already be bad vibes from previous direct negotiations, so a mediator may be forced to work with more private sessions. In one case I remember, pre-Covid, the lawyers wanted me to do the mediation completely be telephone as they had had such dire experiences with the other lawyers and between clients, that even meeting in the same building was deemed to be grounds for immediate failure!
More often it is not a chemistry problem, but the capability problem that can undermine the effectiveness of a mediation.
In particular, failing to bring someone who not only has authority but also is accustomed to making tough decisions, can make negotiations unsatisfactory or too woolly to achieve results.
A common variant of this is not bringing a decision-maker but having them ‘on the phone’.
This might help keep numbers small and focused but its downside is that the decision-maker is not experiencing the real impact of the mediated discussions, just being relayed second hand information and being likely to second guess their teams. It is also very inefficient as the team have to repeat conversations that have already taken place within the mediation meeting, and are not always efficient in doing so.
Again, advisers and mediators need to be alert to this in preparation, and try to ensure key people attend or that the mediator speaks to the decision-maker directly if there is a serious attendance issue.
Clients who are Blind to their Risks in Litigation
Let us face it, clients are sometimes not only unreasonable, but wilfully blind to their situation.
People normally agree or offer deals when they think that a deal or offer is better than the alternative of non-settlement, say, pursuing a case to trial with all the time and cost involved.
Very often the results from the alternative scenario have some degree of uncertainty around them even if they tend in a particular direction for that party – ‘it depends on the judge’; ‘I would say you have a “good” chance of a judgement in your favour” (= 60-70%?).
There is scope for negotiation to be positive by offering to fix the uncertainty for that party.
Clients of this kind will also be motivated to explore or take a deal. And the process of intensive review of a case in a mediation can help them and their advisers clarify their thinking on what ultimately makes sense for the client in the circumstances of the case.
Often there is a degree of objectivity in terms of what risks are realistic given the particular circumstances facing a client, so two initially opposed parties find they do converge towards a zone of agreement as a result of assisted negotiation and the in-depth exploration of a case that mediation usually provides.
Sometimes however, there are clients who see no risk in future stages of a conflict, or are obsessively partisan in their thinking about their case and its risks.
This can arise from a variety of causes.
First, particular clients can just be mentally oblivious to risk-based thinking and be driven massively by their personal sense of affront or entitlement. Unrepresented litigants or emotionally wrought litigants in cases like family inheritance disputes or long-term whistle-blower cases can often lean in this direction – they reach a point in the search for justice where they find it inconceivable that a judge would find against them. For them, ‘justice demands’ a particular outcome. So they may find a mediation environment confusing – they do not see why compromise or adjustment is of any advantage to them compared to real justice. They are more likely to take absolute or ‘fixed’ positions rather than the ‘movable’ but sticky positions associated with tough bargaining between realistic parties. In these cases, mediators have to be particularly empathetic to help move things along and may prove a useful ally to advisers who have had difficulty in getting risk messages across to their clients.
I should say in this context, and as someone who has been vigorously promoting mediation in human rights cases, that it is not always about unrealistic claimants.
Some clients, whistle-blowers a common category, are rightly fired up with a sense of injustice and the mediator’s role may be more objectively one of helping a defendant party raise their game on empathy and remedy options in order to get a fair settlement that works for the claimant.
There is a second category of case where the client is less skewed in their thinking, but is still strongly motivated by other considerations than legal risk and facing an opposing party which is negotiating only with legal risk in mind. A serious mismatch in negotiation and outcome motivation can emerge. Some litigants feel they are in a very strong position financially so they would rather wait and see if the other party will eventually ‘cave in’. This can happen with individuals of high net worth, with cases skewed by legal funding considerations, or commercial parties who feel in a particularly strong legal position even if not in terms of ethical business behaviour. Or there may be powerful commercial agendas outside the legal risk, such as a precedent a settlement might create in a marketplace.
My most extreme personal example of this category of ‘broader considerations’ was a mediation over a corporate acquisition claim, where I took the MD of one company aside at one point in the mediation to question his team’s negotiation stance on the grounds that I was finding it impossible, as a neutral, to put their case convincingly to the other party as it made no sense! His reply was – “That is all right. This is not a lot of money; I have already told my management team that I wanted them to get experience of how unreasonable negotiators can sometimes get results.”
How to tackle these potential sources of failure in a mediation?
Both can be difficult, and require different strategies.
The first is more obviously emotionally based, so requires sympathetic and careful working through options and steps in the negotiation and a clear review of alternatives with the clients present – preferably with the support of that party’s adviser or a supportive friend or family member if available.
The second is a strategic choice taken by a party, so is best addressed at that level – can other approaches offer significantly better outcomes that they had not appreciated, such as a new business relationship or diversion of potential litigation costs into more immediate investments?
With individuals of high net worth, sometimes a day of mediation is just a reminder of how ‘tedious’ the whole business of litigation and witness examination can be compared to entrepreneurial activities, so they can suddenly collapse into an agreed settlement rather than face continuation of life with lawyers….
Overconfident Advisers and Experts
Research shows that legal advisers generally tend towards overconfidence in their case – largely because they have spent a lot of time working the case up on their client’s behalf, and finding confirmatory arguments for it.
That is their job, and why most cases of any complexity have teams of lawyers apparently convinced of the justice of their own client’s position.
The problem for the clients is that both sets of lawyers cannot both be right – only one will ‘win’ before the judge.
Litigators can also be buoyed emotionally by the thrill of the chase, and fall into the trap of what is known technically in negotiation psychology as ‘reactive devaluation’ (reflex disparagement) of any points put by their ‘opponents’.
Of course, the above situation is a normal peril for mediation rather than a distinct source of failure.
Most advisers and experts are prepared to consider arguments against their position when put to them carefully by the other side, or laid before them by a mediator.
Many mediated discussions, particularly in the early stages of negotiations motivated by legal risk considerations, are about working through case strengths and weaknesses. Sometimes too, more open advisers and clients also welcome the mediator’s role as a detached sounding board to help them determine whether and how to settle.
However, where overconfidence veers into a dramatic source of failure, is where mindsets of advisers or experts are working from rigidity rather than conviction.
My favourite example of this phenomenon was in mediating with a major professional services firm being sued for professional negligence. They were heavily reliant on a particular expert. While I appreciated how good their expert was, I did point out that their expertise and conclusions were founded on only one case study example of a new technical approach in their services offerings. Would that be sufficient for a judge to find in their favour? The other party made an offer in the mediation which reflected some risk around the expert’s conclusions. However, the defendants were immovable and went so far as to tell me that they had a ‘scientific’ system in their firm for appraising cases, and had concluded they had no real risk. Their position was therefore fixed and they would make a ‘nuisance’ offer only. Some months after this failed mediation, I read in the press that they had lost at trial and were exposed to a bigger penalty of damages and costs than had been on offer in the mediation. Their conviction about their case was very solid however. I then heard that they had gone on to the Court of Appeal. They lost again. Subsequently they went to the highest court in the land, and lost again.
Obviously, experts and advisers do differ in their judgements, so it can sometimes be a fine line between confidence and mental rigidity, but once you cross that line it becomes difficult to find a realistic route for a negotiated outcome where the other team take a very different world view.
Tactical Failures and Glass Half-Full
Lawyers and clients have often commented to me that they were surprised how the process developed its own momentum, so they found themselves negotiating further than they had expected.
Some lawyers in the early days were even reluctant to go into mediation because they worried about clients falling under the ‘spell’ of the magnetic forces towards settlement that come from a day focused on getting a settlement result.
While most parties coming to mediation are motivated to settle a matter, this is not always the reality.
Some users, particularly those which frequently mediate cases, have been known to consider mediation not as a settlement forum, but as a testing ground for the strength of a case, of a witness, or just to get a feel for what settlement zone might work in the future. Or just to get a better feel for what they are dealing with on the other side of the table.
So, for those with this approach, mediation has not failed, they never expected to settle in the first place and just wanted to review the case for one of the above purposes. It is an example of mediation being used as a tactical approach rather than for it to reach a conclusion of a dispute.
Generally, parties do not trumpet this kind of tactical use of mediation, so mediators and other parties involved just have to deploy their negotiation antennae to ‘read’ the party they think may be adopting this approach.
For example, it may come through in a lack of urgency to make offers, or use of certain language to indicate that ‘we need to be persuaded’, or a firm indication of wanting to close the mediation at a set time.
Or it may be obvious that they are dealing with a party that has many cases of this kind (e.g. insurer or group action settings) and this particular mediation is clearly serving as a quick test of the kind of settlement ambition they are facing from a particular party, which can be considered as part of an aggregate approach along with many other cases they are dealing with.
To avoid this kind of failure, the mediator or other party may just have to articulate the question of whether that party is coming to the mediation with serious intent to settle, and invite them to demonstrate that with a proposal that shows significant response to their position.
Or be upfront about making an offer but ‘we will leave it with you, get back to us when you are ready for serious discussion’.
Do Mediations Really Fail?
Here we come to a particularly important observation about mediation – does this area of tactical ‘failure’, or indeed any other of these other failures above, really matter in the grand scheme of things?
In most effective mediations, parties leave better informed.
They have spent time working closely with the other side, chewing over the issues and arguments in the case. They should leave with much greater know-how and sense of what it will take to bridge a gap.
They will have a better sense of the client on the other side and what is driving the case. They may have found out more about the funding of the case or what other stakeholders have to be satisfied for settlement to be achieved. They may want to go away and regroup to consider a change in strategy, or whether they need to offer much more – or less than they had originally assumed.
Does all this count as ‘failure’?
It certainly may seem to do for a party coming along with a deep desire to settle on the day, or if the other side is going to harden its approach to negotiation.
But such a reaction is often just based on finding out also the fuller realities already facing each party if the case goes forward to an alternative track of non-settlement. Everyone has to reconsider their negotiation options in these circumstances, and arguably far from failing, mediation has succeeded in helping get to realism.
One would not usually describe the disclosure phase of litigation, for example, as being considered a ‘failure’, it is just a necessary stage of processing a claim in the route to finding an appropriate resolution. In the case of disclosure, the courts have made it mandatory as a valuable contributor to processing cases, similarly mediation is simply a very useful process step for contested cases.
Just to summarise on this topic, it is usually therefore a mistake to discuss mediations ‘failing’ if they do not settle.
Advisers working in mediation, and mediators, should rethink their guidance to clients.
Mediation is at its heart one of the best processes for turbo-charging negotiations, and while this may lead to settlement, its essential purpose is to ensure that parties get a feeling that they have left no stone unturned in attempting settlement, that they have achieved a solid ‘strategic review’ of their true negotiation landscape.
It is one of the best forums for doing so, and why some high value cases in my experience can go through several rounds of mediation (with the same or different mediators), just to assess if the landscape for either party has changed significantly in the gap between mediation sessions.
So the remedy for the potential for a mediation to fail, is for advisers to manage client expectations at the outset – “most cases do settle as a result of mediation, but we need to approach this as our best shot for the time being, and during it to search for what we can find out that is worthwhile for laying the ground if we have future negotiations?”
In other words, be positive about having a negotiation glass that is half-full, rather than a vague horizon of untested assumptions about the key negotiation drivers in a case.
CEDR’s statistics regularly indicate that most mediations, around 70%, end up with a settlement on the day. And another proportion, 10-15%, settle within the next three months. ‘Failure’ is therefore limited. Interestingly, this applies too not only to cases coming under court rules but also where parties are ‘compelled’ into mediation because they have it in their contracts.