FAQs for Mediators 9781526500854, 9781526500885, 9781526500878

Table of contents :
Preface
Bibliography
Part I Pre-mediation
Question 1
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Question 8
Question 9
Question 10
Question 11
Part 2 At the mediation
Question 12
Question 13
Question 14
Question 15
Question 16
Question 17
Question 18
Question 19
Question 20
Question 21
Question 22
Question 23
Question 24
Question 25
Question 26
Question 27
Question 28
Question 29
Question 30
Question 31
Question 32
Question 33
Question 34
Question 35
Question 36
Question 37
Question 38
Question 39
Question 40
Question 41
Question 42
Question 43
Part 3 End of the mediation and after
Question 44
Question 45
Question 46
Question 47
Question 48
Question 49
Question 50
Appendix 1 SCMA Guidelines for Lawyers in Mediations
Appendix 2 Mediation Record Form
Appendix 3 Mediation Terms and Conditions
Index

Citation preview



FAQs for Mediators

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FAQs for Mediators Stephen Walker MA (Oxon), FCIArb Solicitor and Accredited Mediator

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 Bloomsbury Professional An imprint of Bloomsbury Publishing Plc Bloomsbury Professional Ltd 41–43 Boltro Road Haywards Heath RH16 1BJ UK

Bloomsbury Publishing Plc 50 Bedford Square London WC1B 3DP UK

www.bloomsbury.com BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc © Stephen Walker 2017 Extracts from CEDR Model Mediation Procedure 2017 and CEDR Code of Conduct for Third Party Neutrals 2017 © CEDR 2017 Stephen Walker has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as Author of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www.nationalarchives.gov.uk/ doc/open-government-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998-2017. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. ISBN:

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Typeset by Phoenix Photosetting, Chatham, Kent Printed and bound by CPI Group (UK) Ltd, Croydon, CRO 4YY To find out more about our authors and books visit www.bloomsburyprofessional.com. Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters

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Dedication To John Dixon Walsh of Jesus College Oxford in his 90th year – History Tutor sans pareil and instinctive mediator. With heartfelt thanks and gratitude.

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Preface

Preface

Introduction This book continues the theme of my previous books: how to get the best out of the mediation process. It shares experience about how to cope with situations that all mediators come across at some stage in their careers. Some are more likely to be encountered by novice mediators. Others are the sort that arise in the more complex mediations that are usually handled by experienced mediators.

Things have changed Twenty years ago being a mediator was much easier. There were far fewer disputes to mediate but there were also far fewer mediators. Clients and their lawyers did not know much about mediation. They were inexperienced. Knowledge really was power. Mediators had authority just because they were mediators. Not any more. Clients and their lawyers are all far more experienced and sophisticated. Some are frankly jaded. They complain that mediation has become formulaic. They attend, perhaps, not just to tick a box but with a world-weariness as they gear themselves up to trudge through an over-familiar ritual. Many lawyers attending mediations with their clients have been trained as mediation advocates or mediators themselves. What you, as a mediator, were taught on your basic training won’t cut it anymore. You need to be far more aware of what mediations can throw up.

The format of the book •

There are 50 Questions divided in to 3 Parts: Pre-Mediation, At the Mediation and After the Mediation arranged in the order in which they are likely to arise during the mediation process.

• The Core Issues are highlighted. These are the underlying problem or issues, which the Question raises. • The Background to the issues with Comment is given to provide context and then options are highlighted in the In A Nutshell section. •

Potential traps are highlighted in Beware sections.

The Questions are drawn from real-life mediations. The stories illustrating them are all true but have been anonymised. vii

Preface • The Questions cover ethical, practical, legal, behavioural and procedural issues. Reference is made to various Codes of Conduct or Standard Terms. You will find it very useful to know about them in a pressure moment when your mind is in danger of stalling. •

Options on how to deal with the problem are discussed. Advice is offered on the best options.

•

There are several Survival Kits containing information or precedents that you can quickly use.

•

Cross-references to other sources are given in the See Also and Follow Up sections so that you can explore the issues further.

•

Relevant English law judgments are cited but this has been kept to a minimum.

The emphasis is upon real-life situations and practical advice. The Questions are not theoretical thought-experiments. They are based upon my actual experience and those of other mediators who have been good enough to share information and comments with me. All the cases, and the identities of the participants and the mediators, have been anonymised.

Self help You can, as a mediator, take preventative steps to protect yourself against some of the problems that are illustrated. You can do this by: The terms of your Mediation Agreement. or What you say to the parties in advance of the mediation either orally on the telephone/Skype/Zoom or in emails. or What you say in your Opening Statement at the initial meetings with the parties either in caucus or in a Joint Opening Session. For this reason there are Templates for: •

a Mediation Agreement; and

•

terms and conditions.

and Scripts for: •

initial conversation with parties/lawyers; and

•

mediator’s opening statement.

In pressure situations we can all fumble for the right response or question. Examples of tried and tested words that work are given. viii

Preface Many mediators worry about what to do after the mediation negotiations have concluded but before the document recording the agreement is signed. And after all it is almost a universal truth that an agreement made at a mediation is not legally binding until it is set out in a document which is signed by all parties. A template for a settlement agreement with comments is included. Reference is made to the templates throughout the book. They are not prescriptive. Alternative versions of clauses are suggested. There are intended to be something you can work with. Certain themes recur: Unrepresented Parties You need to deal with them differently from how you deal with parties who have their lawyers with them. You have to take more time. Go over things more carefully. Check that they are understanding what you are saying. Advise them to take legal advice. One tip is to form a network of other lawyer mediators who would be prepared to give some legal advice to an unrepresented party in an emergency. Your mediation approach The style wars between facilitative, evaluative, transformative and so on are said to be falling out of fashion. The distinctions between them are blurring. But style warriors still fight their particular corner of the mediation bio-sphere. Different mediators handle the same problem in different ways. You need to be clear what your general approach is and to be comfortable with it. •

How direct are you?

•

How much do you want to intervene in the process and the parties’ decision making?

•

Will you offer suggestions?

•

How testing is your reality testing.

•

Can you confront a problem head on?

•

How ready are to walk away from a mediation?

Process control The classic mantra is that the problem and the solution belong to the parties and the process belongs to you as the mediator. How much do you want to control the process? What is your appetite for fighting procedural battles? Are they are a waste of time, energy and goodwill? Or are they an essential step in asserting your position so that you can provide the direction, involvement and drive that clients say they want? Priming Talking to the parties and their lawyers before the mediation day and on the day itself, before negotiations really get under way, is vital. You can do this in private ix

Preface chats, joint opening sessions and the first round of caucuses. You can seed ideas, set the mood music, shape the agenda and start to manage expectations. The importance of doing this is often overlooked. Priming is not the same as rapport building although you may do both at the same time. If you have done both well you should find it easier to cope with some of the issues raised in the Questions. It’s a buyers’ market The power is with the customers. There are thousands of mediators competing for work. Most do not have enough. But does this mean that you have to do whatever your clients ask of you? When and how do you say no? Confidentiality This concept is still the bedrock of mediation in the UK. How you apply the principle of internal confidentiality will influence which options you choose on some of the Questions. Impartiality and Neutrality Two other treasured traditional values of mediators in the UK but ones that are being increasingly challenged - even more so than confidentiality. Again how you apply these two principles will influence your choice of options.

How to use the book Inevitably with these recurrent themes there is a degree of overlap amongst the Questions. I have tried to make them self-contained which means that there is some duplication but hopefully it has been kept to a workable minimum. You can read the book from start to finish. If you do you will see where there is some duplication but also where there is signposting and cross-references. Or you can dip into and follow your nose as you move from one Question to another via the See Also sections. Or you can consult it when you have a problem. Look it up in the Contents or Index. Note the discussion and the options and decide what to do. I hope that you find the discussions and advice helpful. Good luck. Stephen Walker 3 September 2017

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Contents

Contents Prefacevii Bibliographyxvii

Part I Pre-mediation Question 1 One of the parties’ solicitors emails to suggest that I should copy all correspondence with one party to the other and that there should be no confidential communications. Do I agree to this?

3

Question 2 11 I have been sent four lever arch files of document – do I need to read them all? Question 3 One of the parties wants to make amendments to my mediation agreement. Do I just accept them?

17

Question 4 What do I need to take with me to the mediation?

37

Question 5 In my pre-mediation telephone call one party asks me to check that the other side will be attending with someone with authority to settle. What do I do?

49

Question 6 53 One of the parties asks if I do ODR and whether it’s a good idea. What do I say? Question 7 What do I do about tax at mediations?

57

Question 8 One side is insisting on bringing a witness and the other side objects. What do I do?

63

Question 9 One party asks about my experience. What do I say?

69

Question 10 How friendly should I be?

75

Question 11 The parties have asked if I have insurance. What do I say? Do I need it?

81

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Contents

Part 2 At the mediation Question 12 I did my pre-mediation conflict checks. On arrival I realise that I know one of the parties/their lawyers. What do I do?

89

Question 13 One of the people at the mediation refuses to sign the mediation agreement. What do I do?

97

Question 14 103 One side wants a Joint Opening Session but the other doesn’t. What do I do? Question 15 One of the lawyers tells me that they are going to be aggressive in the Joint Opening Session. What do I do?

109

Question 16 An anxious party asks me: ‘Can you guarantee that nothing that I say in this mediation can ever be referred to elsewhere?’ What do I say?

115

Question 17 ‘Don’t tell the other room’ one party says, having just revealed that their expert has changed his report which fundamentally weakens their case. What do I do?

123

Question 18 Neither side will make an offer. They both say they want to hear from the other side first. What do I do?

129

Question 19 One party insists that I take their offer to the other room. I fear it will trigger a walk-out. Do I have to take it?

135

Question 20 The clients want to accept an offer but their lawyer says no. What do I do?

141

Question 21 147 One party is secretly recording what is going on at the mediation. What do I do? Question 22 What do I do when one party accuses me of bias?

153

Question 23 The mediation is being hijacked by a dominant personality. What do I do?

159

Question 24 A party refuses to discuss their risk-reward calculation. What do I do?

167

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Contents Question 25 What’s a risk analysis? How do I do one?

173

Question 26 One party has simply got the law and the facts wrong. What do I do?

181

Question 27 What do I do when one party seems to be receiving wrong or even negligent advice?

189

Question 28 One of the parties does not seem to be understanding what is going on. What do I do?

195

Question 29 One of the parties asks to see my notes on a break-out session that I had with both setss of clients without lawyers? How do I respond?

201

Question 30 The parties want to bring their experts to the mediation. Do I let them?

205

Question 31 What do I do when one party insists on arguing their legal case?

213

Question 32 I’m a facilitative mediator. The parties want me to bang heads together. Is reality testing the same as head banging?

221

Question 33 One of the parties asks me for my advice, opinion, and suggestions. What do I say?

227

Question 34 I have a multi-party mediation. What do I do differently?

233

Question 35 One party wants to clear the air. The other doesn’t. What do I do?

241

Question 36 Do I have to do what the parties tell me to do?

249

Question 37 ‘We are not here to settle. We’ve come to tick a box.’ What do I do?

257

Question 38 In a Joint Opening Session one party is provoked by the other and storms out. What do I do?

263

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Contents Question 39 In the Joint Opening Session one side’s lawyers insist on cross-examining the other side’s client. What do I do?

271

Question 40 One of the barrister tells me in a caucus, in front of his solicitors and clients, that he prefers to side-step the mediator and talk directly to the other side. What do I do?

277

Question 41 At a mediation between a large company and an unrepresented individual the company’s lawyers negotiate a favourable settlement for their client. I think that their draft settlement agreement is one-sided. What do I do?

283

Question 42 The mediation has taken a long time to arrange. Everyone is there on the day but one party has not paid my bill in advance despite promising to do so. What do I do?

289

Question 43 Co-defendants at a mediation blame each other. Each wants to make a separate deal with the claimant but does not want their co-defendant to know what their deal is. What do I do?

295

Part 3 End of the mediation and after Question 44 How do I close the deal?

305

Question 45 The parties have shaken hands. What do I do now?

313

Question 46 When can I bring a mediation to an end?

321

Question 47 After ten hours the lawyers are drafting the settlement agreement. One party announces that it cannot sign the agreement today – they have to obtain sign-off from the Main Board. What do I do?

327

Question 48 They want me to draft the settlement agreement. What do I do?

331

Question 49 I’m not a lawyer. What does a Settlement Agreement look like?

341

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Contents Question 50 One side rings up after a successful mediation and asks what I think the mediation agreement means. What do I do?

355

Appendix 1  SCMA Guidelines for Lawyers in Mediations

361

Appendix 2  Mediation Record Form

367

Appendix 3  Mediation Terms and Conditions

369

Index

371

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Contents

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Bibliography

Bibliography Allen, Tony: Mediation Law and Civil Practice (Bloomsbury Professional, 2013) Blake, Browne, Sime: The Jackson ADR Handbook, 2nd edn, (OUP, 2016) Bond, Greg, ed: Mediation Practice (ICC, 2016) Brooker, Penny: Mediation Law: Journey through Institutionalism to Juridification (Routledge, 2013) CEDR: How to Master Negotiation (Bloomsbury Professional, 2015) Feldman Barrett, Lisa: How Emotions Are Made (Macmillan, 2017) Kahneman, Daniel: Thinking Fast and Slow (Penguin, 2011) Randolph, Paul: The Psychology of Conflict (Bloomsbury, 2016) Richbell, David: How to Master Commercial Mediation (Bloomsbury Professional, 2015) Walker, Stephen: Mediation Advocacy: Representing Clients in Mediation (Bloomsbury Professional, 2015) Walker, Stephen: Setting Up in Business as a Mediator (Bloomsbury Professional, 2015) Walker, Stephen: Mediation: An A-Z Guide (Bloomsbury Professional, 2016) Watt Smith, Tiffany: The Book of Human Emotions (Profile Books, 2016)

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Part 1 Pre-mediation

1

Question 1

One of the parties’ solicitors emails to suggest that I should copy all correspondence with one party to the other and that there should be no confidential communications. Do I agree to this?

Core issues •

who controls the process

•

what contact you have with the parties before the mediation.

Discussion The traditional definition of mediation emphasises that mediation is a voluntary, confidential process in which the parties to the dispute exercise autonomy. They – and only they – decide whether or not to settle and, if so, when and on what terms. Most mediators endorse this. Many go further and say that both the problem and the solution belong to the parties. Accepting that the process belongs to the mediator many describe themselves as process managers. Some take a very prescriptive approach for example insisting that that there is a Joint Opening Session and stipulating what material they receive before the mediation and when. They insist on fixing the start and finish time and the procedure to be followed at the mediation. One mediator insisted that there was a Joint Opening Session even though the parties and their lawyers were not keen. ‘I am the mediator today. I know what I am doing and this how I do it. I am the Vice-Chair of XXXX.’ (See also Q14, at p 105.) Another experienced mediator who also holds judicial office tells the parties that the mediation will not start at all without a Joint Operating Session. So far, he reports, no one has called his bluff. But he is waiting for the day. Other mediators take a more laissez-faire approach. They expressly tell the parties that the mediation is their day. The mediator will do what the parties want. In this way they seek to avoid procedural battles, which just drain away energy, dilute goodwill and distract focus. All of which is sensible. They are quite happy to turn up on the day without having been sent any preparatory material and rely on what the parties tell them what is important and take it from there – which might not be quite so sensible. They often prefer to conduct the entire mediation in a joint session rather than using the caucus model. 3

Part 1  Pre-mediation All mediators seem to agree on one point. Establishing rapport with the parties is vital to what you do as mediators. Until trust and confidence has been built up the parties will not feel able to discuss openly and frankly with you, as mediator, what they want and what they are prepared to do to obtain it. For this reason, confidentiality, both internal and external, is emphasised. This is explained in more detail in Q16. So consider how hands-on you want to be at your mediations. Should I speak to the parties before the mediation? Most mediators, knowing that expectation influences performance and outcome, agree that managing expectations is an important part of what they do during the mediation process. They may do it in different ways but most of them do it. Time and energy are not infinite resources. People run out of both at mediations. Mediators do not want to waste them. Therefore ask yourself why not start the process of rapport building and expectation management sooner rather than later. Why leave it until the day of the mediation? Many people going to mediation do so with reservations or concerns. Most clients have never been to a mediation before and will not go to one again. They are suspicious about the process because they are not familiar with it. Or perhaps they do not really want to be there. They are only attending because of court pressure and want to avoid a costs sanction. Or they signed a contract which contains a waterfall clause that stipulates that they must try mediation before commencing litigation or arbitration. Lawyers are often suspicious about the prospects of success at mediation. They think that the parties are too far apart and entrenched in their positions. They may be having difficulties persuading their clients that mediation is appropriate and can work. Or they may have had previous bad experiences in mediations and be jaundiced about the process. Mediators are usually advised by trainers and commentators to make premediation contact with the parties and/or their advisors. The first opportunity is during the days before the mediation. Email the parties asking them when it would be convenient for you to telephone them to discuss the mediation. In conventional two-party mediations, where both parties are represented by lawyers, you will speak to the solicitors. Here is an example of an email. ‘Dear Both I write about the mediation fixed for 25 December 2017. Is there any material that you would like me to read before the mediation? If there is when do you think that you will be able to send it to me? I am happy to receive material by email to this address. If you prefer to use DX or post my address is: 4

Question 1 Please could you let me know when it would be convenient for me to call you for a private and confidential word about the mediation. Regards’ Do you have separate or joint telephone calls? Conference calls by telephone or Skype and Zoom are easy to arrange. These are useful when agreeing logistics such as room hire, timings etc, particularly in multi-party mediations (see Q34). But more usually you will have a telephone conversation with each party on a private and confidential basis. Why is it private and confidential? You want to be able to speak freely to the lawyers and encourage them to share with you any concerns that they have about the process, their client or the other side. This is a crucial part of rapport building. The demand that all communication be joint and that there should be no unilateral confidential communication probably stems both from a fear that you will in some way be influenced by the other side and also from the practice of communicating with courts or arbitrators. This fear is misplaced. Not allowing any unilateral confidential communication with the court or arbitration tribunal is understandable. The judge or the arbitrator is going to make a decision on the rights or wrong of a party’s case. The evidence on which they base their decisions has to be known to all parties. But mediators do not adjudicate in this way. Surprisingly this difference between what mediators do and what arbitrators do is not always fully understood even by relatively experienced litigants or their legal advisers. The mediator is still seen as a judge figure who will in some way decide the outcome of the mediation. Admittedly some mediators, especially those from an arbitration background or who have sat in a judicial capacity, do tell the parties that they cannot have confidential conversations. They say that will have to inform the other side of anything that is said to them by one party. They are incorporating the norms of their other backgrounds. In practice in mediation there is no such norm. It is up to mediators to decide whether or not they have confidential conversations. If you as mediator choose not to have them you are passing up the chance of early rapport building. Most mediators do have confidential conversations. Some mediators resist having confidential chats as a defensive measure. They do not want to be drawn into protracted discussions about the merits of the case or giving guidance, bordering on advice, to a party. One well-known and successful mediator never contacts the parties or their lawyers to discuss the dispute or the mediation before the day. If they telephone her, she speaks to them, but not otherwise. Another hugely successful mediator does contact the parties or their lawyers as a matter of course but only on an ‘if needed’ basis. This raises the whole question of what extent a mediator should give help, direction or coaching to parties. This is considered in more detail in Q33. What you do talk about? You want to set the mood and find out from them what their general approach to mediation is and whether there is any particular detail that they think you should be aware of at this stage. 5

Part 1  Pre-mediation Here is a suggested script ‘Good morning. Is it convenient to have a word? •

There are just three things I wanted to talk to you about. One was to introduce myself. Two was to explain how I normally do things and to make sure that this matches your expectations. Three was to find out who is coming from your side and whether there was anything that you want me to be particularly aware of at this stage.

• I  should have said that everything that we talk about in this conversation is confidential between us. •

There are different ways of doing the job as mediator. My approach is this. I take it at face value when the parties say that they want to try and settle. My question to both of them is – while you say you want to settle, what’s stopping you? We try and get out into the open the options for settlement. These are not always what they appear to be in the pleadings and correspondence. We work on trying to get over the obstacles.

•

In my experience – I don’t know whether yours is the same – you get deals done not by arguing about the law and facts all day long but by discussing proposals. Therefore the sooner we can get an exchange of proposals the better.

•

How does this sound to you?

•

I usually do have a joint opening session but I do not insist on it. What do you think about joint opening sessions? What are relations like between the clients?

•

Who is coming from your side? Have they been to mediation before?

•

Is there anything that you want me to be particularly aware of at this stage?’

Do you tell the other side? When you speak to one side they will almost always ask if you have spoken to the other side. Just say whether or not you have. There is nothing to hide. There is a difference between telling one party of the fact that you have spoken or are going to speak to the other and disclosing the contents of that conversation. Let each party know that you intend to speak to the other side. Give each party the same opportunity to communicate with you. It is for them to decide whether or not to take it. Written communications Most mediation agreements provide that any communications through you as mediator that take place before the mediation are treated as confidential in the same way as communications made during the mediation. Unless the communication is about a confidential matter the better practice is for you as mediator to have bilateral, not unilateral, written communications. This is especially true when discussing arrangements for the mediation. But any party can provide information to you as mediator at any time on a confidential basis. 6

Question 1 Should I have pre-mediation meetings? Some mediators encourage (and even insist on) pre-mediation meetings. Usually these are joint meetings to cover procedural matters and to work out what issues are still in dispute and will have to be tackled at the mediation. Occasionally there are separate meetings. They are usually arranged to enable clients and the mediator to meet and get to know each other a little before the mediation. This is helpful when the client has had no previous experience at all of mediation and is highly suspicious of the whole process. Sometimes they can be quite formal, taking place in the mediator’s offices but on other occasions they are over lunch. Some very experienced and successful commercial mediators encourage such meetings as a matter of course and charge for them. Sometimes they include them in their mediation fee. They do not always tell the other side that they are having such a meeting. This carries obvious risks of perceived bias (see Q22). The better practice is to make sure that both sides have the same opportunity to meet you and are told if either has taken advantage of it. In multi-party mediations such procedural meetings are common, and often essential. They do not always take place face-to-face and can be done through conference calls on the telephone or via Skype, Zoom, etc (see Q34). Explanations to the parties of how you normally conduct mediations is sensible. They set the scene for them and helps flush out any mismatch of expectations. What if a party does not have legal representation? Whether the parties are legally represented or not makes a big difference. Unrepresented parties require different treatment. Most will not know very much about the mediation process or the philosophy behind it. You have to do much more educating. Many will require advice on how to prepare for the mediation and what to do on the day. You can urge them to consult lawyers but they may not have any access to legal advice. Be prepared to give them some help. Make it clear that giving an explanation is one thing: giving advice is another. In practice the line can become blurred but there is still a line. One way of helping clients without crossing the line is to refer them to other sources of advice, eg your website. Include tips and links on your website. Some mediators as a matter of course send out checklists and advice notes to the parties when they are first appointed. Most mediation providers also do this and so do many mediators when they are appointed directly. Others prefer to do it on the telephone or on an as-needed basis. But beware •

Avoid being drawn into a detailed discussion of the case. Many unrepresented clients want to talk at length about the case. There are various reasons for this. Everybody wants to be heard. They want to detect some indication of support or approval in your responses that will encourage them. People under stress tend to either say nothing or say everything.

•

Not all unrepresented parties will feel confident about preparing a position paper or mediation statement. They prefer to just tell you what their version of 7

Part 1  Pre-mediation events is. This is particularly true for people whose first language is not English and who find it easier to express themselves in the spoken rather than the written word. There is nothing wrong with this but make sure that you do take notes of what they say to you. •

Be open – ask if you can take a note of what they are saying. People rarely refuse. When they press you for a response or reaction you can say that you have made a note of what they have said. Emphasise that you are not a judge.

•

Continuously check whether what you are being told is on a confidential basis or not. Can you tell the other side what they are telling you?

•

You will need patience. Unrepresented parties will often contact you several times before the mediation. Be careful about allowing them to regard you as their lawyer or advocate. They will want you to express support for their position but you must behave impartially.

•

Email them, emphasising that what you have been told is confidential and that you are not able to give them advice. Remind them that if they need advice on the legal merits or on tax implications of the dispute they must take it from their own lawyer or accountant.

Parties with legal representation With represented clients it is much easier. The lawyers understand the rules of the game. You can talk in legal shorthand. Prepare for the conversation. If you do not know them, introduce yourself. Ask who is coming from their side. Explain how you normally do things to see if it meets their expectations. Ask expressly if they have any comments or want to do something in a different way. Repeat that the conversation is on a confidential basis. Sometimes they will want you to ask a question of the other side, for example, who is coming from the other side and whether or not they have authority to settle. Going direct to the clients Some mediators, including experienced and successful ones, ask if they can speak to the lawyer’s client directly. They report that they are rarely refused. The perceived advantage is that they can start establishing rapport with the client before the mediation. After all, at the mediation the clients are the most important people present. They are the ones who have to take the decision on whether or not to settle. Clients are the ones who are most likely to have reservations or concerns about mediation. Lawyers generally are much more experienced in mediation than their clients. But beware There are risks. •

The lawyers might think that you are trying to drive a wedge between them and their clients. They may be right. They may well feel isolated and threatened. If they do they will become defensive. You do not want the lawyers to become an obstacle to settlement. You need them to be an ally in finding a settlement. 8

Question 1 •

Messages can become mixed and wires crossed. After all most of us hear what we want to hear.

In a nutshell •

Always email the parties asking when would be a convenient time for you to call them for a confidential word about the mediation.

•

Most pre-mediation conversations do not last for more than 10 minutes. Some go on for twice as long. If you are speaking to an unrepresented party expect to spend from 15–30 minutes.

•

The risks of asking lawyers who are representing their clients at the mediation if you can speak to their clients direct outweigh the possible advantages.

SEE ALSO Q16, Q22, Q33, Q34 FOLLOW UP Walker: Setting Up in Business as a Mediator, Ch 20

9

Question 2

I have been sent four lever arch files of documents – do I need to read them all?

Core issues •

how far should mediators involve themselves in the details of the dispute?

•

do you carry out independent background research into the law, issues and personalities?

•

how much preparation do you charge for?

Discussion Judges have been divided by Neuberger LJ into Impressionists and Pre-Raphaelites. Mediators can be similarly described. Impressionists They insist that mediators should not concern themselves with the details of the dispute. The parties know what the dispute is about. Mediators are not interested in the details; they are interested in what the parties’ interests and needs are. Some mediators, such as Thierry Garby, go further and say that mediators should not read the papers at all before the mediation. If they do they will be drawn into irrelevant details and prejudge the issues in the case. They will not have an open mind when they are engaged in active listening with the parties during the mediation. Instead they can ask the parties on the day of mediation what they need to know. The parties will tell them. Mediations are all about emotions and perceptions. Asking the parties to tell you their side of the story helps to establish rapport and encourages them to disclose what is really important. Mediators of the narrative mediation school think that the whole mediation process is about each side telling their story to the other side and to the mediator. Time spent with the parties telling their story and providing information about the dispute is never wasted. By doing this parties will feel acknowledged and heard. They will be having their day in court without having to go to court. Being heard and feeling acknowledged is what every party at mediation most wants. Failing to give the parties an opportunity to tell their story will prevent there being a resolution of the dispute. Only by listening to all the details of the dispute as the 11

Part 1  Pre-mediation parties present them in their own narratives or stories can the fundamental issues that have given rise to the conflict be identified. Until these have been identified any attempts to construct a settlement will be premature and any settlement incomplete or partial. Mediators who take this approach often believe that they are there to help the parties change their behaviour towards each other. They are usually of the transformative, therapeutic or narrative school of mediation. Even mediators who do not seek to change the parties’ behaviour or view of the world may regard themselves as primarily process managers. They say that the details are not important to you as the mediator. The problem belongs to the parties. The solution belongs to the parties. Only the process is the mediator’s. Traditional facilitative mediators see their job as helping the parties find their own solution. For them mediation is a process of asking questions to find out what the parties need, exchanging information and encouraging parties to cooperate or collaborate in framing mutually beneficial solutions. Mediators do not offer opinions or suggestions. They are scrupulously non-judgemental and never make recommendations or give indications. At their most interventionist they may engage in some form of reality testing. Pre-Raphaelites They believe that mediators should study all the papers that they are sent. They say that the parties expect you as mediator to be properly prepared. You are being paid to help them resolve their dispute quickly. They do not expect to have to spend several hours bringing you up to speed or clarifying misunderstandings. One of the most common complaints about mediators, particularly commercial ones, is that they are not properly prepared. This complaint was identified in the survey carried out in 2013 by the Commercial Mediators Users group organised by Katie Bradford of Linklaters. The reason was that mediators were too busy to prepare. The group suggested that mediators should charge more and take on fewer cases so that they could spend more time preparing for the mediations that they undertook. The suggestion was not received with universal acclaim. Reading all the papers and, showing the parties that you have read them, helps you establish early trust and confidence with the parties – a key step in establishing rapport. If you have any doubts about this, ask yourself how you would feel as a client if, having paid your lawyers money to assemble the documents, you saw that someone that you were paying to know what was in them had not read them. Perhaps it is different if you, as the mediator, do not charge for reading and expressly tell the parties when they appoint you that you would not be reading the papers and would not be charging any preparation time. Even mediators with a more evaluative or interventionist style who are most interested in the facts and the law on which they like to express opinions frequently complain that they are sent large mediation bundles to read. They diligently read them only to find that no one refers to the documents or even opens the bundles during the actual mediation. Is this just an expensive waste of time? 12

Question 2 Parties do not have limitless time and energy. Mediators must make the best use of both. The sooner that you, as mediator, can start engaging in constructive conversations with the parties the better. Reading the papers beforehand gives you a framework. This will help you assimilate and process new information that will come at you from all angles during the day. If there is one thing apart from establishing rapport that mediators must be able to do, it is to quickly process new information and deploy it to help the parties find their way through the thicket of detail to the path of settlement. If I read the papers what do I charge and how long do I spend? Most mediators charge something for preparation. They do this even if it is built into their day rate. Their Terms & Conditions usually stipulate 2/3 hours of preparation time or reasonable/expected preparation time. They often reserve the right to charge specifically for reading if this time is exceeded. Other mediators charge specifically and additionally for all preparation time. Disputes about the amount charged for preparation time are not unknown even in the big commercial cases. Certainly some mediators seem to be extremely slow readers. If you are going to prepare, prepare properly. Should I read material that I have not been sent? In other words what independent research should I carry out? Independent research can cover the following fields: •

Who the parties are?

What is wrong with finding out more about who you will be dealing with? Googling the parties is simple. It might provide information which makes it easier for you to engage with them. Common links – where they were born, or educated, countries visited, etc. If they have achieved fame or success they will be pleased to see that you are aware of it. What if they have achieved notoriety and been criticised in public? This is a much greater risk in the blogosphere. Could you be prejudiced against them? Francis Bacon famously said that: ‘Knowledge is Power’. But remember: having an open mind is not the same as having an empty mind. So do not suspend all critical disbelief. You are going to a mediation not to a theatre. Googling the legal advisers and representatives is also often helpful. You might have some shared background. Mentioning someone else that you know in their chambers or firm can help break the ice. Consider this Remember clients and their advisors will have Googled you before appointing you. When you walk into the room to meet the parties for the first time and introduce yourself the clients often say: ‘Yes I recognise you from your website’. 13

Part 1  Pre-mediation •

The law

The legendary David Shapiro who credited himself with bringing commercial mediation from the US to the UK stressed the importance of researching the legal background. He used to confront the parties and their lawyers with his views on the case, even saying things like: ‘Don’t be a dummy. Your case stinks’. That is one way of establishing authority. It is high risk but it might work. The law does matter at mediations even though less so than in court. Mediators who work in law firms or chambers can be seen reading background briefing notes on the law prepared by one of their junior colleagues. Updating yourself on the legal background is to establish credibility with the lawyers present. You do not make yourself into an instant expert but you can show some familiarity with the concepts, subject matter and language. Lawyers may then assume that you are one of them and react more favourably. The alternative is to say: ‘This is not my area of expertise. I know nothing about this particular subject. Please tell me what you think that I need to know.’ You will find some subjects repeatedly cropping up at mediations. Take notes and retain them (see Q29). In this way you will acquire a familiarity with the cases and principles that lawyers quote to each other at mediations. Consider this If you are a non-lawyer it can be extremely difficult to acquire a working legal knowledge of the subject. It can also be extremely dangerous. As Alexander Pope said: ‘A little knowledge is a dangerous thing’. It’s better to say you know nothing than to know a little and pretend that you know a lot. Or follow the advice of Abraham Lincoln: ‘Better to remain silent and be thought a fool than to speak out and to remove all doubt’. •

Technical material

If you are sent technical reports make sure that you understand the acronyms, abbreviations and technical terms. Google them. If there is something that you do not understand ask one of the parties to clarify it for you. •

The other problem – no papers

This is where you are not sent any papers or they arrive so late, often the night before, that you do not have the time to prepare properly. Some mediators have been known to object to this to such an extent that they have declined to attend the mediation. They do not want to go there without being fully prepared. Others think that this is over-scrupulous. Civil and commercial mediators have to be pragmatic. You have to deal with what you have in front of you. If you do not have any papers in front of you start from scratch and ask the parties to brief you. Without doubt time will be wasted in being brought up to speed, but the parties may well feel that they have explained their case to you in their own words. That 14

Question 2 may not be such a bad thing at all because even when you have been sent files of papers to read and have diligently read them the parties usually still want to tell you in their own words why they are right. Late delivery of papers is an increasing problem. You either make a fuss or you make do with what you have got. Remember it’s a buyer’s market out there. Be aware: If something is important to a client it is important to you as a mediator. What concerns clients will influence their approach to the mediation and settlement. You need to be able to understand what concerns them. So read the papers.

In a nutshell •

Very few civil and commercial mediators do not read the papers at all. Some only review them but do not study them.

•

It is not sufficient to be well prepared – you have to be seen to be well prepared.

•

Make notes so that you can cross-refer to pages in the bundle.

•

Use post-it notes so that the clients can see that you have read the papers. Avoid doing what one legendary mediator does and randomly stick post-it notes in the bundle.

•

Read all the papers.

•

Be careful how you charge for reading time. Don’t be greedy.

SEE ALSO Q29 FOLLOW UP Walker: Setting Up in Business as a Mediator, Ch 20

15

Question 3

One of the parties wants to make amendments to my mediation agreement. Do I just accept them?

Core issues •

how full and legal do you make your agreement?

•

what protections do you include in your agreement?

•

do you limit your liability?

•

do you impose obligations as to good faith and authority on the parties?

Discussion Judging by the number of parties at mediations who do not read the mediation agreement before they sign it, the importance of the mediation agreement is not widely understood. Your mediation agreement is a crucial document. Most mediations are creatures of contract. The rights and duties of the parties towards each other are set out in the agreement. This includes the rights and duties of the mediator. On a practical level many of the problems which arise in practice in mediation can be addressed and usually avoided by appropriate wording in your mediation agreement. The most common ones are highlighted in this section. Panel Appointments If you are appointed by a panel you will have to use their mediation agreement. Read it to make sure that you fully understand it. Most mediation agreements cover the same key points, but their provisions are not all identical. Check what they say, for example, about: •

how the mediation can be terminated;

•

whether there is a presumption of confidentiality; and

•

in what circumstances a mediation can be extended.

Panels’ requirements for completing the mediation agreement vary. Some insist that it is done before the day and you can rely upon the panel to sort that out. Others ask you to make sure that the agreement is signed on the day. 17

Part 1  Pre-mediation Be aware: Any amendments to panel documentation will have to be agreed by the panel administrator. Some mediation agreements are self-contained documents. Others refer to terms and conditions or standard procedures and rules contained in other documents. They all have to be read together. Direct appointments For your direct appointment you must rely upon your own mediation agreement. In addition to this document you need to have your own Terms and Conditions (Ts&Cs). Consider including in your mediation agreement: Definitions •

The parties and their advisers.

• Dispute. Confirmation •

Your appointment.

•

Date, time and venue.

•

Start time and duration.

•

Your charges and terms of payment.

Warranties •

That the parties attend mediation in good faith with the intention to try and settle the dispute by negotiation.

•

That the parties are represented by someone with sufficient authority to negotiate and sign a legally binding agreement to settle the dispute at the mediation.

•

That the parties’ advisers have carried out due diligence and money-laundering enquiries on their clients.

Rights •

The right to terminate the mediation before the stipulated finish time. You need this in your back pocket. You may rarely use it. But it can be useful to mention it if the mediation is not progressing at all or degenerating into an unpleasant mini-trial.

•

The right to ask people to leave the mediation.

•

The right to charge overtime.

Reading the mediation agreement Send it to the parties in draft in advance. Ask for any amendments. This will help head off queries and challenges on the day when the relationship partner or 18

Question 3 barrister attends and feels the need to exert control from the outset by questioning the wording of the agreement (see Q23). Clients need to have a chance to read the mediation agreement before the mediation day. Surprisingly their representatives have often not even sent the agreement to them let alone taken them through it and asked whether or not they had any questions. If the clients have not seen the mediation agreement before you come into their room and ask everyone to sign it, the day has a false start. The clients look at their solicitor wondering what is going on. Usually the solicitor says: ‘I have read it and it is a standard form.’ Experienced mediators will always ask the clients to read the mediation agreement before they sign. Nearly every client says that they will. Some read it very carefully. Others scan it while looking at their solicitor for advice on whether to sign it. Tell the clients to take as much time as they need. On the day of the mediation clients are already under pressure. They are feeling stressed because of the mediation itself. They are receiving a lot of new information. They may not be able to quickly take in the full meaning of the mediation agreement. Clients who think that their solicitor has not kept them fully in the picture might start to feel unhappy straightaway. This does not set the right tone for the mediation. If the clients eventually settle and on reflection wish that they had not they might complain to their solicitor that they had not realised what they were letting themselves in for. Settler’s remorse is not unknown. If they have not been given a proper opportunity of considering the mediation agreement before signing it they may well have grounds for complaint (see Q50). Sometimes these complaints spill over to the mediator. Clients who are unhappy with what happens at a mediation often blame everyone involved. You as mediator want to keep clear of this dissatisfaction contagion. Common requests for amendment These fall into two categories: • tactical • practical. Tactical ones These are used when the parties are trying to show who is dominant. They are trying to impose their influence on the process from the outset. Examples are: • Quibbling about the start time. It says 10am. What happens if one of the parties is late and we start at 11am? Does the eight hours run from 11am? •

We don’t want the other side to bring counsel/witnesses/named persons. 19

Part 1  Pre-mediation • Costs will be borne by the parties irrespective of whether or not the case settles. In other words if the case does not settle and the matter goes to trial the winning party will not be able to claim the costs of mediation from the paying party.

Practical ones Fees If you stipulate that your fees are paid in advance or within seven days of delivery of your invoice you may be told by solicitors acting for insurers or insolvency practitioners that it is not practical because of their billing cycle. In the real world you will have to go along with this. Ask them for an expected date and monitor it in your diary (see Q42). Confidentiality carve out The standard confidentiality clause provides that the parties may not discuss what happens in mediation with anyone other than their legal advisers. Variations are often requested to allow: • Officeholders such as trustees in bankruptcy or insolvency practitioners to report to creditors and or government departments. •

If insurers are involved the solicitors will have to make a report to them if they are not present. Even if they are present insurers themselves may have to make a report to co-insurers or reinsurers. Clients if they are insured, may have to report details of the mediation to their brokers either as part of the claim handling process or on renewal (see Q16).

Statements of independence Solicitors who act in arbitrations often incorporate some of the standard clauses from arbitration agreements such as: •

‘The mediator confirms that as an independent contractor he is not acting in any capacity, including but not limited to acting as an agent, for any of the Parties.’

•

‘The mediator further confirms that he has no personal or financial interest in the subject matter or the outcome of the mediation.’

•

‘After accepting appointment until the mediation process ends, the mediator will not enter into any financial, business, professional, family or social relationships or acquire financial or personal interests that are likely to create an actual or perceived threat to mediation impartiality. In the case of perceived threats, the mediator may proceed after full disclosure to and consent of the Parties.’

•

‘Within 12 months following the end of the Mediation, the Mediator will not represent in an advisory capacity or accept employment with any party to the Mediation in the same or a substantially related matter, unless all the Parties expressly consent to that representation after full disclosure. Acting as a neutral in other dispute resolution proceedings that may involve some or all of the Parties will not be considered as representation in an advisory capacity for this clause.’ 20

Question 3 Limitations on liability Not all mediators include a limitation on their liability. Most do. Most professional indemnity insurers expect to see such clauses in their insured agreements. But more and more challenges to them are being made (see Q11). An established mediator recently had his standard clause challenged by a wellknown national insurance law firm. They said that they did not usually find these clauses in mediation agreements these days. It read: ‘The Parties confirm that they shall not bring any claim against the Mediator for breach of contract, breach of duty or negligence unless the Mediator has acted dishonestly towards them’ Eventually it was replaced with: ‘The Mediator shall not be liable to the Parties for any act or omission in connection with the service provided in or in relation to the mediation unless the act or omission is shown to have been in bad faith.’ After all it is a buyer’s market. The risk of mediators being found liable for breach of contract or in negligence is small. Hence the low rates that Professional Indemnity insurers charge. So why make a fuss, just take care when mediating. Be aware: Remember that all amendments to your agreement have to be accepted by all parties.

In a nutshell •

Compare your mediation agreement with those used by other mediators to keep in step with market practice.

•

Update your agreement twice a year.

•

Be flexible about agreeing amendments.

• Avoid drafting battles- they will come over the settlement agreement (see Q24). SEE ALSO Q11, Q16, Q23, Q42, Q50 FOLLOW UP Allen: Mediation Law and Civil Practice, Ch 9 Walker: Mediation Advocacy, paras 12.17–12.20 Walker: Setting Up in Business as a Mediator, paras 17.42–17.44, Ch 18 21

Part 1  Pre-mediation

Survival kit Below is an analysis of a standard form mediation agreement clause by clause. The examples of wording have been taken from mediation agreements that are currently in use. THE FOLLOWING PARTIES namely: 1. (represented by [   ]) 2. (represented by [   ]) (collectively the ‘Parties’) hereby agree to appoint [    ] (‘The Mediator’), to administer the mediation of the Dispute on the following terms and conditions: COMMENT

It is essential to make sure that the parties are correctly described. This is particularly important when there are corporate entities or trading names. Exactly the same care has to be taken as when drafting commercial agreements. Sometimes, as part of a settlement, a parent company which is not actually a party to the dispute will join in, for example, as a guarantor, or promise to procure that something happens, or other group members may agree, for example to waive any claims they may have. Quite often group companies will have given their authority to the company representative to bind them at the mediation. They may not actually be parties to the mediation agreement. This can be important for the confidentiality provisions. Therefore, it can be sensible to widen the definition of party by including any related or subsidiary companies,  etc.

Mediation rules 1. Mediation Procedures 1.1 The mediation shall be held and conducted according to this Agreement to Mediate (‘Agreement’). The Parties will attempt to settle the Dispute by mediation and undertake to participate in the Mediation in good faith. 1.2 The Mediator’s standard Terms and Conditions as specified at www. swalkermediation.com are incorporated into this Agreement. Where there is any conflict between them and this Agreement, the terms of this Agreement shall prevail. COMMENT

Administered mediations are conducted according to the rules of the service provider. Sometimes these are contained in a separate document or available on the website. They must be consulted.

22

Question 3 One well-known mediation provider expressly provides that the legal representative confirms when he signs his name on the mediation agreement that: ‘I have advised my client on the meaning and effect of this agreement, undertake to ensure that my client’s fees are paid to [XXX] in accordance with the terms of this agreement, and acknowledge and agree that my firm is liable for the costs of the mediation in the same way as it is liable for disbursements incurred in the course of litigation and shall be a responsible to and shall indemnify [XXX] for payment of the fees set out herein in the event of my client’s failure to pay pursuant to this agreement.’ Some of the rules contained in procedures can be quite prescriptive. For example, CEDR, in the 2016 edition of the Model mediation agreement, provides in clause 1: ‘The parties agree to attempt in good faith to settle their dispute at the mediation and to conduct the mediation in accordance with this Agreement and consistent with the CEDR  Model Mediation Procedure and the CEDR Code Of Conduct for Mediators current at the date of this Agreement.’ In the Model Mediation Procedure, (2016 edition), the parties agree that they will prepare and exchange a case summary for the mediation specifically and send the mediator one copy of the bundle of documents no less than one week before the date of the mediation. It expressly provides that the good faith of a party may be questioned if they do not submit documents on time. In other words if you do not send your documents on time to your client you are in breach of the agreement. Who said mediation was not like litigation? The rules of some providers can also be prescriptive about who can attend the mediation. The JAMS rules provide: ‘persons other than the parties and their representatives may attend only with the permission of the parties and with the consent of the mediator.’ Clerksroom provides: ‘no other person shall attend mediation without the consent of the parties and the mediator’. By contrast the ADR group says: ‘every party should notify ADR Group and other parties involved in mediation of the names of those people intended to be present at the mediation session and indicate their capacity at the mediation is a principal, representative, adviser or otherwise.’ 23

Part 1  Pre-mediation The Dispute 1.3 The Dispute shall mean [all matters in dispute between the Parties arising out of [  ] COMMENT

It is important to define the dispute. This serves several purposes: •

It focuses the parties’ minds on what they are actually going to discuss and try and settle.

•

It helps prevent disputes in the future if there is no settlement at all, there is a partial settlement, or there is a settlement in this matter but further related matters give rise to litigation.

•

In theory there should not be a problem because if there is a settlement the settlement agreement should adequately define what has been settled. In practice most parties want as wide a settlement in as final a form as possible. Although in practice this of course does not always happen.

The reason why the definition of dispute is potentially important is because of the application of the confidentiality provisions (see below). It is not unknown for •

a party to allege after the mediation that some sort of an admission was made, which was not covered by the without prejudice or confidentiality provisions of the mediation agreement because what was being discussed is not what is now being litigated.

•

for parties to allege that whatever privilege or confidentiality attached to the mediation discussions was destroyed by some threat or unconscionable conduct by one of the other parties at the mediation. Some of these assertions may be genuine but more often they are tactical. They can still cause a lot of time, money and effort to be expended.

In practice there is rarely any dispute about the definition of dispute. If proceedings have been started there is usually a simple reference to ‘all matters referred to or arising out of the pleadings in case number XX’. If there are no proceedings then a little more care has to be taken. If there has been a pre-action protocol letter and response then that is often the document to which reference is made. It is analogous to a pleading. In mediations where the issues have not been defined so formally either in pleadings or in pre-action protocol exchanges the dispute has sometimes been defined by reference to what has been set out in the position papers/ mediation statements or in a list of issues or particularly detailed letter, as expanded by the position papers. Try and encourage the parties to agree to the definition of the dispute before the mediation day. Otherwise time can be wasted and anxiety generated at the start of the mediation.

24

Question 3 Mediation 1.4 The mediation has been scheduled for an initial period of up to [4/8] hours (‘Scheduled Period’) starting at [   ] on [   ] at the offices of [   ].

COMMENT

It might be thought that this would be otiose, but issues have arisen about when a mediation starts and more particularly when it finishes. The significance of this point is not just confined to questions of costs and the mediator’s fees. It is also important when considering the scope of confidentiality and formalities for concluding a settlement. All mediation agreements contain: •

details of when the mediation will begin and how long it will last; and

•

provisions for termination of the mediation before the allotted time, either by the mediator or any of the parties.

There is usually a provision that the mediation continues if the parties want it to after the allotted time. What are not expressly set out are the circumstances where there is no settlement. In that case when does the mediation end? Some providers and some mediators produce a Mediation Record Form which they ask the parties to sign to confirm the start and finish time of the mediation and that it has not settled. Even in these circumstances there are questions: • What happens if the parties agree to leave offers on the table, or to invite the mediator to telephone them the next day to explore settlement? •

Is the mediation still in session?

•

Do the provisions of the mediation agreement about confidentiality and more particularly the formality of concluding a settlement still apply?

There has been litigation over these points. Make sure that the position is clear and agreed by all parties. Some agreements expressly provide that, if the mediator is involved in any subsequent discussions or contact, the provisions of the mediation agreement still apply. The question of when the mediation starts is usually less contentious. It only becomes an issue when one of the parties is late. Someone often asks when the time starts to run. Most mediators reply that the time the specified time the mediation starts is stipulated in the mediation agreement (which at this time has often not yet been signed by everyone.) More importantly agreements often specify that their terms apply as soon as the mediator is appointed even if the mediation agreement is not signed. 25

Part 1  Pre-mediation This imposes the obligations of confidentiality on all the parties from the start. Make sure that any pre-mediation conversations that you have with the parties or their lawyers are confidential.

Legally binding agreement 1.5 Any settlement reached in the Mediation will not be legally binding until it has been reduced to writing and signed by or on behalf of the Parties. COMMENT

This provision is universal in civil and commercial mediations. It is designed to prevent arguments about whether or not a binding settlement was reached at mediation. All these do is produce satellite litigations. This defeats the purpose of mediation, which is to bring an end to litigation. In practice this issue frequently arises. The parties negotiate and make good progress but cannot come to a final detailed settlement. This is often because they run out of time and energy. Sometimes it is because they need further information or to involve someone who is not present at the mediation. Heads of Agreement are proposed. Everybody needs to be clear and agree about whether or not this provision continues to apply. The recent case of AB v CD [2013] EWHC 1376 (Ch) provides a graphic illustration of what happens when it is not spelt out but the mediator stays involved in trying to help the parties conclude a settlement 1.6 The Mediation shall be conducted in such manner as the Mediator considers appropriate, taking into account the views of the Parties and the nature of the dispute and the need to conduct the mediation with efficiency and expedition. COMMENT

Most, but not all, mediators regard themselves as process managers. They are also there to protect the integrity of the mediation process. This clause gives them power to decide on procedure, but only after taking account of any views expressed by the parties. The mediator cannot act as a process dictator. After all one of the selling points of mediation is that it is a flexible process and that party autonomy is paramount. This is discussed in greater detail in Q33.

2. Mediator 2.1 The Parties agree that [   ] will be the Mediator. 26

Question 3

COMMENT

There is no difficulty in identifying the mediator once appointed. The difficulty is agreeing who it should be in the first place. The main point of this clause is to make clear that the contracting parties are agreed. Self-administered mediations are straightforward. The parties contract with each other and the individual mediator. Usually you as the mediator will want to make clear that you are acting in an individual capacity and any liability that you may have towards the parties is yours alone and not that of your firm or any organisation to which you may be connected. Administered mediations are sometimes more complicated. It depends on what the mediation provider is actually providing. Clerksroom says: ‘parties acknowledge that the mediator is independent and neutral, is not an agent or employee of Clerksroom and that the mediator does not give legal advice.’ This point really goes to the question of mediator liability, which is discussed in detail in Q11 and mentioned further below. 2.2. The Parties recognise that the Mediator is an independent contractor, there is no contract between the Parties and any firm to which the Mediator may be a consultant and no duty of care is owed by any such firm to the Parties. 2.3 The Parties confirm that they shall not bring any claim against the Mediator for breach of contract, breach of duty or negligence unless the Mediator has acted dishonestly towards them’. COMMENT

Different mediators protect and limit their liability in different ways. Do not assume that all mediation agreements are the same. They are not. Clerksroom, for example, deals with the liability of the provider as follows: ‘Save in the case of gross error or misconduct, the parties agree that they will respect the neutrality of the Mediator and any professional body to which the Mediator may belong, and not bring any claim, demands or proceedings against the Mediator. Further, the parties agree and acknowledge that Clerksroom shall not be liable for any alleged or actual loss or damage arising out of the appointment of the mediator or the conduct of mediation, whether in contract or tort, and agree they will not bring any claim, demands or proceedings against Clerksroom.’ CEDR provides that: 27

Part 1  Pre-mediation ‘Neither the Mediator nor CEDR shall be liable to the Parties for any act or omission in relation to the Mediation unless the act or ommission is proved to have been fraudulent or involved wilful misconduct.’ ‘the parties understand that the Mediator and CEDR do not give legal advice and agree that they will not make any claim against the Mediator or CEDR in connection with this mediation.’ ADR Group say that: ‘nothing in these rules shall limit or exclude ADR  Group’s or the mediator’s liability for any matter in respect of which it would be unlawful for ADR Group or the mediator to exclude or restrict liability. Subject to that proviso, neither the mediator nor ADR Group shall be liable to the parties for any act or omission in connection with the services provided by them in, or in relation to, the mediation, unless the act or omission is fraudulent or involves wilful misconduct.’ The practical point is that the various mediation agreements, whether for administered or self-administered mediations, are all trying to cover the same point, ie  exclude liability. They do it in different ways. Be clear in your own mind of what the scope of the purported exclusion is and how effective it would be if tested.

3. Mediation Fees 3.1 The mediation has been scheduled for an initial period of up to [4/8] hours (‘Scheduled Period’) starting at [   ] on [   ] at the offices of [   ] at a cost of £[   ] per room. All sums referred to in this Agreement are exclusive of Value Added Tax. 3.2 The mediation fee (‘Mediation Fee’) shall consist of: (i) the deposit payable for the Scheduled Period in the sum of [£ ] to include also all expected preparation time; (ii) the additional sum of £xx.00 plus VAT for each hour (or part thereof) the Mediation exceeds the Scheduled Period up to 12 midnight and at £500 plus VAT for each hour (or part thereof) after then. ‘ COMMENT

All mediation agreements contain provisions for the charging of and payment of fees. They are not all the same. Be clear whether they include travel and preparation time. Increasingly travel time is included in the daily rate. It is not always and some mediators submit a supplemental invoice after the mediation. The standard full-day mediation has been eight hours for many years. Some mediators now charge on the basis of a ten-hour day. This is possibly 28

Question 3 more realistic as most eight-hour mediations overrun by one or two hours as the parties hone the settlement agreement. There is an increasing tendency for parties to choose a shorter period. The usual half day is four hours but some parties choose three or five hours. They think that this will be cheaper. Sometimes it is if there is a settlement or the parties close the mediation without exceeding the allotted time. In practice most half-day mediations overrun by an hour or so and sometimes more. This is usually because it takes longer to draft and agree the settlement agreement than people predict. As a rule of thumb it has been found that, as an example of optimism bias, people underestimate by 40% the amount of time that it will take to complete a task. Parties rarely walk out at the exact time fixed for the end of the mediation. Discussions usually carry on. Make sure that the parties realise that they are now incurring overtime. Some mediation agreements provide that the mediation will continue beyond the finish time unless the parties say that they do not want to continue. Most mediators ask the parties to expressly confirm that they want to carry on.

3.3 This provision shall not disentitle any party to recover the costs of the Mediation in any subsequent assessment of costs whether or not there has been a concluded settlement of the dispute, which is the subject of the Mediation.

COMMENT

Most mediation agreements provide that the parties shall split the mediation cost equally. As part of a settlement, the paying party may agree to reimburse the mediation cost to the receiving party. Sometimes one of the parties pays all the costs. This usually happens where the potential paying party is a company, for example, an insurance company, and wants the matter to go to mediation or the other side says it does not have the money. A variation is where one party does not pay the whole of the cost but does pay a higher proportion than 50%. If a settlement is reached it usually deals with costs of the mediation by including an amount for them, either as part of a global sum or as a contribution towards costs. The alternative is for costs to be assessed if not agreed. Where proceedings have started this is a straightforward procedure. If the mediation is taking place before the issue of proceedings this formula can still be used and an application can be made to the court for costs to be assessed. If no settlement is reached this provision preserves the party’s position on costs. In other words if cost orders are made in favour of one of the parties it can include the costs of the mediation in its claim for the costs that it seeks to recover from the paying party.

29

Part 1  Pre-mediation Sometimes insurers in particular try and make the costs of the mediation irrecoverable if the case does not settle. In other words costs are not in the case. 3.4 If the Mediation exceeds the Scheduled Period, the parties acknowledge and agree that any additional time incurred is not included in the deposit amount and that such additional time will be charged for. COMMENT

Usually the mediator in these circumstances asks the parties to sign a Mediation Record Form recording the start and finish time of the mediation so that there is no argument about how much the additional time should be charged for. 3.5 The Parties are required to inform the Mediator, either before or during the course of the mediation session, if they do not wish to exceed the Scheduled Period. COMMENT

Sensible mediators remind the parties that the scheduled time is about to expire and let them know that he will be charging additional time.

Legal Aid 3.6 Where a party is CLS  Funded, the legal representative acknowledges that authority has been obtained from the Legal Services Commission in relation to the Mediation of this dispute, and that such authority will cover the full cost of the mediation. COMMENT

With the changes to the legal aid system this is less of a problem in practice than it used to be.

Expenses 3.7 Incidental expenses (Mediator’s travel disbursements will be charged at cost.

costs,

refreshments

etc)

and

COMMENT

Given the competitive nature of the mediation market it is usually possible to have these included in the day rate. Clients usually want to know how much they will have to pay for the mediation action and do not like little extras. 30

Question 3 If you charge expenses, expect parties to check whether or not you are going to drive and if so, what your mileage rate will be and whether or not you will be staying in a five-star hotel and travelling first class. These expenses can mount up and cause a disproportionate amount of angst. 3.8 The Parties shall pay all invoices within 7 (seven) days of receipt by cheque or by electronic transfer to the account shown on the invoice and in any case before the date of the Mediation. COMMENT

Most mediation agreements make the legal representatives liable for the payment of fees and the cost of the mediation as well as the clients. Most lawyers require their clients to put them in funds. It is almost unheard of for mediators to agree that their costs can be paid after the mediation. Occasionally they may do this but it is not, as some solicitors argue, standard practice. The exception is with insurers. Most are slow payers. Some seem to revel in their reputation for being notoriously slow in paying. In fairness most panel solicitors have agreed billing cycles with their insurance clients. If you want the business you will have to agree a paid when paid basis. 3.9 Interest at the prevailing judgment rate will be charged on overdue amounts. COMMENT

Mediation providers and mediators reserve the right to do this, but in practice rarely do so.

4. Consulting with legal advisers 4.1 A party does not require legal representatives to attend the Mediation, but is free to choose whatever representation it wishes. COMMENT

If proceedings have started and solicitors are on the record it is unusual for there to be no legal representation at all. Experienced users of legal services such as insurers may dispense with legal representation. Sometimes an inhouse lawyer attends or the contract director. It is increasingly common for there to be only either a solicitor or counsel present and not both. If counsel is going to be at the mediation alone, he needs to obtain authority from the solicitors to sign the mediation agreement as the legal representative of the party. 31

Part 1  Pre-mediation For smaller disputes and where proceedings have not been started it is common for parties to represent themselves. In family, workplace and community disputes it is the norm for parties to represent themselves and for no other legal representatives to be present at all.

Legal advice 4.2 Where a party is not legally represented, such party is advised to obtain independent legal advice before, during and after the Mediation and prior to finalising any agreement reached pursuant to the Mediation. 4.3 The Parties recognise that the Mediator does not offer legal advice or act as a legal adviser for any of the parties of the Mediation nor will he analyse or protect any party’s position or rights. COMMENT

This clause or something like it is standard. In practice it may not hold much weight at all. Evaluative mediators do give legal opinions when they give their view on the merits of the case. The European Code of Conduct expressly provides that mediators should address any questions of imbalance of power. Most mediators say that they do abide by the European Code of Conduct. A copy can be found at http://ec.europa.eu/ civiljustice/adr/adr_ec_code_conduct_en.pdf In practice this clause is honoured more in the breach than in the observance.

5. Private sessions 5.1 The Mediator may hold private sessions with one party at a time. These private sessions are designed to improve the Mediator’s understanding of the party’s position and to facilitate the Mediator in expressing each party’s viewpoint to the other side. 5.2 Information gained by the Mediator through such a session is confidential unless: (a) it is in any event publicly available; or (b) the Mediator is authorised by that party to disclose it. COMMENT

Many, but by no means all mediation agreements contain a provision that what parties say to a mediator in a private session or caucus will not be disclosed by the mediator to anyone else at the mediation without their consent. It is often assumed that this is the principle upon which the mediation is being conducted. Some mediators like to work on the principle that everything is presumed to be disclosable unless they are told that it is not.

32

Question 3 This clause also makes it clear that you as mediator could call for a private session whenever you like. So can a party. Most civil and commercial mediations are conducted on the caucus basis. In other words, most discussions take place in private sessions rather than in joint sessions. There are mediators who prefer to try and conduct as much of the mediation in joint session as possible. There is anecdotal evidence that this is a growing trend and certainly some commentators urge mediators to do this.

6. Confidentiality 6.1 The Parties recognise that the Mediation is for the purpose of attempting to achieve a negotiated settlement and as such all information provided during the Mediation is without prejudice and will be inadmissible in any litigation or arbitration of the dispute. 6.2 Evidence, which is otherwise admissible, shall not be rendered inadmissible as a result of its use in the Mediation. 6.3 The Parties will not issue a witness summons or otherwise require the Mediator or any other person attending the Mediation under the auspices of the Mediator to testify or produce records, notes or any other information or material whatsoever in any future or continuing proceedings. 6.4 All documents, statements, information and other material produced prior to or during the course of the Mediation, save to the extent that these documents have been disclosed already and are in the domain of the litigation, whether in writing or orally, shall be held in confidence by the parties and shall be used solely for the purposes of the Mediation. COMMENT

Mediation is promoted as a confidential process. So is arbitration. The question of how confidential mediation really is in practice is not as straightforward as the wording of these provisions would suggest. This is discussed in more detail in Q16. The key points to note are: •

The mediator cannot be called as a witness.

• Documents produced for the purpose of the mediation are not disclosable unless they would be disclosable in any event. •

Any document that would be disclosable under the normal rules is not protected from disclosure by the fact that it was referred to or used at the mediation.

The safe working assumption is that what occurs at mediation is covered by the ordinary rules about ‘without prejudice’ communications. There is no special privilege called mediation privilege as a matter of law, but there might be an extra duty of confidentiality as a matter of the contract between the parties contained in the mediation agreement.

33

Part 1  Pre-mediation Pre-mediation confidentiality 6.5 Any communication by or through the Mediator before the commencement of the Mediation or after its termination shall, unless expressly agreed in writing by the Parties, shall be subject to the same confidentiality provisions as set out elsewhere in this Agreement. COMMENT

You need to make sure that the parties are aware of this clause. Better to stipulate in emails and telephone conversations that they are conducted on a confidential basis.

7. Termination of the mediation Either of the Parties or the Mediator shall be entitled, in their absolute discretion, to terminate the mediation at any time without giving a reason. COMMENT

This provision is not as straightforward as it appears. This is because the courts have had regard to whether or not a party’s conduct at the mediation was reasonable or not. However, refusing to negotiate at all or walking out after a short time for no apparent reason may fall into the category of unreasonable conduct. It may also amount to a breach of warranty of good faith, which is contained in most mediation agreements. Mediators who want to end the mediation before the allotted time must in practice have a good reason for doing it otherwise they may be in breach of contract. Complaints have been made against mediators who have done this and fees have had to be reimbursed. Some clauses are rather fuller, for example: ‘Mediations shall terminate when: •

a written settlement agreement is executed by the parties, or

•

a written notice of withdrawal is given by any party, or the time set for the mediation has expired without agreement for continuation or resumption, or the mediator decides and notifies the parties that continuing with the mediation is unlikely to result in a settlement, or is undesirable or inappropriate for any other reason.’

(Independent Mediators) At most mediations one of the parties, and sometimes both, tells the mediator at some point in the day that they might as well terminate the mediation and leave. This is almost always an expression of extreme frustration. Usually the mediator does not agree with them and asks them to stay. Usually they do and usually a settlement is reached. 34

Question 3 Walking out before the end of the allotted time may amount to a breach of the warranty of good faith.

8. Warranty 8.1 The legal representatives warrant that: •

they have carried out all necessary checks as recommended by the Law Society and/or the Bar Council to verify their clients’ identity; and

•

advised their clients of the obligations of disclosure on the part of legal advisers and/or mediators under the Proceeds of Crime Act 2002 (POCA).

COMMENT

This is a warranty given by the legal representatives. For their own protection, sensible advocates make sure that they are able to give them with a clear conscience. The rules about mediators making disclosure under POCA have been much relaxed. However, most commercial mediators will have encountered some complex arrangements, which were not easy to fathom. A private word with the lawyers usually ensues.

Authority 8.2 The parties warrant that they or their representatives have full authority to negotiate and enter into a legally binding settlement agreement disposing of the dispute at the Mediation. COMMENT

The question of authority in mediations is in practice one that arises very frequently. The whole purpose of the mediation is to achieve finality by negotiating a legally binding settlement on the day. This means that there has to be someone present who can do this. The warranty is in absolute terms. What happens when a party does not have full and unlimited authority is discussed at Q45.

9. Signature of this agreement 9.1 This agreement is to be signed by the instructed legal representative of each party attending the Mediation (if represented) on behalf of that party. 9.2 The legal representative is liable for the fees of the Mediation in the same way as they are liable for disbursements incurred in the course of litigation. COMMENT

This makes the solicitor liable for the Mediator’s fees. Always collect money on account. 35

Part 1  Pre-mediation

Signed……………………………………

Signed …………………………………… Representative

Name ……………………………………

Name ……………………………………..

Signed……………………………………

Signed ……………………………………. Representative

Name ……………………………………

Name ……………………………………..

Accepted to act as Mediator :Date……………………………………. Signed………………………(‘the Mediator’) Observer Signed …………………………………

Other Attendees ………………………………………….

Who sign only for the

…………………………………

purposes of confirming their agreement to be bound by the provisions of Clause 6

36

Question 4

What do I need to take with me to the mediation?

Core issues •

what is your role as a mediator?

•

how hands-on you are going to be?

•

what facilities can you expect to be supplied?

•

how much are you going to rely on the parties?

Discussion Different mediators interpret their role differently. Helicopter mediators just turn up at the appointed time and place. They drop in, do their stuff and leave. They do not think that they have to involve themselves in all the detail and the practicalities of the mediation or the dispute. All they do is read the papers, reflect on the issues to be sorted out on the day and turn up. They expect that: •

The parties or the service provider make all the logistical arrangements. There will be a minimum of three rooms for a two party mediation. In any event they will always have their own room and there will always be a room big enough to accommodate all attendees for joint meetings.

•

Any facilities that will be required on the day will be provided at the venue such as typing, photocopying, printing out, Wi-Fi, taxi ordering, etc.

•

The parties will be competently represented by lawyers.

•

The venue will be well equipped and staffed. There will be no problem about staying on after hours.

•

Food and drink will be available round-the-clock.

Such arrangements are sometimes made. Large law firms, the International Dispute Resolution Centre (IDRC) or five-star hotels can provide most if not all these facilities. But there will be times when not all these facilities will be available. And some of them may still be required for there to be a successful mediation. Other mediators like to be personally involved in the practicalities of the mediation. They have not been appointed by a panel. They do not have the infrastructure of a 37

Part 1  Pre-mediation chambers or law firm to take care of things for them. The parties may not be able to afford a well-equipped de-luxe venue. The parties may not have legal representation. This may not be important if they are serial users of mediation such as insurance companies or financial institutions. Although their representative may not be legally qualified they will be experienced at what happens in mediation. But more often than not the parties who are unrepresented will not be experienced in mediation. They will place much greater reliance upon the mediator. And this extends to the logistics of the day as well as procedural and substantive matters of the dispute. In any case you as mediator have to expect the unexpected. Here is a list of things that you should seriously consider taking to mediation. Some of them will appear to be trivial or obvious. But the list is based upon observing what happens at mediations on over 500 occasions. Hardware •

Laptop/iPad

Take one. You will need it yourself. Smart phones have not entirely replaced them. Documents are sent to mediators digitally these days. You need to be able to access them. Also of course you can look things up during the day. So often these are needed: •

Details of properties from valuers or the Land Registry.

•

Credit searches.

•

Bankruptcy and priority searches.

•

Up to date information from Companies House.

•

Exchange, inflation or interest rates.

You as mediator may have to prepare the settlement agreement. You can do this by writing it out on paper or on your smart phone but it takes so much longer. You will be amazed how often neither the parties nor their advocates bring their iPads or laptops. Even when they do they can forget their chargers. Or they leave early and take their equipment with them. Be prepared to plug the gaps. •

Smart phone

You cannot live as a mediator without one. But they are not a complete replacement for a laptop/iPad or a calculator. •

Chargers

Often overlooked. You cannot assume that the venue will have them. You will often lend yours to one of the rooms. Make sure that that you collect it at the end of the day. You need them for both your phone and your laptop/iPad. 38

Question 4 •

Calculator

A purpose-built dedicated calculator is still easier to use and share than one on a phone or tablet. Some calculations are always needed. The person with the calculator has the power. You will need one when you are doing your own risk reward or risk analysis calculations in the intervals between sessions with the parties. •

Printer

Producing the settlement agreement in physical documentary form is often more of a challenge than it should be. This is made worse if the venue does not have after-hours printing or facilities. And even quite expensive and well-appointed venues, eg corporate facilities in sports stadia, may not provide them. Some parties and mediators take along a portable printer. They are slow but better than nothing. •

Flash drive/memory stick

Sometimes needed to facilitate the printing of the settlement agreement. Connectivity and email connections can still be a problem, more often than they should be. Software • Templates •

Draft agreement clauses

Phone numbers and emails You need these – both landline and mobile: • Clients • Counsel • Partners • Accountants • Experts •

Taxi firms

• Hotels • Mediators •

Panel administrator

You cannot assume that the people who actually attend the mediation will have them. Quite often counsel attend on their own with no one from the solicitor’s office. Or junior members of staff with no real knowledge of the case or mediation experience are sent to keep costs down. 39

Part 1  Pre-mediation You may have spoken to the partner in charge of the case before the mediation but they do not turn up and just send counsel with a trainee. So often they cannot find the partner’s phone number. Have your own ‘black book’ of counsel, accountants or other experts that you can call on in an emergency. When mediations overrun you might need to rebook your hotel for a second night. Have the number on your phone. Stationery •

Mediation Agreement Don’t assume that all the attendees will have signed and returned it before the mediation. Almost certainly not everyone will have.

•

Mediation Record Form A  template is at Appendix 2. You need to have this signed at the end of the mediation to confirm the outcome and the time spent. This obviates arguments about charging for overtime.

•

Extra copies of: –

Position Papers

– Schedules You will probably have made notes and comments on your copy. Having a clean copy to share with an attendee or to handover to illustrate what you are saying is essential. •

Note book plus one Law firms and chambers can supply them, many commercial venues supply thin, small A5 pads. Not really what you need. If you have an observer with you expect them not to have brought their notebook – this applies to High Court Judges as well as law students.

•

Pens/pencils/highlighters/erasers/post it notes Some venues are surprisingly badly equipped.

Necessities • Money •

Credit card

•

Medical kit – plasters, painkillers and stomach ache preparations. Paper cuts, as well nose bleeds, headaches, stomach cramps and other stressinduced symptoms are more frequent at mediations than you might expect. Sometimes you will suffer them but more usually it is one of the parties. Proactive assistance works wonders. Remember it’s not always the application of highly honed analytical skills that is needed or wins over clients.

•

Nuts and biscuits. 40

Question 4 These are needed to keep your energy levels up. But when the on-site catering falters – and it often will – being able to hand round supplies from your own biscuit stock can work wonders. People perk up and also regard you more favourably. ‘You didn’t tell me that you had jaffa cakes’ exclaimed one rather battle-weary and sullen party in a bitter right of way dispute. Their obduracy over some fine details evaporated as they munched away. Never underestimate the power of confectionery. • Tissues Boxes of tissues are not always in evidence in mediation rooms. Tears often are. ‘I’m already impressed by you’ announced the solicitor for the defendant to the mediator in a fraught 1975 Inheritance Act claim. ‘You brought tissues.’ About two minutes into the pre-mediation private chat his client had started to sob. He together with both counsel looked on. The mediator took a packet of tissues out of their pocket, opened it and handed it to the client. Creating the right mood. Rapport building. All are achieved in different ways. It’s not just open questioning and active listening. •

Clean handkerchiefs The same comments apply to handkerchiefs. In another family will dispute the three daughters and the stepmother met, without lawyers but with the mediator. There were tears. In fact this turned out to be a four-packet mediation. The mediator used up all their supply of tissues – all four packets – and had to proffer a handkerchief. The eldest daughter dabbed her eyes with it. ‘Oh!’ she said, ‘It’s a real handkerchief. Not used one of these for years. How nice.’ The tears were followed by five minutes of animated chat and reminiscence about how things change and not always for the better. And yes, they settled.

•

Socks and pants All-nighters can be draining. Fresh linen works wonders.

• Toiletries Nothing like freshening up to re-energise during a protracted slow burning mediation. Check lists Make your own check lists of steps to be taken to a mediation. It’s so easy to forget something in the hurly burly of negotiation. Here is an example: Check list 1 Introductory •

Go and see parties in rooms. Write down the room numbers. 41

Part 1  Pre-mediation •

Take mediation agreement.

•

Get it signed.

•

Check the definition of dispute has been completed.

•

Check start and finish time.

•

Ask if anyone has time constraints.

•

Ask if they want a Joint Settlement Meeting.

•

If they do, who will be speaking?

Check list 2 Joint Opening Sessions •

Turn phones off.

•

Introduce yourself.

•

Ask everyone to introduce themselves.

•

Make opening statement.

•

Invite others to speak. Claimant usually go first.

•

When one party finishes, thank them: Anyone else?

•

Move on to next party.

•

When all have finished ask any clarifying questions or highlight any obvious issues.

•

If continuing in joint session, start formulating a ‘shopping list’ or agenda.

•

If breaking up, say which room you will go to first and give everyone five minutes to go back to their rooms.

Check list 3 Individual parties •

Caucus – note start and finish time.

•

Knock on door before entering.

•

Make sure everyone has tea/coffee/water.

•

What can I tell the other side?

•

What I want you to do while I am with the other room.

Check list 4 Impasse •

Sealed offers

•

Review obstacles

•

Ranging offers

•

What if…?

•

Splitting difference – auto-settler

Check list 5 End of Day •

Leaving offers open – summarise them in writing either on the day or by round robin email the next day. 42

Question 4

In a nutshell •

Use check lists-they save time and stress.

•

Take the little things with you: they can make a big difference.

•

Be prepared and well organised: it breeds confidence.

SEE ALSO Appendix 2, Q37

Survival kit You will be challenged from time to time. Sometimes this will be unexpected. You want to retain your poise under pressure. Having a check list of handy retorts or references can help. For example, you can refer to Codes of Conduct if you feel under pressure about imbalance of power or unconscionable behaviour. As a mediator you can be subject to various regulatory regimes. If you register as a member of the Civil Mediation Council (CMC) you will be subject to their code of conduct, which in turn incorporates the European Code of Conduct for Mediators. If the International Mediation Institute (IMI) accredits you, you will be subject to their code. Different appointing bodies have their own codes. Even if you are appointed direct and are not registered with the CMC or IMI you will still find various duties and obligations being implied into your contract. If your mediation agreement does not expressly deal with a point and someone challenges you, you might find a term being incorporated by way of being implied. The most useful ones are: •

IMI Code of Conduct

•

European Code of Conduct for Mediators

•

CEDR Code of Conduct for Third Party Neutrals

•

CEDR Model Mediation Procedure

•

CMC Code of Conduct

You can also quote what the courts have said. Here are some useful extracts from cases: 1  We will appeal – yes but still the court encourages mediation Ali Ghaith v Indesit Company UK Ltd [2012] EWCA Civ 642 Ward LJ, para 29 43

Part 1  Pre-mediation ‘When this court grants permission to appeal, it does so because there is a real prospect of success. That does not mean that the appeal will succeed, but it does mean that the appeal is by no means hopeless. That should tell both parties that there is still all to play for. If they have any sense, they will therefore heed a recommendation to mediate because the costs of mediation are likely to be exceeded by the costs of the appeal by a significant margin.’ ‘It is not enough … , that there has been some attempt in the correspondence between solicitors to settle the case. The opening bids in a mediation are likely to remain as belligerently far apart as they were in correspondence but no one should underestimate the new dynamic that an experienced mediator brings to the round table. He has an uncanny knack of transforming the intractable into the possible. That is the art of good mediation and that is why mediation should not be spurned when it is offered.’ 2  It’s my land. I have my rights. Bradley v Heslin [2014] EWHC 3207 (Ch) This is of particular help in boundary disputes. Mr Justice Norris says in this case about gates between two neighbours that: ‘I  think it is no longer enough to leave the parties the opportunity to mediate and to warn of costs consequences if the opportunity is not taken. In boundary and neighbour disputes the opportunities are not being taken and the warnings are not being heeded, and those embroiled in them need saving from themselves. The Court cannot oblige truly unwilling parties to submit their disputes to mediation: but I do not see why, in the notorious case of boundary and neighbour disputes, directing the parties to take (over a short defined period) all reasonable steps to resolve the dispute by mediation before preparing for a trial should be regarded as an unacceptable obstruction on the right of access to justice.’ 3  It’s not worth us trying to settle this complex technical dispute at mediation. Coming to mediation is not a sign of weakness. Burchell v Bullard [2005] EWCA Civ 358 Ward LJ, when Bullard suggested mediation the surveyor for Burchell said, at para 2: ‘ … the matters complained of are technically complex and as such mediation is not an appropriate route to settled matters.’ All his clients wanted was for the builder to finish the work. Para 43 The court has given its stamp of approval to mediation and it is now the legal profession which must become fully aware of and acknowledge its value. 44

Question 4 The profession can no longer with impunity shrug aside reasonable requests to mediate. The parties cannot ignore a proper request to mediate simply because it was made before the claim was issued…’ para 43 Rix LJ, at para 50: ‘ I  agree that mediation here would have had a reasonable prospect of success and that a party cannot rely upon its own obstinacy to assert that it would not. I  would also add that it may not be able to rely on its own solicitor’s or expert’s advice either, where the result shows that mediation ought reasonably to have been attempted.’ 4  Unreasonable conduct at the mediation Carleton (Earl of Malmesbury) v Strutt & Parker [2008] EWHC 424 Mr Justice Jack on costs and mediation, at para 72: ‘ … an unreasonable position in the mediation. It is not dissimilar in effect to an unreasonable refusal to engage in mediation. For a party who agrees to mediation but then causes the mediation to fail by reason of his unreasonable position in the mediation is in reality in the same position as a party who unreasonably refuses to mediate …This is something which the court can and should take account of in the costs order in accordance with the principles in Halsey.’ NOTE Court reduced their costs by 20% because of their attitude in mediation. 5  But the law is on my side. The judge will find in my favour – there is no point in carrying on with this mediation. Faidi v Elliot Corporation [20012] EWCA Civ 287 Wooden floor in upstairs flat. Noise below. Failure to carpet. Jackson LJ, at paras 34 and 36: ‘This case concerns a dispute between neighbours which should have been capable of sensible resolution without recourse to the courts … . A moderate degree of carpeting in flat 8 might reduce noise etc. This is precisely the sort of outcome which a skilled mediator could achieve but which the court will not impose. … ‘In the present case a mediator would not have been concerned about the interaction between the various leases and the licence to carry out work. Nor would he have been concerned about the other interesting points of construction, which first the county court judge and now this court have been called upon to decide. Instead he would have been helping the parties to find a sensible resolution of the practical problem which has arisen. I have little doubt that such a mediation would have been successful.’

45

Part 1  Pre-mediation 6  We are too far apart – might as well go home now Garritt-Critchley v Ronnan and Solarpower PV Ltd [2014] EWHC 1774 (Ch) His Honour Judge Waksman QC, at para 14: ‘To consider that mediation is not worth it because the sides are opposed on a binary issue, I’m afraid seems to me to be misconceived.’ At para 22: ‘This gets back to the point about parties being too far apart. Parties don’t know whether in truth they are too far apart unless they sit down and explore settlement. If they are irreconcilably too far apart, then the mediator will say this as much within the first hour of mediation. That happens very rarely in my experience.’

7  Their case is doomed to fail. There is no point us being here at this mediation. Northrop Grumman Mission Systems Europe Ltd v BAE  Systems (Al Diriyah C4I) Ltd [2014] EWHC 3148 (TCC) Mr Justice Ramsay, at para 59: ‘The authors of the Jackson ADR  Handbook properly, in my view, draw attention at paragraph 11.13 to the fact that this seems to ignore the positive effect that mediation can have in resolving disputes even the claims have no merit. As they state, a mediator can bring a new independent perspective to the parties if using evaluative techniques and not every mediation ends in payment to a claimant.’

8  No one wins at court even when you do. Dispute over rights of way. Oliver v Symons [2012] EWCA Civ 267 Ward LJ, at para 53: ‘All disputes involving neighbours arouse deep passions and entrenched positions are taken as the parties stand upon their rights seemingly blissfully unaware or unconcerned that they are committing themselves to unremitting litigation which will leave them bruised by the experience and very much the poorer, win or lose. It depresses me that solicitors cannot at the very first interview persuade their clients to put their faith in the hands of an experienced mediator, a dispassionate third party, to guide them to a fair and sensible compromise of an unseemly battle which will otherwise blight their lives for months and months to come.’ 46

Question 4 9  They are only here at mediation because they know that they have a weak case. PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288 Briggs LJ said in clear words, at para 56: ‘The court’s task in encouraging the more proportional conduct of civil litigation is so important in current economic circumstances that it is appropriate to emphasise that message by a sanction … pour encourager les autres.’

47

Question 5

In my pre-mediation telephone call one party asks me to check that the other side will be attending with someone with authority to settle. What do I do?

Core issue •

making contact with the parties pre-mediation

• authority •

who attends mediations and preconditions.

Discussion Your pre-mediation telephone calls are a two-way opportunity. You can explain how you do mediation and find out what the parties’ experiences and expectations are (see Q1).The parties have a chance to learn about you and to express any concerns or reservations that they have. The two most common are about Joint Opening Sessions and authority. As mediator you will be often assured that the person you are speaking to and their clients are committed to the idea of mediation and approaching settlement in a constructive and open-minded way. But they tell you that they are not sure about the other side. They often want to know who is attending from the other side and in particular whether they are approaching mediation in the same constructive way and will have authority to settle. As part of your agenda for your pre-mediation telephone call ask who is attending from both sides and confirm that the attendees will have authority to settle. Usually if you are talking to the solicitors they can give an immediate assurance. Sometimes they have to double check. But it has to be recognised that there are circumstances in which authority is an issue. Insurers When insurers are involved and no one from the insurers is attending the mediation the lawyers at the mediation will not have unlimited authority. It is unrealistic to expect that they will have. Insurers will have discussed settlement limits with them. Internally insurers will have set a reserve for the claim. This is the maximum amount they think they will have to pay out. Different insurers have different approaches to 49

Part 1  Pre-mediation setting reserves. Some use possible maximum loss others probable maximum loss. They tend to be cautious because they do not want to be under-reserved. The level of the anticipated loss may have consequences for their own reinsurance arrangements. For large claims which are sometimes referred to as market losses there will be several co-insurers involved. Although there is usually a leader who can bind the following market to a claims settlement, some degree of consultation and consent may be required. As mediator you need to make sure that the lawyers will have access to the claims handler at its insurance client during the mediation. You will usually be assured that they will be on the end of a telephone. What you tend to find is that they do not have an open line. They are working. When lawyers telephone to update them on the progress of the mediation and perhaps ask for further instructions they may not be available. Usually they leave their office around 5pm. As mediator you try and make sure that the lawyers have all the necessary mobile numbers for out of hours’ conversations. You will be disappointed to learn how often the person with the appropriate authority is in an area of poor reception or cannot be contacted. Corporates Where corporate bodies are involved, whether in the private or public sector, their representatives rarely have unlimited authority. Usually there has to be some final sign off either by the board, if the claim is large enough, or by the finance director. Sometimes this can be obtained during the course of the mediation by telephone calls, emails or texts. Sometimes it cannot be. There can be no guarantee that a settlement that is agreed at mediation but is subject to final approval will go through. The best that can be achieved is an agreement subject to final approval and the term in which the representatives at the mediation undertake to recommend acceptance of the settlement (see Q47). Co-owners and chargees Other common instances of where third-party approval is required include where a property is to be sold or mortgaged to provide security for instalments and the permission of the co-owner or chargee is required. This is often overlooked. Sometimes this is because of lack of thought or inadvertence. Occasionally it is because the party with the problem has not shared it with those whose help they need to solve it. Some very difficult conversations take place during mediation when this has happened. Here the problem of confidentiality can arise. Often the third-party that is required to give consent is not a party to the mediation agreement. Various devices are used to get round this: •

The party who needs to discuss mediation with the third party undertakes to ensure that they are bound by confidentiality.

•

Sometimes a party can sign on behalf of the organisation and undertakes to make clear to the recipients that they have been bound to confidentiality by signature on the mediation agreement.

•

The third party can, by email or text, send confirmation that they will be bound by the confidentiality provisions in the mediation agreement. 50

Question 5

Double checking At the mediation clarify the question of authority right at the beginning. If no one has mentioned it to you as an issue beforehand, say during your opening remarks in the Joint Opening Session that one of the things that is required for mediation is authority. Ask specifically if the parties have authority (see Q14). When they nod or say yes double check with something like ‘You don’t have to ring anybody – partners, family members, insurers, funders?’ Sometimes you are told that they have to make a phone call. Occasionally you will be specifically told that the best that they can achieve today is an agreement in principle subject to final confirmation by the board, eg this is not unknown when dealing with the larger back tax cases with HMRC. Lack of authority causes two problems: •

A final legally binding settlement cannot be achieved on the day.

•

If an agreement is signed on the day by a person without actual authority there can be arguments about the enforceability and validity of the settlement. It is always a good idea to ask if the board has given specific authority to the representative to negotiate and sign an agreement. Some suspicious parties insist on seeing a copy of the board minute.

The same problem can arise where only one joint owner of a property is attending the mediation or where someone is holding a power of attorney. The better practice is to verify that they do have valid written instructions. Some parties use the lack of authority as a negotiating ploy – the empty chair tactic. This can cause huge ill will if the other side get wind of it. Some very tough minded mediators never accept that authority cannot be obtained if need be. It’s just a question of making the need urgent and important enough. Bruising conversations are not unknown. Hence the desirability of preparing the ground by asking about authority early on in the process- both before the mediation day and at the start of it. But beware: Parties to a mediation which does not finally settle on the day because of one party admitting – often late in the day – that they could not have the requisite authority, are starting to make claims about breach of warranty and good faith and seeking abortive costs. The spectre of unreasonable conduct at mediation arises (see Q47). As mediator you can manage the question of limited or lack of authority during the mediation process. Ask the party with the limited authority to keep their principal informed. Quite often a party will tell you what their limited authority is. They say: ‘We can only go to £200,000 today. Anything above that we have to make a call.’ It is a matter of judgement but be ready to ask them to make the call. Sometimes you will be met with: ‘We can only make one call. The claims director is a very busy and impatient person or the finance director is in a meeting and is only available between 3.30 and 3.45pm ‘. Usually these conversations with their home base take place in your absence. Sometimes you have to be prepared to intervene and ask if you can speak to the absent decision-maker. This can be appropriate if the representative admits that 51

Part 1  Pre-mediation they are getting nowhere at this time, if they are trying to explain why the level of authority should be increased or they give a garbled account of the decisionmaker’s response. Very occasionally the representative asks you to speak to the decision-maker. Usually what they are looking for is some sort of reassurance that the settlement figure that is being proposed is a reasonable one. For the problems that can arise when a party only discloses that they have limited authority on the day of the mediation, see Q47. The conversations that you have on the telephone with the parties before the mediation are almost always conducted on a private and confidential basis. If one party asks you to find out from the other side who is attending then clearly you can do that. What you have to double-check is whether or not you are able to disclose the reason for the question. Clarify whether you are entitled to tell the other side the reason, especially if it is that there are doubts about their commitment to settle (see Q1). Sometimes people go further and try to impose as a precondition of mediation that a named person or someone of a certain rank attends the mediation. Try to discourage this. Procedural battles can develop. Often setting preconditions is a power-play or displacement activity. Let’s concentrate on peripheral rather than central issues. It’s easier than trying to work out a settlement that will satisfy both sides’ needs. You can remind them that unreasonable conduct can be treated in the same way as an unreasonable refusal to go to mediation for the purpose of considering costs sanctions. Setting preconditions such as stipulating minimum offer figures or that certain information must be available can be treated as unreasonable conduct (see Q4). It is probably better that you as mediator are the intermediary in these situations rather than the parties going head-to-head in direct contact. Some parties and especially their lawyers find it difficult to stop the guerrilla warfare and keep on sniping at each other, point scoring throughout the whole mediation process. You just have to tell the parties that mediation is not litigation by other means.

In a nutshell • Always ask all parties before the mediation if someone with the necessary authority to negotiate and agree a legally binding deal will be present. •

Do this on your own initiative. Do not wait to be prompted by one of the parties.

•

Be prepared for people to tell you that they have full authority when they only have limited authority. The parties can express their annoyance. You cannot.

SEE ALSO Q1, Q4, Q14, Q47

52

Question 6

One of the parties asks if I do ODR and whether it’s a good idea. What do I say?

Core issues •

is Online Dispute Resolution (ODR) a threat or an opportunity?

•

what are the differences doing mediation online instead of in the flesh?

Discussion Let’s be clear what ODR is. As far as mediation is concerned ODR can mean three different things: 1  Algorithms give you the answer. These are completely automated dispute resolution processes. You input the information. The algorithm gives you the answer. There is no human involvement in the decision-making. They are already used for mono-issue low value consumer claims such as those that arise on eBay. If this part of the process does not resolve the dispute a human may become involved to review the dispute. 2  Telephone mediations. These count as ODR. Humans are involved but they are not physically present together. Telephone mediations have been used for many years. In the UK the Court Service uses them for small claims. There is a one-hour free mediation service. Mediators employed by the Court Service do several a day. Private providers have also moved in to provide this sort of service as well. Again they are used for single issue, or at least simple, disputes of low value. Many of them are consumer claims, eg: •

‘I took my computer in for a new hard drive. They said they would download information from my old hard drive. When I got it home everything had been wiped and they can’t find the old hard drive. ‘

•

‘I  called in a plumber to fix the leak in my bathroom and water is coming through the ceiling? I want my money back.’ 53

Part 1  Pre-mediation 3  Video systems. The parties are not physically present at the same time the same place. But the mediation is conducted in the same way as though they were. Communication is through a system such as Skype/Zoom/GoToMeeting. They are used widely for simple small claim consumer disputes but also for much larger multi-party disputes. ODR good news or bad news? The other key question for mediators is whether or not the ODR system replaces mediation or supplements it. This is also referred to as TFN – Technology Facilitated Negotiation. Example of this are new techniques used to try and find common ground or the zone of possible agreement, eg double blind bidding or visual blind bidding techniques that are used. They are most appropriate where liability is not disputed. The parties are just trying to reach a number. TFN systems are used as a supplement to the mediator’s skills. They provide information. This is more than just carrying out an Internet search. They provide a process, for example the decision trees or risk analysis. Examples can be found on the IMI website. https://imimediation.org At a more basic level you just use them as a means of communication. You have a face-to-face mediation booked but you need to have pre-mediation discussions. For example in multi-party disputes pre-mediation logistic discussions are essential. These can be done on the telephone or by or by video and are very useful. Is ODR always the best way? Probably even the most fanatical ODR evangelists would not claim that it offers the same experience to disputants and mediators as an in-the-flesh mediation (ITFM). Conversely probably even the most fanatical ITFM evangelist would not claim that ODR has no advantages: •

It can be much easier to set up an online mediation. People do not have to travel. You do not have to find venues that are convenient for everybody and big enough to accommodate all the participants. Everybody can join in from their offices or homes.

•

There is a saving in travel time, fares and accommodation.

• Paradoxically, some people find it easier to discuss sensitive matters online rather than face-to-face. Not everybody does but some people do – in much the same way as people will discuss their most intimate details with a stranger. They feel they can because they are never going to see that person again. All this is reinforced by the knowledge that it all becomes a bit too much they can simply log out or put the phone down. Hybrid mediations are on the increase. This is where there is a face-to-face ITFM but for some reason some of the participants cannot be present. This is not a new problem. Telephone calls are often made to people who are not at the mediation physically but are part of it. Using video systems makes this much easier. Recent examples of this include a TOLATA claim where the claimant was rushed to 54

Question 6 hospital. He participated from his hospital bed via Skype. He was represented at the mediation by his son, solicitors and barrister. His daughter was with him in the hospital looking after the technology. It all worked very well. And of course it is usually much cheaper than using the telephone. Also most people feel that by seeing each other they have a better experience of the whole mediation process. There are differences: 1

You cannot be certain who else is on the end of the telephone or in the room. Confidentiality is an essential part of the mediation process. All participants have to sign up to the confidentiality provisions in the mediation agreement. You can ask for warranties there is nobody else present and that if anybody does join later they will sign that mediation agreement’s confidentiality provisions. Although this is easy to do online you never be certain who else is present but out of camera shot.

2

People can switch off more easily. Stopping people mentally switching off is always a danger at ITFMs, especially when you use the caucus model and they are left in their rooms for some time. Online, people can literally switch off and log out. One click and they are gone.

3

Threats to walk out at ITFMs. Staged demonstrations of putting on coats and packing bags are par for the course. Even when people have put on their coats and packed their bags they still have to walk to the lift and leave the building. This gives time and opportunity to retrieve the situation. Not so easy when someone says that they are going to log out.

4 The tempo is slower. Even with the most sophisticated videoconferencing system there is a time lag between transmission and receipt, between you talking to someone and their hearing you. Also because usually you cannot see the whole person, just their head and shoulders, you don’t have the full range of non-verbal cues or body language to help you move the conversation along. So you spend more time double-checking that you have been understood. 5 It is difficult enough to keep people focused and concentrated at mediation without plenty of distractions from colleagues, iPhones and so. With online mediations cats and small children do make unheralded appearances. The bottom line is that ODR is not as good as ITFM but it is much better than nothing. Video is better than telephone. The technology is a little more complicated but you as the mediator can orchestrate the joint meetings much more efficiently. You can see when it is time to bring somebody else in or to call a timeout. If you are going to offer video conferencing based mediation facilities such as Zoom you need some training in the technology. If the technology is not slick the parties will lose faith in the process. There are techniques that you need to master – the digital door knock, the instant chat/messaging system, looking at the camera not at the screen etc. ODR is here. It will not go away. It will grow. Be part of it. If you don’t offer it someone else will. 55

Part 1  Pre-mediation

In a nutshell •

Make yourself competent and comfortable with all forms of ODR.

•

ODR might be oversold but it cannot be ignored.

•

ODR will be used more and more in dispute resolution.

•

Seize the marketing opportunities and make it part of your offering.

FOLLOW UP Walker: Setting Up in Business as a Mediator, Ch 15 For training in ODR, see: www.themediationroom.org>training www.adrgroup.co.uk>training>our-training www.virtualmediationlab.com

56

Question 7

What do I do about tax at mediations?

Core issues •

what do mediators do when it is clear that there are tax issues – either in structuring the settlement, or in the conduct of the parties?

•

are HMRC disputes different?

Discussion No matter how often you advise parties and their advisers to take tax advice before they come to the mediation they hardly ever do. Or if they do it is usually on the basis of a rushed telephone call. There is rarely considered comprehensive tax advice available at the start of the mediation. Why is this important? Parties need to know the cost to them of agreeing a settlement. This is not just a case of considering legal costs. If properties are to be sold, shares transferred or businesses divided up there can be tax implications. There is a tax bill to be paid. Who pays it is part of the negotiation. The primary liability will be to one party but as part of the deal they may want to share the cost of meeting it. Paying parties want to know whether or not they can claim tax deductions for payments that they make to settle the dispute. Receiving parties want to avoid unwittingly incurring a tax liability on receipt of the payments. Parties are often surprisingly unsure about what their potential liabilities are. As mediator unless you are a tax expert the golden rule is: avoid tax. Many legal professionals in their retainer letters expressly provide that they do not give tax advice. It is a minefield for the non-specialist. No matter how evaluative or interventionist you are as a mediator, do yourself and your indemnity insurers a favour and avoid tax. In your pre-mediation correspondence with the parties advise the parties to take any tax advice that they think they will need. Leave it at that. During the course of the mediation when tax issues arise you can find the tax tail wagging the settlement dog. Advisers and clients think out loud in general terms as 57

Part 1  Pre-mediation to whether or not there is a problem. You feel like shouting: ‘Why did you not think of that before?’ But you cannot. Sometimes worries about tax make the parties reluctant to sign a legally binding deal even though they are happy with the commercial terms. There are various ways around this: •

A settlement document can be drafted to include a provision that the parties will cooperate in constructing a settlement in a mutually advantageous way from the tax point of view.

•

The parties will jointly instruct an independent tax advisor to structure the deal at the lowest combined tax cost.

•

If there is uncertainty about the liability for tax and who may have to bear it there can be an adjustment clause so that the settlement sum payable is increased or reduced depending on how much tax one of the parties has to pay.

•

The agreement can be final, subject only to tax clearance.

Sometimes inventive solutions about how to structure settlements involving nonparties are discussed. As the mediator you want to stay out of them. Common tax problems that crop up are: • VAT •

capital gains tax

•

income tax

•

compensation payments, especially in employment disputes.

What often happens is that urgent telephone calls are made to tax partners or to accountants and counsel because none of the lawyers present know much about tax. Usually those with tax expertise have not been pre-warned and are not on standby. Momentum slows down as frustration and irritation start to rise. Tax as a threat People’s conduct prior to the mediation can also give rise to tax issues. Not everybody’s tax affairs withstand scrutiny by HMRC. Sometimes they have previously been scrutinised by HMRC and been found wanting. When this has happened the scrutinised party becomes ultra-sensitive and their opponents use it as a lever. Often at mediation parties will make adverse comments about each other’s compliance with the tax rules and suggest that it is better all round if a deal is done and people’s tax affairs are not discussed in open court. Undertakings not to report matters to HMRC are usually sought as part of the settlement. Tax records such as tax and VAT returns are often regarded as useful documentary sources of corroborative evidence. Rarely are they produced on the mediation day. Anxious phone calls are made to the office to find them and to scan them over to the mediation. Lawyers say that if this matter is not settled they will be making 58

Question 7 urgent applications for disclosure of the other party’s tax records. They think they think that this sort of threat is conducive to settlement. Sometimes they are right. Usually they are wrong as the parties hunker down in defensive positions distracted from thoughts of constructive settlements. What happens if it becomes clear that there has been clear tax evasion? In other words criminal activity. What are your duties as a mediator? They are not as clear cut as you would like. The main ones that you have to know about are laid out under the Proceeds of Crime Act 2002 (POCA 2002), Part 7, as amended by the Serious Organised Crime and Police Act 2005, the Serious Crime Act 2007 and the Serious Crime Act 2015. Also make sure that you are familiar with the Terrorism Act 2000 (TACT), Part 3. You need to avoid committing an offence under POCA 2002, s 328 of arranging (entering into or becoming concerned in an arrangement) or aiding, abetting, counselling or procuring such an arrangement, which you as mediator know or suspect facilitates the acquisition, retention use or control of criminal property by or on behalf of another person. Criminal property includes proceeds or benefits of tax evasion. Knowledge is one thing: suspicion is another. You can give yourself a fire-proof defence by making an authorised disclosure under s 338. You may think that this might not be very practical in the middle of the mediation but you can now do it online. So in theory it’s doable. For detailed guidance see the National Crime Agency’s website: seewww.Nationalcrimeagency. gov.uk or www.ukciu.gov.uk/saronline.aspx. The other problem is not to find yourself committing the offence of tipping off (POCA  2002, s  333). This is why you want to make sure that your mediation agreement gives you the right to adjourn the mediation or to bring it to an end at any time without giving a reason (see Q3). Make sure that you are familiar with the relevant sections of POCA 2002 but do not scare yourself to death. The Court of Appeal gave guidance on the interpretation of s 328, which was of some help to lawyers but also to mediators and arbitrators whether or not they are lawyers. The upshot of the decision in the case of Bowman v Fels [2005] EWCA Civ 226. You are not generally at risk of being concerned in an arrangement if all you do is facilitate a consensual resolution of a dispute in the context of litigation. But beware: Do not completely relax and assume that there is no problem. You have to stay alert: •

It is not a complete defence in all circumstances that can arise in practice, and still give rise to problems.

• Litigation or arbitration does not have to have been actually started. It is sufficient for it to be existing or contemplated. 59

Part 1  Pre-mediation •

Where there are no existing or contemplated legal or arbitration proceedings or where the link between the mediation in such proceedings is tenuous

•

Where even if there are existing or contemplated proceedings the settlement did not: ‘reflect the legal and practical merits of the parties respective positions in the proceedings and was known or suspected to be no more than a pretext for agreeing on the acquisition, retention, use or control of criminal property‘.

These duties relate to procuring the benefit of criminal activity and can include tax evasion. Just be very alert. The answer is simple. If you don’t like it, walk away from it. If you have to give your fee back then you have to give your fee back. At least you will know you did not commit a criminal offence and you can sleep at night and carry on as a mediator. What you do not do is what one newly qualified mediator did when ‘assisting’ a more experienced one. The newly qualified mediator was a tax barrister. During a commercial dispute between shareholders and the company it became clear that inventive tax arrangements had been made to place some income offshore. The observer, without telling the lead mediator, took it upon himself to inform the parties and their lawyers that they had committed tax fraud and that he was going to report them to HMRC. Both sets of lawyers were highly respectable and experienced from City firms. After experiencing their reactions, the novice mediator decided not to pursue a career as a mediator. The case did eventually settle but without further assistance from him. Please see the exceptions to confidentiality and duties to disclose discussed in Q16. HMRC-specific HMRC have for some time been prepared to mediate back tax cases. But they have their own particular features. You have to be aware of them if you are going to mediate in these types of cases. First, HMRC may require your consent to carry out enquiries to verify that your own tax affairs are in good standing. Secondly although on the face of it they are bound by the Attorney General’s pledge they also have their own code of behaviour set out in the Litigation and Settlement Strategy (‘LSS’). If you are going to be involved with HMRC you need to study this. The commentary, which is described as practical advice to the staff of HMRC on the application of the LSS, states that: • ‘ADR and more specifically mediation is a flexible dispute resolution tool available to HMRC, which, in appropriate cases, can help HMRC and its customers resolve disputes (or reach key decision points) in a cost-effective and efficient manner. 60

Question 7 •

The LSS applies to the resolution of all disputes to civil procedures; therefore any agreement to resolve the dispute between HMRC and the customer, whether facilitated by the use of ADR or not, must accord with the terms of the LSS.’

In practice HMRC interpret this to mean: •

That they resolve disputes in accordance with their considered view of the law. Their officials at mediation will tell you that if they are advised that there is more than a 50% chance of winning they will go to court. They emphasise that they cannot take the same commercial view about a case in the same way that private individuals or businesses can. This is because they are upholding the law as regulators.

•

Not only will they not do commercial deals they are reluctant to engage in the usual form of risk analysis. Litigation discount does not seem to play any part in the decision-making. Also recoverability as a risk factor seems to be disregarded.

•

In strong cases they will settle for the full amount that HMRC believes it is due or litigate. In all cases they do not split the difference. They concede weak cases. They do not do package deals. So the sort of constructive and creative solutions that parties can create by combining different elements or different areas of dispute are not available.

•

In the larger cases you may find that although the officials come with authority they need to have the settlement approved by the Board of HMRC which do not always follow their officials’ recommendations.

•

They often require a carve-out of the confidentiality provisions. In other words they may wish to use information that they learn in the mediation to carry out further investigations. This means that you as mediator must be extra careful to confirm at each stage of the process what information you can disclose to HMRC and what you cannot.

All this makes it more difficult for the mediator to help the parties to structure settlements because there is simply less to work with. But they do settle. So do not give up hope if you are asked to act as a mediator in an HMRC back-tax case.

In a nutshell •

Tax crops up in many mediations. Avoid tax.

•

Do not involve yourself in discussions about tax.

•

Do not express your frustration that tax advice has not already been taken before the mediation.

•

HMRC cases are different but still settle and are worth doing. Read the LSS.

SEE ALSO Q16

61

Question 8

One side is insisting on bringing a witness and the other side objects. What do I do?

Core issues •

who needs to be at the mediation?

•

who is in charge of the process?

•

party autonomy.

Discussion Witnesses will cause you more problems as mediator than you might imagine. This question brings into focus three separate questions which frequently crop up at mediations. 1  Who should attend the mediation? There is always room for legitimate disagreement about this. Most mediators advise that the golden rule is ‘less is more’. The more people in a room the harder it is to avoid groupthink – the tendency of people in groups to adopt more extreme positions than they would individually. Some people must attend, eg the person with the authority to settle. This is not always the same person who is involved in the circumstances which led to the dispute in the first place. Often the person brought in to sort out the problem was not originally involved and is more senior to those who were involved. That creates its own dynamic. Not many people feel comfortable about attending a mediation by themselves. They usually want someone there with them. The most common choice is their legal representative. It is usually their solicitor. No one can really object to that and very few do. The only exception is where one side suggests that the parties get together with the mediator without lawyers to sort it out. This could be because: •

Negotiations may have stalled because the lawyers are at loggerheads. The dispute is being discussed in increasingly legalistic terms. The parties want to return to a personal and commercial vocabulary.

•

The amounts involved may not justify avoidable legal fees. 63

Part 1  Pre-mediation But in the end if one party wants to be legally represented it is difficult for the other party to insist that they should not be. Very rarely do parties refuse to participate at all if their stipulations that there should be no legal representatives present are not agreed. As the mediator you can point out that the courts have considered that the laying down of pre-conditions can amount to unreasonable conduct within the meaning of that phrase when considering cost sanctions. A more frequently encountered objection is to barristers being present. There are two main reasons for this: 1

Many clients and solicitors see barristers as barriers to settlement. They cannot abandon their court room habits. They find it difficult to understand that making war in litigation is not the same as making peace in a mediation. Parties fear that barristers will try and turn mediation into a mini-trial. Admittedly this is a temptation many barristers find difficult to resist even when they avow that they are there to make peace. They believe that peace emerges out of the ruins of the other side’s case, which has been reduced to rubble by their forensic brilliance. Sadly this approach is often still adopted but less frequently than it used to be.

2

If one side brings a barrister, the other side worries that they will have some sort of tactical advantage. In some way a barrister will try to intimidate or bamboozle their client or overwhelm you as mediator and get you on his side. Insisting that barristers cannot attend the mediation is likely to be seen as trying to impose an unreasonable pre-condition in much the same way as stipulating that solicitors should not attend does.

Apart from the decision maker and legal adviser who needs to attend a mediation? Witnesses. There are two sorts: witnesses of fact and expert witnesses. Witnesses of fact Sometimes at mediations the evidence of the witnesses is useful. This is not the same as having them physically present. If a witness of fact is physically present what are they going to do? Are they going to give their evidence to the other side in some sort of oral hearing? They will not be on oath. Are they just going to confirm their written witness statement? What if they have not yet made a witness statement? Are they simply going to summarise what they would say if they did make one? Quite often what the party producing the live witness wants is some sort of confrontation with the other side. They want the other side to see that the witness does actually exist and is ready, willing and able to give evidence, which will damage the other side’s case. That gives rise to a difficulty. The witness turns up at mediation. The other side do not want to hear or see them. They are under no obligation to do that. If the presenting party wants the witness to attend the Joint Opening Session the other 64

Question 8 side can simply refuse to attend the session. Sometimes during the day a breakout meeting will be suggested so that the witness can meet some representatives from the other side. Again the other side can simply refuse. There is no obligation on anybody to attend any particular session at a mediation. Discussions can take place through you. You are the mediator and one of your roles is as an intermediary. Be prepared to deal with this situation. The witness is present. The other side don’t want to meet them. The presenting side are anxious that the other side realises that the witness is present, ready, willing and able to give important evidence. They ask you as the mediator to hear what the witness has to say and then to convey it the other side. Why not listen to the evidence? There is no obvious good reason not to. Ask if you can make a note of what is said. Check that what you have written down reflects what the witness wishes to say. Whether or not you take this evidence to the other side is a different matter. Is it unhelpful to the cause of settlement? Is it inflammatory or defamatory? But beware: Even assuming that the evidence is none of these you have to be alert to the danger that the other side will perceive you as an advocate for their opponent. Make it very clear that you are simply the messenger. You give no warranty, express or implied, about the authenticity or veracity of the evidence. All you have done is heard what someone has told you, recorded it and, as requested, passed it on. If the receiving party wants to challenge the evidence they can. It’s up to them. Very occasionally a live witness transforms a mediation. In one bitter case involving a 1975 Act application and challenges to the validity of a will by the widow after a relatively short marriage, a friend of the deceased made an unexpected appearance at the mediation on behalf of the defendant. Their solicitors did not know she was coming. She produced on her mobile phone a string of text messages which provided some support for the defendant’s explanation of the circumstances in which the will had been made. In addition she gave oral evidence of her recollection that on the face of it sounded credible. The claimant did not want to meet her. Her QC expostulated at this ambush, but he realised the potential significance of what the witness had to say. The mediator summarised the evidence in the terms agreed with the defendant. He expressly said he was giving no warranties whatsoever and all he was doing was acting as a messenger. He read it out and left the room to allow the claimant and her lawyers to process it. On his return they asked to see the text string. The witness gave her phone to the mediator who showed it to the other room. He watched as the confidence drained out of the claimant. Four hours later the case settled despite the QC’s advice that the claimant should not agree the terms.

65

Part 1  Pre-mediation Another issue was raised by this unexpected appearance of a witness. As mediator you have to make sure that they sign the mediation agreement so that they are bound by the confidentiality provisions. Sometimes someone unexpected turns up at a mediation. They are not there to be a witness, but to participate in some unspecified way such as an informal adviser or provider of moral support. Quite often they are turning up later in the day after the mediation is underway because the other side would have objected if they had known they were going to attend. You may be asked as mediator not to tell the other side that they are there (see Q17). What do you do? The answer is very simple. You point out that if they are going to stay they have to sign the mediation agreement. You will be supplying a copy of the signed mediation agreement to both sides. There is no point in concealing their presence. Another common objection to a potential witness of fact attending is that they will simply become an obstacle to settlement. They will have their own agenda and will simply egg on their side’s decision maker. This is more likely to happen if they were involved in the circumstances that have given rise to the dispute in the first place. There is no doubt that there is this danger. Point out to the objecting party if they think that this is going to be difficult that it might, in the scheme of things, be better that the witness is present so that they can experience first-hand the cooling effects of reality testing and alternative perspectives. Nearly always, the presence of witnesses at a mediation whose presence was objected to in the first place has no effect whatsoever. Their significance was overestimated by both sides. Expert witnesses Here there are different considerations. The usual objections to expert witnesses being present are that • They will get bogged down in the technical detail and the mediation will become a mini-trial. This is a similar objection to barristers being present. •

The other side’s expert is biased and unreasonable and will not see sense.

•

Relations between the two experts have deteriorated and will be an obstacle to settlement.

•

Bringing an expert is seen as trying to gain a tactical advantage in much the same way as when one side wants to bring a barrister and the other doesn’t.

Unless the dispute is really about quite technical issues such as the nature and scope of remedial work there is not much to be gained by having the experts present. Their evidence can be available in written form. If need be they can be consulted by telephone or Skype to confirm the detail. If experts are physically present the sooner you put them together with you present acting as umpire the better. Most experts subconsciously or not act as advocates for 66

Question 8 their client. Remind them of their obligations under CPR Part 35. When asked why they are disagreeing it is usually because they are making different assumptions. Experts always choose the assumptions that most favour their client. You point that out to them (see Q30). Sometimes clients like to hide behind their experts. Even insurers do this. If we are being advised by our expert that this is the case, how, they ask, can we depart from their advice? The answer is very simple. Every day in court 50% of experts are proved wrong. Sometimes it’s more than 50%. What can you do as mediator? Some mediators and appointing bodies stipulate in their mediation agreement that people can only attend the mediation with the approval of the mediator or the appointing body. If you have given yourself that power and the parties have signed up to your agreement then exercise it as you think best. Bear in mind all the points made about witnesses of fact and evidence discussed above. If you do not have this express power you have to decide whether you want to grant it to yourself. This is, in the end, a matter for your commercial judgement of what suits your clients best. Some mediation agreements stipulate that only persons whose attendance has been notified to the mediator and all parties in advance can attend the mediation. In practice final decisions about who should attend with each party are not made until the day before the mediation. Some agreements go further and give the power of veto to either the mediator and/or the parties on who can attend. Anybody can object to anybody else attending. When objections are raised you, as mediator, may have to engage in a pre-mediation mediation about attendees. Usually these procedural tussles are simply power plays. But not always. There may be a history between the attendees which could have an adverse effect on the progress of the mediation, for example if there has been intimidation, bullying or previous litigation. Where there has been a relationship breakup bringing a new partner can be seen as deliberately provocative. Sometimes a ‘virtual’ presence can be arranged with the person being at the end of the telephone or on Skype/Zoom. Usually at the mediation as the day progresses people become more relaxed and comfortable both with the process and each other. Objections to individuals being in physical attendance are often dropped. After all nobody can be compelled at the mediation to meet anyone that they don’t want to. Where does party autonomy come in? Many mediators take the view that it is for the parties to choose who they want to bring to the mediation. They can bring whoever they want. If the other side do not want to speak to or hear them they do not have to. This is the better approach. Make it clear to each party that they have an absolute choice on who to bring and also an absolute choice on whether or not listen to the other party and their attendants or not. More often than not one party wants to stipulate that the other does bring a named person not that they don’t bring them. It is usually somebody who they 67

Part 1  Pre-mediation believe will have specific authority to settle. Often people at the mediation who were involved in the dispute, do not have the objectivity to see that there is another version of events and most importantly do not have the status or actual power to conclude a settlement. In many ways this is an easy situation for you as mediator to deal with. In the mediation agreement you should include a warranty that parties attend with sufficient authority to settle. This is discussed in more detail in Q5.

In a nutshell •

Let the parties bring who they want unless the other side objects.

• Remind the parties that witnesses who are physically present are rarely of much value at mediations. •

Experts’ evidence if potentially useful can be made available without them being present.

SEE ALSO Q5, Q17, Q30

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Question 9

One party asks about my experience. What do I say?

Core issues •

how to escape the Catch 22 of not being able to gain experience until you have experience

•

accuracy of advertising

•

what experience means

Discussion Relevant experience is one of the key factors that parties take into account when choosing a mediator. In the 2016 CEDR Audit it was, when linked with reputation, identified as the most important factor. There are three types of relevant experience: 1

How many mediations have you attended? Either as a client, representative, observer, assistant or co-mediator.

2

How many mediations have you attended as the lead mediator?

3

What sector or subject matter experience or expertise do you have?

In addition there is collateral experience. What have you done in related conflict resolution activities? For example: Have you negotiated commercial contracts? Have you been in the Diplomatic Service? Were you a hostage negotiator? Did you work in an HR department? Have you been trained in psychology, psychotherapy or counselling? What do I say in my profile? You can provide advance information about yourself on your website or in your profile/CV. This might forestall further enquiries. But it requires careful framing. You can accentuate the positive. You may also, more dangerously, even engage in a little judicious mis-direction. What you cannot do is positively mislead or tell falsehoods. Be aware: Various codes of conduct give clear guidance on this. 69

Part 1  Pre-mediation The European Code of Conduct for Mediators stipulates ‘1.4 Promotion of mediator’s services Mediators may promote their practice provided that they do so in a professional, truthful and dignified way.’ The CEDR Code of Conduct for Third Party Neutrals states ‘The Neutral assures the Parties that he or she 2.3. does not present his or her skills or background in all promotional material in any way which is not truthful or professional..’ Useful phrases that are used in drafting websites include such terms of art such as: •

‘experience of’ You can legitimately say that you have experience of mediation if you have attended a mediation in any capacity whatsoever. Many lawyer mediators have attended dozens of mediations even if they have not actually acted as a lead mediator in any of them. They are familiar with the process.

•

‘attended’ or ‘been to’

•

‘involved in’

•

‘active/ busy/extensive/established mediation practice’

Sometimes these terms of art are prefaced with words such as ‘many years’, ‘long’, ‘diverse’, ‘varied’. Perusal of websites provides evidence of considerable poetic licence being employed. A  Chancery silk is described as having an extensive mediation practice. It turned out that he had done twelve in total over a period of seven years. Another high profile mediation figure advertises their services as a civil and commercial mediator, saying that they have done over 200 mediations. That is true but they are all non-fee paying community mediations. Another counsel is described as being a specialist mediator in financial services. It turned out he had done three mediations and none had been in financial services although he had done some cases as counsel in this sector. How many mediations do you need to have done as a mediator before you can describe yourself as ‘experienced’? There is no clear-cut answer to this. One well-known mediation provider used to describe panel members as experienced if they had completed eight mediations as lead mediator. Clerksroom, another well-known mediation provider, has a tripartite listing: •

Junior mediators have undertaken up to 25 mediations 70

Question 9 •

Senior mediators have undertaken up to 50 mediations

•

Elite mediators have undertaken over 50 mediations with feedback all positive

All this information deals with passive enquires. What about active ones? You might be asked point blank either by email or in a telephone conversation what experience you have. Just tell it as it is. If you have not done any mediations, say what observations, etc you have done and say that you are looking for your first mediation as a lead mediator. Not everyone will be put off. They know that we all have to start somewhere. They did. If they appear to baulk at your lack of experience, be open. Tell them that you are not sure that you have the right level of experience for this particular case. Most people find candour both refreshing and reassuring. Say that you would love to have a chance to show them what you can do. Don’t forget people do business with people that they know, like and trust. If they are asking about your sector or subject experience rather than your mediation experience the same rules apply. But you will have more latitude. If you have collateral experience highlight it. Emphasise its transferability. Give an illustration of a conflict resolution event that you were involved in. What is the worst that can happen? You have got your first mediation. No one has asked you about your mediation or sector experience. You have read the papers; arrived at the venue early; introduced yourself to everyone. The Joint Opening Session starts. You say who you are and go round the table asking everyone to say who they are. Someone makes a polite but hostile enquiry. ‘Could you just tell me what experience you have as a mediator?’ What do you do? Pause. Smile. Lean forward, look at the interlocutor. ‘Yes. Of course. This is in fact my first mediation.’ Don’t hesitate. Look at the next person and say ‘Let’s carry on. Can you say who you are and why you’re at the mediation.’ In those immortal words: ‘Keep calm and carry on.’ If the question has come from a client give the answer to the client. Glance at his lawyers. See what their reaction is but keep the momentum going. If the question has come from a solicitor glance at his client or barrister, if there is one. And if it is from the barrister look at the solicitor and client in a single gaze. Don’t have a quizzical look – it could invite a response. Remember by this stage they have signed the mediation agreement and paid your fee. What are they are going to do? Is the interlocutor going to abandon the mediation? What happens if this question is asked during your pre-mediation chat before the Joint Opening Session? Follow the same drill with a calm fluent answer as above. Just keep going. Let the interlocutor make the next move. What happens next will depend on why the question was asked in the first place. Was it a kindly meant and genuine enquiry? If it was, your answer should be the end of it. What if it was not? Is someone trying to make mischief in order to establish 71

Part 1  Pre-mediation dominance over you? Or are they looking for a pretext to sabotage the mediation by claiming they had been misled into attending and they cannot carry on with someone who is so obviously inappropriate for the job? In these circumstances you put the monkey on their back? Ask them point-blank what they want to do? ‘Do you want to abandon the whole mediation? We are all here. The day has been booked, the preparation done and the fee paid. Why not give it a go?’ If you have been appointed by a mediation provider, telephone them and ask them to speak to the interlocutor. Do not panic. Do not try and justify yourself. Do not engage in an argument. The most you should do is ask them why they are asking this question at this stage. Remind them how long ago you were appointed. If it looks like there is a chance that the mediation will be abandoned you must tell the other room. After all it is their mediation as well. They may have something to say about it. You will be feeling stress. But just carry on in the assumptive mode. There is no problem. We will just carry on. You are ready, willing and able to do so. Poise under pressure is something that all mediators have to cultivate. If the mediation continues, be polite and optimistic. ’Well let’s crack on. We don’t want to run out of time.’ Of course in the interlocutor’s room the atmosphere might be a little tense. Stick to your game plan. If the interlocutor continues to be hostile, deploy the survival tactics used when being accused of bias (see Q22.) Don’t let yourself be intimidated. Remember the blow that doesn’t break you makes you. Consider this: If the mediation is abandoned, just express regret at the missed opportunity. Don’t play the blame game. Be honest with yourself. If you have even a smidgeon of doubt that you may have misled someone about your experience, be prepared to apologise. If you have been appointed by a mediation provider the chances are that you will not have done any misleading. Discussions about your selection as mediator will have been carried on between the parties and the provider. If it is a direct appointment examine your conscience. And notify your Professional Indemnity Insurers. Expect some rough rides. No one said that being a mediator is plain sailing. It isn’t even for experienced mediators. Catching Catch 22 To start with join panels that offer low-cost schemes for new mediators. Clerksroom is one. The ADR Group is another. The going rate for mediations with a value less than £100,000 is a fee to the mediator of £1,000. But there are also schemes where your fee is £500. 72

Question 9 Do free or pro-bono mediations. These are often community mediations or small value consumer claims. Do any mediation that comes your way. The name of the game is to gain experience and to get your numbers up. It is quantity not quality of cases that is important at this stage of your business development.

In a nutshell •

Maximise the positives in your profile: minimise the negatives.

•

Never lie. It takes years to build a reputation and minutes to destroy one.

•

Be upfront: say you have not mediated before. Ask for a chance.

•

Everyone has had to do everything for the first time.

•

Trust yourself. If you don’t why should anyone else?

SEE ALSO Q22 FOLLOW UP CEDR 2016 AUDIT

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Question 10

How friendly should I be?

Core issues •

how informal to be in establishing rapport and a relaxed atmosphere

•

the dangers of apparent and perceived partiality

•

is there a distinction between being friendly towards the parties and being a friend of the parties?

Discussion Mediators may not agree on very much. But they do all agree that an essential part of their job as mediators is to establish rapport. A  relaxed, friendly and warm atmosphere will encourage the parties to feel comfortable in discussing sensitive and difficult matters. They will be at ease in a way they can never be in court. Some lawyers advise their clients against the danger of assuming that because mediators are friendly they are their friend. They warn that the mediator’s only friend is settlement. Often they see their job as mediation advocates is to protect their clients from the mediator. So how friendly and informal should you be? Your decision will influence how you behave, how you address people, what you wear and how the parties and their lawyers behave towards you. Addressing people All mediators are trained to ask at the start of the mediation day how each of the attendees would like to be addressed. Do they want to use first names, surnames, titles such as Dr Smith, or the impersonal counsel or counsellor? Generally mediators are encouraged to use first names as this breaks down barriers and informality encourages free and easy conversation. Be careful because not everybody is comfortable with the Anglo-American habit of early and frequent use of first names. •

Some cultures and countries place great store on their titles. Expert witnesses can bridle if they are not referred to as Professor or Dr. 75

Part 1  Pre-mediation •

In some cultures deference is paid to older people. As a matter of course you never use the familiar form of address. In fact you may be well advised to use an honorific form.

•

Gender also plays a part. Addressing an older woman by her first name can often be less acceptable than addressing her husband in the same way.

•

In England in particular there can be social overtones. If the clients regard you as socially inferior you address them by their first name at your peril. If they hold rank it is safer and probably more courteous to use their rank until you are told for the third time not to do so. If they have a title, eg Lord or Lady or Sir, use it no matter what your political leanings might be until they tell you to refer to them as Richard or Susan.

The golden rule is to start with a degree of formality and to feel your way gently and slowly. Moving from formal to informal is much easier than moving from informal to formal. The parties will also want to know what to call you. Surprisingly often they can’t remember your name even though you have used it several times to introduce yourself to the various members of their team. Do not object if you are referred to as ‘the mediator’. And don’t show any reaction if you are referred to throughout the mediation as ‘Sir’. As one barrister did when explaining to his client ‘What Sir is asking you is…’ ‘Could you just tell Sir what you told me earlier?’ One of the judges in the TCC in London who conducts judicial mediations under the Court Settlement Process (CSP) as a mediator rather than as a judge acknowledged that it was a tricky matter. He said that he had thought about it and in the end he had decided to tell people to just call him ‘Judge.’ Be aware: Parties and their lawyers can be sensitive about judicial appellations. In a JAMS-administered mediation, the American mediator who had flown into London told the parties to call him ‘Judge.’ The American lawyers all happily did that. The extremely well known British woman solicitor, who is also a renowned mediator, said in forceful terms that this was inappropriate. He was not there as a judge. She referred to him as ‘the mediator’ throughout. The case did not settle. Other mediators, including Americans, do the exact opposite. They insist on being called by their first name. This is to show what regular guys they are. In your pre-mediation chats ask people if they are happy to be addressed by their first name. Just ask. ‘Is every one alright with first names?’ Doing this is better than going round the room in the Joint Opening Session asking everyone how they would like to be addressed. That just wastes time. Some people feel embarrassed. Others use the opportunity to send out a warning signal: ‘Dr Jones,’ they say, with an emphasis on the Dr. 76

Question 10 Take your cue from the people in the room on how they address each other when you walk in. If the clients are referring to the barrister as ‘Mrs Jones’ or the solicitor is referring to his client as ‘Mr Smith’ you can follow suit. Some mediators insist on using formal forms of address throughout. It is always ‘Mr Smith’ or ‘Mrs Jones’. They also ask to be addressed in this way. They believe that it retains a degree of distance, which makes it easier to break bad news and to engage in robust reality testing. They feel that it helps maintain their position as process manager. A degree of formality can lend an air of authority. Formality can always be relaxed. It is much harder to re-introduce. Although it is interesting to note when this happens as tensions rise and irritation grows. The slightly synthetic bonhomie that has been engendered in the commercial to-ing and fro-ing is replaced by a more clipped and cooler formality as people retreat behind their legal positions. Behaviour You want to establish rapport. A big part of your job is to help people, especially the clients who will probably have not been to mediation before, relax and feel comfortable in an environment which is outside their normal experience. Smiling helps. But some very successful mediators are not obviously ‘people’ people, particularly those who were former barristers or judges where those skills were not at a premium. They can be civil but distant. Others particularly if they have worked in family or criminal law are the opposite. We all have naturally different levels of affability and openness. Just find your own level. You will feel more comfortable. Being over friendly can be as off-putting as being too formal. Above all radiate confidence. You are in charge of the process. The parties want to feel that you know what you are doing. Mastery of the documents and the details of the case is one way of showing this. So is bearing and behaviour. People decide within a few seconds whether you display sufficient confidence and competence for them to take you seriously. Without realising it they pick up on your breathing pattern. You probably do not realise that you have a breathing pattern. But we all do. Shallow rapid breathing denotes nervousness and lack of confidence. So before you go into the room for the first time steady yourself, check your clothing, knock on the door and walk in. Pause. Say: ‘Good morning. Can I come in?’ Announce yourself: ‘Good morning. I’m XXXXXXX’. Go around the room and shake everybody’s hand. Repeat their name as they say it to you. This gives you a better chance of remembering them all. Say: ‘I’d like to start by getting the mediation agreement signed by everyone.’ If it has already been signed say you just want to just check that it has signed by everyone. 77

Part 1  Pre-mediation Do not forget that you want the decision-maker/agent of the party to sign and also the legal representative. Anybody else who is in attendance even though they may be a member of a party which is a company or partnership or of the law firm should sign the schedule at the back of the agreement confirming that they are personally bound by the confidentiality provisions. Ask them to sign and print their name. This does three things: 1

It impresses upon them the seriousness of what they’re doing, ie agreeing to keep everything confidential.

2 Aids legibility – you will be able to remind yourself of people’s names more easily later. 3

Provides a checklist of names.

Getting people’s names right is essential. Getting them wrong shows a lack of confidence and competence. During your pre-mediation preparation and especially in your pre-mediation telephone conversations, ask who is attending. Make a note of the names in your notebook that you will use on the day of the mediation. You will find that additional people do turn up and some of the expected attendees don’t turn up but at least you have a check list. At the mediation when people are introducing themselves, use the waiter’s trick of writing some identifying remark against their name, eg bald, red hair, beard, glasses, etc. Multi-partiality, omni-partiality, impartiality Mediator theorists bandy these words about. What do these phrases mean and do they help? Multi-partiality is attention to multiple identities and experiences and most importantly those identities and experiences that might be absent or unheard Or: a more extended definition ‘multi-partiality, as opposed to impartiality, is a practice in intergroup dialogue facilitation that focuses on balancing social power, independent of in contrast to the norms of society.’ Omni-partiality is said to be a principle of being on both sides of the same time. Impartiality. This is often used synonymously with neutrality. They are not the same. Neutrality defines a mediator’s position to the parties in the dispute, eg  do you have a prior association with any of them. Impartiality defines a mediator’s conduct towards the parties, eg do you treat them all in an even handed and fair way. Are you biased against any one? See Q12. These concepts are used much more in restorative justice, facilitation between different groups and in mediations where there is a breakdown of personal relationships, in particular divorce. As mediator you have to take care not to seem to be favouring one party over the other. Your key job is to make sure that each party has had the opportunity of explaining themselves to the other side and of understanding what the other side is explaining to them. 78

Question 10 In practice, during the mediation you may well feel differently towards different parties. Some will be more reserved or hostile and be resistant to your efforts to look at the bigger picture. Some people are just nicer than others. You have to consciously suppress any personal preferences that might have developed. Not all mediators agree with this. They believe that it is acceptable to display annoyance. It is of course true that mediators are human beings. We cannot suppress all facial indications of our thoughts and feelings. Some mediators are more expressive than others. How easy is it to build and sustained rapport with a blank poker face? If you feel anger or frustration building up inside you take time out. Calm down. Make a list of obstacles to settlement. Ask the party concerned why they cannot accommodate the other side. Go back over what they have previously said about wanting to settle or the goals that they prioritised. People generally prefer to be consistent. Name and shame. If the atmosphere is becoming tense, say so. Suggest that everyone takes five minutes or in William Ury’s phrase ‘goes to the balcony’ (see Q22). When under pressure the key points are: •

Lean back if a drama is developing

•

Lean forward to encourage and engage

•

Never cross your arms.

What to wear Do you dress up or down? Some mediators believe that you should dress down. This is especially true of those working in consumer or neighbourhood mediations. Many male mediators take off their ties. Others abandon jackets and wear jeans or chinos and a pullover. Part of the reason is that they do not want to be seen by disputants in community mediation as part of the establishment or a figure of authority. After all any neighbour disputes involve some degree of dispute with the Local Authority. One well known mediator tells the legal representatives not to come in suits but to come in pullovers. This is meant to engender a relaxed and informal environment in which people can talk freely. He wears a pullover.

A barrister mediator appointed in a building dispute decided to engage with his clients and dress in T-shirt and jeans. He was mortified to find that they had dressed up wearing suits and ties.

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Part 1  Pre-mediation Trying to match your client’s dress code and getting it wrong can easily be seen as disrespectful or patronising. Anecdotal field research suggests that clients, both male and female, think that a male mediator without a tie is either trying too hard or not taking the mediation seriously. For male mediators it is much easier to start formal and dress down during the day. Ties can come off and jackets be removed. Not so easy for female mediators. But they have more choice in the first place to strike a balance between courtroom formality and relaxed professionalism. But beware: For male mediators whatever type of trousers you wear make sure you check your flies. Walking into a party’s room for a brief chat in your best double-breasted navy blue pinstripe with your zip undone is never a good start to the day. In summary, the safe rule is to be more formal in behaviour, mode of address and type of clothing rather than less.

In a nutshell •

Always be polite and approachable.

•

Smile but err on the side of formality until everyone is feeling comfortable with you.

•

Be yourself. Do not fake it until you make it.

•

Dress up rather than down.

•

Some people are just easier to get along with than others. That’s the way it is.

SEE ALSO Q12, Q22 FOLLOW UP Pollack, Craig Mediation: An Approximation to Justice in ADR, Arbitration, and Mediation, A  Collection of Essays, ed Julio Cesar Betancourt and Jason A  Crook, AuthorHouse (2014).

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Question 11

The parties have asked if I have insurance. What do I say? Do I need it?

Core issues •

mediators’ liability

•

professional indemnity insurance

•

client expectations

Discussion As a mediator you will ask parties what is their appetite for risk. What is yours? Many mediators, including some successful and experienced ones, do not have professional indemnity insurance. Presumably this for the same reason that some mediators do not have exclusion or limitations of liability clauses in their mediation agreements. They assess their risk exposure as negligible. Either this is because of the nature of the job as mediator or because they are confident in their performance. Compared with other service providers, such as solicitors or engineers, mediators are low risk. Many mediators are solicitors, barristers, surveyors, accountants, engineers, etc and have to carry professional indemnity insurance. They are astonished at how low the rates for their practices as mediators are compared with those for their main professional activity. The only reason that insurers quote at these much lower rates for mediators is because they see that the risk of claims is low. Yet many mediation service providers and accrediting bodies stipulate that panel members must have professional indemnity insurance. For example: •

The CEDR Code of Conduct for Third Party Neutrals 2017 Edition ‘6 Professional Indemnity Insurance The Neutral will take out professional indemnity insurance in an adequate amount with a responsible insurer against such risks as may arise in the performance of the Neutral’s duties in relation to the Dispute before acting as a Neutral.’

•

Clerksroom, a large mediation service provider in England and Wales, does not charge mediators to download their profiles on to its website but it does require them to also download details of their professional indemnity insurance. If 81

Part 1  Pre-mediation they do not provide evidence of current professional indemnity insurance their profile is taken down from the website. •

The Civil Mediation Council requires members who want to register with it to have minimum professional indemnity insurance of £1 million.

Many mediation service providers buy a block policy for their panel members. That is a benefit that you obtain by being a panel member although of course you have to pay a joining fee. It is also an advantage for users if they appoint a mediator through a mediation provider. They know that the mediator will have professional indemnity insurance. The CMC require registered members to have professional indemnity insurance as part of its attempt to establish CMC registration as a quality kitemark. The mediators are properly trained, experienced, up-to-date and insured. They hope that the mediation-buying public will be reassured. Buying your own professional indemnity insurance can provide a degree of commercial credibility. A leading international arbitrator who was a senior partner of one the magic circle firms always told his partners to purchase as much as the insurance market would sell them when considering how much professional indemnity cover to buy,. It proved to be a fantastic marketing tool. You don’t have to do that as a mediator necessarily but because the coverage is so cheap you can regard your premiums as part of your marketing budget. If you want to do bigticket mediations buy some big-ticket professional indemnity cover. There is not much reason not to. It is not expensive. Depending on the terms of cover and the quality of the insurer you can buy £1 million of cover for £75–£200 a year. But beware: PI insurance is an annual contract, written on a claims-made basis not on a lossoccurring basis. This means that the insurers who are on risk are those who are your insurers in the year in which the claim is notified to you. The insurers who insured in the year in which your negligent act or omission occurred are not on risk if the claim was not notified in that year. But beware: You can be sued for up to six years after having carried out a mediation. So you need to keep some insurance in place after you have stopped mediating. This is called run-off cover. How likely is it that I will get sued? Your potential liability is either breach of contract or negligence or both. Common complaints against mediators are: •

Not having read the papers properly.

•

Turning up late. 82

Question 11 •

Rushing to get away at the end of the day and terminating the mediation prematurely.

•

Being rude or overtired.

These are really poor service level complaints rather than breach of contract claims. But if you have contracted to be on time and to read papers as part of your preparation then you are in breach of contract. The IMI Code of Professional Conduct states that ‘2 Diligence Mediators may accept an assignment to act as Mediator in any situation in which they are competent to serve in that capacity. Mediators should ensure that they have the requisite time, energy and procedural and subject matter expertise to competently meet the reasonable expectations of the parties.’ The measure of damage – the quantum – is to put the innocent party in the position that they would have been in had the contract been performed. Apart from wasted costs it will be difficult to show that there was any damage caused by these sort of breaches. But beware: Given that you, as the mediator, will often be the lowest paid person in the mediation room, defending a claim for wasted costs because you were not properly prepared and the mediation therefore did not go ahead could exceed your fee several times over. The amount of compensation will be subject in the usual way to consideration of remoteness and causation. But at the very least you can expect to be required to repay your fee. There has been no reported case so far in the English courts of claim against a mediator for breach of contract or negligence. But it is only a matter of time. The most common areas of potential liability are: Failure to disclose a conflict of interest As seen in Q12 some codes impose strict express obligations to make disclosure of potential conflict of interest. Remember this is a continuing duty. Breach of confidentiality Potentially the most serious area of liability. Certainly this is the one that you are automatically failed for in your training. Examples include: • Disclosing information which you were not authorised to disclose to other participants at the mediation, whether inadvertently or intentionally. •

Leaving confidential papers so that the other side can read them.

•

Leaving your iPad in the other room open with documents that had been emailed to you in plain sight. 83

Part 1  Pre-mediation •

Disclosing information outside the mediation. Depending on the circumstances and on what you said this could be defamatory.

Advertising your services and experience in a misleading or false way If people had known the true position they would not have appointed you. JAMS  International has been sued in the US along with its neutral, a retired appellate judge by a party who claimed that they had falsely represented the nature and extent of the neutral’s experience. Although after a three week trial the San Diego Superior Court jury were unable to decide whether the neutral had falsified her credentials to attract business they decided the claimant had not suffered any harm as a result of her resume. But JAMS before the trial added a disclaimer to each of its online bios saying that it makes no warranties about accuracy or completeness

Committing fraud For example: • Deliberately telling one party that the other side have crucial evidence or witnesses which they do not have. As a result of that belief that this evidence exists, and is in the possession of the other side, there is a higher settlement. • Accepting a bribe or inducement to act differently towards one party in attempt to achieve a more favourable settlement. Negligent advice Many mediation agreements expressly provide that the parties acknowledge that the mediator does not give legal advice. In practice the difference between being highly evaluative and giving advice will be blurred. Consider this: The mediator knows a very recent judgment, which is authority for a proposition that destroys the claimant’s case. It is so recent that the claimant’s lawyers do not know about it. Nor do the defendants. The mediator keeps this knowledge to himself. Later during the day he shares it with the claimant’s lawyers who tell him not to say anything about it to the other side. He does as they ask. The defendants are still unaware of this judgment and settle on the basis that they are still potentially liable to the claimant. If they had known about the recent judgment they would have realised that they now had a cast-iron defence. The mediator knows that the defendants are acting in ignorance of the judgment. The defendants ask him what he thinks of the settlement and he says that in all the circumstances it seems like a good one or a fair one. But he knows that it cannot be. At best he has been negligent, in breach of contract and possibly fraudulent. Would his position be better or worse if the claimant said to him ‘Keep this to yourself and we will appoint you in a huge mediation next month’? Would it be the same if the claimant had used those immortal words ‘Keep this to yourself there will 84

Question 11 be a drink in it for you.’ In these scenarios the mediator is negligent, in breach of contract and definitely fraudulent. Leaving aside the cast-iron authority which has a devastating effect on one side’s case what about where the mediator says that in their opinion one party’s case will fail? In giving their reasons they overlook relevant authorities or get the law wrong. They do not believe that they are wrong. They think that they are being helpful. There is no ulterior motive or inducement. But their giving of the opinion or advice falls below the standard reasonably expected of professional practitioners in the mediator’s sector who give advice. The mediator is also potentially liable. Whether or not the parties will be able to prove reliance, causation and damage is of course another matter. Although it can be said that mediators are not making the decision in the way that arbitrators or adjudicators do, their authority may be such that in practice they are. Consider how much more difficult the position will be if any of the parties are unrepresented and the mediator gives advice or evaluative assessments to them. If you intend to provide MED/ARB or ARB/MED services make sure that you tell your insurers and that your policy covers you for this activity. At the moment in the UK surer insurers are not usually charging an extra premium for extending cover in this way.

In a nutshell •

The answer to the question when your client asks you if you have professional indemnity cover is: ‘How much would you like me to have?’ Go and buy it and tell them that you have bought it. They will be impressed.

•

PI insurance is cheap at the moment. Buy it and keep cheerful.

•

Not many mediators have been sued yet but it is only a matter of time.

•

Read the various codes of conduct. Then re-read them every few months.

SEE ALSO Q12 FOLLOW UP Walker: Setting Up in Business as a Mediator, paras 17.42–17.44

85

Part 2 At the mediation

87

Question 12

I  did my pre-mediation conflict checks. On arrival I  realise that I know one of the parties/their lawyers. What do I do?

Core issues • impartiality/neutrality • bias •

conflicts of interest

• checks/disclosure.

Discussion Impartiality and neutrality are concepts that are endlessly debated by mediators. There is a disturbing lack of clarity and agreement. Quite often the words impartiality and neutrality are used interchangeably (see Q10). In fact they are not actually synonymous. You can be neutral but not impartial and impartial without being neutral. For example, most High Court judges in England and Wales are regarded as being neutral. They are employed by the state. They have no stake in the outcome of the trial. If they have any prior personal or professional connection with any of the parties they are meant to disclose that and recuse themselves. But even though neutral, judges are often accused of not being impartial. Usually this is by the losing parties who think that the judge was biased against them. Similarly a person may not be neutral but can be impartial. For example, in an internal disciplinary hearing a senior member of staff will often hear the complaint. They are paid by the employer. To that extent they are not neutral in the same way that a third party brought in to the deal with the complaint, for example a workplace mediator, would be. They can, though, act impartially by not showing favouritism towards either side and giving each side equal opportunity to prepare their case and address them on the issues. In the end what this boils down to is whether or not a party can have grounds for believing that a mediator is or could be inclined to favour the other side. Parties at mediations are often in a heightened sense of awareness on this issue. They can be exquisitely sensitive to any perceived bias or favouritism. 89

Part 2  At the mediation What should mediators disclose to ensure there are no grounds for anyone to perceive them as biased or prejudiced? Much will depend on whether or not you have been appointed by a mediation provider, appointing body, or subject to a Code of Conduct. If you have, then certain rules may well be imposed upon you. Not all the rules are the same. So the first thing that you do is make yourself familiar with them. They are more useful in sorting out practical answers to real problems than you might think. Here are extracts from some of the most recent codes promulgated by influential organisations. The European Code of Conduct for Mediators provides: ‘1.2 Appointment Mediators must verify that they have the appropriate background and competence to conduct mediation in a given case before accepting the appointment. Upon request, they must disclose information concerning their background and experience to the parties.’ ‘2 INDEPENDENCE AND IMPARTIALITY 2.1 Independence If there are any circumstances that may, or may be seen to, affect a mediator’s independence or give rise to a conflict of interests, the mediator must disclose those circumstances to the parties before acting or continuing to act. Such circumstances include: •

any personal or business relationship with one or more of the parties;

•

any financial or other interest, direct or indirect, in the outcome of the mediation;

•

the mediator, or a member of his firm, having acted in any capacity other than mediator for one or more of the parties.

In such cases the mediator may only agree to act or continue to act if he is certain of being able to carry out the mediation in full independence in order to ensure complete impartiality and the parties explicitly consent. The duty to disclose is a continuing obligation throughout the process of mediation. 2.2 Impartiality Mediators must at all times act, and endeavour to be seen to act, with impartiality towards the parties and be committed to serve all parties equally with respect to the process of mediation.’ 90

Question 12 The IMI Code of Professional Conduct stipulates that: ‘1.3 Appointment 1.3.1 Before the mediation begins, Mediators will inform the parties of their relevant background and experience. 1.3.3 Mediators, will, prior to appointment, conduct reasonable inquiries to determine if any pre-existing relationship or interest in the subject matter of the dispute creates a real or perceived conflict of interest. The mediator will disclose any such interests and obtain the parties’ consent to continue. Regardless of party consent, if the mediator thinks that the relationship or interest poses a threat to the mediator’s ability to conduct the mediation impartially, the mediator shall decline the appointment. IMPARTIALITY 3.1 Mediators will always conduct mediation in an impartial manner avoiding bias or prejudice in favour or against any party. Bias or favouritism can result from several sources: mediator reaction to a mediation participant’s personal characteristics, background or values; mediator’s personal, professional or financial interests in the subject matter of the dispute; or pre-existing relationships with any mediation participant. If at any time a Mediator feels unable to conduct the process in an impartial manner, s(he) will express that concern and withdraw from the mediation. 3.2 Mediators will not accept an appointment without first disclosing anything within their knowledge that may, or may be perceived to, materially affect their impartiality. This duty to disclose is a continuing obligation throughout the mediation process. 3.3 The existence of a relationship or interests potentially affecting, or appearing to affect, a Mediator’s impartiality will not automatically imply unfitness to act as a mediator provided these circumstances have been fully disclosed and addressed to the satisfaction of the parties and the Mediator. 3.4 The duty to disclose perceived or actual threats to Mediation impartiality is ongoing. Newly discovered interests or relationships creating an actual or perceived threat to the Mediator’s impartiality must be disclosed and parties must renew their consent to proceed with the process. 3.5 Following any such disclosure, if any party raises an objection, the mediator will withdraw from the mediation.’ Brick Court Chambers’ mediation agreement stipulates: ‘7. Prior to or in the course of the Mediation if the Mediator is or becomes aware of any circumstance which might reasonably be considered to affect the Mediator’s capacity to act impartially, the Mediator will immediately inform the parties giving such details as are appropriate.’ The CEDR Model Mediation Procedure 2017 Edition provides that: 91

Part 2  At the mediation 4 ‘The mediator will ensure at all times that the Code is complied with in respect of the mediation of the dispute, reporting any conflict of interest or other relevant matter, if any to CEDR and open question and (subject to any question of confidentiality or privilege)’ the parties immediately it emerges.’ The Code referred to is the CEDR Code of Conduct for Third Party Neutrals. This stipulates that: ‘4. Independence and neutrality The Neutral: 4.1 will at all times act, and endeavour to be seen to act fairly, independently and with complete impartiality towards the Parties in the Process, without any bias in favour of, or discrimination against, any of the Parties; 4.3 will disclose to the Parties any matter of which the Neutral is or at any time becomes aware which could be regarded as being or creating a conflict of interest (whether apparent, potential or real) in relation to the Dispute or any of the Parties involved in the Process, and, having done so, will not act or continue to act as Neutral in relation to the Dispute unless the Parties specifically acknowledge such disclosure and agree to the Neutral’s continuing to act in the Process: such matters include but are not limited to: •

Any personal or business relationship with any of the Parties any financial or other interest in the outcome of the Mediation;

•

Having acted ( either personally or through the Neutral’s own firm or business) in any capacity other than as a Neutral in another Process for any of the Parties;

•

Being in prior possession of any confidential information about any of the Parties or about the subject-matter of the Dispute (but excluding any confidential information given to the Neutral by one of the Parties while acting as Neutral in relation to the Dispute)

•

Any such matters involving a close member of the Neutral’s family

4.4 will not (nor will any member of the Neutral’s own firm or business or close family) act for any of the Parties individually in relation to the Dispute either while acting as Neutral or at any time thereafter, without the written consent of all the Parties.’ Where does this leave us? Do you volunteer or wait to be asked? One difference in the various codes is whether or not as mediator you volunteer information or merely provide it when you are asked. Clearly you must provide accurate and truthful information when asked. What enquiries or searches should you make as mediator to see if there is any potential conflict of interest or other reason why you should not accept the appointment? 92

Question 12 In practice, when you receive an enquiry you will often be given limited information. You are asked for your availability and charges. You may be given information about the nature of the dispute but not necessarily the identity of the parties. You may not be told the identity of the other legal representatives involved in the dispute. If enquiries are made by telephone you can in theory ask these questions if you want to know the answers. It is probably a good idea if you do, but do not expect the person on the other end to know the answers either. Quite often junior members of staff are told to make enquiries about mediators’ availability and charges. They know nothing about the case itself. When you receive information about the parties and their representatives you will immediately know whether you have personally acted for the firms involved before or the parties. If in any doubt check your records. If you not keep any records then you are asking for trouble. As part of your preparation you may well carry out Google searches on the lawyers and the parties involved. Not everybody does this as a matter of course. They do it if they have time. For reasons explained in Q1 searching in this way can be useful in uncovering potential conflicts. But beware: Bear in mind the usual caveats about the uncorrected nature of much of the information on the Internet. Do not abandon your critical faculties when reading it. Do not assume that it is all accurate. I’ve mediated for them before – so what? If you are attached to an organisation of any sort, in particular a firm of solicitors or a set of barristers’ chambers, then you should carry out a firm-wide conflict check. If they have acted for a party before in any other capacity than a mediator you should tell the parties. If you do not and this prior connection comes out later you will probably face a demand from at least one side that you step down. Imagine how embarrassing if this happened at the mediation and you were asked if you were aware of the prior connection. Regard this as reputation maintenance. Does the fact that you have acted for a party as a mediator before mean you are potentially biased and therefore you have to disclose the fact that you have acted as a mediator before? Being a mediator in a dispute is not the same as acting as a lawyer representing a party in that dispute. Quite apart from your different function, ie you are not going to make any legally binding decisions, you are jointly appointed by the parties. Your client is not just one party it is all the parties. You have more than one client. That is fundamentally different from when you are acting as a lawyer. But serial users of litigation and mediation, for example, construction companies or banks can have the same claims handler or manager representing them in mediations. Is this a prior relationship that you have to disclose? 93

Part 2  At the mediation In practice when the parties’ solicitors are trying to agree on which mediator to appoint they usually make enquiries of each other about prior contact or relationships that that firm or their clients may have had with the mediator. Unless someone asks you specifically you may be inclined to assume that they have already satisfied themselves about your suitability. Quite often if you are successful as a mediator you will receive repeat business from a firm of solicitors. If you are asked whether you have mediated in a dispute involving the other side in the past you must answer truthfully. If you are not asked do you have to volunteer the information? Many mediators take the view that if you have not been asked then it is not important to the parties. What happens if you have not dealt with the firm before or their clients but at mediation you find they have instructed counsel and you know them? You were not expecting that. Do you have to disclose that fact to the solicitors in both rooms? Most mediators would take the view that you do not. Over the years as mediations pile up and memory fades you may simply forget who the barristers were – particularly from several years ago. If you recognise one of the lawyers: there is no need to disclose that fact. More difficult if you recognise one of the parties. You should disclose that you have acted in a mediation for them, or if you know them socially. In fact, although mediators and, in particular, mediation theorists and commentators angst about this issue it crops up much less frequently in practice than you might imagine. Much more common is the situation where you are waiting in reception at the mediation venue and some of the parties and their lawyers also arrive at the same time. You may recognise them because you have met them before or from their website. What do you do? The safest course is not to go over and start talking to them. If you do that the obvious danger is that the other party will arrive and see that you are talking to their enemies and assume that you have been nobbled. If someone approaches you, be courteous, but say that you will come and talk to them their private rooms. When you have your pre-mediation chat you can explain that you did not want to appear unfriendly or standoffish, but you did not want the other side to think that you had been nobbled. To avoid this happening is another good reason for you arriving at the venue earlier than everybody else. Social media presents its own issues. For example, if you are on LinkedIn, you can expect to receive a message saying that people are looking at your profile. Quite often it is someone that you do not know but who is associated with the mediation dispute. People are checking out the website profiles in your social media footprint. Just as you are doing. You may receive invitations to become a Facebook friend. Since anybody advising you on how to build a mediation practice will tell you that you need to extend your networks and that the name of the game is all about name recognition you will want to accept invitations. You are ‘getting your name out there’. 94

Question 12 But beware: But what about invitations that come in when you are been considered for a mediation appointment or having been appointed awaiting for the mediation to take place? The sensible and prudent course is not to accept the invitations. Wait until the mediation is over. Being a LinkedIn or Facebook friend is of course not necessarily the same as being a friend in real life. Most professionals will feel comfortable about you being connected on LinkedIn with other professionals and their clients. But Facebook friendship, even on a dedicated business page, seems to connote an extra degree of intimacy. During mediation, if one of the clients asks how well you know the other side’s solicitors or barristers, you just have to tell the truth. Another problem that arises is when they will tell you that they know that you know them. If you do, just confirm it. Do not elaborate unless you are pressed for more information. Just carry on. They might be just testing you out. They do not really care. They just want to try and dictate the agenda and set the tone for the mediation. If they have an issue with it leave it to them to raise it. The specific problem of bias is discussed in Q22.

In a nutshell •

Always check whether you or your associates have previously acted for any of the parties in any capacity other than as a mediator.

•

If you find a prior non-mediator connection, tell the parties promptly.

•

If in any doubt make a disclosure. Do not let greed overcome your discretion.

•

In practice, it is much less of an issue than the commentariat would have you believe.

SEE ALSO Q1, Q10, Q22

95

Question 13

One of the people at the mediation refuses to sign the mediation agreement. What do I do?

Core issues •

the significance of the mediation agreement

•

who controls the mediation process?

•

the importance of confidentiality.

Discussion Mediation is largely a creature of contract. The contract is the mediation agreement. This is particularly significant if you as mediator are conducting a selfadministered mediation. You have to make sure that your mediation agreement not only contains all the terms that you need but that it is signed as well. Scheme mediations, whether court annexed or not, will have a set of rules that apply to mediations conducted under the scheme. They usually stipulate that the parties to the mediation, by signing the agreement, consent to taking part in the mediation under the scheme and in accordance with the scheme rules. If there is a failure to sign an agreement it will be easier in these circumstances to imply terms and incorporate the rules. The same may also apply where the mediation is conducted under the auspices of a mediation provider such as the ADR Group, CEDR or the ICC. They have rules and terms and conditions. They require the parties to sign up to them. But if there is a failure to do that they can be implied and incorporated. Contract in this context means a legally enforceable agreement. But beware: There is no absolute universal requirement that mediations have to be conducted in accordance with a written mediation agreement. The possibility of mediating without a prior written mediation agreement is expressly acknowledged in for example the IMI Code of Professional Conduct which says ‘4.1 Procedure The Mediator will ensure that before the mediation begins, the parties have understood and agreed to the terms of and conditions which will govern 97

Part 2  At the mediation the mediation including those relating to Mediator and party obligations to respect Mediator confidentiality. It is best practice for those terms to be contained in a written Agreement to Mediate, unless the parties or the circumstances dictate otherwise.’ [emphasis added] When does the mediation agreement have to be signed? Most mediators require a mediation agreement to be signed before the mediation starts. Ideally this should be done in advance of the mediation day so the mediator is in possession of a signed mediation agreement when they arrive at the mediation venue. In practice most mediation agreements are signed on the day. Draft agreements for signature are sent out to the parties in advance. Well drafted Terms & Conditions provide that the terms of the mediation agreement apply even if the mediation agreement is not signed before the mediation day. This overcomes the problem of whether pre-mediation correspondence and conversations are covered by the terms of the mediation agreement and in particular the confidentiality provisions (see Q3). Not all mediators require the mediation agreement to be signed before the mediation starts. This is rare in civil and commercial mediations and is more common in community mediations. Even in civil and commercial mediations though it is not unknown for the mediation agreement to remain unsigned. The mediator assumes that the mediation appointing body or provider has obtained the signatures. In the heat of the moment they do not check. Sometimes in the general enthusiasm to get on with the process the agreement is overlooked. But beware: Implying or incorporating terms between the parties, the legal representatives and the mediator is relatively straightforward. It is much more difficult in the absence of express written consent to do this for other attendees such as experts, witnesses or supporters. Legal representatives will understand the importance of signing the mediation agreement. Unrepresented parties may need to have this more carefully explained to them. Lawyers can be assumed to be familiar with the concepts of without prejudice and confidentiality. Unrepresented parties cannot. Attendees who are not parties or legal representatives are in a different position. There may be: •

Potential witnesses, for example, experts.

•

People affected by the outcome, for example, partners or spouses.

• People who are there to provide moral support and have some undefined position of influence with the decision-making party. • Office holders such as trustees in bankruptcy or liquidators who are not technically parties to the mediation agreement. For example where one party has prompted the liquidation of an associated company who is not a party to the dispute but is still a significant player in the dispute. 98

Question 13 All sorts of consequences can flow if there is no signed mediation agreement. You as mediator may not be able to charge overtime or indeed even for your fee in advance. Limitation, let alone exclusion of liability will not be implied. In practice this is not a serious matter: the non-payment of fees is. But beware: The absence of a signed mediation agreement not only makes the mediator more vulnerable but also may prejudice any settlement agreement that is made at the mediation. Applications to court to overturn a settlement agreement made at a mediation on the grounds that the unrepresented party did not fully understand what was going on or the nature of the process have been made. In one case the mediator did not require the parties to sign the mediation agreement. This was probably an oversight. The position was exacerbated by the fact that the other party was legally represented by counsel but no solicitor was present. Why do some people not want to sign? Understanding the significance of the mediation agreement will make it easier for you to explain to someone who is reluctant to sign why they must sign. Some have good reasons for not wanting to sign. Most don’t. Experts Experts are potential witnesses at trial. A  difficulty can arise if they have already signed their expert reports and submitted them. This is even more difficult if it has been exchanged. Why? By signing the report experts are confirming that they are complying with the provisions of Part 35 of the Civil Procedure Rules. In particular PD 35.2.5 which states that: ‘If, after producing a report, an expert’s view changes in any material matter, such change of view should be communicated to all parties without delay, and when appropriate to the court.’ The potential dilemma is this. During the mediation experts learn material information that causes them to change their minds. Two questions arise: 1 Are they entitled to use this information in forming their opinion for the purposes of an expert’s report under Part 35? Like all information learned at a mediation it cannot be unlearned. You may not be able to refer to it because it was learned in circumstances of confidentiality but you know that it exists. There is always the possibility and probably the likelihood that any material information of this nature will eventually be disclosed during the litigation. At the very least it is useful background intelligence if not deployable information. 2 Are they obliged to use this information in forming their opinion for the purposes of an expert’s report Part 35? If they are asked to consider the information at the mediation it is easier to argue that they are obliged to. This is especially so if, as is likely, the experts have a joint discussion under PD 35.9.1. After all PD 35.9.8 stipulates that 99

Part 2  At the mediation ‘If an expert significantly alters an opinion, the joint statement must include a note or addendum by that expert explaining the change of opinion.’ Quite often at mediations there is a joint meeting of the experts in the absence of their clients or lawyers. Regulators A party to the mediation may be a government department which has a regulatory function or a regulatory body. Quite often they will have a continued duty to investigate complaints or wrongdoing. Frequently there will be multiple issues affecting the other side only some of which are the subject matter of the dispute that is being dealt with in the mediation. Information learned at the mediation may suggest to the regulator other lines of enquiry either against a party or against people not present at the mediation. They must be free to use this information and say that they cannot restricted. Just make sure that the other side know, understand it and give their express written consent. Officeholders These are Trustees in Bankruptcy or Liquidators. They have similar reporting functions either to regulators or to creditors. They may also insist that they cannot be hamstrung in carrying out those duties. Barristers They sometimes insist that it is not necessary for them to sign the mediation agreement. They say that it is not necessary because their professional Code of Conduct is sufficient. At one mediation a junior counsel for the claimant refused to sign the mediation agreement. He was only asked to sign that part which confirmed that he was bound by the confidentiality provisions. It was particularly significant because he was representing a regulator which had itself expressed concerns about not being able to use information about wrongdoing that they might learn at the mediation. Their concerns were met by a carve-out, ie the confidentiality provisions were amended to expressly provide that they would not prevented from carrying out their statutory duties. Of course the other side were extremely careful not to tell them anything despite the barrage of requests for clarification. The barrister on the other hand after 90 minutes, including discussions with the professional practice of advisers at the Bar Council, said that he was refusing to sign. There were six other people on his team. What to do? The mediator had a private word with the claimant’s solicitors. Clearly they were exasperated by their counsel’s behaviour but loyally stuck up for him. The mediator spelt it out: ‘If the barrister does not sign, the mediation is not going ahead. You can have your money back and fix another day.’ 100

Question 13 The barrister signed but insisted on including some supplementary words about this being within the context of his professional obligations. The mediation continued until the late hours. It did not settle on the day. The other side were just fed up with the delay and had trains to catch. It settled shortly afterwards. In this case the mediator chose to confront the issue and the party responsible for the issue. As a general rule mediators are well advised to avoid procedural battles. They waste time and dissipate goodwill, but this issue of signing up to confidentiality provisions in the mediation agreement is crucial so the best option is to confront the recalcitrant signatory in this way. Late arrivals Be careful when people arrive late for the mediation, after the mediation agreement has been signed. Make sure that everybody participating signs the agreement. This could be more difficult if parties say that they may want to discuss what’s happening at the mediation with people who are not present. If they are part of the same organisation and that organisation is a party to the mediation they will be bound by the signature on the agreement but often they are individuals, for example, spouses or partners. The experienced mediator obtains an email or text that they agree to be bound by the confidentiality provisions in the mediation agreement. This is why it is crucial to ask the parties right at the start of the day if they have authority to negotiate and agree a legally binding settlement or whether they will have to consult anyone else (see Q15).

In a nutshell • Insist that the mediation agreement is signed by all attendees before your formally start the mediation. This is a deal breaker. No signed mediation agreement: no mediation. •

Have your precedents for carve-outs ready.

•

Watch out for late joiners who need to sign.

•

If non-attendees are to be consulted they have to be bound by the confidentiality provisions – emails and texts can be used to sort this out.

SEE ALSO Q3, Q15

101

Question 14

One side wants a Joint Opening Session but the other doesn’t. What do I do?

Core issues •

is the joint meeting or the caucus meeting model best?

•

who is in control of the mediation process?

•

how the mediator sets the mood for deal making.

Discussion For many mediators the Joint Opening Session (JOS) is an article of faith. If a mediation does not start with a JOS it is not a real mediation. This is still the mantra of mediation training in the UK and in many other jurisdictions and has been for the past 25 years or so. Some mediators go further and say that the whole of mediation should be conducted in joint or plenary sessions rather than using the shuttle diplomacy model based on separate caucus sessions. Commentators and mediators endlessly debate the decline of the Joint Opening Session. Many regret it. Some welcome it. Others just acknowledge that it is happening and get on with life. Is it a bad thing? Is it inevitable? Usually the reluctance to hold a Joint Opening Session comes from one of the parties or indeed sometimes both. There are very few mediators who do not prefer or suggest a Joint Opening Session. But there is a growing body of mediators who discourage Joint Opening Sessions. They think that they are a waste of time. There is too much posturing and showboating. Nothing constructive is achieved. Instead the parties usually just feel irritated with each other. Let’s get down to business they say. Why is there this difference of opinion? Much of it comes from different views about what mediation is. The classic model emphasises that mediation is a voluntary process where the parties choose to invite a neutral third party to help them find their own solution to the problem. Party autonomy is paramount (see Q1). 103

Part 2  At the mediation On top of that is overlaid the teachings of the Harvard Negotiation Project as explained by Fisher and Ury. In their book Getting to Yes they promulgated the doctrine of principled negotiation. There are four basic principles: 1

Separate the people from the problem.

2

Focus on interests, not positions.

3

Invent options for mutual gain.

4

Insist on using objective criteria.

They talk about creating value and growing the pie to achieve win-win outcomes where there is mutual benefit and gain. This contrasts with positional negotiation where the parties claim value to achieve the biggest slice of pie leading to zerosum outcomes where one party’s gain is another party’s loss. The focus of the negotiation is on collaborative not competitive effort. When the parties realise that there is a problem which it is in their mutual interests to solve they will work together to find mutually beneficial solutions. Horse trading is out: problem-solving is in. This philosophy and approach leads to the conclusion that if the parties can sit together they can work together. Hence the preference for joint meetings. In the UK the caucus model is more usual. This is particularly true for civil and commercial mediations. By contrast family mediations are almost always entirely conducted in joint sessions – although there is a growing trend for there to be some private meetings in caucus. With community and workplace mediations hybrid models are used – with a mixture of joint and caucus meeting. Mediators of the transformative or narrative school tend to prefer joint sessions. Those of a more evaluative problem solving approach prefer caucuses. The more purely facilitative mediators are pretty evenly split between those who like to keep the joint sessions going as long as possible and those who like to break up to caucuses as soon as possible. What are the perceived merits of caucuses? •

The parties can speak more freely.

•

The parties can try out ideas with the mediator without telling the other side what they have in mind.

•

Imbalances of power are reduced. The smaller or more vulnerable party will not have to face the danger of being overwhelmed by the larger more forceful one.

•

The mediator can be more interventionist.

•

The risk of rows, arguments and inappropriate displays of emotions which only inflame the situation is reduced.

•

The risk of showboating and turning the mediation into a rehearsal for trial is reduced.

•

Advisers can give confidential advice to their clients.

•

Parties can brief the mediator to become their advocate. 104

Question 14 What are the merits of the joint session? •

Parties to a dispute want most of all to be acknowledged. This means they have to be heard and be seen to be heard. They can do this much more easily in a joint session when they can see their audience. Impact is greater than if the messages are sent through the intermediary, ie the mediator.

•

The risks of each side demonising and thinking the worst are reduced when they can actually see each other and talk face to face.

• Venting, as it is traditionally known, is the process where the parties are encouraged to express their emotions and feelings openly. The idea is that until people have got things off their chest or out of their system they will not be able to think constructively about settlement. While they are locked in the past they cannot start thinking about the future in the present. As the mantra goes: ‘suppressed emotions sabotage settlements.’ Venting is more effective in joint sessions. •

People find it easier to collaborate with people. The more time people spend collaborating the more they like each other. The more they like each other the more they trust each other. People do business with people they know, like and trust. But beware of what happened at one two-party mediation. Two disputants were on very bad terms. Both had instructed counsel on a direct access basis. The barristers turned up at the mediation and had a word with each other. They agreed that the case really ought to be settled and the scope of settlement seemed to be achievable. They also agreed that it would be a very bad idea for their respective clients to be in the same room. They both told the mediator that. The mediator was having none of it: ‘This is my mediation. I am in charge of the process. I know what I am doing. I  am the Vice-President of XXX. I  always have a joint opening session. I keep it going for long as possible. It is important that the parties feel that they can express their emotions about the dispute and each other. ‘ ‘No.’ said both barristers. ‘That is a very bad idea in this particular case.’ The mediator insisted on a Joint Opening Session. It went on until lunchtime as she explored the parties’ emotions. By the end the two parties were incensed with each other. Blows were narrowly averted. They returned to their rooms for a sandwich. The mediator visited both rooms and was shocked and shaken at the vehemence and venom in each room. It was so bad that the mediator refused to visit the rooms again and insisted on conducting the rest of the mediation through counsel coming to see her in the mediator’s room. No settlement was achieved.

105

Part 2  At the mediation What are the reasons for not having a Joint Opening Session? • Relations between the parties are so bad that they cannot bear to look at each other. Sometimes this is justified. Particularly if there has been a history of physical or psychological violence, eg bullying. The victim may not want to be in the same room as the perpetrator. •

Trust is low and emotions are high. People cannot stop themselves having a go and telling each other exactly what they think of each other. An offensive and sometimes aggressive and hostile atmosphere is generated. This is not conducive to deal-making.

•

The lawyers have their day in court. They try and intimidate and cross-examine the other side. A classic example from an experienced barrister was: Q: ‘Are you an honest man?’ A: ‘Yes.’ Q: ‘I am really looking forward to cross-examining you. I’m very good at it. The last person I cross-examined committed suicide.’ The other side looked bewildered, his side looked stunned and the mediator tried to look elsewhere.

•

Everybody’s impatient to get on with things. The lawyers say we all know what the points are. We’ve been corresponding and arguing them for a long time. Let’s just get down to the dealing with the figures.

•

Stress: will stress levels be raised or lowered by a Joint Opening Session? In one bitter shareholder dispute between the founders of the company the claimant’s lawyers refused to allow their client to attend the Joint Opening Session because he was recovering from a heart attack. His wife attended as his alternate. She reported back to her husband who later in the day happily joined in breakout sessions with the other side’s accountants.

What are joint sessions for? There are basically two types of joint session: •

The brief getting to know you session Where the mediator sets the ground rules and mood music. All attendees introduce themselves.

•

The traditional exchange of views Where the lawyers explain to each other why they are going to win.

In deciding your approach to whether to have a joint opening session go back to basics. What is mediation about? If it is about making peace not war and trying to make deals why not have a joint opening session? 106

Question 14 If you think that making a deal to settle a dispute or a legal proceedings is at heart the same as doing a deal to sell a company or buy a property then you will have a joint session. Very rarely do vendors and purchasers of companies of properties never meet. Sometimes the parties never meet or say even say ‘Hello’ to each other. Quite often they don’t know each other. Their lawyers have never met. The decision-makers may not have been involved in the situation that gave rise to the problem. Why negotiate with strangers? At least say ‘Hello’. Some experienced mediators in fact insist that the parties have breakfast together. They don’t talk about the dispute or the mediation they just share croissants. Some clients love this. Others just get a dose of indigestion to add to their indignation. But in practice strangers do manage to do deals and reach settlements. At a recent TOLATA mediation the estranged partners were present. They had not spoken for two years except through solicitors. Neither solicitor was present. Each had instructed counsel who did not know each other. There was no Joint Opening Session. There was no joint meeting of any type, not even between counsel when drafting the settlement agreement. But it settled within time and everyone seemed happy. An important part of any negotiation is trying to read the other side. The more that you know about them, the easier this will be. After all the heart of negotiation is trying to find something they want you to exchange for something they have that you want. If you tell the parties this you might be surprised how often they come round to the idea of a Joint Opening Session. What are your options? With this background about the potential benefits of the joint session you can explore with the parties what their objections are. •

Assure them that you will not allow cross-examination and that if they feel too stressed or fragile they can leave at any time.

•

Emphasise in your opening statement (see Q15) that the purpose of being in mediation is to make peace not war and that you will not allow bad behaviour. People, because of past relations with the other side, are reluctant to go to a joint session, but those that go usually feel much better afterwards. They overcome some psychological barrier. It’s rarely as bad as they fear.

• Pre-empt. In your preliminary chat with the parties before the mediation actually starts (see Q1) you can often find out from the other side what they intend to say and what approach they will be taking. If you have any doubts about how appropriate this is you can tactfully discuss them with them. •

Explain that the benefit of a joint session is mainly for the mediator’s benefit. You as mediator can explain the purpose of mediation in the same language to everybody at the same time. They all receive the same message.

•

Say that it doesn’t look good if people do not nod when you say: ‘We’re all here to settle today aren’t we?’ 107

Part 2  At the mediation or confirm when you ask them point-blank in front of everybody: ‘Do you have authority to settle?’ The abbreviated ‘getting to know the other side’ type of joint sessions can be useful. In practice they are rarely limited to just saying ‘Hello’ and everyone confirming that they are here to settle and have authority to do so. Not everybody can exercise that degree of self-restraint. Especially if they are lawyers. But beware: If the parties, and especially the lawyers, want to explain to the other side why their case is hopeless and that they are going to lose, let them, but do warn everybody of the dangers of inflaming the situation so that everybody’s temperature rises and you spend the next two hours bringing them down to operational level (see Q31). If the lawyers are talking too much or are using excessively aggressive language be prepared to confront them and intervene to say that you’re not sure that this is helping the parties to do what they said they want to do and make peace. But do it tactfully and don’t do it very often (see Q15). Does it matter if there is no Joint Opening Session? Anecdotally the evidence is that the Joint Opening Sessions are falling out of fashion. Solicitors are increasingly attending mediations with a track record of previous mediations. They know how the process works and the games people play. They fear that time is just wasted as the lawyers grandstand. Let’s get on with the process, they say and we can meet up later if need be. Perhaps in the past there was some evidence that the settlement rate on the day was a little lower if there was no Joint Opening Session. But now it seems to make little difference.

In a nutshell •

You cannot force anyone to do anything and procedural battles are not worth fighting.

•

Joint Opening Sessions are a mediators’ tool not a badge of ideological purity and commitment.

•

If a party does not want one don’t force them. Their stress levels will already be high enough.

SEE ALSO Q1, Q15, Q31 FOLLOW UP Walker: Setting Up in Business as a Mediator, paras 20.25–20.29 108

Question 15

One of the lawyers tells me that they are going to be aggressive in the Joint Opening Session. What do I do?

Core issues •

what is the purpose of a Joint Opening Session?

•

what is the mediator’s role?

Discussion One issue that most mediators agree on is that their job is to help the parties reach a settlement if they can. Different mediators go about this in different ways. But most want the mediation day to start off on the right footing. They want to create atmosphere which is conducive to settlement. What mediators say and do in any Joint Opening Session is an important part of doing this. Most Joint Opening Sessions start with the mediator making an opening statement. Again there is a wide variation in the way that mediators do this. This is your opportunity to set the mood and the agenda and clarify the procedure for the day. If you know that one of the parties is itching for a fight and wants to turn the mediation into a mini trial this is your chance to forestall them. How do you do this? In your opening remarks you emphasise the following: •

The purpose of mediation is to make a settlement. There is no other purpose. You are there to make peace not war. That requires a different mind-set and skill set.

•

Mediation is not a rehearsal for trial. Neither is it a mini-trial. If the parties want to have a fight they can go to court. Someone can then say who has won.

• Settlements are not achieved by arguing about the law and evidence all day long. Deals get done by discussing proposals. The sooner that there are proposals on the table the better the chance of doing a deal that day. •

We therefore look for an early exchange of proposals. Preferably before the sandwiches arrive.

•

Most mediations fall into three phases. 109

Part 2  At the mediation 1

The advocacy phase. Where the parties tell the mediator all the points that they will tell the judge if the case does not settle. You cannot ignore legal points altogether, but unlike in litigation you should not concentrate your time and energies on them.

2

The problem-solving phase. Where the parties look to see if they have the building blocks to build on and to move into negotiating the final figures.

3

The negotiation phase. Where the parties have decided they do have the building blocks to construct a platform for settlement and can concentrate on agreeing the final wording and the final figures.

• As soon as everybody can move out of the advocacy phase into problemsolving phase the greater the chance of settlement. •

•

You will also tell the parties that mediation needs at least three things: 1

The authority to settle. Look at each party and ask them point-blank whether they have the authority to settle. Check that they do not have to refer back to anybody. No phone calls to insurers, funders, board members, partners, etc.

2

The will to settle. Everybody knows what that means. To be flexible, to give a point and take a point. To think laterally.

3

The confidence to know that if you do make any suggestions, suggest compromises or concessions they will not be thrown back in your face. Everything is without prejudice and confidential.

You then go on to explain that they do not have to convince you of anything except that they are trying to negotiate a settlement in good faith. You ask them to do two things: 1 Price up the risk of doing better elsewhere, ie  calculate the litigation discount. This is an exercise for the lawyers. 2

What is the benefit of settling? You do not just look at the cost of settlement but also the value.

•

Doing that will help the parties benchmark any proposals that are put on the table on the day.

•

Say that in a moment you will ask everybody if there is anything that they would like to say, bearing in mind that everyone is there to make peace not war and they have exchanged position papers.

• Ask the listening party to bite their tongue no matter how defamatory, inflammatory or just plain wrong they think that the speaker is. Everybody gets the chance to say what they want at the mediation. •

Give them words of encouragement and remind them that the statistics show that something like 70% of all mediations worldwide produce a settlement on the day.

•

Conclude by asking who would like to go first – indicating that it is usually the claimant who does this.

Giving your remarks along these lines does several things. •

You are putting down markers and sowing seeds. 110

Question 15 •

You are setting the mood and the agenda.

•

You are managing expectations by telling them that the purpose of mediation is to try and do a deal. Most people who come to mediations succeed in doing a deal. But you are also warning them that if they stay too long in the advocacy phase arguing about the law and facts they will make that difficult for themselves.

By doing this you have created a context in which aggressive behaviour will be seen as inappropriate. Realistically you cannot prevent lawyers or clients who are intent on ‘sticking it to the other side’ from doing so. You are also giving yourself and the parties and their lawyers a framework within which to work. You will be able to refer back to what you said in your early statement later in the day. Do not forget the power of people’s bias towards consistency and commitment. If they heard what you said at the beginning and didn’t object they are more likely to buy into it later in the day when you repeat it when the going becomes more difficult. Doing this also highlights your position as manager or director of the process. Beware: Do not open your remarks with a history of your life and achievements. You waste time and look egotistical. It shifts the focus from the clients to you. You also give the awkward advocate an opportunity to ask questions about your experience. You do not want to start justifying yourself right at the start of the process (see Q9). Some of these remarks will echo what you said in your pre-mediation chats with the parties and their lawyers. Hearing them again does no harm. You reinforce the message. Should I give aggression coaching? When someone therefore tells you that they intend to be aggressive, acknowledge that their right is to conduct negotiations as they think best. But ask how they will respond if they are attacked in their turn. Explain that giving a clear and pointed assessment of the situation is one thing. Giving a tendentious and partisan presentation of your best points is another. Tell them that you have seen at mediations how if one side sides gives an aggressive presentation and the other side responds in kind they will see the temperature rise, arms folded and shutters going up. If you see this happening do not be afraid to say that this is what you are observing and to suggest that people take five minutes to regroup. At this stage you have to be prepared to show leadership. Should mediators ask questions or summarise/reframe as they go along? Generally it is better to save questions until both sides have finished their opening statements. You can ask short closed questions by way of clarification just to make 111

Part 2  At the mediation sure that you fully understood what is being said. If you have misheard a name or did not catch the cross-reference ask for it to be repeated at an appropriate stage. You do not want to appear inquisitorial. At this stage both sides can be hypersensitive to any indication of bias or favouritism in their opponent’s favour. Some mediators provide a summary of the points they think need to be addressed at the mediation before the parties speak. They do this as part of their opening remarks. This is a very overt setting of the agenda. Barrister advocates seem to welcome this more than solicitors or clients. Probably because they are used to hearing judges do the same thing in court. Others summarise after each person has spoken. That certainly gives a direction to what is being said but again carries the risk of the other side thinking that you as mediator are indicating a preference. It also interrupts momentum. If you are going to keep the Joint Opening Session going and not immediately break up into caucus sessions you will need to summarise to give the next round of discussions in the joint session some direction. Many use a flipchart to do this. In some mediation training schools use of a flipchart is mandatory. Mediators who use flipcharts as a matter of course tend to follow the joint session model rather than the caucus model. Flip charts are used less in commercial mediations than in other types. As a general rule the more sophisticated the audience the less flip charts are used. But beware: If you do not want to keep the Joint Opening Session going, go promptly to see the parties in their private rooms for a caucus. Decide which party to go to first. It does not have to be the claimant. There is a convention that the mediator goes to the claimant first, but if you think that it would be more useful for you to speak to the defendant first just say that is what you will do because there is something you want to clarify. Deflecting aggression If in the Joint Opening Session one of the parties, or more likely their lawyers, raises difficult questions suggest that you take delivery of it and come back to it later. Never reject – or decline to answer – a question. Always defer. Say you will postpone further discussion but offer the prospect of revisiting the issue. Say something like: ‘Yes. I’ve made a note of that point. Might be better if we come back to it a little later when everyone has had the opportunity of reflecting on what’s been said so far. We won’t lose sight of it.’

In a nutshell •

Discourage parties from court room tactics and in particular being aggressive. 112

Question 15 • Do not tell people, especially lawyers, how to do their job. This will alienate them. •

Warn the other side if an aggressive display is forecast.

•

Be prepared to coach the parties in mediation process and presentation.

SEE ALSO Q9

113

Question 16

An anxious party asks me: ‘Can you guarantee that nothing that I say in this mediation can ever be referred to elsewhere?’ What do I say?

Core issues •

how confidential is mediation in reality.

•

what should you as the mediator explain to the parties about confidentiality.

Discussion There are those who believe that confidentiality is at the very heart of mediation. Some go so far as to say that without confidentiality you cannot have a mediation at all. Others are now challenging this. They point out that confidentiality is never absolute and has never been absolute. In any case why can’t negotiations take place and succeed without confidentiality? After all some mediations are conducted without any confidentiality being expected, for example practitioners of public mediation involving many different stakeholders and government agencies say that you have to assume that nothing is confidential and everything will be leaked. The difficulty is that widespread confusion has emerged about the concept of confidentiality. Under English law there is confidentiality, which is implied whether or not there is a provision in a mediation agreement. This is the confidentiality, which attaches to any genuine settlement discussions. More usually this is referred to as ‘without prejudice’ confidentiality or privilege. In addition there is contractual confidentiality. Contractual confidentiality Most mediation agreements impose it. They include terms such as: ‘1 The Parties, their representatives and advisors and the Mediator agree in relation to all information and statements, whether written or oral, disclosed or made to them in the mediation including any preliminary steps: i

To keep them confidential (save only as may be required to report to the Court or an Arbitrator or Arbitrators whether or not the matter has been resolved, to professional advisers, HM Revenue & Customs, relevant regulatory authorities or as may be required by law)

ii

Not to use them for a purpose other than the Mediation 115

Part 2  At the mediation iii That the obligation of confidentiality herein shall bind the Parties on all those attending on their behalf and the mediator iv That no notes taken by the parties or by the Mediator and no other evidence concerning the conduct of the Mediation including oral submissions, oral statements, concessions or admissions of law or fact will be adduced in evidence in any subsequent proceedings in Court or before an Arbitrator or Arbitrators in connection with the Dispute (provided that if they would otherwise independently of the Mediation have been admissible in such proceedings they should not be rendered inadmissible by reason of having been made during the course of the Mediation) 2

This agreement is without prejudice to the parties’ ability to disclose the fact or the terms of any settlement made in the course of the mediation, the parties being free to determine as and when the agreement is entered into and the extent to which it should remain confidential.

3

None of the Parties will seek to procure evidence from the Mediator nor call him as a witness in any litigation or arbitration arising out of or in connection with the Dispute, the Mediation or any settlement reached at or in the course or following the Mediation. The Mediator may at his absolute discretion give such evidence only with the written consent of all the Parties.

4 Any party who seeks (whether successfully or not) to require that the Mediator (including any servant or agent of that Mediator who may with the consent of the Parties be involved in the Mediation) give evidence and/or provide documents arising out of or concerning the Mediation or this Dispute in any arbitral or judicial proceeding hereby agrees to indemnify the Mediator and/or any such servant or agent of the Mediator against any costs, expenses or disbursements including legal expenses incurred in respect of any such attempt by that party. ‘ Contractual confidentiality is a three-way relationship. You, as mediator, are bound by the confidentiality provisions and you also have the benefit of them. It is in addition to the without prejudice privilege which attaches to all genuine settlement discussions. There are differences between them. Without prejudice confidentiality This is never absolute. Essentially what it means is that the parties to the mediation may engage in frank discussions about settlement and make concessions that are trying to achieve this in the knowledge that if the case does not settle those offers and concessions cannot be referred to later. The discussions are without prejudice to their legal rights. The exceptions to this rule are well-established. They are often referred to as the eight ‘Unilever exceptions’. The Supreme Court added a ninth in Oceanbulk Shipping & Trading SA v TMT Asia Ltd [2010] UKSC 44. The nine reasons are: 116

Question 16 1

When the issue is whether without prejudice communications have resulted in the concluding compromise agreement then those communications shall be admissible.

2

Evidence of without prejudice negotiations is also admissible to show that an agreement arising from those negotiations should be set aside on the ground of fraud or undue influence.

3

Without prejudice negotiations, even with no clearly concluded compromise agreement, may be admissible where there is a clear statement which gives rise to an estoppel.

4 Without prejudice negotiations may be admitted if their exclusion would conceal some form of impropriety, such as blackmail or perjury, although this exception is only to be granted on most unambiguous of occasions. 5

Evidence of without prejudice negotiations may be given in order to explain delay or apparent acquiescence, although this evidence is normally limited to the existence of communications rather than their contents.

6

Without prejudice indications may be admitted as evidence that a party has acted reasonably to mitigate the loss in his conduct.

7 The use of the express phrase ‘without prejudice save as to costs’ attracts an exemption to the without prejudice rule in relation to the assessment of costs. By the same token, where the parties had also clearly stated some other exception to the rule in the communications, then this would also apply. 8

In matrimonial cases there is a separate privilege extending to communications received in confidence with a view to matrimonial conciliation and this is distinct from the normal without prejudice privilege which belongs to the parties.

9 Where there is a necessity to examine without prejudice negotiations in order to assist in interpretation of an agreement, which results from those negotiations. Usually there will be no need for you as the mediator to explain the exemptions to the without prejudice rule. If the need arises it will be sufficient to briefly summarise them as indicated above. If the parties have legal advisors present or available tell them not to take your word for what you’re saying but to check with their advisors. Always ask the lawyers to correct you if they think that you have got it wrong. Be aware that there are real practical limits to without prejudice confidentiality in mediations. Recently Master Howarth said in Savings Advice Limited v EDF Energy Customers Plc (2017, unreported), in relation to costs (see also p 120), at para 29: ‘It seems to me that without prejudice privilege exists to protect the disclosure of admissions and concessions made in negotiations not to protect statements of pure fact.’ Confidentiality In practice there are two types of confidentiality: • Internal • External 117

Part 2  At the mediation Internal confidentiality This applies to communications which take place between the parties and the mediator in private. What a party tells you in a caucus is confidential to you as mediator and you cannot disclose it to the other side without the permission of that party. You therefore have to make very sure at the end of each caucus what that party is happy for you to disclose and what it does not want you to disclose. Often it will be obvious. If they ask to take an offer on their behalf or their response to a question from the other side, then that is disclosable. If the lawyers have discussed openly with you their legal assessment of the case and told you what they think that the percentage chances of winning at trial are, that is obviously non-disclosable. It is good practice at the end of each caucus, particularly after the first caucus which might be quite wide ranging, to ask the parties: (1) If there is anything that they specifically want you to tell the other side. (2) If there is anything that they specifically do not want you to tell the other side. (3) If there is anything that they are happy for you to tell you the other side if you think that it will help the process. In (1) and (2) the parties are giving you an express instruction. If they specifically say that you must not disclose something then you must not. There is no exception to this. If they specifically instruct you to tell the side new information you can decline to do so if you think that it is inappropriate. For example, if they tell you to give an extreme response such as ‘That is just the sort of fraudulent statement I would expect a bunch of crooks like you to make.’ Or ‘that is a typically slimy and untrustworthy statement that the sort of people from their background usually make.’ See also Q19. If they give you discretion, as in (3), exercise your discretion in a professional and reasonable way. But you must actually exercise it. Think about whether or not to disclose some information. If you have any doubts the safe bet is to go back and check. Practical problems do arise. There may be confusion about whether or not you have discretion to disclose information. That it is why it is always best to double-check. If you have an observer, assistant or co-mediator they may inadvertently blurt out information or they may have misunderstood what was covered by the discretion and what was not. This is less of a problem with observers but it can be a problem with assistants and especially co -mediators. Observers will realise that they are learning and will probably remember to keep quiet. Barristers and senior lawyers sometimes find this difficult to do as they are used to taking the lead in their professional lives. Co-mediators are much more aware because they are in the same position as you. 118

Question 16 What happens if your co-mediator does blurt out something? A  lot will depend upon whether the receiving party realises that confidence has been broken. If they do you will simply have to say that you would like to stop this caucus for a moment and come back in a minute. You then discuss with the blabbermouth why they disclosed the information. Tell the disclosing party what has happened. How bad the disclosure is will depend on the nature of the information. Of course the disclosing party will be concerned. They may take the view that the whole settlement procedure has now been compromised and want to terminate it. Certainly their trust and confidence in you, and especially in your colleague, will have been shaken. In the circumstances the best thing to do is to ask the perpetrator to leave the mediation. Go and see the receiving party and tell them what has happened. They will of course realise that there has been a breach of confidence. Pick up the mediation process as best you can from that stage and move on. They may not want to continue because they may have also lost confidence in you. If you are prepared to break a confidence in telling them something will you make unauthorised disclosures to the other side? If when the disclosure is made the receiving party does not realise that there has been an unauthorised disclosure bring the caucus to an end as soon as you can without it looking as so you are doing this prematurely and deliberately. Then go and see the disclosing party as above and tell them what has happened. Often whether there really is any confidentiality in a piece of information is a matter of timing. There is often nothing inherently confidential about the information. The issue is the circumstances in which it should be disclosed and when. Often on closer analysis no real harm is done by a premature disclosure. But the real harm is the damage to your reputation for competence and reliability. External confidentiality This refers to discussing with third parties who are not present at the mediation what happens at the mediation. As a mediator can you be compelled to discuss what happened? After all, unlike without prejudice confidentiality which belongs to the parties, contractual mediation confidentiality belongs to the parties and to you as the mediator. But beware: Have no doubt, under English law if the court thinks that it is, as they say, in the interests of justice that you give evidence about what happened at the mediation you will be compelled to give it. Whether this is just or not is not the point – it is settled law for the time being. As Mr Justice Ramsay said in the leading case of Farm Assist Limited (in liquidation) v The Secretary of State for the Environment, Food and Rural Affairs (No 2) [2009] EWHC 1102 (TCC), at para 52: ‘Fifthly, as I  have set out above the Mediator has an enforceable right to confidentiality under the express terms of the Mediation Agreement unless it is in the interests of justice that she should be called as a witness.’ 119

Part 2  At the mediation And concluded at para 53: ‘(5) Finally , whilst the Mediator has right to rely on the confidentiality provision in the Mediation Agreement, I  consider that this is a case where, as an exception, the interests of justice lie strongly in favour of evidence being given of what was said and done.’ Not all information is equally confidential. The courts have decided recently that the information disclosed at mediation about costs is disclosable. This was at a costs hearing- Savings Advice Limited and Zinc Consumer Ltd v EDF Energy Customers Plc. Master Howarth said, at paras 29 and 30: ‘In my judgment it is imperative that when parties enter into to a formal mediation or informal negotiations for settlement of a claim that they do so in the full knowledge of their opponent’s costs. The amount of the costs of litigation condition any subsequent negotiations or mediation that may follow. Documents that are brought into existence for the purpose of the mediation or settlement in order to settle the substantive claim should in my judgment be treated as inadmissible in any subsequent litigation in accordance with the judgment of Ramsay J in Farm. … The whole purpose of the mediation was to achieve a settlement. In those circumstances any costs information given in mediation is and must be admissible in order to work out a consequence of any subsequent settlement.’ In addition confidentiality can be lost by unconscionable conduct such as making threats . A  good recent example involving a mediation is the case of Ferster v Ferster. Be aware if you become involved in post mediation discussions of the dangers of forwarding communications from one side to the other as a post-box. Here the court found that an email sent via a mediator after a failed mediation over share sales still amounted to blackmail even though it was routed through the mediator. Never suspend your critical faculties or switch off your self-preservation antennae. Exceptions to mediation confidentiality There are four main ones in mediations •

Criminal activity – see POCA part 7, Q7.

•

Terrorism-see TACT part 3, Q7.

•

Children see Children Act 1989.

•

Financial disclosure in family mediations.

120

Question 16

In a nutshell • Breach of confidence by mediators is rare in practice. It does happen by accident or confusion. •

Breach of confidence by parties is more common. It happens by accident or confusion and by design.

•

If the court wants to hear what you as mediator have to say they will compel you to attend in the interests of justice.

•

Be careful not to breach confidentiality. Check with the parties what you can disclose but do not be paranoid about it.

SEE ALSO Q7, Q19 FOLLOW UP Children Act 1989 Toulson and Phipps Confidentiality (3rd edn, 2012) 17-018 Ferster v Ferster [2016] EWCA Civ 717 Allen: Mediation Law and Civil Practice, Ch 9

121

Question 17

‘Don’t tell the other room’ one party says, having just revealed that their expert has changed his report which fundamentally weakens their case. What do I do?

Core issues •

what does good faith mean in mediations?

•

the role of the mediator as referee to make sure that the parties play by the rules that the settlement is a fair and reasonable one.

•

what do mediators do with ‘guilty knowledge’?

Discussion Good faith in mediation can mean different things. 1 That people are genuinely trying to settle the case. They have not come for some ulterior or collateral purpose such as merely to tick a box or to try and intimidate the other side so that they will drop their case or to find out information about the other side’s case, preparation and witnesses. There is no doubt that some parties attend mediations without a fixed, genuine intention to try and settle the dispute on the day. Instead they see it as a preparatory step before a fuller attempt at negotiation. Or they may see it as a reconnaissance to help them formulate an effective Part 36 Offer. Insurers, for example, are particularly prone to doing this. 2

That the parties do not deliberately mislead each other. They do not present false information. They do not tell lies. If you accept that while not every negotiation is a mediation, every mediation is a negotiation, you know to expect people to behave in a way that suits them and is to their advantage not yours. So they will bluff and exaggerate. Inevitably they will maximise their good points and minimise their bad ones. They will not volunteer information that is helpful to you but unhelpful to them.

This distinction between the two meanings of good faith has been recognised by the courts in England in the case of Walford v Miles [1992] 2 AC 128: Lord Justice Ackner said: ‘However the concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations. Each party to the negotiations is entitled to pursue his 123

Part 2  At the mediation (or her) own interest, so long as he avoids making misrepresentations. To advance that interest he must be entitled, … to threaten to withdraw from further negotiations or to withdraw, in fact, in the hope that the opposite party may seek to reopen the negotiations by offering him improved terms.’ What is the effect of unreasonable conduct? In the case of Carleton (Earl of Malmesbury) v Strutt & Parker (A  Partnership) [2008] EWHC 424 (QB) Mr Justice Jack said: ‘As far as I am aware the courts have not had to consider the situation where a party has agreed to mediate but has then taken an unreasonable position in the mediation. It is not dissimilar in effect to an unreasonable refusal to engage in mediation. For a party who agrees to mediation but then causes the mediation to fail by reason of his unreasonable position in the mediation is in reality in the same position as a party who unreasonably refuses to mediate. In my view it is something which the court can and should take account of in the costs order in accordance with the principles considered in Halsey.’ Between these two poles of trying to reach a settlement at mediation by bluffing and pressurising and not destroying the chance of achieving it by lying or making misrepresentations is the grey area in which mediators have to operate. Mediators do acquire information that could be relevant to the decision making of one side or the other and which they are not free to share or disclose. They acquire different sorts of information in different ways: •

One party expressly tells them something about themselves, eg the medical expert has changed his prognosis. Their client is now likely to make a full recovery or in fact is now malingering. They suppress evidence that is harmful to their case. This is evidence that may eventually come out during the litigation process, for example, the revised expert’s medical report. Or it may be evidence that will not come out in this way, eg  the fact that a witness refused to sign their draft witness statement and does not wish to attend at trial.

•

One party expressly tells you something about the other side, eg they have video footage with sound showing the other side’s clients to be fully recovered and boasting in the bar about how they have conned their insurers. One side wants to keep back evidence that is helpful to their case and harmful to the other side’s. They want to retain a bombshell for cross-examination. They are trying to set a trap. One side tells you of their intentions if the case doesn’t settle but they do not want you to tell the other side.

•

One party does not tell you something – they show you, eg photographs, tape recordings, email strings which they regard as potential evidence but have not yet disclosed to other side. For example, they make it clear to you that if the mediation doesn’t settle they are going to report the other side to the police/ and or regulator for fraudulent activity.

•

No one expressly tells you anything but they hint. Do you, the mediator, try and decode what they are saying or leave it as a hint? They are marking your card but do they expect you to go mark the other side’s card? 124

Question 17 •

No one tells you anything – expressly or implied. You are there in the caucus room talking to them, listening and observing. You cannot stop yourself learning things. You receive data, process it and you interpret it. You might suspect that one party is not telling you everything that you need to know. You may doubt the veracity of what they are telling you. What do you do with your opinions? One side tells you of their intentions about their own future activity, eg that they intend to file for bankruptcy or liquidation. What do you do, for example, in a restrictive covenant case where one side is being sued by the other for breach of restrictive covenants and siphoning off business opportunities etc and there is talk about as part of the settlement entering into a fresh restriction you hear the Counsel say ‘Agree to it. I’ve advised you how to get round it.’

•

You overhear something. You are in the washrooms and you overhear one side talking and saying that they are not going to make an offer until 16:00. And they are going to leave at 17.00 because they have a plane to catch. What do you do?

• You observe from the behaviour of the parties in one room that there is disagreement between what the clients want to do and what some or all of the lawyers are advising. Disagreements arise out of: Legal costs Clients often learn at mediation for the first time exactly what their legal costs are going to be if they settle or if they do not settle and go to trial. When they do they are usually disappointed at the scale of them and how little they will have as net cash in their hand after being deducted from any settlement sum or judgment award. To settle or not? Usually it is the clients who want to settle and the lawyers advising them not to on the grounds that they can do better at trial for their clients. Sometimes it is the other way round and it is the clients who are holding out. Previous advice Clients complain that what they are being told now is different from what they have been told before. They say that they have been told previously that they were going to win or that a particular type of evidence was not required and now they are being told the opposite. When the counsel representing them at mediation has only recently been instructed, they may be given advice with a different emphasis from what their solicitors have previously being saying. Or the clients can be changing their instructions. In the past they have been very confident in their recollection of particular events but at the mediation their confidence is weakening. Quite often the version of events in the case that is 125

Part 2  At the mediation being advanced at the mediation is not the same as that put forward either in correspondence or in the pleadings/court papers. They tell the other side that they have evidence Usually this is in the form of a witness statement. The other side asks to see it, but are refused. The side with the evidence then offers to show it to you and invites you to confirm to the other side that you have read it and that it says what they say it says. Sometimes one side offers to show you their Counsel’s opinion. They do not want to actually show it to the other side for fear of waiving legal privilege. What do they want you to do with the knowledge? What do you do in these circumstances? A lot will depend on what your professional obligations are to whatever professional body you may belong to, for example, as a barrister, solicitor accountant or doctor as opposed to your obligations as a mediator. You cannot assume, for example, that if you are a solicitor acting as a mediator you are free of your professional obligations as a solicitor. You cannot act in a way which might be acceptable under the codes of conduct for mediators but not under the professional etiquette requirements for solicitors. In these cases there are certain questions you should ask yourself: •

Why is someone telling me this?

•

What is the reason they are telling me something that they do not want to disclose to the other side?

•

Whose behaviour are they trying to influence?

Consider this: •

Are they in fact trying to win me over to their case or their point of view? Probably they are. Do they think that if I buy into their case more that in some way I will convey my confidence to their side?

• Are they subliminally hoping that my approach and demeanour will be influenced by what they told me? •

Do they want me to use the knowledge or information which is not to be shared with the other side in my questioning of the other side when I  am reality testing? So that the other side’s confidence in their own case or even in their lawyers will be undermined.

But beware: They may be road testing the potential impact of what they have told you. They want to see how you react to it. Is it as powerful a bit of ammunition as they think that it is? Be careful not to react immediately. Keep a straight face. Wait for them to ask you what you think. If they ask you, you discuss with them its potential significance and implications. But think twice about volunteering your opinions without being asked. 126

Question 17 Consider this: Discuss with them the implications of non-disclosure. Is the information potentially so fundamentally important that if the other side knew they would radically change their position? Might it cause them to capitulate because it is a bombshell? If it has this potential to make them more amenable to settle why delay disclosing it? But beware: There are dangers in springing surprises. If the information truly is devastating the other side will probably need time to absorb it and reflect on what they are going to do. The mediation is likely to be adjourned, if not actually cancelled. You might have to do some coaching (see Q33). •

Discuss with them whether or not the effect will be as devastating as they think. Ask how they would receive it if they were the other side. In practice most bombshells are less lethal than those launching them think. Remind them that very few things turn out to be as bad or as good as people imagine. But they won’t know until they have delivered it.

•

A  key question is whether or not subsequent disclosure of the information would affect either any settlement that was made at the mediation or any application for costs. As the two cases quoted above make clear, parties at negotiation are free to be as tactical as they like, but not to misrepresent. Remember unreasonable conduct during a mediation is equivalent to an unreasonable refusal to mediate and carries the same potential adverse costs consequences.

• Discuss with them how they would react if the other side learns of the suppressed evidence and applies to set aside any settlement made at the mediation. What will this do generally for the disposal of the case, and for their reputation, whether as clients or solicitors? •

Ask them how they would respond if the other side required a warranty in the settlement agreement that there has been full disclosure of their client’s financial means and that no material information is false or omitted.

•

In the end if you, as mediator, form the view that what is being withheld or put forward amounts to misrepresentation you have to bite the bullet. You can either frame this as an ethical question or as one of self-preservation. They overlap but much depends upon your emphasis.

If there has been a misrepresentation and an application is made to set aside a settlement agreement and it comes out that you as mediator knew about the information before the agreement was made that will not do your reputation any good at all. It won’t do much for the reputation of mediation either. Remember not all judges are fans of mediation and would welcome the opportunity to make adverse comments about this second rate unregulated activity which threatens the untrammelled majesty of the law. You must also act in an even- handed way. How is it impartial to keep potential information of fundamental significance to yourself at one party’s request? What would the other side say if they knew? They would accuse you of bias and favouritism. 127

Part 2  At the mediation What happens if you learn about illegal activity? If the settlement agreement requires in some way someone to do something illegal then how can you be party to negotiating it? You cannot. You step away and stop the mediation if necessary (see Q7). If you learn that the parties intend to engage in illegal activity after they have signed the agreement say that this sounds very dangerous to you and before they do anything they have to take legal advice so that they do not end up breaking the law. If they refuse and you still have doubts, the best option is to step away and stop the mediation. If the clients have lawyers present you look at them and say ‘You will be advising them won’t you?’ At any stage you can always ask the lawyers for a private word. Outline the situation. Do they feel they have any professional embarrassment? Have you misunderstood what is being suggested or said? If you think that you might be in a difficult position of having to terminate the mediation, warn the lawyers if they are present. Otherwise explain to the parties what is causing you to have these doubts. Tell them that you are going to tell the other room that you are terminating because you feel unhappy about continuing. You can leave your explanation at that but of course the chances are that they will read between the lines. You have an opportunity of protecting yourself if a party wants to tell you something but says that they want you to promise to keep it to yourself before they tell it to you. Explain that if what they want to tell amounts to a misrepresentation it will cause real problems for you and them and for the mediation. This allows them to reflect. If need be, refer to the case of Hayward v Zurich Insurance Co Plc [2016] UKSC 48, where a settlement agreement was set aside on the grounds of deceit and fraudulent misrepresentation even though Zurich were aware that there might have been fraud at the time that they entered into the settlement.

In a nutshell •

You be told things by the parties that they do not want you to disclose to the other side. This happens at nearly every mediation.

•

Always ask yourself why they are giving you this information. It will be for a reason. They are trying to influence you in some way. If in any doubt ask them.

•

Beware of leakage – letting your conduct, phrasing, expressions betray to the other side that you have some secret significant information that you cannot share with them.

SEE ALSO Q7, Q16 FOLLOW UP Allen: Mediation Law and Civil Practice, Ch 9 Richbell: How to Master Commercial Mediation, Part 2, Ch 9 128

Question 18

Neither side will make an offer. They both say they want to hear from the other side first. What do I do?

Core issues •

negotiation coaching

•

the role of the mediator in generating settlement proposals

Discussion Offers and proposals are the lifeblood of mediation. Without them there can be no settlement. Much angst is expressed within the mediation commentariat about when and how offers should be solicited and made. What is the best time for an offer? 1  Later rather than sooner There are those who believe that sooner is better than later and those who believe that you should take it slowly and not push for early offers. They emphasise the danger of premature offers. Until the parties have had an opportunity to express themselves, work out whether they can trust the mediator or not, feel comfortable with the environment and get things off their chests they will not be in a position to make an offer. Parties want to feel acknowledged and heard. Mediators have to work hard so that the parties feel confident in expressing what they really need for mediation and what is important to them. The mantra is ‘suppressed emotions sabotage settlements’. The lawyers want to explore the issues. They like to show their professional skill in explaining to the other side why they are wrong. Legal analysis cannot be ignored. After all going to court and trying to exercise your legal rights is the default position for most parties at mediation if they do not settle. Everyone at the mediation talks about fairness. The difficulty is in agreeing how you define fairness. A  person’s definition of fairness usually reflects what’s in their commercial self-interest. The mediator needs to be careful about pushing too far ahead too quickly in case they miss something. If you get talking about the figures too soon you might overlook unexpressed or half-expressed interests, which the parties have not fully developed themselves. These may not form part of a party’s demands in correspondence and pleadings but they are on a party’s agenda and have to be 129

Part 2  At the mediation teased out. These submerged interests can unlock a settlement. You as mediator need to show the parties that they would both do better by making a mutually beneficial settlement at mediation than either of them could do at trial even if they had a very successful day. Moreover parties do not make a settlement or do a deal for your reasons. They do it for their reasons. Therefore you need to explore their reasons with them. You can only do that by discussing their issues and interests. This takes time and should not be rushed. 2  Sooner rather than later The ‘sooner the better’ school of mediators disagree. They point out that the parties are here to negotiate a settlement. You do not achieve settlements by arguing about evidence and the law all day long. You get settlements by discussing proposals. The sooner that the parties exchange proposals and put them on the table, the sooner that you can generate settlement momentum. The point about mediation, and one of its features that is heavily advertised, is that it is forward-looking. Unlike arbitration or litigation which is concerned with allocating blame for the past and awarding compensation for what has already happened, mediation is about the future. Mediators do not allocate blame. They do not decide who is right and who is wrong. They discuss with the parties what they need to achieve in order to move forward. Discussing the case in terms of evidence and legal argument is looking at the past. Asking parties to explain their story of how they arrived at this current situation invites them to dwell on the past. The more that the parties explain why they are taking that position the more they will stay rooted in the advocacy phase and not move forward to problem-solving. As a mediator you will see groupthink develop as the parties just repeat their best points to each other and they end up believing their own propaganda. As Eric Hoffer said: ‘Propaganda does not deceive people. It merely helps them to deceive themselves.’ Eyes front Encouraging the parties to look forward and think about what they want to achieve by way of outcomes either at trial or settlement does not preclude them from explaining how they have got to where they are and giving their version of events. But what it does do is place these reflections about the past in a framework of thinking about the future. The main job of the mediator is to find out what the obstacles to settlement are. Once they have been identified you can work with the parties on ways of removing them. Mediators want the parties to find the common ground not the battleground. That is where settlements are to be found. What mediators need to know is how far apart the parties are. One thing that everybody who is engaged in litigation or in negotiations knows is that people’s thinking changes. Both the legal and commercial case can get stronger or weaker. 130

Question 18 They always change. Time passes. People’s priorities change. The resources available to them change. Money might start to run out. They may want to do other things and do not have the time and energy to carry on the dispute as well. Surprisingly often parties to mediation are closer to settlement than they realise. They may not want you to tell the other side this especially if they believe in what one mediator calls ‘Hollywood negotiation’. They have seen it on the screen. The banging on the table, the jabbing fingers, the shouting and swearing, the threats and storming out. The poker playing, bluffing and double-crossing. Great box office. Terrible mediation tactics. Tea time offers One of the more questionable conventions developed in mediation is that you do not make an offer until 4:00pm. Insurers are especially fond of this. ‘Let’s make them sweat. They can talk themselves into a standstill. We will learn something. They will get tired and desperate. It’s personal for them. It’s just money for us. They have much more to lose’ Lawyers who are being paid by the hour and with one eye on the clock encourage this. Even after 25 years of it not working some still hold to this traditional way of negotiating. Why? Partly habit and partly because it is easier. You just have to sit and react. You don’t take any initiatives. You first. No, please, after you. As a variation of this mindset parties are often reluctant to make the first offer. Very often when you ask them for their proposal one, or sometimes both, will request that the other side goes first. ‘We prefer to hear from them first.’ Or ‘We have made a Part 36 Offer it is for them to respond.’ ‘We do not want to bid against ourselves.’ ‘We do not want to enter into a Dutch auction.’ You can deal with this in two ways: 1 Ask them whether or not they are supporters of the theory of anchoring. Often they ask what that is. Explain that it’s a sailing metaphor. You drop an anchor and the vessel drifts towards it. Negotiation research has shown that the parties that go first tend to achieve a better outcome in the negotiation. This is because all subsequent discussions are conducted by reference to that first proposal. They are all influenced by it. Naturally a counter-philosophy has developed – the theory of de-anchoring. 2 Encourage them to exchange offers simultaneously not sequentially. By exchanging offers simultaneously and not following the offer, counter-offer, counter counter-offer routine you overcome several of the objections to making the first offer. By exchanging no one is bidding against themselves. Both sides are showing their hand. There is no hint of a Dutch auction. Both sides are doing the same thing at the same time. Consider giving them a health warning. Explain that part of what you are to do in a mediation is to try and achieve a degree of convergence. Warn them of the dangers of setting that process back by making inappropriate offers. Explain to them the five-stage classification of offers: 131

Part 2  At the mediation 1 insulting 2 extreme 3 credible 4

reasonable; and

5

acceptable – the one that we all want to receive

Then ask them the following questions: •

Which category do they think their offer is in? Do they think the other side will see it in the same way?

•

What message they want to send and what message they think that the other side will receive? Explain to them that when they make the proposal they are also sending a message. This is not confined to the information and detail in the proposal. It also includes signals about their intentions and style or approach.

•

How they think that the side will receive the offer?

•

What would they do if they were in the other room and they received this offer? How would they react?

In doing this, you, as mediator, are coaching the parties about how to settle. You are not suggesting what the terms should be. All you are doing is getting them to think more strategically about how they will get to where they want to get to. The first offer is important. Perhaps not as important as the final but it does set a tone. One well-known and respected mediator, Rosemary Jackson QC, refers to the ‘doom laden experience of receiving the first offer’. Try sealed offers If the parties will not give you an offer to take to the other side, suggest this. Each of them writes down an offer that they give to you. These are for your eyes only. They are sealed offers. You take them away and look at them in private. You report back to each room using the same language as much as possible. Usually both sides will then ask you to disclose to them what the other side said and give permission for you to disclose their offer to the other side. If the dispute is a multi-issue as opposed to a single-issue one – for example, how much insurers will pay to satisfy the claim – there can often be a surprising amount of overlap and common ground even in the first exchange of proposals. When this happens the parties are encouraged and energised. If the parties will not even give you a sealed offer then try bracketing or ranging offers. ‘As the paying party are you prepared or can you contemplate a figure in the range £400,000–£500,000?’ If ‘yes’ pose the same question, but with slightly different figures to the receiving party. If they both say ‘yes’ you all know the bands within which you will have to work. Often the refusal to make an offer is a power play. It has nothing to do with negotiating strategy or tactics as such. One side merely wants to try and set the 132

Question 18 agenda and establish a dominant position. It is a bit like insisting on standing when everybody else is sitting down. Finally if nobody will make an offer, tell them that as far as you can see without an offer from anybody there can be no settlement. You can of course refer to the cases about behaviour at mediation (see Q17) and say that both sides do not seem to be here in good faith to settle and therefore the mediation might as well be wound up. Try to do this in a joint meeting so that they all hear the same message in the same language at the same time. What about pre-mediation offers? Where offers have been made before the mediation and not accepted – which of course is why the parties are at mediation – they form part of the mental furniture. Paying parties expect receiving parties to reduce their demands. Receiving parties expects paying parties to increase the amount they are prepared to pay. This applies whether or not the offer that has been made previously is a Party 36 offer or not. In practice previous offers are floors and ceilings. And as Paul Simon said ‘One man’s ceiling is another man’s floor.’ Some parties come to mediation saying that they will not reinstate a previous offer that has been rejected. They insist on making their first offer at the mediation lower than the one previously rejected. Warn any parties contemplating doing this of the dangers of sending out the wrong signal. The chances are that all that they will do is irritate the other side. Ask them how they would feel if the other side did the same to them. You will hear explanations such as ‘Well since then we have had to spend a lot more money on legal costs’. Or ‘We are more confident in our case as result of the evidence that we have now’. ‘We do not think that the other side has got the stomach or the pocket for a fight’. ‘They do not intend to go to trial’. ‘They cannot afford it’. Occasionally new information has come to light, which does change the way a case looks. The classic case is a better medical prognosis or property being sold for more than expected. What do you think? Every mediator is asked this at every mediation. Sometimes you will be asked for guidance on how to pitch an offer. This is not usually done with the first round of offers. But it is quite common later in the settlement cycle. Some mediators are prepared to name a figure. Try £X they say. Or ‘You don’t need to go as high as £Y just yet. Try £Y minus £100 and see what happens’. Without breaking confidentiality you can summarise the mood in the other room as you are seeing it. If the other side have told you that they will not look at a figure without a 4 in front of it why not tell other side that that is what you are hearing? Whether this is a deal-breaker or not will emerge. Always check of course with the other room what you can say. 133

Part 2  At the mediation Many mediators fight shy of doing any such thing. They do not want to compromise their neutrality or impartiality. This is probably the norm in the UK. But in other jurisdictions they see things differently. Take the example of Lee Jay Berman a rock star US mediator. Talking about being in caucus with the claimant he says: ‘In that room, I’m her negotiation coach. I’m giving her perspective and helping her through the process. Even if she’s got an attorney there with her… I’m helping the two of them together.… But I’m an advocate in that room for them in trying to help them get the best result they can what she needs … almost all the time I  don’t make the decision for them, but what I  do is take a very heavy coaching hand to move them… forward through the process… I’m very much a negotiation coach in both rooms.’ Berman is a self-styled ‘heavy metal’ mediator. But even those of you who prefer acoustic guitar will have to coach sometimes. How much and in what way is a matter of your personal style of mediation. Be aware: Clients appoint you as mediator for a reason. They expect you to add value. Otherwise, as an insurance solicitor said: ‘We might as well just have a direct without prejudice negotiation with the other side. Go and work your magic’.

In a nutshell •

Offers are the oxygen of mediation. Without offers the mediation dies.

•

Make sure that they understand this. If they really are reluctant to go first used the sealed bid technique so that they both make the first offer but only to you.

• Be prepared to provide negotiation coaching even if you are not heavy metal fan. SEE ALSO Q17, Q33 FOLLOW UP www.mediatoracademy.com Lee Jay Berman

134

Question 19

One party insists that I  take their offer to the other room. I fear it will trigger a walk-out. Do I have to take it?

Core issues •

How does the mediator control the process?

•

Should mediators influence how parties conduct their negotiations?

Discussion Are you a control freak? Do you want to be hands-on or hands-off`? The classic formulation of mediation emphasises party autonomy. The parties decide whether or not to go to mediation. They choose the mediator. They decide the terms of the settlement and whether or not to enter into a legally binding agreement. The mediator is there to facilitate their finding their own solution to their own problem (see Q1). Mediators are not there to make sure that the settlement represents a good, fair or workable settlement for the parties. Parties look after themselves. That is what party autonomy means. Some mediators, particularly the transformative or narrative mediators, take the view that it does not really matter if settlement is never mentioned let alone reached. It is sufficient for the parties to simply have the opportunity of explaining themselves to each other. From the mutual exchange of explanations greater understanding of the situation can be achieved. That is empowering. Armed with this better mutual understanding the parties will be able to conduct themselves in a better way in the future so as to avoid future conflicts. Other mediators, particularly those of the facilitative school, take the view that while they are not there to express opinions or give advice they are there to help the parties by directing the process. They describe themselves as process managers. What do process managers do? Some mediators are extremely prescriptive right from the start. They emphasise to the parties that they are in control of the process. They tell them what steps need to be taken and make the parties stick to what they have said. An obvious and common example is by insisting on a Joint Opening Session. They stipulate where 135

Part 2  At the mediation the clients should sit both in the plenary session room and in the caucus room. They usually want the clients, rather than the lawyers, next to them so that they can make close personal contact. Others are much more laissez faire. They tell the parties that the mediation day is their day. The mediator will do what the parties want. This is a true expression of party autonomy. Others believe that while mediators must remain impartial they do not have to remain impassive. They do not have to watch the parties wondering about not making progress and falling into procedural quagmires. They can intervene to help the parties help themselves. Even within the purist facilitative school, there are mediators who say that they coach the parties in negotiation during the mediation. In other words they help the parties to achieve what they want. The split role of the mediator was summarised by one eminent barrister representing a party at mediation when he told the mediator that ‘You are both our master and our servant.’ Leaving aside the rather antique vocabulary this highlights a problem that every mediator faces every time they mediate. How far can they dictate the process? Do they control it? There is no doubt that some very distinguished and experienced mediators believe that they are in control. As part of their standard operating procedure they like to show that they are in control at an early stage during the day (see Q36).

Three examples 1

An experienced mediator faced this dilemma at a mediation. He was there with his observer. One of the parties insisted that he take an offer to the other side. The mediator did not want to do this. He said that if he did this, the other side would walk out. That, of course, would bring the mediation to an end. He asked for discretion on whether or not to take the offer depending on the mood in the other room when he went back. The offering party refused. They insisted that he take the offer to the other room. They set in forceful terms that the mediator was under a duty to do what they instructed him to do. As he had an observer present, he did not want there to be a showboating stand-off between him and the offering party’s lawyers. He took time out. He made three telephone calls to some fellow practitioners for a second opinion. They were all experienced and successful commercial mediators. The first one said that he could not refuse to do what the party told him to do. The second said that he was entitled to refuse. The third, who was the most experienced and successful mediator of them all, said that that it depended. To be fair he was on holiday at the time and perhaps was not closely applying his mind to the question. 136

Question 19 Being a master of negotiation the mediator returned to the offering party room. He expressed his grave misgivings about what he was being asked to do. He gave them the health warning that this might torpedo the mediation. In the end he said that he would take the offer and give it to the other side when he thought it was the right time. The offering party reluctantly agreed. Negotiations continued. Settlement was reached on terms that were not very far from what the offering party had wanted to put to the other side in the first place. The mediator never gave the offending offer to the other side. But the case settled. He acknowledges this was risky and the he had got away with it. Contrast that example with these two. 2

The parties were very close to settlement but the mediator took a different stance. He was told by one of the parties that the final offer was X. It was £2,000 short of what the other side said that they would accept. The offering party would not increase its offer. The mediator went to the receiving party and told them that. They offered to settle for another £500. The mediator said that as they were not accepting the paying party’s final offer the mediation was over. There had been no settlement. He told the paying party that as well. The mediation broke up without a settlement. He never put the counter-offer from the receiving party to the paying party. He bumped into the paying party’s solicitor as they went to the lift together. The solicitor said that it was a pity that the other side had not made a counter-proposal to their final offer. His clients would have offered another £500. This mediator also took a risk and did not get away with it.

Most mediation agreements do not stipulate whether or not the mediator has discretion as to whether or not to pass on the information or offers that he is instructed to pass on. If you want to give yourself this discretion include it in your mediation agreement. 3 Another successful commercial mediator was asked by the paying party to take an offer to the side. It did not deal with costs. These were, as is often the case at mediation, a significant consideration. The paying party confirmed they were not going to offer anything for costs. The mediator said that he was refusing to take their offer to the other room. It was a complete waste of time and was disrespectful to the other side. The paying party insisted. The mediator refused. The paying party insisted again. The mediator refused and said he was leaving. He packed his bag and left. He told the other side that the mediation was over. As he was about to get into the lift the paying party’s solicitor grabbed him back. Negotiations continued and the case settled. 137

Part 2  At the mediation Was the mediator entitled to do this? Most mediation agreements provide that the mediator can terminate the mediation at any time without giving a reason. Many mediators put a gloss on why they are terminating the mediation, often giving as a reason that they feel that the parties are not trying to settle at the mediation in good faith. Some mediators are blunt. They tell the parties that there does not seem to be much appetite for settlement or that they do not seem to be trying to negotiate a settlement in good faith. Such statements are often interpreted as accusations. Rapport can be damaged. Some clients, including the lawyers, regard this as bullying behaviour. Confidence in the mediator is destroyed. Your options Decide before you start what your mediation style is. Be aware: not all clients or lawyers want to be reality tested. Will you discuss settlement proposals with a party who asks you how to put a proposal together? It is very rare for a mediator not to be asked at some stage what they think either about how a settlement proposal should be presented or what the response to a proposal should be. Some mediators even though they proclaim themselves to be facilitative candidly say ‘I think that you should accept this offer’. Although they are noticeably more reluctant to say ‘I do not think you should accept this offer’. Is this because they are, as some solicitors allege, settlement junkies? Or is it because they want to avoid the possibility on their conscience that a client who could have settled a dispute, but did not ends up in a worse position later as a result of accepting the offer? When faced with this dilemma ask yourself: why do I think that this is a bad idea? You need to be clear in your mind. Then explain to them why you think that it is a bad idea to take their proposal to the other room. If they insist, say you understand and respect why they want you to do this, but you think that it would be better if the client or their lawyers went into the room and explained the proposal. You do not want the quality and nature of the proposal to be in some way influenced by your admitted reluctance to make it. If they won’t do that, ask them to write out their proposal in precisely the words that they want you to use. Take the piece of paper into the other room and tell the receiving party that you have been asked to give it to them. Stand back if the anticipated explosion takes place. Ask the exploding party what has caused such an adverse reaction. Ask them if there are any amendments to the proposal that would make it acceptable. Ask their indulgence for 20 minutes while you take their comments back to the other side before they walk out – if that is what they are threatening to do. Go back into the offering party’s room with the news. The obvious exception is any proposal which contain terms that are illegal or unconscionable. No one can insist that you put such a proposal. You should decline to be any part of formulating or communicating such proposals. 138

Question 19 As a mediator you want to avoid procedural battles. They are a distraction. They waste time money and energy. There is a danger that mediators who insist that they are in control and that they are the process managers and are ready to prove it by engaging in procedural matters will become a barrier to settlement. This is something the mediator must never become; the mediation day is about the parties. It is not about their lawyers or experts. It is not about you as the mediator.

In a nutshell •

As mediator your best policy is to advise and warn. You cannot insist or force.

•

If a party instructs you, despite all your health warnings, to take an offer that you consider potentially damaging to the other side bite your tongue, smile and do it.

•

If the offer all goes wrong, as you anticipated, resist the temptation to say: ‘I told you so.’

SEE ALSO Q1, Q36 FOLLOW UP Richbell: How to Master Commercial Mediation, Part 2, Ch 9

139

Question 20

The clients want to accept an offer but their lawyer says no. What do I do?

Core issues •

Do mediators owe a duty to the parties as their clients or to the solicitors?

•

Should mediators intervene when there is an obvious conflict between clients and their representatives?

Discussion Lawyers are under a professional duty to give their client advice which is in their client’s best interests. They cannot allow a conflict of interest to develop between their own interests and those of their client. If it does they must refuse to act. Clients are under no obligation to accept their lawyer’s advice. There may come a time when solicitors would be in breach of their professional duties if they continued to act for a client who refuses to accept their advice. Does this matter for you as the mediator? No Most mediators take the view that it is not their job to police the mediation or make sure that the settlement is a fair one. All they want is to make sure that the client who signs it or authorises his solicitor to sign on his behalf, knows what they are signing and agrees to it. Mediators, so the conventional view goes, should not satisfy themselves that the client is getting a good deal. That is beyond their remit and competence. This is the advisor’s job. Yes It matters a great deal. At mediation you usually have two clients on each side: the party to the actual dispute and their legal advisers. All of them have signed your mediation agreement and have accepted liability for your fees. The lawyers are a better potential source of referral work than their clients unless the clients are serial users of mediation, such as insurers. You will know what your approach to the parties is: polite, empathetic and respectful. Working out your approach to the lawyers is more complicated. There are five main approaches: 141

Part 2  At the mediation • hostile • fawning • neutral • welcoming • supportive There are plenty of mediators who see it as their place to protect the clients from their lawyers. Not all of these mediators are non-lawyers. Some lawyer mediators can be very confrontational and interventionist in defence of lay clients.

There was a commercial mediation which was proving to be sticky. The mediator, a renowned lawyer mediator, decided to apply some robust reality therapy. He told the room that was being, in his view, particularly difficult that he had identified the main obstacle to settlement. He pointed to the senior partner of the firm who had attended to help even though he was not the lawyer handling the case and said that it was him. Consternation and embarrassment all round. The case settled. The mediator was not blacklisted by the firm. His reputation for firm direction and plain speaking was enhanced. He admitted that it was a high-risk tactic. On this occasion he got away with it. Mainly because, as he quite rightly guessed, everybody else in the room thought the same thing but they were too polite or cowed to say so.

You will on occasions have two mediations in one. A primary mediation between the parties in the dispute and a secondary one between clients and their legal representatives. Sometimes the issues between the clients and lawyers are obvious, eg  revelations about costs, reappraisals about prospects at trial, inadequate preparation or unrealistic expectations. But often they are about funding. Funding arrangements such as Conditional Fee Agreements (CFAs), Damages Based Agreements (DBAs), third party financing and insurance have made the situation worse. For example, where there is insurance, the insurers sometimes want to settle and the client wants to fight on. Or, the client is happy with the amount being offered for the claim but the insurers are not happy with the amount offered for costs, ie recovery of their outlay. Where there are CFAs which were pre-April 2013 and the success fee and ATE insurance premiums were recoverable from the paying party there is often conflict between clients who want to settle and the lawyers who want to make sure that they will be paid their mark-up. Often paying parties either refuse to pay any markup and make an offer in respect of basic charges only. Or they offer a lump sum inclusive of costs and leave it to the lawyers and their clients to argue about the distribution between them. Why can conflicts of this sort arise between the clients and their legal 142

Question 20 advisers? As discussed in Q17 there can be various reasons: •

Folklore tells us that it is lawyers who are against settlement and clients who are all in favour of it. Lawyers want to prolong cases because they make more money by allowing the litigation to run on. They allow their commercial selfinterest to predominate.

•

Anecdotally there is evidence of this. Many mediators report that they have suspected that the lawyers were advising against mediation or against settlement for their own commercial interests. In other words they wanted to continue with the case for the sake of their fees. Not all are as blatant as the excited junior who was heard as she came off the phone, shouting across the clerks’ room to her leader: ‘Good news, Arnold, the mediation failed.’

•

The clients are more inclined to settle than their lawyers but have not explained to their lawyers why. They may have various reasons: –

They have a diminished appetite for litigation and going all the way to trial now that they have had a taste of it.

–

They fear humiliation in the witness box.

–

They are worried about running out of money.

–

The promised additional witness evidence which they told their lawyers would be forthcoming is disappearing.

–

They have not told the lawyers the truth, the whole truth and nothing but the truth when giving them instructions.

Their lawyers therefore have based their advice on their instructions which are either incomplete or inaccurate. The clients feel guilty about misleading their lawyers. •

They do not have insurance to cover them for an adverse costs order. At the start of the litigation it is easy to downplay the impact that an adverse costs order could have on you. It is even easier to downplay the likelihood of it happening. With costs budgeting and more detailed costs information being provided the scale of what clients may have to face becomes much clearer as the case has developed and perhaps the possibility of an adverse costs order has increased. Not all cases become stronger.

When this starts to happen clients become worried about other people such as spouses, partners, co-shareholders and directors. They may not have kept them fully and completely informed about what is going on. Clients usually are inherently less keen on litigation than their lawyers are. They may feel indignant and want redress. They may feel outraged that claims made against them or want to see the other side in hell first. But the fires of outrage die down as time passes and expense rises. Surveys continually show that what clients want are: • certainty; •

a cap on their downside exposure; 143

Part 2  At the mediation •

cost containment; and

• speed. Naturally the psychology of the potential receiving party is different from that of the potential paying party. The well-known cognitive bias – the endowment effect – comes into play. It is harder to give up something that you already have – ie money – than something that you don’t have – ie a claim for money. This is why defendants are often more inclined to take a riskier option than claimants. As a mediator you can flush this out in various ways. Divide and conquer? Some mediators like to separate the clients from their lawyers early on during the process. For others this is anathema. They do not want to destabilise the relationship between the lawyers and clients. They fear that they will alienate the lawyers. A big part of being a skilled mediator is making the various players, your allies. 1

Make sure that early on in the mediation day you go through with the parties and their advisors the alternative scenarios of what will happen if they don’t settle today. Ask them what their net cash position will be in three different scenarios: •

Good day in court

•

Bad day in court

•

Middling day in court

2

In one of your early caucuses ask the clients what a settlement has to look like for them. Explain that at this stage you are not asking for a proposal, just what elements a settlement has to contain or what points have to be covered. In other words you are asking the parties what is important to them.

3

Discuss with the parties and their lawyers what their confidence factor is for any of the above three court scenarios. Do a risk analysis that enables you to put a present value on their claim/defence. This enables you to frame the differences of opinion between client and lawyer in neutral numerical language.

4 By doing these things you are setting a context, which allows people to exchange views and possibly retreat from their positions without losing face. 5

Acknowledge that a concern of all professional advisers at mediation is to make sure their clients do not make a bad bargain. The receiving party’s lawyers want to make sure that their client does not under-settle. The paying party’s solicitors do not want their clients to over-pay.

Mediators are familiar with settler’s remorse. Claimants’ solicitors are sometimes criticised later by their clients for not obtaining more money for them at the mediation. Lawyers want to protect themselves. Perfectly understandable. They can of course do this by confirming their advice to their clients in writing. Allow them the space and time to do this. Have a private word with the lawyers to see if this is something that they want to do. 144

Question 20 Professional advisers are often motivated by professional pride. Mediators often hear lawyers say ‘I can get you more in court’. ‘If they don’t settle today they will settle later and we will get more money.’ This can happen. But there are two caveats: 1 Although more money might be obtained later does the client’s net cash position improve? The law of diminishing returns can bite earlier during litigation than people might think. Yes, the paying party pays more, but the receiving party does not receive more. Their lawyers do. Anecdotal evidence from busy litigation solicitors who go to mediation frequently suggests that claimants who do not accept settlements on offer at mediation are usually worse off. This is true whether they accept a later settlement or are successful at trial. But this is not always the case. Of course if they lose at trial they are much worse off. 2

Ask the reluctant lawyers what they think the other side will do next. If they say that they will make a Part 36 Offer, ask what, if they make a Part 36 Offer at the figure that is now being rejected, they will do? At the very least this will make sure that the implications of Part 36 offers are fully explained again. Even if they have been explained – and surprisingly often they have not – the clients may not have not fully understood what it means to them in cash terms.

As mediator you have to decide how interventionist or evaluative you are going to be. The more interventionist or evaluative that you are the easier you will find it to tell clients and their lawyers whether you think that a settlement proposal should be accepted. If the clients and their lawyers know that is your mediation style they will not be surprised if you do this. They may not like it when you do it, but at least they cannot complain that they have been ambushed. Being left at the altar. Mediators hear lawyers say things such as: •

‘It’s not fair, but it’s your decision.’

•

‘This is not justice and you can do better at trial but it’s your money.’

When they do this they are making life difficult for their clients by egging them on, giving them a reason to say ‘no’, while putting responsibility for the decision firmly on them. There’s nothing wrong with the responsibility of the decision being given to the client as it is after all their money and their case. When you hear this a helpful response can be: ‘I understand what you are saying, but really it is a decision about what is most important to your client.’ If you have carried out some of the mood setting steps described in Q14 the clients will not be surprised to hear you say this and will find it easier to carry out their own assessment. A more difficult situation arises when, as one experienced, enthusiastic litigator in a national firm told his client in front of the mediator: ‘it is my professional duty to advise you not to accept this offer’. The client was desperate to settle. The solicitor went on to say that his firm would fight as hard as possible to get the client more money. 145

Part 2  At the mediation The mediator confronted the solicitor in front of his client and said ‘I’m sure you will. It’s not your money you’ll be spending fighting.’ Everybody was tired after nearly 11 hours of negotiation. The solicitor glared at the mediator. In the end the client gladly accepted the offer. The solicitor was just about able to bring himself to say good night to the mediator. But no further appointments came from his firm to the mediator for over five years. Mayday, mayday Sometimes it is the other way round. The lawyers want to settle, but the clients will not take their advice. They need help and ask mediators to join them in trying persuade their clients. Should you do this? Does it violate the sacred principle of party autonomy? If the clients have told you they want to try and settle are you entitled to take that at face value? You need to discuss with them what their reasons are for rejecting their lawyer’s advice. With the lawyer’s consent try to do this in private with the client. Clients often have concerns they will tell you as mediator, but not tell their lawyers. These can be concerns about how their case has been handled to date or about the advice they are receiving on the day. More usually it is a case of the clients feeling railroaded. Everything is happening too fast. They are having to process a lot of new information. Some of it is coming from a new source, ie  you, the mediator. Some of their cherished assumptions may have been challenged. They are not in their comfort zone. They may need reassurance from others who are not present at the mediation, for example family members. As a mediator you are there to create a safe place in which people can do dangerous things such as leaving the warm embrace of their comfort zone or even completely reversing their perspective. U-turns can be stimulating. You have to stay flexible. Many is the time that one party who was demanding to be bought out ends up buying out the other side. Purchasers turning vendors and vice versa is part of the mediator’s daily menu of issues to be dealt with.

In a nutshell •

If you see a conflict between lawyers and clients you cannot ignore it. This does no one any good.

•

Pause before rushing in. Consider what might be going on.

•

Raise it with the lawyers first, in private.

•

In the end you might have to confront the conflict head on and raise it in a caucus with clients and lawyers. Always be diplomatic and leave an exit route by saying that.

•

Always take a note of what happens and who says what.

SEE ALSO Q2 146

Question 21

One party is secretly recording what is going on at the mediation. What do I do?

Core issues • confidentiality •

integrity of the process

•

conduct of parties

Discussion Mediators and parties are becoming increasingly concerned about this. Parties sometimes distrust each other so much that they insist that the mediation suite is electronically swept to make sure that there are no hidden recording devices. That is quite a sophisticated level of concern. At a more everyday level parties object to the other taking a full note on a laptop or iPad. This is not recording the mediation discussion but typing a note on it. Most mediation agreements stipulate no recordings of the mediation – stenographic or electronic – should be made. After all everything that is said in the mediation is covered by without prejudice privilege and mediation confidentiality. For example clause 7 of The CEDR Model Mediation Procedure says: ‘No verbatim recording or transcript should be made of the mediation by the parties or the mediator in any form, but participants can make their own private notes which will not be disclosable to anyone else, including in any subsequent litigation or arbitration.’ Leaving aside the legality under criminal and civil law of covert recordings there is the risk that making them will damage the element of trust that is needed at any mediation. It does not have to be a high level of trust, just an operational level. Even if people ask for consent to make a recording others will feel nervous. What use will be made of this recording? Why do they want to do it? The fact that people know that they are being recorded can inhibit free exchanges of information and frank conversations. The non-recording party begins to doubt the good faith of the recording party. So against this background what do you do? 147

Part 2  At the mediation Legal Background English law on covert recording of conversations is complicated. In essence: •

It is not unlawful for private individuals to secretly record a conversation. You do not have to tell the other party to the conversation. But it is unlawful to pass such a recording on to a third party.

•

It is unlawful for an organisation to secretly record a conversation where there was a legitimate expectation of confidentiality.

•

It is unlawful to intercept another person’s telephone call and to ‘bug’ their conversation.

•

Eavesdropping is unethical but not illegal.

How does recording impact mediations? There are five separate scenarios which occur more frequently than you might expect. This is due in part to the greater availability of recording devices, smart phones, iPads, spy cameras and concealed devices in pens etc. Scenario 1 One party wants to record joint sessions and asks you and the other side for permission. It is overt not covert. The obvious response will be to ask why they want to do it. Explanations which have been offered include: •

To ensure that there has been no misunderstanding about what is being said. This can be especially important to a party whose first language is not English.

• They are aware that the courts can examine the conduct of the parties at mediation on the question of costs. If that does happen they want to be able to produce a record of what happened. •

There have been previous without prejudice meetings between the parties and the other side so distorted what was said that they are worried that they will do the same again.

•

There is no real difference between making a digital recording of what is said and making a full note on a laptop.

If the other side consents why should you, as mediator, not consent? This goes back to the question of who is in control of the process. But if both sides are happy for there to be a recording you risk alienating them if you refuse your consent. You just have to be extra careful about what you say to make sure you summarise and clarify frequently. Anybody who has listened to recordings of meetings and conversations will know how difficult they can be to decipher. People talk across each other. They jump from one topic to another. There is rarely a logical linear progression in the discussion. The same word is used to mean different things and different words are used to mean the same thing. 148

Question 21 Scenario 2 Joint meetings are being recorded by somebody in one of the teams. They have not asked consent from you or from the other side. It is covert not overt. Somebody notices what is happening. This is potentially unlawful conduct. At mediations disputes are not always between private individuals. Commercial organisations are often involved, even if only on one side. The confidentiality of the proceedings is emphasised in the mediation agreement. If the agreement contains a prohibition on any sort of recording being taken or made of the mediation any covert recording is obviously a breach of this agreement. In practice the main problem for you is the effect it has on the mood of the mediation. People do express outrage. Apologies are usually offered but not always. Explanations are demanded and sometimes given but, again, not always. You, as mediator, have to allow the parties to express their indignation and/or contrition and then find out whether they want to abandon the day or not. The big danger is that the indignation which may well be justified, becomes a displacement activity and the day is spent in fulminating instead of formulating settlements. Be prepared to be asked to extract from the guilty party written undertakings about destruction of the recording and of future good conduct. The innocent party may insist that the recording is deleted there and then. They may even be a request to have the device examined by an expert to make sure that it has been permanently wiped clean. If any moral high ground can exist at a mediation the innocent party will feel that they are entitled to occupy it. They will use the guilty behaviour as a justification for all sorts of demands. They will expect a premium to be paid by the guilty party. The guilty party will probably feel that they have lost the initiative and be on the back foot. But some who engage in covert recording are surprisingly insouciant about it. A variation on this theme is where the innocent party finds out that there has been a covert recording of joint sessions but decides not to disclose this knowledge either to you or the other side. They just keep it to themselves. If this happens you will never know. You might detect changes in behaviour. If you do be prepared to find out what is going on. Say ‘The mood in this room seems to have changed?’ or ‘I am picking up different vibes?’ More usually they disclose their information to you as the mediator but ask you not to tell the other side. This is another example of you being asked to hold ‘guilty knowledge’ (see Q17). Be aware: Don’t jump in. At this stage all you are being told by one side is that they think that the other side has been covertly recording joint sessions. You do not know for certain that this is true. You have to ask the innocent party whether or not they’re absolutely sure. Otherwise it is just a suspicion. If it is true, or you think that it is probably true, ask yourself whether or not the guilty party has also been recording you in private session. If you are not able to 149

Part 2  At the mediation disclose information which the innocent party has given you so that you can raise it with the other side rely upon your own instincts. The sensible thing is to assume that they have been, and are still, recording you and to moderate your comments accordingly. Be very clear to restate and summarise. If you think that you are being asked questions in a certain way give your answers and say ‘just to confirm ‘or ‘just to make sure that there is no misunderstanding ‘ and restate exactly what you want to say on the topic not just in answer to their slanted question. If the innocent party wants to continue with the mediation you have to respect that. The chances are during the day you will see that their knowledge is affecting their approach to mediation. If it is influencing their thinking about settlement ask them that if they think that this is happening. They will probably say no and they may not even be aware of it. If it is something that is influencing them you have to say so. Ideally – with their permission – you want to be able to tell the other side because they may not be understanding clearly what they are dealing with. You also have to think about your reputation and the future. Whether or not the matter is settled the innocent party may try and disclose the fact, whether in without prejudice or confidential communications or not, the fact that they suspected or knew of the illicit recording. They may say that they told the mediator. Such a disclosure could cause you embarrassment. The safer course – so that nobody can say that you are acting in an underhand way – is to say to the innocent party that you want to disclose what they have told you to the other side. If they refuse, consider terminating the mediation. Tell them why you are doing it. In essence it is because there is a danger that your position is compromised. This could inhibit your from acting in the open and even handed way that is required. Scenario 3 You are in caucus and one party is recording the private sessions in caucus with you. They have not asked your consent. This is covert and not overt. What do you do? You can make a fuss and bring the mediation to an immediate end. Who benefits from that? Demand that the recording be deleted. You have to ask yourself if they had requested your consent would you have given it? If you would have given it then, why not give it now? If you would not have consented, tell them and also explain why you are refusing. You have to decide whether you tell the other side. To do so is the safer option. In the end your overriding duty is to act in an impartial and even handed way between the parties and to protect the integrity of the process so that neither side is disadvantaged. On a practical level it is to make sure that nothing that happens at the mediation to impede progress towards a settlement. You do not want to set back the process of settlement. 150

Question 21 You can terminate the mediation if they will not allow you to disclose that fact. The harder question is whether you tell the other side even if one party does not want you to. You are not obliged under the terms of your mediation agreement to give a reason for bringing the mediation to a premature end. If you decide to do this you can say that there has been a breakdown of confidence in the other room and you cannot continue as mediator. You will be asked what happened. You may say you are not able to give further details. If they want to they can speak to the other side directly. Consider bringing all parties together and summarising, without giving any detail, the situation in which you now find yourself and see whether or not they can find a way forward themselves. You will of course tell the guilty party that you may be asked to provide evidence about what happened at any hearing on costs based upon unreasonable conduct at the mediation. Ask them how they think the court will regard their behaviour Scenario 4 One of the parties asks if they can record a caucus sessions. This is overt and not covert. You may be inclined to agree but the question is whether or not you can give unilateral consent. In other words can you agree to this request in one room without telling the other room that you have done so? If you do not tell the other room and they learn about it they may think that you were not being even handed. They may say: ‘You never told us we could do that and we would have liked to have done it if we had been given the opportunity.’ It’s not worth the risk of compromising either your personal integrity or the integrity of the process. So if you are prepared to consent, tell the other room. Scenario 5 This is where one party tries to eavesdrop by electronic bugging or just by listening attentively if inappropriately. This is covert and not overt. This is more of a problem than you might imagine. In many modern buildings the partitioning is not as soundproof as people think it is. As a mediator you will want to try make sure that there is a cordon sanitaire between the parties’ rooms wherever possible. In one classic case involving a family property dispute over three generations, one of the parties’ younger members went for a coffee. The coffee machine was in the reception area of the firm’s offices where the mediation was being held. Modern soundproofing was not of the highest. He decided to deliberately try and overhear what was being said in the other side’s room. He could hear and repeated what he heard to his sister. They rushed down the corridor to tell their parents. Sadly they did this in front of the receptionist who went and told the other room, which was where her boss was, what had happened. 151

Part 2  At the mediation The innocent room told the mediator what had happened. He asked them if they wanted to carry on with the mediation. They did but they wanted the incident to be drawn the attention of the other room. The mediator decided not to make a drama out of this. He popped into the room and asked the barrister if they could have a private word. The mediator explained what he had been told had happened. The barrister did not express any surprise and certainly did not deny it. He said he would speak to his client. When the mediator returned to the room the barrister told the mediator, looking carefully round the room’s clients, that he had discussed what had happened. It was regretted and there would be no repetition. The day moved on. Later a proposal received from the innocent room was met with ‘they are not acting in good faith’. The mediator warned them about the dangers of raising the concept of good faith in view of what had happened earlier. This warning was heeded. Operational calmness returned. The case settled.

In a nutshell •

Recording devices are everywhere. They are becoming easier to use and harder to detect.

•

Always assume that someone is recording you. Moderate your language and behaviour accordingly.

•

The value of recordings and intercepts is often exaggerated.

•

Casual non-electronic eavesdropping is in practice more of problem. Take care not to be overheard and make sure that the rooms are soundproof or you have a cordon sanitaire between them

SEE ALSO Q29 FOLLOW UP The Regulation of Investigatory Powers Act 2000 Data Protection Act 1998 Human Rights Act 1998

152

Question 22

What do I do when one party accuses me of bias?

Core issues •

the importance and appearance of impartiality

•

the risks of being interventionist.

Discussion Be aware: The more interventionist or evaluative you are as a mediator the more chance you have of being perceived as being biased. Parties and their lawyers do not really want feedback – they want validation and agreement. As a mediator you start with a credit in your goodwill account. The parties have appointed you and paid you in advance. You have a certain amount of authority and they want you to do a good job for them. After all, that is what they are paying you for. Expect a degree of reservation or even suspicion if they do not know you and, most of the time, most of the people at the mediation will not know you. As mediator you have to establish rapport and build up an atmosphere of mutual trust and respect so that the parties can collaborate in finding their own settlement. During the day you can increase the credit balance in your goodwill account or you can deplete it. If you do not engender a mutual feeling of trust with the parties your job will be much harder. You want the parties to confide in you. If you ask a question or make a comment you want them to pay attention and believe that it is worth their while engaging with you as a mediator. Once you lose a party’s trust your chances of achieving a settlement on the day diminish dramatically. Also remember the duty imposed on mediators to act in a neutral and impartial way and not to discriminate against any party (see Q12). Why a party may accuse you of being biased Not listening to them This is the most common accusation. It can arise in the following ways: 1

Not spend enough time allowing them to tell you their side of the story or their version of events. Traditionally mediators have been encouraged by theorists 153

Part 2  At the mediation and trainers to allow unrestricted venting. In practice unrestricted venting creates frustration as no development of thinking is achieved while people go one repeating themselves. But you have to allow people to tell you their side of their story in their own way and in their own time. The skill is managing this so that obstacles to settlement are removed and that not too much time and energy is spent in a re-telling of the past. Mediators vary in the way that they do this. Generally, firm but gentle direction is welcomed. After all parties who keep repeating themselves, talk themselves into a dead end. They cannot see a way forward. That is what you are there for: to help them find it. 2

Interrupting people while they are talking or talking over them. You may want to help by passing on information from the other room quickly or by acknowledging that you have understood by making a responsive comment. As you build up momentum and a genuine conversation takes place the habits of ordinary social conversation can creep in such as interrupting or talking across each other as we do in social circumstances. But a conversation at a mediation is not the same sort of conversation that you have in the wine bar. If you find yourself interrupting, apologise.

3 Not acknowledging the points that they are making. Some mediators are openly dismissive of arguments that are put forward, particularly legal ones. Be careful of giving too much away by facial gestures – a bored, switched-off appearance sends a very negative message. Asking too many tough questions In civil and commercial mediations, mediators are encouraged to engage in reality testing or reality therapy. One of the UK’s best-known mediators refers it being part of the mediator’s job to having ‘challenging conversations’. Three problems arise here. 1

Clients who do not understand that this is part of the process can feel that they are being singled out and attacked. You may not be attacking them, but you are challenging them. When you are on the receiving end the difference is not always clear. Clients can see them both as hostile acts. Some mediators in their opening remarks tell the parties that they will be engaging in reality testing and assure everybody in the room that they will be doing the same to everyone so no one should feel picked on or victimised. You cannot safely assume that the party’s representatives will have told them about reality testing. So be prepared to explain it on the day.

2 The party representatives, particularly if they are lawyers who are taking a very adversarial role, can react badly. Paradoxically the more forensic and adversarial they are the more they are likely to accuse the mediator of crossexamining them or of engaging in un-mediator like behaviour. Questions about risk reward analysis and confidence factors often generate this response amongst lawyers who are more used to talking in general terms of ‘very strong cases’ and ‘feelings of supreme confidence’. 3

If you are asking challenging questions make sure that you distinguish between ones that you are bringing in from the other room and ones that you are asking on your own behalf. Be clear and remember to say whether these are your points or their opponent’s points. It is a good idea to preface questioning sessions with remarks such as ‘Well, what’s being said in the other room of 154

Question 22 course is …’ or ‘The points that they’re making against you are …’. If you’re being more evaluative you can preface your remarks with ‘If you do not settle, isn’t the court going to ask you this …?’ As mediator your job is to make sure each party understands what the other is saying. Often you will see at mediations that there has been a breakdown in communication as the parties have not really been listening to each other. Now is your chance to make sure that the respective messages are clearly transmitted and received. Lawyers often think that if you are not overtly agreeing with them, or if the other side has not changed their mind, it is because they have not been understood. They therefore repeat themselves. Sometimes they will reframe their argument. More usually they just repeat it in the same language but even more insistently. Being argumentative Some evaluative mediators do engage in discussions about the merits of the case and likely outcomes at trial with the lawyers in quite frank terms. These discussions can sometimes sound like arguments. One well-known mediator tells about the time that he really did have an argument with a barrister who he thought was being particularly obstructive and excessively forensic. As he put it, he argued with the barrister for 20 minutes. He admitted that he became very agitated and raised his voice. After the session was over and while taking time to calm down he started to have palpitations and became very worried about what had happened. The mediation carried on but did not settle. The mediator tortured himself with anxieties that it was his fault. Later he bumped into the barrister who said that he had recommended him to be a mediator in another case. He was appointed and at that mediation the same barrister was completely different and said that he had just been fulfilling his role. There were no hard feelings. Difficult to say who was behaving the more inappropriately but neither seemed to really understand what mediation is about.

Neglecting them Remember that the parties at mediation are in a state of arousal. They are hypersensitive. Be careful about doing things that can inadvertently give the impression of you favouring the other side. Mediators have been accused of being biased because they were spending more time in the other room. One mediator, when accused of this, tried to explain that this was because progress was much slower in the other room. The clients were mollified up to a point but remained suspicious. 155

Part 2  At the mediation Mediators might believe that impartiality does not mean equality. But clients tend to think that it does. Time management is a key skill for all mediators. Be aware of how much time you’re spending in each room. If you are spending more time in one room than in the other, let the other room know that you are aware this is happening. Give them an indication, obviously within the bounds of confidentiality, of why you think it is necessary to do this. You are biased! If, despite having taken steps to avoid these traps, a party accuses you of being biased against them you have the following choices: 1

Express regret that they feel like that. Ask why they feel this way. Don’t jump into trying to justify yourself. If they say, for example, that you are not listening to them. Apologise and summarise what you think they have told you. Ask them to correct any mistakes or fill in any gaps. If you have been paying attention you should be able to give a fairly accurate and complete summary.

2

If they feel that you have cut them off, ask them for an example. If you have done this and there was no justification – you just felt impatient or misjudged the moment – apologise. Explain that this was not your intention. If you did cut them off, for example, when the barrister was making his favourite legal point for the third or fourth time explain that it’s not really helpful to keep on repeating legal points at mediation.

3

Walk them through the process of reality testing. Explain it as you go. Quite often the clients will not have been made aware of it. Assure them that you’re asking similarly tough questions in the other room.

4

Always tell them that you are sorry if they have lost confidence in you. Tell them that you will withdraw. In fact it will be impossible for you to carry on without the confidence of all parties. Say that you will leave them for 10 minutes. If they want you to withdraw you will tell the other side that with regret that will be the end of the day. Be aware that they may ask you to withdraw. That will be the end of the day and you may receive demands for repayment of your fees. But generally people do not want you to withdraw.

5 Make sure that both parties understand what questions or points you are raising on behalf of the other side and which ones are of your own creation. If there is confusion, apologise and restate the questions making it clear whose questions they are. Tactical challenges Take all accusations of bias seriously. But be aware that there is a breed of advocate who think that it is their job to undermine the mediator. They want to take control of the process. Sometimes this is motivated by a genuine desire to protect their client from the mediator. More often, it is an extension of trying to dominate the day which is something they habitually do in court. So you steel yourself to be on the receiving end of tactical challenges. If they are making a tactical challenge, offer to withdraw – call their bluff. 156

Question 22 Of course offering to withdraw is much easier when you have done several hundred mediations and you have another four bookings coming up in the next fortnight than when you have only done half a dozen and this is your first mediation for a year. But you need nerve and self-confidence to succeed as a mediator. Displacement activity: mediator as a stress ball Being at mediation, particularly for the clients, can be a difficult and stressful experience. It may not be as bad as being at court, but it is not easy. Some try to transfer their feelings onto mediators by blaming them. This is just a form of displacement activity. All you can do is recognise it for what it is. Still apologise. Do not try and justify yourself. Say that you had not meant to give this impression or cause offence and that if you have you apologise. Ask them: ‘What would you like me to do now?’ Humour is a useful tool in mediation. But beware: Take care to use it wisely. Try and avoid what happened to a well-known and very witty mediator. As the mediator opened the door to leave the room he made a merry quip which produced gratifyingly loud gales of laughter. He stepped into the corridor and bumped into the decision-maker from the other room who sourly commented: ‘Well you seem to be having much more fun in that room then you are with us.’

In a nutshell •

Expect some criticism from parties and their lawyers. Remember one of your roles is stress ball. Some of the criticism will be tactical. In your gut you will know whether a criticism is potentially justified. If it could be apologise.

•

In the case of bias perception really is reality. If you have truly lost the trust of one room you cannot do your job properly. Cut your losses. Withdraw and refund your fee.

• Console yourself with the wise words of Donald Rumsfeld: ‘If you are not criticised, you may not be doing much.’ SEE ALSO Q12 FOLLOW UP Richbell: How to Master Commercial Mediation, Part 2, Ch 9 Walker: Mediation: An A–Z Guide, pp 60, 228, 318 157

Question 23

The mediation is being hijacked by a dominant personality. What do I do?

Core issues •

process control,

•

group dynamic

•

ego management.

Discussion Displays of what is termed ‘dominance behaviour’ are not unusual at mediations. Usually they are short lived while someone tries to secure some supposed tactical high ground. Sometimes they do go on for too long. How you deal with them depends upon who is displaying the dominance behaviour. The usual suspects are: • Barristers • Solicitors • Clients • Experts •

Third parties

Barristers Displays of dominance behaviour are almost to be expected from barristers at mediations. Many find it difficult to relinquish the leadership role which they have in court. The worst displays come from either very junior barristers or very senior ones. The latter usually think that being at a mediation is rather beneath them. Counsel of their experience and status should be astounding the Supreme Court with their forensic brilliance. The former are not quite sure what they are meant to be doing, have limited experience and are desperate to impress their instructing solicitors. The displays usually take the form of: •

Over-forceful presentations of their case, especially in joint sessions.

•

References to all the significant cases that they have been in.

•

Name dropping and in particular referring to every judge by their first name. 159

Part 2  At the mediation • Dismissive brushing aside of inconvenient facts or points made by the other room. •

Heavily condescending manner and patronising tone of voice.

•

Refusal to allow anybody in their room to speak during a caucus.

•

Refusing to allow you as mediator to make any points and meeting everything you say with: ‘Yes, we have thought of that.’ ‘Yes, we know all that.’ ‘I’ve never encountered such a suggestion in all my years’, etc.

•

Talking constantly and loudly.

•

Occasionally there are theatrics such as taking the other side’s position paper and tearing it up.

As soon as you get a whiff of this remind them of the basics of what mediation is about. You may have already said something about this either in your premediation chats or in the Joint Opening Session. It doesn’t matter; repeat it. If you didn’t explain the basics then, explain them now. Make sure you say that you are reiterating the points. These basics can be expressed as: •

‘We come to mediation to make peace not war.’

•

‘That requires a different skill set and mindset.’

•

‘Mediation is not a mini-trial. And I am not a judge.’

•

‘You don’t get deals done in the same way you get judgments. You get deals done by discussing proposals rather than by arguing about the evidence and the law all day long.’

•

‘The first job of the day is to find out why two sets of competent lawyers looking at the same facts are apparently coming to such different conclusions. Are they in fact looking at the same thing? Or is it a case, as Churchill said, of ‘Where you stand depends on where you sit.’

• ‘The only point of being here today is to try and reach a settlement. So everything that we do or say should be designed to move us towards that.’ Do not let anybody interrupt you. If they try to interrupt say: ‘In a moment. Please let me finish’ and keep going. Remember to lean forward while you are speaking. Finish with: ‘Today is not about proving that you’re right. It’s about finding the right deal for everybody. You can only get this by agreement and that means everybody has to think that there is something in it for them. If you need to have a fight to prove your point then you are right to go to court.’ You will have to listen patiently to at least two reiterations by the barrister of the overpowering strength of their case. They will express, several times, their doubts about whether the other side really do understand what they are saying or in fact are mentally competent to understand what is being said to them. Ask the barrister to dictate – exactly – the words they want you to use when you take these points to the other side. If they are still unsatisfied ask if they want to see the other side and put their points to them across the table for one more time. 160

Question 23 Legal firsts You will often be told by both sets of lawyers that they are going to win. Smile and, ask them why they are at mediation at all. •

Ask: ‘Why not go to court if you can both win?’ That sometimes produces a wry smile of acknowledgement.

•

Or say: ‘Well, if you are both going to win at court don’t let me stop you from making legal history.’ Clients usually look at their lawyers as if to say: ‘We’re not interested in making history; we’re interested in making money’.

•

Looking at the clients say: ‘Both sides are telling me that they have got a really strong case. You are telling me that you have an 80% chance of winning. I can tell you something that is 100%. One of you is wrong.’

•

When assertive barristers tell you that they are not wrong, nod and smile and ask them if they have ever won a case that they thought they were going to lose.

Staying with it Keep smiling. Stay patient. Try hard not let your irritation show at any time. Do not forget that part of this dominance display is to try and assert control over you. When barristers make their more pointed remarks, nod and say – with a smile of course – ‘I know you’re just pulling my leg’ or ‘You trying to tease me’ or a little more bluntly: ‘Is this a case of trying to wind up the mediator?’ Eventually, if it carries on, you will have to identify the behaviour as being an obstacle to settlement. Don’t be shy and don’t be insulting. Just tell the barrister and their team that their adversarial/forensic approach is not helping settlement at all. Name it and shame it. During your caucus look round to see how others are reacting to the barrister. Be alert to any signs of frustration, hesitation or opposition. People can show ways of disassociating themselves from what someone else is saying by non-verbal cues. Watch out for them. When you spot one start building alliances with that person. Address more of your remarks to them. Smile and nod encouragement when they say anything. If the behaviour remains extreme have a separate breakout session. Speak to the solicitors. They may be as uneasy with their barrister’s behaviour as you are. Expect to hear things like: ‘Well yes Crispin is always like this. He is the same in court.’ Tell the solicitor that we’re not in court and please can they tell Crispin to stop otherwise you will have to tell him. Some mediators advise talking to the barrister first. Unless they are just putting on a performance and don’t really believe what they are saying your comments are not likely to be well received. Why not have someone else deliver your uncomfortable messages? Solicitors It is rare for solicitors to engage in dominance behaviour if they have a barrister with them. If they do it is usually when the solicitor is senior and counsel is more junior. Generally barristers take the lead. 161

Part 2  At the mediation If there is no barrister present solicitors can sometimes, although more rarely, exhibit very similar dominance displays. Use the same tactics as with the barristers. Feel able to raise some concerns with them in caucus in front of their clients. Gently refer to the need to move from advocacy mode to problem solving mode. Most clients relate to that. After all, problem solving and negotiation are what they are used to. Advocacy and legal analysis are not. Occasionally you encounter some deliberate, but rather unsophisticated dominance, displays. One solicitor refused to sit down at a joint review meeting. There were 10 people in the room and he was the only one standing. The mediator just asked him quietly and politely three times to sit down and did not start the meeting until he had sat down.

Another solicitor adopted a slightly different tactic and stood up all the time during the caucus. He was over six-foot tall and shaven headed. The mediator was a very experienced construction counsel well used to dealing with ‘blokey’ men. But she was petite (5’4’’) and slightly built. She felt intimidated. She was so worried that she telephoned another more experienced male mediator colleague for advice. He suggested that she go and see the solicitor and his clients in their room and tell them that she found this behaviour intimidating. She did this and told him that he may not realise that this was the effect of his constant standing up. He probably did not mean to appear to be bullying but that is how it was coming across. He was over six foot and she was five foot four. How would either of you, she asked, indicating the solicitor and his client, like it if your wives reported to you that this had happened to them. She looked at his client while saying all this. There was a very silent silence. She stood up and left saying she would be back in 10 minutes after she had finished speaking to the other room. When she returned there was a garbled quasi-apology of sorts but no more standing behaviour. One dominance display that really irritates many mediators is when you go into a room with an offer from the other side. You read it out. Without even looking at their client the lawyer says ‘Well that’s no good.’ Don’t object. Nod in acknowledgment. Look at the client. Smile and say: ‘OK. And what do you think?’ If it happens again or you have established a working relationship with the room you can say: ‘I was asking your clients what they thought of the offer’. Be careful to modulate your tone of voice when doing this so it is light and regretful rather than reproving or minatory. Clients Most clients are content to let their lawyers make the running at least in the early part of the day. But not all. Indications are: 162

Question 23 •

They are sitting at the head of the table. Just to let you know who is team leader today.

•

They stand up and walk around while talking to you. Just to let you know who is top dog.

•

They are on their mobile whenever you walk in and stay on it for a second too long. Just to let you know who really counts here.

As the day develops and they relax more, their chair is pushed back, feet go up on the table, hands are cupped round the back of the head. This is all fine. They are the decision makers. What causes problems is when they keep repeating their own propaganda. They assert what their legal case is and how confident they are that they are going to win. Their lawyers have told them so. They repeat what their barrister told them in conference only last week. When either you or they look across to their lawyers for confirmation there is a noticeable pause before something like ‘Well, that depends on proving this or that … and there are never any cast iron guarantees …’ In other words caveats and qualified confirmation enter the room. With the really dominant client you can find yourself ending up listening to them arguing about the law with their lawyers. Best option is to let them talk themselves to a standstill. Resist the temptation to join in unless expressly invited. At a mediation over underground parking in Central London the client, an experienced and successful property developer, told the mediator when he brought in the other side’s final offer, ‘No way. I’ll take my chances at court.’ His solicitor, an experienced and successful property lawyer said, ‘I’ve been telling you, you haven’t got any chance at court. You will lose. I’ve told you that and so has counsel.’ The case went to trial. After the first day the property developer settled on significantly worse terms than were on offer at the mediation. Party autonomy?

Experts Experts can be even more extreme in their displays of dominance behaviour than barristers. They are the experts. And they let everybody know it. They belittle the expert on the other side. Usually they emphasise how limited his experience is compared with their own and how often they have been in cases with him and won. You cannot help yourself from thinking about those surveys that show that 90% of people think they are above average. You have to engage in counter-assertiveness. Right from the start. Do not let the experts think that they control the process. Solicitors have been known to complain about how even experienced and successful mediators let the other side’s expert bully their client. Imagine what that does for solicitor-client relations. Ask the experts if they are there as independent expert witnesses or as advocates? (see Q30). 163

Part 2  At the mediation If they say the former you can ask them for an overall assessment of the situation with a view to settlement. If they say the latter you can explain that this will not help today and will not be allowed at court. If need be refer them to Part 35 and the  PD and the Guidance- the relevant extracts are In the Survival Kit section in Q30. You cannot argue with experts. They know more than you about the subject matter of the dispute. The best you can do is to ask them to spell out in simple terms that even a mediator can understand why they are not agreeing with the other side and why the other side is not agreeing with them. The inevitable differences in methodology and assumptions will be exposed. The range of honestly held opinions on most, but not all, matters, which come to mediation are narrow. Hence the use of single joint experts. If they continue to try and dominate you can: •

Name and shame in the discussion of obstacles to settlement. or

•

Just say to the lawyers that unless they can rein in their expert there is no point in continuing. This is a mediation neither a mini-trial nor an expert determination.

Third Parties Much depends upon who they are. Insurers, for example, are in a different position from an associate or family member who has come along to support a party. Politely ask what their involvement is. Expect the unexpected, ranging from them being the real client with the party named in the Mediation Agreement just acting as a front, to an anxious creditor of the receiving party who is desperate for his money.

But nothing can really prepare you for dealing with this dominant third party who was controlling the defendants in a building case. He was their former solicitor. He was not present at the mediation because he had died. But the builder and his partner were still taking advice from him and following it. They were spiritualists. In that case the hardest thing was avoiding catching the eye of their current solicitor who was present and very much alive and was about to explode with suppressed mirth. The case did not settle. The defendants lost. They said that they had done the right thing and honoured the memory of their deceased former solicitor. Party autonomy. Or was it?

164

Question 23

In a nutshell •

Egotism is always displayed at mediations. It is just a question of how much and by whom.

•

Make sure that it’s not yours.

•

A resigned, polite tolerance tinged with a world weariness to suggest that you have seen it all before is a safe policy.

•

Do not go head to head.

•

In the end if the behaviour is proving to be an obstacles to settlement name it and shame it. Sometimes you have to confront. After all you are being paid to add value.

SEE ALSO Q30 Survival Kit on Part 35 FOLLOW UP Walker: Mediation: An A–Z Guide, pp 173–175 Bond: Mediation Practice, p 44

165

Question 24

A party refuses to discuss their risk-reward calculation. What do I do?

Core issues •

moving the parties from advocacy to assessment

•

the appliance of science

Discussion The short answer is that you do it for them. Why? (See Q25). Despite all the mediation theory and training available most parties and their advisers turn up at mediation with a forthright presentation of their position and an equally forthright attack on the other side’s position. They expect the other side to change their mind, realise the error of their ways and either pay up or reduce their claim accordingly. You will see a lot of bluffing, brinkmanship, self-delusion and wishful thinking at mediations. In fact parties, by just repeating all their best points, do not convince anybody except themselves. They end up believing their own propaganda. You need to move them away from this. Try to persuade them to contemplate alternatives. If they don’t settle, what is going to happen? Often the answer is the parties will end up in court. Either they win or they lose. Accept that it is not unusual for parties at mediation not to have carried out a risk-reward calculation. This is despite the professional requirement on lawyers to carry out a risk-reward analysis with their clients so that they know exactly what they are getting into when they commence litigation. Don’t let yourself become frustrated or irritated with them. There are various reasons why people don’t do this analysis: •

Pressure of time.

•

Lack of money.

•

Lack of inclination – the clients ‘know’ that they are going to win. They don’t feel the need to contemplate anything else. They become irritated when asked to think about what might happen if they don’t have a resounding victory in court. 167

Part 2  At the mediation •

Lack of confidence in being able to do it. Many lawyers, particularly barristers, are not used to numerical analysis of risk. They prefer to express it in terms of ‘a very strong case’ or ‘evenly balanced’. This verbal as opposed to numerical approach is falling out of fashion. Clients want to know what their chances are. Insurers and funders think in terms of percentages. There’s nothing new about this. When legal aid was more widely available, the Legal Aid Commission/ Agency required a percentage calculation.

Take the initiative early in the mediation, probably in the second caucus. Be prepared for some initial hesitation. They may not be quite sure what you’re asking them to do. Go through the methodology more than once. Sketch out worked examples. This is an occasion when a flipchart can be useful. But pen and paper work just as well. Simple methods See Q25 for a worked example on all of the following calculations. Good day/bad day/middling day. You work out in round figures what will happen in court in three scenarios. •

Take the expected range of compensation if the client wins on good day, bad day or middling day

•

interest calculation

•

costs expended

•

costs recoverable from the other side.

Then take the figure if he loses: •

Own costs

•

Contribution to other side’s costs.

Compare the net cash positions in the three different trial scenarios: •

a good day in court;

•

a bad day in court; and

•

a middling day in court.

Decision trees Identify the uncertainties. The more uncertainties there are, the lower the odds of winning at trial. Take a professional negligence case. The claimant has to prove breach of duty (ie liability), causation and loss (ie quantum). If the chances of proving breach of duty are 90%; causation 70% and loss 100% the overall chance of proving all three elements is: 90% × 70% × 100% = 63%. 168

Question 24 What starts off in verbal descriptions as a case near the top of the range is now one that is more likely to win than lose. This is not the same thing at all. Doing this sort of quantitative calculation makes it easier to double-check whether a qualitative assessment is too optimistic. It usually is. Summing up the differences This is a simple way of encouraging clients to think about their cases and their prospects in a monetary way. Here is a basic example: •

The claimant has a claim for £200,000. He has a 60% chance of winning.

•

If he loses it will cost him £60,000 for his own costs and £40,000 for the other side’s costs. Total £100,000 If he has a 60% chance of winning the calculation looks like this: £200,000 × 0.6 = £120,000 + (£100,000) × 0.4 = (£40,000) So the value of the claim is £120,000 – £40,000 = £80,000

Other responses to your encouragement to assess the risk-reward ratio can be more negative. Here are some suggestions on how to meet them. •

Lawyers, again particularly barristers say: ‘What I advise my client is between me and my client.’ Your response: ‘Of course I  respect your position. Please be assured that anything you say to me is covered by confidentiality. I will not tell the other side what you tell me or even hint at it. You will not be waiving legal privilege by telling me.’

•

‘Don’t cross-examine me.’ Your response: ‘I’m sorry if you think that I’m cross-examining you. Certainly I did not intend to do that. What I am doing is asking you to share with me your assessment of the situation. I did say in my opening remarks that I would ask you to price up the risk of assuming you will do better elsewhere.’

•

‘I don’t believe in percentages. ‘ Your response: ‘I understand. But sadly these days we tend to have to talk in terms of percentages. ATE insurers and funders require percentage evaluations. The old Legal Aid Commission used to do the same thing.’

•

‘We have already done these calculations.’ Your response:’ I’m sure that you have. I  would not expect anything else. Perhaps we could just go through them so that I understand where you are coming from.’

•

‘We are not going to tell you to tell you the results of our calculations. We are basing our proposals on those calculations.’ Your response: ‘All right. I’ve asked both rooms to do the same thing. But it is a matter for you. And I can assure you that anything you say to me will be confidential. I will not even hint let alone tell the other side what you tell me.’ 169

Part 2  At the mediation •

The lawyers, particularly the barristers, tell you: ‘We are extremely confident or supremely confident that we are going to win. I have told my clients that they have a 90% chance of winning.’ Your response: ‘I understand. The other is side telling me they have a strong case as well. Both sides are telling me they are going to win. Do not let me stop you from making legal history. Both sides know that they can go to court and win. Therefore, why are you here at mediation?’ or ‘I understand that. The other room are telling me that they have a strong case as well. You are telling your client that you have got a 90% chance of winning. I can tell both rooms something that has a 100% chance of being correct. One of you is wrong.’

•

Sometimes you come across a dogmatic advocate who says ‘I have told my client we have a 100% chance of winning. Listen to me – we are going to win at trial. There is no point in offering any discount now to try and obtain a settlement.’ Your response: ‘I understand. If you are giving a guarantee to your clients that they will win and be better off than they could be today then there is no benefit in a settlement to them. Is that right?’

If they still refuse to do the calculations or to share them with you don’t press further. Try and avoid getting into an argument. Just leave them with your requests. Go to your own private room and do the calculations yourself (see Q25). Come back with your calculations. Say something along these lines: ‘I’m asking both rooms to do the same thing. This exercise enables me to see how far apart you are and more importantly why you are apart.’ Ask the parties what their confidence factor is that they will end up in any particular scenario. In practice, even the most optimistic lawyers never tell their clients that they have more than a 80% chance of winning. You probably told the parties in your opening remarks that you see your job as identifying the obstacles to settlement. Hold on to that thought. There will come a time when you tell the parties: ‘We’re not making progress and having listened to you for four or five hours I have identified the following obstacles to settlement … ’. If one side has done the calculation that you’ve asked and the other side hasn’t, you tell them that is proving to be an obstacle to making progress. Kick starting risk assessment If your attempts to encourage a party and their advisors to look at risk-reward calculations are stalling ask the decision-maker if you can ask him a question. It’s designed to flush out their appetite for risk and consistency of thinking. Assure him that it’s not a trick question. Take them through this sequence. Imagine two Scenarios – A and B. 170

Question 24 •

In Scenario A you have £1,000. I offer you two options: a 100% chance of winning an additional £500 or a 50/50 chance of winning £1,000. Which would do you chose?

•

Most people choose the first option and are certain of receiving the additional £500. They prefer to secure their upside.

•

In Scenario B you have £2,000. Again, I offer two options: a 100% chance of losing £500 or a 50/50 chance of losing £1,000 or nothing. Which would you chose?

Most people (66%) chose the second option and take a chance on losing either £1,000 or nothing. They prefer not to secure their downside. Explain that this is inconsistent: •

Non-risk takers should take Option 1 in both Scenarios.

The end result is the same: the net cash position is that you have £1,500. If £1,500 was sufficient in Scenario A why was it not sufficient in Scenario B? •

Risk takers should take Option 2 in both Scenarios and end up with either £1,000 or £2,000.

No one likes a loss Explain to them that is an illustration of a well-known cognitive bias – which we are all prone to – known as the endowment effect. That is the tendency of people to be loss averse. We all find it harder to give up something that we already own than to give up the prospect of acquiring something that we do not already own. This is why receiving and paying parties have different approaches to settlement negotiations and offers. Let them see that what all the above risk analysis examples show is that most claims are worth less than the claimants think. When combined with optimism bias this explains the parties’ mindsets. You will be struck how much one side expresses concerns about the welfare of the other side. They will tell you that they are worried that the other side do not realise the awfulness of their predicament. They ask you as an act of kindness to explain to them the consequences of not settling on the offeror’s terms. Parties at mediation always seem to be convinced that the downside risk to the other side is much worse than it is for their own side. Often it is not. But sometimes it is. When it is the party facing the greater downside exposure has to be encouraged to price up the benefit of buying off the risk. When people are asked if they want to spend £50,000 to gain £126,000 with a 60% chance of achieving this and a 40% chance of losing £94,000 they always pause for thought. You, as mediator, should not feel shy about asking this sort of question In these examples the risk-reward ratio can easily be seen. It is difficult to believe that parties attend mediations without having carried out this sort of calculation. But they do more often than not. 171

Part 2  At the mediation Be prepared to do some risk coaching. 1

Explain that having a 70% chance of winning at trial does not mean that they will receive 70% of what they are claiming. It means that if the case were tried ten times they would win on seven days and lose on three.

2

Ask how well they could withstand the impact of losing. The answers are often revealing. Of course the impact of having to pay out £200,000 is often more serious than failing to receive £200,000. But this is not always so. Some parties may be desperate for money and have creditors climbing all over them.

3

Look at non-monetary factors with them. Parties often tell mediators that the dispute is a matter of principle. It is not just about the money. They may see value in a settlement that satisfies other non-monetary criteria. See Q25 for a detailed list. Some of these non-monetary considerations are intangible and difficult to quantify in monetary terms. But when parties carry out a cost-benefit analysis they find that they can put a value in money terms on most of them. Although not an exact science it can encourage parties to prioritise and define what they really need.

4

Review changing circumstances. All cases change and develop over time. New issues emerge. Experts change their opinions. Vary rarely are cases the same on the first day of trial as they were on the day that proceedings were issued. The same can happen with settlements. The value of the settlement can increase or decline over time.

In a nutshell • We are all loss-averse. We are all prone to believe our own propaganda. Accept it. •

This partly explains the reluctance to carry out risk-reward analysis. It is also hard work.

•

Be prepared to do it for the parties.

•

Learn the theory and practice and try it out on the disputes that come to you for mediation.

•

Do not be shy about sharing your analysis with the parties. You will see how their thinking can change.

SEE ALSO Q25 FOLLOW UP CEDR: How to Master Negotiation, Ch 10

172

Question 25

What’s a risk analysis? How do I do one?

Core issues •

how far should mediators involve themselves in numerical analysis?

•

how far should mediators engage in risk coaching?

Discussion In Q24 you learned why as a mediator you need to be ready, willing and able to do a risk analysis. You do it if the parties cannot or will not do it themselves. You can use it to road test any analysis that they present to you. There are various techniques. If you learn and practise them you will be able to confidently deploy them at your mediations. This will show the parties that you are adding value. Net cash position This is a simple calculation to do. Take the expected ranges of compensation if the client wins, the interest calculation and the level of costs expended and recoverable from the other side. Here is a worked example. It compares the net cash positions in three different trial scenarios: •

a good day in court;

•

a bad day in court; and

•

a middling day in court.

The first two are simple to calculate. The third is not but it is often the actual outcome at trial with neither party winning 100% nor losing 100%. Of course there can be several permutations for this scenario. Example Assumptions In this example it is assumed that: •

It is a contract claim for £200,000. 173

Part 2  At the mediation •

The legal costs for each party at the time of the mediation are £30,000.

•

Total costs of going to trial are £50,000 per party, ie an additional £20,000. Interest at the time of the mediation is £10,000 and at trial £12,000.

•

The percentage of costs to be recovered by the winning party from the losing party is 70%.

Scenario A: good day in court Money received (£) Damages

200,000

Interest

 12,000

Total

212,000

Net before costs recovery

162,000

Costs

 35,000

Final net figure (C)

197,000

Final net figure (D)

(247,000)

Money paid out (£)

(50,000)

Scenario B: bad day in court Money received (£) Damages

nil

Interest

nil

Total

nil

Net before costs recovery

Money paid out (£)

(50,000)

Costs

(35,500)

Final Net Position (C)

(85,000)

Final Net Position(D)

(35,000)

Scenario C(i): middling day in court Assumption: the claimant wins 60% of his claim and costs Money paid in (£) Damages

120,000

Interest

  7,200

Total

127,200

Net before costs recovery

  77, 200

Costs

 30,000

Final Net Figure (C)

107,200

Final Net Figure (D)

(207,000)

174

Money paid out (£)

(50,000)

Question 25 Scenario C(ii): middling day in court Assumption: the claimant wins 50% of his claim and costs. Money paid in (£) Damages

100,000

Interest

  6,000

Total Net before costs recovery

Money paid in (£)

106,000  (56,000)

Costs

 25,000

Final net figure (C)

 81,000

Final Net Figure (D)

(181,000)

(50,000)

Decision Tree First identify the uncertainties. The more uncertainties there are, the lower the odds of winning at trial. Take a professional negligence case. The claimant has to prove breach of duty, ie liability, causation and loss, ie quantum. If the chance of proving breach of duty are 90% causation 70% and loss 100% the overall chance of proving all three elements is: 90% × 70% × 100% = 63%. If the defendants made a Part 36 Offer of £250,000, the probability of beating that has to be factored in as well. If there is a 90% chance of beating an offer option of £250,000 the chances of beating the Part 36 Offer are 63% × 90% = 58% What starts off in verbal descriptions as a case near the top of the range is now one that is more likely to win than lose. Doing this sort of quantitative calculation makes it easier to double check whether a qualitative assessment is too optimistic. They usually are.

175

Part 2  At the mediation Decision Tree Simple version for professional negligence action with 3 tests : was the advice negligent? : did client rely on it? : did client suffer loss (causation) as a result? £2m claim 1 Negligence 90% 2 Reliance 3 Loss Present value

10%

£1.8m £1.26m 50% £630K

70%

30% 50%

Summing the differences This is a simple way of encouraging clients to think about their cases and their prospects in a monetary way. See the following example: Take the same assumptions as used in the Net Cash Position example. •

The claimant has a claim for £200,000.

•

His legal costs are £50,000 and he can expect to recover £35,000 (70%) if he wins and to pay that if he loses.

•

Interest is left out of this calculation for simplicity.

If he has a 60% chance of winning the calculation looks like this: £200.000 × 0.6 + £35,000 × 0.6 + (£15,000) × 1= £ 126,000 + (£35,000) × 0.4 + (£35.000) × 0.4 + (£15,000) × 1 = (£43,000) So the value of the claim is £126,000- £43,000 = £83,000 Even if you assume an 80% chance of winning the figures are: £200.000 × 0.8 + £35,000 × 0.8 + (£15,000) × 1 = £ 173,000 + (£35,000) × 0.2 + (£35,000) × 0.2+ (£15,000) × 1= £ 30,000 So the value of the claim is £173,000 – £30,00 = £143,000

176

Question 25 Confidence and risk factors What all these examples show is that most claims are worth less than the claimants think. When this is combined with optimism bias (see Q18) it explains the mindset often displayed by clients, which their advocates have to try and adjust. Parties who attend mediations without having carried out this sort of calculation will have several disadvantages: •

When the mediator suggests that they do the calculation the clients are often shocked at the outcome, particularly when they realise what the net result of their best case in court will be if they do not settle.

•

This unwelcome and unexpected realisation usually causes clients to change their attitude to settlement and to their lawyers.

•

Parties often arrive with unrealistic expectations. They make an early offer to settle which is in excess of what they would receive on their best-case scenario. These sorts of proposals are a waste of time and goodwill and send the wrong signals.

Appetite for risk The client’s appetite for risk can be easily and quickly assessed by taking them through this sequence described in Q24. Impact and value of losing Remind clients what having a 70% chance of winning means (see Q24). Consider with them how they could withstand the impact of losing (see Q24). Impact and value of settlement Calculating risk factors and net cash positions is only half of the pre-mediation analysis that the client must carry out. They also need to calculate the value and impact of settlement. This is not just limited to the financial savings that they can achieve by not having to pay any further legal fees. Non-monetary factors Parties often tell their lawyers that they are prepared to fight the case as a matter of principle and it is not just about the money. As discussed in Chapter 5, the concept of fairness is very important for most people. Settlement therefore can have value if it satisfies other non-monetary criteria such as:

177

Part 2  At the mediation Heal wounds

An acknowledgment of liability or an apology is often very valuable to the recipient. It is vindication.

Reduce stress

Litigation is a stressful activity for most people. This does not apply, for example, to repeat litigators such as insurance claim handlers. But for most people it is. It also places strain on relationships. In many mediations, the claimant’s wife has come along with her husband and has told him that she has had enough and wants the dispute settled today.

Give certainty

Most people prefer certainty to uncertainty. This is as true in our business lives as well as private. Businesses do not like surprises. Uncertainty makes planning more difficult.

Save reputation

There is always the risk that if the dispute goes to court that the judge can make adverse comments about the parties, even if he decides the case in their favour.

Confidentiality

Many disputants prefer to keep the details of their dispute private for as long as they can. This is impossible once the trial starts. Details of the settlement can also be kept private.

Free up time

Disputes are time consuming. Most people could be doing something better with their time. Nobody’s last words are ‘I wish that I had spent more time litigating.’

Reduce distraction

Many businesses find that they spend time and effort on litigation when they could have been spending it on their business. Litigation for most businesses is down time.

Relationships

Many relationships, both personal and commercial, do not survive a court trial. Too many harsh words are said in public.

Protect third parties

Litigation does not just affect the disputants. Innocent bystanders can be injured. If a company loses at trial its creditors and shareholders may suffer.

Contain the dispute

Disputes have a tendency to escalate. They not only become more expensive. The scope of the dispute expands. More issues and evidence are uncovered. Parties often come to regret this.

Some of these non-monetary considerations are intangible and difficult to quantify in monetary terms. In practice when clients start to carry out a cost-benefit analysis they find that they can put a value expressed in money terms on most of the factors listed above. It is not an exact science. But it does allow clients to prioritise and define what they really need. Value can change Consider with the clients what the value of settlement today is and what it could be at the time of trial or after judgment- whether favourable or not. 178

Question 25 The other side’s settlement A fundamental part of any negotiation, and in particular mediation, is the mutual recognition of reality. Each side has to recognise its own reality and the other side’s. Once that degree of common understanding has been achieved, finding common ground on which a settlement can be built becomes much easier. So after analysing one side’s client’s risk-reward ratio – ie the benefits as well as the costs of settlement – do the same exercise for the other side. You usually have much less information available than the parties themselves. However, an intelligent estimate can be made. Some idea of how accurate the estimates are will be seen when proposals are framed and put forward at the mediation. Once the mediation is underway you will be able to do this better than the parties. You use your secret weapon – your unique knowledge of what is happening in both rooms. In the first instance encourage the parties to do it themselves. You may well be able to provide guidance to the parties during caucuses. Carrying out this exercise will help each party work out what they can afford to do for the other side. This is not just in terms of how much money to pay. There will be more intangible potential benefits. For example in an employment dispute, the employer may work out how much he thinks the employee will need until he finds another job. That is a money element. He may also work out that the employee needs help in finding a job, for example, by receiving a positive reference or being able to continue to use his laptop and mobile phone number. These additional items cost the employer very little but can be of great value to the employee. When devising proposals for settlement, always look to minimise the cost to the paying party and to maximise the benefit to the receiving party.

In a nutshell •

Practise these techniques. Use them at mediations and see how they work. Modify as necessary.

•

You will probably have more experience of this sort of risk analysis than the parties and their lawyers. Share it with them. Add value.

SEE ALSO Q18, Q24 FOLLOW UP CEDR: How to Master Negotiation, Ch 10 Richbell: How to Master Commercial Mediation, Part 2, Ch 8 Walker: Mediation Advocacy, Chs 7, 18 Walker: Mediation: An A–Z Guide, pp 422–423 179

Question 26

One party has simply got the law and the facts wrong. What do I do?

Core issues •

how far you are there to guide or advise the parties

•

the relative importance of fact, law, perceptions and commercial or emotional factors.

Discussion Mediators take wide range of different approaches to this problem, depending on their view about the role of the mediator. Process managers They think that their job is to manage the process. The details of the dispute – whether evidential or legal – are not of interest to them. They may be of interest to the parties; they are after all the ones who own the problem and the solution. Mediators should stay above the fray and not involve themselves in the detail. Unlike a judge the mediator is not there to find fact or to decide the law. Non-lawyers Most non-lawyer mediators – for the first time in 2016 in the UK most civil and commercial mediators were not lawyers – are reluctant to identify legal issues or discuss them let alone express an opinion on whether or not one party is wrong. They do not have the legal knowledge or experience to do this. Some however do not feel inhibited by this lack or hesitate to give a view. Post-truthers They argue that facts don’t really exist in the sense that they are independent of those observing or expressing them. Some go further and say that really there is no such thing as truth. ‘If late 20th-century learning has taught us anything, it is that truth is illusive, partial, interpretable, dependent on the characteristics of the knower as well as the known and most importantly, complex’. Professor Menkel-Meadow (1996). 181

Part 2  At the mediation All well and good in academic seminars, of much less relevance in real life mediations. Facts are constantly asserted and relied upon as incontrovertible. Purists They adopt the classic definition of mediation, which is that mediation is a confidential voluntary process where the parties to a dispute invite a neutral third party to help them find their own solution to their problem. This is the essence of facilitative mediation. Even some lawyer mediators who see their role as more than just managing the process will not offer opinions or do anything if they think that one of the parties is getting the law or the facts wrong. But some do. These are usually lawyer mediators who, while describing themselves as evaluative, see their job as engaging in challenging conversations. As part of reality testing they will challenge legal interpretations advanced by the parties’ lawyers. One well-known lawyer mediator openly asks the parties if they have considered such and such a judgment in a reported case. Mediators who do this usually research the legal points before the mediation or are still active lawyers and know the material because this is what they do in their day job. Another prominent commercial mediator as a matter of course checks any legal arguments put forward in the parties’ position papers against the legal authorities to see if they stand up. He is also a QC. Some non-lawyer mediators who are specialists or experts in the area of the dispute will challenge what is said based on their own knowledge of the sector, the way things work and recent developments. Evaluators These are the mediators who see it as their job to give an opinion on the legal and factual merits of the parties’ cases. Some of them openly advertise that this is what they do. Others reserve the right to do it. For example, the standard Mediation Agreement for Brick Court Chambers says at clause 13: ‘The Mediator shall be entitled but not obliged, at any stage in the Mediation, to express his view privately to any Party on the reasonableness or otherwise of any argument or proposal made by that party.’ Others just do it, whether they have this contractual entitlement or not, during the course of the day. They are usually but not always lawyers. Pragmatists These are the mediators who probably do not recognise themselves as falling into any of the above categories. They just try and deal with the issues as they present themselves during the mediation. They often take the view that their job is to help 182

Question 26 the parties identify the obstacles to settlement and to work on removing them or getting round them. At most mediations there is a difference of opinion expressed by the parties and their lawyers about the law and the facts. You expect this. The parties are advocating. They are putting their best case forward. They are not carrying out assessments of the situation. At least they are not doing it publicly. There is often a range of legitimately held opinions about the same factual circumstances but the range is usually much narrower than appears from the reports and opinions tendered at mediations. Experts and lawyers give their opinions and in doing so often have to make assumptions. Mediators note that they find it hard to resist making the assumptions that always favour their own clients. You as mediator can approach this problem by identifying the obstacles to settlement. The three recurrent ones are: 1 The parties are receiving different legal advice. Very often their lawyers are advising both parties that they are going to win at trial. 2

The parties have different recollections about events. The witnesses contradict each other. Sometimes it is obvious that they cannot both be telling the truth, the whole truth and nothing but the truth. But there is plenty of room for honestly held different recollections of the same events.

3

The parties have different information. If the parties have different information they are more likely to have different perspectives and opinions. The more that information is shared the greater the chance of shared views.

You can remind the parties that the court will investigate whether personal recollection and oral testimony are supported by corroborative evidence. This is usually evidence from other witnesses or by the lawyers’ favourite source – documents. How far can mediators investigate in that way even if they want to? In practice not very far. But beware: Mediators work under limitations: •

You are not sent all the material – only a selection.

•

You have limited time to study the material – often you receive it late.

•

You cannot test the evidence – you can ask some probing questions but that is it. No one is under oath.

•

You only have so many hours available at the mediation.

Lawyers often bluntly tell each other at mediation that they have got the law wrong. They do this in court as well. At least there the judge decides in the end which version prevails, ie what the law is. This is a clash of interpretations. Lawyers adopt the interpretation which most suits their client’s interests. How certain can you as mediator be that any particular interpretation is the correct one? Sometimes people do get the law wrong – as opposed to interpreting it in a way that suits their case. This can arise as a result of: 183

Part 2  At the mediation •

Overlooking something such as a recent change in the law.

• Misunderstanding what is on the page, eg  overlooking a time limit or exception. •

Defective instructions. Clients have given their lawyers a certain set of facts and the lawyers have assumed that they are correct.

Only you have spotted the error What happens if you, as mediator, form the view that one room has got the law wrong, but the other room has not picked up on this? •

Do you keep your opinion to yourself?

•

Even if you do not express a view, do you try and draw their attention to it by your questions?

•

Do you do this with both rooms or just with the room that you think is in error?

If you do subtly draw one room’s attention to the error, be prepared for this response: ‘Well the other side have not raised this.’ Sometimes this carries the implication you are making mischief by doing it yourself. And that is not the job of the mediator. You are exceeding your remit. There is also the hidden warning that you had better not raise it in the other room. You can respond with: ‘No that’s true. But they might get round to it as they start to think about things’ or: ‘How likely is it that the judge will not spot it in court?’ Where there are lawyers on both sides the simple solution is to get the lawyers together without their clients. You can suggest this as mediator. Explain that you just want each room to be confident that the other room fully understands the legal case that they are putting forward. Often when this happens the lawyers find that there is much more common ground than there had appeared to be. If one lawyer has made a mistake for whatever reason this gives them the opportunity to reflect. Occasionally at such meetings one side actually produces the authority in a case or a textbook to show why they say what they say. As mediator it is important that you establish an atmosphere in which this can happen without humiliation. Don’t appear as a judge. As part of the risk-reward analysis (see Q24) you will be asking the parties what their confidence factors are. That is often an opportunity for discussing how likely it is that the judge will accept their legal analysis. Quite often during mediations the parties develop their thinking and transmit it through you to the other side. When you do this expect to be told that: •

this point is not in the pleadings.

•

they have not made this point in correspondence before today.

•

if they want to make this case they will have to apply to amend.

All very true but is it relevant? You can deal with these sort of objections by saying that: ‘But these points are being raised today. If the case doesn’t settle how likely do you think it is that the points will not be raised at trial either by the parties by way of amendment or by the judge asking the questions? ‘ 184

Question 26 If you think the mistake is not one of law but of fact you can make the following points: • ‘Courts every day have to deal with different recollections. They have to choose. They do this not on the basis of the witness statements but on the basis of the evidence given live in court on oath before them.’ •

‘The court does not have to find that anybody is not telling the truth or is lying in order to prefer one recollection over another. People do misremember, misunderstand, or just plain forget. We are all subject to selective amnesia.’

•

You will be able to say in all good faith that you cannot decide today which recollection is to be preferred or which the judge will prefer.

Be aware: Often a party will make an assertion to you: ‘I’m going to win this case because my expert report supports me.’ Ask them if the other side have seen the report. If the answer is no, ask why not. The usual reason are that it is in draft or contains other unhelpful material. They may offer to show you the good bits. If you are shown the report you will see that nearly always reports do not expressly give definitive conclusions and opinions. The readers over-interpret their expert’s report. They exhibit confirmation bias and pick on the parts that that support their view of the dispute. You just have to point this out. When you do this you see the lawyers nod in agreement and silently say to their clients: ‘I told you so.’ If you think that they have got things wrong the tactful way of suggesting it is this: •

say that the other side are not accepting what is being said and ask if it is worth double checking

or •

say ‘I’m not sure that I have got this straight myself. Are you saying that … ?

•

‘Thanks. OK. How sure are you about that?’

You are there to help to facilitate settlement. One way of doing this is to encourage clarity and focus. Clearing up mistaken or confused thinking is part of that job. But beware: Going head to head with a party and telling them that they have got the law and/or facts wrong is high risk. The legendary David Shapiro who said that he introduced modern commercial mediation from the USA into the UK used to do that. He claimed to get away with it most of the time. The climate of mediation has changed. The users of mediation – mediators, lawyers and clients – have all moved on and are more sophisticated (see Q2). What do you with unrepresented parties? If both parties are unrepresented it is easier. You tell them both to obtain legal advice about their legal positions. If they tell you that they have spoken to their lawyers you acknowledge that and ask if the lawyers have confirmed in writing 185

Part 2  At the mediation the advice that you are being told has been given. Usually it has not been given in writing. Confirmation bias comes into play again. All you can do is ask them to double check. You will have more difficulty where one party is legally represented and the other is unrepresented. You simply have to emphasise to the unrepresented party even more strongly the importance to them of obtaining legal advice. Often the legally represented party will realise that an obstacle to settlement is the other side’s lack of competent legal advice. Sometimes they suggest that they will pay for independent advice to be given to both parties. This is an illustration of adopting one of the five key principles of the classic model of principled negotiation, ie insist on using objective criteria. There are those who doubt whether there is such a thing as independent legal advice but if joint instructions are given to a third party lawyer with no connection with the case or there is a reasonable chance of receiving an objective assessment. If you have concerns that by not having independent legal advice a party is prejudicing their position tell them of your concern. Say that you are worried about what they are doing. But it is up to them in the end – it is their dispute and solution. Does it matter whether the law and the facts are wrong anyway? There are those who say that it is all about emotions and perceptions. There is no point trying to establish what is right, wrong, accurate or inaccurate. People will just act on the basis of what they think is right and how they feel. In any case even if they are not moved by feelings it all comes down to commercial horse-trade in the end. So don’t worry about the facts. Consider this: There is a lot of truth in this approach, but it has its limitations. The perceptions are often about facts. Feelings of fairness are often closely aligned to interpretations of the law and expectations of what the judge will do in a trial, ie find in their favour. As part of working out how much to offer by way of a commercial horse-trade parties usually do look at the alternative, ie they price up the risk of doing better at trial. In the end it comes down to what is influencing the party’s decision-making. What is going through their mind? If erroneous interpretations of the law and recollections of the facts are influencing them you have to ask yourself two questions: 1

Is this erroneous understanding an obstacle to settlement?

2

Is this erroneous understanding causing the party to act against their own best interests, ie to their detriment?

If it is an obstacle to settlement identify it. Preferably do this in a joint session so that both sides can take stock. If it is causing self-harm deal with this in private. Suggest an adjournment to allow people to review the situation. 186

Question 26 Of course if you are a self-confessed evaluative mediator you will give your opinion to both sides. If you have been asked to give a binding recommendation you will give it based on your own interpretation of the facts. In both cases make sure that you have topped up your professional indemnity insurance. If you have doubts you need to try and clear them up. After all you could be the one that has got the law or facts wrong. Do not shirk doing this. If you are confused, how will you help the parties to be clear and focused on the path to settlement?

In a nutshell •

If you think that someone is getting the law and facts wrong do not ignore it.

•

Politely raise the possibility with them.

•

How you do this will depend on whether they have legal representation or not

•

Be aware that it may be you who are in error.

SEE ALSO Q1, Q2, Q27 FOLLOW UP Richbell: How to Master Commercial Mediation, Part 2, pp 247–254

187

Question 27

What do I do when one party seems to be receiving wrong or even negligent advice?

Core issues •

is it the mediator’s role to coach or advise the parties and their advisers?

•

to whom does the mediator owe a duty?

•

how far is the mediator there to make sure that any settlement is a fair one?

Discussion As a mediator you may often wonder about some of the things that you hear advisers telling their clients at mediations. This may be because of what the other side is telling you, ie that they are worried about the poor quality of the advice that their opponents are receiving. Or it may be because of your own opinions. There are three questions to be clear about in your own mind before you tackle this situation. 1

Is the advice being given about the dispute’s underlying law and/or facts? If yes, is it colouring the client’s attitude towards settlement and the mediation process? That’s one thing. Advice about negotiation and the mediation process is another. This is much more a question of your personal judgement and assessment. You know what is happening in both rooms – that is your secret weapon. You can form a view as to whether a particular approach or tactic during the mediation day is likely to be helpful in achieving a settlement or not. Unless you are specifically asked for guidance or advice be careful about volunteering any too early in the day. If you do you might alienate the advisers who have their own strategic approach. Much better to build alliances with the various players in the mediation drama. Try and avoid your relationship with any particular player becoming an obstacle to settlement. We come back to the question: ‘What is your style of mediation?’ To what extent are you going to give the parties guidance, direction or coaching. Doing this is not the same as giving evaluative advice. It’s more in the nature of encouragement, nudging and support. You can set the scene with some general generic remarks about mediation and negotiation. But are you going to do more during the day? If you tell the parties either jointly or separately that mediation is essentially assisted negotiation then as mediator you should 189

Part 2  At the mediation assist If you do not assist expect the parties to ask why they hired you (see Q3). 2

Always bear in mind that just as you have a secret weapon – only you know what is going on in both rooms – so does the adviser – only he knows what he is telling his clients in private and what they are telling him. As mediator you will be surprised how often advisers adopt different postures at different times during the day. They will adopt one approach and put forward certain arguments in the Joint Opening Session. When in caucus they will take a different line. Finally when they speak to you in private, as they usually do at some point during the day, they may take a different line again. Advisers have been known to tell the mediators privately that what they are really telling their client is to settle at £X and advising them that they have a 50% chance of winning at best, while in your presence either in a caucus or a joint meeting they have been saying that they have a very strong case which they are going to win and will not accept a penny less than twice £X. When one insolvency partner was asked why he was saying something very different in caucus and in Joint Opening sessions from what he was telling the mediator in private he replied ‘I  am advocating.’ Perhaps he was but was he doing his client any favours? As mediator you have to generate sufficient rapport and mutual confidence with the advisers so that they feel that they can confide in you in this way. Are you sure that you know what advice is actually being given to the clients by their lawyers? What you hear in a Joint Opening Session or even in a caucus is not necessarily what is being said. So you either need to be able to read between the lines or put yourself in their position and imagine what you would be saying.

3

Where the advice is about the law as opposed to facts or tactics ask yourself why your opinion on the law is any more accurate than anybody else’s. Remember that, although humility is often near the top of the various lists of essential mediator’s qualities, in practice you will not see much evidence of it. Mediators need to be self-confident and self-assured but not egotistical or arrogant.

Who do you owe duties to? Another recurrent mediation question is to whom does the mediator owe a duty? (See Q20.) Is it the parties or their legal representatives or both? If it is both, and it usually is, what happens if they appear to be in conflict? Do you have a duty to warn the clients that the advice they are receiving is wrong, unwise or negligent? Does this duty change if the other side tells you that they think that the lawyer is negligent and can show credible evidence? Situations have arisen at mediations where the mediator finds out that the courts have already made certain interim judgments or awards of costs against a party and their lawyers have not told them. Judges may have made comments at preliminary hearings about the strength of the case or the presentation of the evidence, which reflect badly on the lawyer. These remarks have not been passed on to their clients. But the other side’s lawyers have reported them to their clients. 190

Question 27 If you think that there is a potentially negligent situation talk to the lawyer privately. Ask them if they think that there is the potential for any professional embarrassment. Ask them if they have discussed the situation or allegation with their client. Tell them you wanted to speak to them first and not suddenly raise this in front of their clients. Make a note of what they tell you. Usually they start off, quite understandably, in a defensive mode. Do not engage in an argument with them. You have raised awareness. They know that you are on to the point and possibly the other side are as well. Leave it to them to sort it out with their client if they can. Whether or not they are able to do that will become clear as the settlement discussions continue. If there is a difficulty you will see it in the changing relationship between the clients and their lawyers. They just behave differently towards each other. The conscientious professional will report to you that they have had discussions and summarise the position. Self-confident clients will become assertive and take greater control of the process. You can see the lawyers looking crestfallen as they announce that this is what they are doing. Quite often the clients ask for a private meeting with their opposite number in your presence. Sometimes they use that as an opportunity for a private word with you when they express their reservations about the advice being given by their lawyers. Usually they are looking for you to express a view as well. Try and avoid it (see Q17/20). If in a caucus you hear the lawyer misrepresent what has been said in court, as can be seen from notes of the judge’s comments or the orders actually made, you have to correct the misunderstanding. Always do it tactfully. You cannot be party to a deliberate or inadvertent deception of their clients. You do not have to adopt the David Shapiro mode: ‘Listen to me, dummy, you’ve got that wrong.’ This blunt approach may have gone down well in New York 20 years ago but not in the UK today. A  golden rule of mediation is to avoid anybody feeling humiliated. If someone feels humiliated they will become defensive and go on the attack. They will not be thinking about settlement. They will be thinking about self-justification and retaliation. Just imagine if it was you in a potential negligence situation. How would you like to be treated? With consideration, tact and discretion is the answer. Most lawyers who make a mistake are usually grateful for it being brought to their attention sooner rather than later. Another scenario is where the faulty advice is proving to be an obstacle to settlement because it is distorting somebody’s decision-making or is an issue on which there are radically different opinions. In a dispute over a portfolio of properties owned by various members of same family the decision had been taken to divide the portfolio between two sides of the family. There were emotional and personal crosscurrents as two sisters were married to two brothers and were on opposing sides. A key question was what the capital gains tax would be. The two barristers who were property specialists had radically different views. In large part these were based upon what the parties’ accountants had said. Although the barristers were property 191

Part 2  At the mediation specialists they were not tax lawyers and said so. The mediator thought that he knew what the answer was, having come across a similar situation in a previous mediation. Without breaking confidentiality he described what view had been taken by the parties in a previous mediation and the outcome. He suggested that that barristers speak directly to the accountants and ask an agreed set of questions. The barristers did this. Of course one of the accountants said that his advice had been misunderstood. There was in fact no difference of opinion. But it took two hours of mediation to establish this. The situation is easier if both counsel and solicitor are with the client at the mediation. That means there are two lawyers. This gives you two opportunities as mediator to speak to a lawyer about the legal or factual advice that you suspect is wrong and or negligent. Do not be surprised to learn that even lawyers on the same side do not agree on everything. Often if you speak to the barrister alone they will say that they have had a difficult conversation with their instructing solicitor. At one mediation the barrister candidly told the mediator (in private) that she had told her solicitor that he had to go back to his firm immediately and tell them what the situation was and ask what they were prepared to do today in order to achieve a settlement. It was absolutely essential to protect the client’s interest that settlement was achieved on the day. Luckily the mediation venue was not far from the solicitors’ office. He did as he was advised. On his return he asked to see the mediator privately and reported what had happened: his firm was prepared to make a contribution towards the settlement figure. This was done in circumstances of absolute confidentiality. The mediator thanked him and told him that when this sort of thing happens you must never refer to it in any caucus. Of course no mention was made of it in any settlement agreement. The matter settled. Sometimes it is the other way round and it is the barrister who has given the negligent advice. As you share this thought with a solicitor you often find that they are grateful as they have had their doubts about the advice as well, but they were not sure because it is outside their area of expertise and experience. What usually happens is that a second opinion is taken from another counsel. More often than not this is done on the telephone during the mediation from another member of the same chambers. These conversations do not usually take place in your presence. You have to rely upon the summary that you are given. If there is a clear potential negligence situation often the lawyers have to adjourn the mediation while they give their client advice about taking independent advice and notify their professional indemnity insurers. In practice this situation is extremely rare. But beware: A note of caution when forming a view as to whether advice here being given is wrong or negligent. You can never know the case as well as those working on it 192

Question 27 either as clients or lawyers. If you are lucky you receive a selection of papers about a week before the mediation. You do not know what instructions the clients have given to their lawyers. Be careful about assuming too much. This is particularly true about factual matters. In theory advice about the law is more straightforward because you can look up the law and check a point. But except in cases where people simply overlook a relevant case, or statutory provision, it is extremely difficult to be certain that there has been potential negligence let alone actual negligence. What about advice given during the mediation? In one mediation the receiving party was discussing what would happen if the paying party defaulted on the proposed instalments. His solicitor advised that it would be very easy to make the defaulter bankrupt because you could present a petition if the debt was £750. He had overlooked that the minimum amount of a debt had been recently increased to £5,000. The mediator did not say that the solicitor was wrong, but said that he thought that he had remembered reading that it was going to be increased. The solicitor wisely checked and found that it had been. Face saved all round. Consider this: If you have doubts think twice about keeping them to yourself. What would happen if the clients sued their lawyers over advice given at the mediation? It has happened. You might find yourself becoming involved. Someone could ask you to be a witness. Do not rely upon the confidentiality clause in your mediation agreement as a shield. Or, you are not called as a witness but it comes out in evidence that the negligent advice was given in your presence. The inevitable question will be: ‘What did the mediator say?’ Will ‘nothing’ sound like a good answer? (See Q16.)

In a nutshell •

Do not suppress your worries or turn a blind eye to potential errors.

•

Tactful exploration of the possibility with the various actors is required.

•

Remember that you never know what instructions are being given or what is being said when you are not in the room.

SEE ALSO Q16, Q17, Q20

193

Question 28

One of the parties does not seem to be understanding what is going on. What do I do?

Core issues •

how far are you as mediator responsible for making sure that the clients are able to give informed consent to the Settlement Agreement?

•

how far can you rely upon their representatives to do this?

•

what pastoral care should mediators provide?

Discussion As mediator you will see various circumstances in which clients do not seem to be fully tuned into what is going on. Sometimes this is obvious, even dramatic. At one mediation, which was entering its 11th hour, a client slumped onto the table knocking over the coffee pot after 10 hours of negotiation. She had not told anybody that she was diabetic. Nobody knew. Luckily a doctor was in the hotel where the mediation was being held and treated her quickly and effectively. Pre-mediation chats with lawyers or clients should mean that someone tells you of any problems. But not always. Clients do not always tell their lawyers. Often the first inkling comes from a supporter that they have brought with them, a family member or friend, rather than from their professional team. You will see clients apparently not understanding what is going on. This can arise for different reasons Age Older people generally get tired quicker. Concentration lapses. At one mediation the key decision maker was 96. He spoke slowly but clearly. He understood what was being said to him, but did not always hear it clearly first time. He confessed that he got tired and would probably need to have some 195

Part 2  At the mediation power naps. That is exactly what happened. Breaks were scheduled into the mediation day so that he could have a nap. He was able to function perfectly well. All parties agreed at the start this is what should happen and that the mediation should not continue beyond the eight hour limit. It settled within time.

Deafness Impaired hearing is the most common disability you will encounter at mediations. As mediator you should be aware of this and try to cope with it during the day by making sure that you speak slowly and clearly while facing the person who does not hear so well. Reframing and summing up are your tools of choice. Also ask questions which will elicit answers that show whether the party has understood what you have said. Don’t ask: ‘Is this clear?’ and leave it at that. Instead ask: ‘That’s their side of the story what is yours?’ If the response does not refer to what you have said about the other side’s version of events you are alerted to the risk that you have not been heard or understood. Medication If at any time during mediation you are told that people are on medication or you observe them acting in such a way as to suggest that they are, ask if they have it with them and when they have to take it. Common signs are people turning pale or becoming very red in the face, shaking, sweating, stumbling over their words, eyelids drooping as they struggle to stay awake or becoming over-active and talking non-stop. The situation arises most commonly with people who have diabetes or are bipolar. In both cases not taking the medication when required can have a fundamental impact on their behaviour. The stress of being in a mediation does not help either condition. Language difficulties Most mediations in the UK are conducted in English. Not all the participants will have English as their first language. If there is any doubt about their ability to process information and express themselves in English make sure that there is an interpreter present. Ideally you, as mediator, want to appoint the interpreter not the parties. They may pay for the interpreter but you choose the person that you want. Make sure that they: •

Are professionals. Well-meaning amateurs can cause more problems than they solve.

•

Have done it before.

•

Report to you. 196

Question 28 Be aware: When working with an interpreter you as mediator lose some degree of control over the process. You cannot be certain that what is being translated back to you is what in fact is being said. You have to proceed more slowly to ensure that everybody is understanding the same words in the same way. Decide with the interpreter whether to use simultaneous or sequential translation. In practice sequential is better. It gives everyone time to think, process what they are hearing and respond. Remember to keep your remarks and questions short. Much better to use three short sentences than one long one. Unfamiliarity Many participants who attend mediation are doing so for what is the first and will probably be the only time in their lives. Many will lack familiarity with lawyers, mediation and the legal process. They are completely outside their comfort zone. If they are represented by lawyers you can expect the lawyers to make up for this experience deficit and explain what is happening. But do not be disappointed or surprised if you find that they have not done it as fully or as well as you would wish. Be prepared to do it all again. Do not become impatient. It is simply part of the job. Your job is more difficult when the parties do not have legal representation. The onus is on you to make sure that they understand what is happening and to explain anything that they are not clear about. Cultural differences Although mediation is practised all over the world people do it in different ways. Many non-UK participants will say that they expect you as mediator to hear what they have to say and then hear what the other side has to say and then tell everybody what you think the answer is. American clients often expect this because apparently this is how mediators in America behave. Well some do and some don’t. You should not feel pressured to act as mediator in a way that is alien to you. Gently explore their expectations. Explain how you normally do things and suggest that you all see how the day goes. Reassure the parties that mediation is a flexible process and you can adapt it as necessary during the day. Sometimes a party turns up with family members. You can see the male family members dominating the female ones even though one of the women is the party in the dispute or in the actual legal proceedings. If you are receiving mixed messages when you are in caucus you have to be brave. In a sensitive and nonconfrontational way tell the group that you are receiving mixed messages. You will not be surprised at how often you receive deep looks of gratitude from the female members of the party. Overload Mediators and professional advisers often underestimate how stressful the whole mediation experience is for their clients. Most are attending mediation for the first time. Some cope with the stress by treating the whole thing as a novel experience. 197

Part 2  At the mediation

In one recent mediation the claimants, who were young farmers, told the mediator how much they were enjoying it and finding out what men in suits did for a living. They said they spent their time in the open air not in offices. They were looking forward to actually being in court. They maintained this approach for most of the morning. But as the day wore on and the reality of the options became clearer they became as anxious as most first-timers to litigation to settle. They could see that their time, money and energy was better spent on the farm than in meetings with lawyers and in court. You see energy levels drop. People becoming frustrated and irritated. Psychologists call this ego depletion. Encourage the parties to take breaks and have a change of scene. You might lose a little momentum but what you lose in that you will gain in renewed energy. Make sure that you do the same thing yourself. Fresh air helps but one to one chats can be useful too. You are providing a sort of counselling. Let people download to you. Hunger As mediator it is your job to make sure that everybody is fed and watered. This does not mean cutting the sandwiches yourself. But it does mean making sure that food and drink are going to be supplied or everybody knows where to obtain it. People’s energy levels and blood sugar rise and falls during the day. A  packet of chocolate biscuits works wonders. This anecdotal evidence is supported by research. One study found that judges deciding applications for parole were more likely to grant approval when they had recently been fed and more likely to reject the applications the more hungry and tired they became. Army officers are trained that it is the first duty of command to eat and sleep. So it is for mediators. Frustration and anger Talk to the parties and ask them to explain why they are feeling this way. The middle of the afternoon, around 3.30pm, is the low point at most mediations, when frustration peaks. Ask what they would like to happen or what they would like to do. Reassure them if possible that what they are feeling at this stage is quite common but it passes. Encourage them to have faith in the process. ‘Fronts’ This is where one person has allowed their name to be used to disguise the identity of the true owner or actor. Nominees are an obvious example. Sometimes this is done formally with a declaration of trust. Often the arrangements are far from formal or even tolerably clear. 198

Question 28 A property is in one person’s name but they have no real stake in it or the dispute. They have just lent their names. As a result they are exposed to personal liability. They may feel that they have responsibility without power. You will often wonder whether there is an actual or potential conflict of interest between the real owner and the nominee. If you do identify it early on. Do not leave it unexamined. Sometimes mediations have to be adjourned so that independent legal advice can be obtained. At all costs avoid being regarded as an independent legal adviser. In one mediation, where a trustee in bankruptcy was claiming property in the name of the bankrupt’s wife it became clear that the wife was desperate to settle but her husband was refusing to allow her. Counsel and solicitors were present. In the end the mediator had to speak to them. The solicitors had acted on many occasions for the husband and he was a good client. They seemed to have a flimsy understanding of the concept of conflict of interests. Counsel was fully alive to the danger. The mediator asked counsel if he had any professional concerns. He said that he had awareness but not concerns and would make sure that the wife instructed him on his own on whether to accept or reject the trustee’s proposal. The mediator was reassured until counsel announced that he had to leave in half an hour because he had tickets for the National Theatre. Final proposals from each side were exchanged. Neither was accepted. Both were left on the table for 24 hours. The case ended up in court and both sides ended up worse off, including the solicitors who had to deal with a negligence claim.

Numbers count You have to raise concerns if you think that people are not understanding what is going on. If words are not doing the job try figures. •

Go through the financial consequences of fighting on to trial as against the settlement.

•

Do simple calculations. Work through the numbers.

• Encourage them to do the maths themselves. A  picture might be worth a thousand words but figures can be worth thousands of pounds. Raise your concerns with their advisers and with the parties themselves. This is not an issue that you can duck no matter how sensitive the circumstances might be. Consider this: After all you are trying to help the parties produce a settlement that will be enforceable and sustainable and for that you need informed consent. No one will thank you if a laboriously constructed settlement falls apart for lack of consent. 199

Part 2  At the mediation

In a nutshell •

The pen might be mightier than the sword but the calculator is mightier still.

•

People with language difficulties will still be able to understand figures.

•

If you have doubts address them. Do not pretend everything is fine when you see signs that it is not.

SEE ALSO Q1, Q24, Q25, Q26, Q27, Q33 FOLLOW UP Kahneman: Thinking Fast and Slow, p 453

200

Question 29

One of the parties asks to see my notes on a break-out session that I had with both sets of clients without lawyers? How do I respond?

Core issues • confidentiality •

process management

•

recording of what happens at mediations.

Discussion Note taking at mediations is another contentious issue. On many mediation training courses you will be marked down if you take notes while talking to the parties whether in joint opening session or in a caucus. Why? The usual reasons are: •

If you are writing you are not listening.

•

People talking to you can become inhibited if they see that you are writing down what they say.

•

Active listening is a crucial skill for mediators. This involves paying very close attention to what is said. You do not just hear what people say, you listen to what they say, how they say it, and what they do not say.

•

Open questioning is not just a matter of using words such as who, why, how, etc. One question prompts an answer and that answer prompts the next question. You do not start thinking about your next question, you listen and take it from there. It is much more open-ended and unstructured – the very opposite of cross-examination. There you are closing down channels so that the witness is forced into agreeing with what you want to put to them. In mediation you are trying to open up channels.

•

Notes are simply not necessary because facts are not being established. There will be not be any judgement based upon what has been said at the mediation. The best mediations are like conversations. No one records conversations except for some ulterior motive.

In practice most mediators take some notes although they vary in their methods. Some have stiff bound notebooks open and unscrew their fountain pens and write slowly and carefully. Sometimes they ask for phrases to be repeated, words and 201

Part 2  At the mediation names to be spelt. As one exasperated solicitor said about a barrister mediator: it was as though he was in conference taking instructions from the client. Others rely upon their observer or assistant to note down things. Others, believing that the details of the dispute do not matter and it is all about perception, emotion and impressions, just rely upon being in the moment and presumably total recall. They do not take any notes. Most mediators adopt a halfway house. They do not continuously write while talking with the parties. They ask permission if they want to make notes. They usually jot down: •

Any proposals or offers. The better practice is in fact to ask the parties making the offer to write it down themselves. This impresses it upon them and also avoids confusion about what is actually being offered.

•

Figures. Most people mis-remember figures more than words.

•

Specific questions which the other side want to ask or specific responses to questions from the other side.

•

Wording that is actually required, for example, the form of apology or the scope of a confidentiality clause.

Many mediators note down key points during the intervals between sessions to remind themselves of what they want to go back to or points to be covered in the other room. Making a list of issues and checking them off as they are dealt with gives a sense of direction which the parties pick up on and generally welcome. What do I note in breakout sessions? If you have a breakout session make a note of who was there and what time it started. Repeat that the session is confidential and that the intention is to make peace not war. And then let the parties discuss whatever they want. Often they will talk across each other and expatiate on their different agendas. Summarise what each is saying and let the parties see that you are making notes of the main points. Again this gives a sense of direction and structure. Note down any proposals. In the conversation between the parties, proposals, ideas, suggestions and concessions will go back and forth. Sometimes the parties are just thinking aloud rather than articulating proposals capable of acceptance. It is very easy for each party to think that they have reached agreement on different points. They leave the meeting with different impressions. That is why it is so important for you as mediator to make sure that you are present at every breakout joint meeting. You may do nothing more than simply make a note of what was said on each side and how you recollect the meeting concluding. At one mediation both parties asked for a meeting with the mediator and without their solicitors. It was a contractual dispute about the supply of animals. The buyer was a very experienced businessman in his 50s who knew a lot about business but not so much about animals. The suppliers were a couple 20 years younger who knew a lot about animals and less about business. 202

Question 29 Both exchanged their points and proposals emerged. What became clear was that while progress was being made on the amount of the outstanding invoice, the two side-issues of interest and legal costs were more contentious. These amounts were more difficult to quantify and neither side was being flexible. The buyer kept insisting that they should be ignored and the figures that he was putting forward were all-inclusive. The sellers were insisting that while they could agree a figure for the outstanding balance on the invoices, interest and costs still had to be taken into account. The mediator took notes and drew a diagram of how of how the parties’ figures compared. The parties returned to their rooms. The mediator checked with each room. The buyer’s room was optimistic. They thought they were on the point of a deal – the gap between them on the outstanding invoice was now within very manageable proportions. The mediator said he did not think so. There was still the question of interest, and costs. The buyer became very agitated. He insisted that it had been agreed that they would be included in the figure agreed for the invoice balance. In other words interest would be dropped and each side would bear their own costs. The mediator said that he would double-check with the other room. He did. They said that interest and costs still had to be taken into account and repeated the proposal they had made in respect of that element. The buyer disputed this and glowered for the rest of the mediation. His solicitor looked uncomfortable. The mediator read out from his notes what had been noted down. He showed the solicitor and the buyer the diagrams. The solicitor was reassured, but the buyer became even more irritated. His bouncy optimism was replaced by a sour obstructive approach. In the end the parties were only £4,000 apart. He refused to split the difference and stormed out of the room slamming the door and accusing the mediator of setting him up. The solicitor had a private word with the mediator and apologised for his client’s behaviour. He had a famously short fuse. The solicitor said he would talk to his client after the weekend. The mediator showed him his notes of the joint meeting. The solicitor asked if he could have a copy if necessary. The mediator agreed. The sellers left their offer on the table. No one asked for a copy of the notes. A week later a settlement was concluded.

But beware: When you are asked to show someone your notes at mediation take a moment before answering. Establish exactly why they are asking and what notes they want to see. You must be careful not to include confidential material within the material that you are prepared to show. Consider this: It’s an excellent idea to start each session of note taking on a fresh page. You might use up quite a lot of paper doing this but you reduce the chances of material becoming mixed up and cross-contaminated. 203

Part 2  At the mediation If you decide to show them, then just show them. Do not leave your notes with anyone. Do not permit copies to be made. There are very few obvious legitimate reasons for asking for copies, as opposed to sight, of your notes. Do I destroy my notes? In the past mediators were advised by their training organisations to tell the parties that they would destroy their notes at the end of the mediation. Some used to give a solemn undertaking to do this. Others actually tore the notes up in front of the parties. This practice has now become dangerous for two reasons. 1 Many mediators now have Professional Indemnity insurance. Professional Indemnity insurers will not be pleased to learn that you have destroyed all your notes if a claim or complaint against you comes in. You might expect there to be some increase in your renewal premiums. 2

The courts have shown themselves increasingly willing to look at what happens in mediation and to call mediators as witnesses. Look at the Farm Assist and the AB v CD cases. Steel yourself for the fact that you may well be called to give evidence. Saying that you cannot remember anything or that you have destroyed all your notes will not save you from being called as a witness and may not enhance your credibility or reputation for professionalism (see Q50).

In a nutshell •

Take notes at the mediation but jot them down in your private room whenever possible.

•

Always with the consent of the parties note down proposals, figures and points that they specifically want you to make to the other side.

•

Retain your notes after a mediation whether not it settled.

SEE ALSO Q50 FOLLOW UP Allen: Mediation Law and Civil Practice, Ch 9

204

Question 30

The parties want to bring their experts to the mediation. Do I let them?

Core issues •

the role of experts at mediation

•

the mediator’s control over the process.

Discussion Should experts attend mediations at all? Mediators are divided over this question. Those against experts attending mediations identify these disadvantages: •

Going to mediation is not like going to court. The aims are completely different. You go to mediation to make peace not war. Litigation is about fighting not peace making.

•

Mediators are not judges. They are not there to find facts and work out who is right and who is wrong.

•

Mediators do not make any decisions and therefore do not need technical help in the way that a judge might. The parties create their own settlement and they already have advice from their experts. If further advice is needed the experts do not need to be physically present; they can be available on the telephone or computer link.

•

Most of the day at mediations is spent on negotiation. Experts have no part to play in negotiation. It is a matter for their clients.

•

Experts by the nature of their business cannot avoid being judgemental. They are there to give opinions. They will be opinionated. Some become very attached to their opinions. They see their job as trying to persuade everyone else at the mediation including the mediator, the other side and their experts and lawyers, and their own client and lawyers that they are right. Experts from certain sectors seem to be particularly prone to this – engineers being an egregious example.

•

Experts are never brought along to mediations if they disagree with their client’s legal case. Most experts, despite specialist training in being an expert, still see their job as an advocate for their client. Their task is to support the client that is paying the fee. This natural tendency has been curtailed in litigation by the requirements of Part 35 of the Civil Procedure Rules (CPR). But here lies a practical problem. 205

Part 2  At the mediation What is Part 35 and is it relevant? In what capacity has the expert been instructed? Is the expert an advisor or a potential witness? Are legal proceedings underway or contemplated? If they are the expert is more likely to be a potential or actual witness than an adviser. That means that, as far as his evidence is concerned, Part 35 CPR applies. This section of the CPR governs the way in which expert evidence is produced and presented in court – subject, of course, to the discretion of the judge. Some mediators argue that no such restrictions apply to experts who attend mediations. In a narrow sense that is true. A mediator has no coercive power as judges have. But in practice the role that an expert plays at mediation is governed by various factors: •

Have the experts produced reports? If they have are they signed or still in draft? If they are already signed it is harder for any expert to amend their views even in private at the mediation no matter how compelling the evidence or arguments that that they may hear on the day.

• Have the experts had a joint meeting to narrow the issues? In theory this should reduce the scope of disagreement and make the mediator’s job easier. In practice if they have already done their best to persuade each other of the errors of their ways their positions may become even more entrenched. Any signed reports and notes of a joint meeting will be governed by the conditions set out in Part 35. Draft reports in contemplation of litigation will also be covered but of course they are not yet final. So some movement away from the position stated in those reports is theoretically more likely. Even though the experts know the requirements of Part 35 and the significance of their declaration that they are giving their independent, expert view irrespective of who is instructing them you will find that most experts are acting as advocates for their clients. Even if they are not overtly doing this and many do – they always adopt the assumptions that are at the farthest end of the spectrum that still support their client. Many experts, especially those who have regular contact with lawyers and litigation, like being an important part of the litigation team. Many of them are lawyers manqués. They are quite expert in a narrow area of law but sadly unable to confine their legal opinions to that narrow area of expertise. They also often think that the case at trial will be won by their expert evidence. They do not realise that the expert evidence is usually only one part of the overall picture. If they have not signed their report but they tell you this is what they are going to say in court you say: ‘Well since you haven’t signed it yet, it is what you say that you are going to say.’ Things change. What experts should be trying to do is to provide an assessment for their clients. This is not an assessment of the overall case but only of the technical issues which are the subject matter of their expertise. Most are too partisan to do this. This is why it is a good idea to have in mind the requirements contained in the Guidance for the Instruction of Experts in Civil Claims. Paragraph 11 stipulates: 206

Question 30 ‘Experts must provide opinions that are independent … A  useful test of ‘independence’ is that the expert would express the same opinion if given the same instructions by another party. Experts should not take it upon themselves to promote the point of view of the party instructing them or to engage in the role of advocates or mediators.’ (emphasis added) Stroppy experts If you have stroppy experts be bold and read out the above extract in the Joint Opening Session. You can be certain that their clients will not have this in the forefront of their mind and probably not even be aware of it. The lawyers will have a recollection of it but this will not be burning bright for them either. Most experts will have read it once upon a time but not recently. They rely upon just refreshing their knowledge of the Part 35 Practice Direction. If you think that doing this in a full plenary session is not appropriate make sure that early on during the mediation day you have a joint meeting with the experts. Whether you refer to the Guidance or not, just ask them what advice they would be giving if they had been instructed by the other side. Sometimes the experts’ opinions are so far apart that you wonder if they are looking at the same thing. In one pension loss case the defendants’ expert valued the loss at a maximum of £20,000 and probably at zero. The claimant’s expert valued the loss at a minimum of £2 million. The mediator told the joint session that the experts could not have been looking at the same thing. It was simply not possible to have this range of honestly held opinions about the same question. The lawyers acknowledged, without making any concessions, the sense in what the mediator said. In reality they did not have any choice. As usual when the mediator tried to establish through his questioning why there was such a fundamental difference it became clear that the experts had used different figures, different time periods and different investment assumptions. Hopeless.

In another mediation involving compensation where land had been compulsory purchased the argument was about the value of the land taken. Once again there was a difference between the expert valuers of over £2 million. The RICS provide guidance to valuation in these circumstances. Each surveyor emphasised that part of the RICS Guidance that supported his client’s case and chose comparators that were the most favourable to them. They each agreed in a private meeting with the mediator that there was something to be said on the other side. When the mediator ask them to confirm this in caucus they did. A settlement was reached because in the end the claimant, whose land had been purchased, being a successful and experienced property developer was happy to take a deal that was ‘good enough’. He was also sufficiently experienced to know that every day in court at least 50% of experts are proved wrong. 207

Part 2  At the mediation Should experts stay for the day? Some mediators suggest to the parties that once the experts have explained their evidence and dealt with any questions they can be released. They have no real part to play in the negotiations. Most clients do not agree to this unless the experts are charging them a lot of money and are themselves under time pressure. The big risk of experts staying on is that they egg on their clients. They exude confidence in their own opinion. The clients love to hear it. More often than not they exude greater confidence than the lawyers who are more aware of the vagaries of litigation and of the danger of experts not coming up to proof. Many a confident expert has been undermined by a skilful cross-examiner or penetrating enquiries from the judge. Lawyers usually have more doubts than their own experts’ evidence than their experts do. What sort of experts? There are many different types of experts. The ones that feature most commonly in civil and commercial mediations – excluding the specialist sectors such as construction – are: •

Surveyors for property disputes, in particular boundary and rights of way.

•

Valuers in all types of disputes from professional negligence, to shareholder disputes under Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) claims. Their evidence does not go so much to liability as to quantum.

•

Experts who scope and value remedial works.

•

Experts on market practice.

Are there any advantages to having experts physically present at mediations? 1

It is harder for the parties to play the empty chair tactic: •

‘My expert says this…’

•

‘Do you have that in writing.’

•

‘No, that’s what they told me.’

or •

‘My expert is advising me this.’

•

‘Really, well it’s not in their report.’

•

‘No, but that is what they have told me.’

2 If the experts are present you can check what the parties are telling you. Usually the clients have cherry picked the best bits from their expert’s evidence or advice. 3

It is easier for information and knowledge to be pooled. The more the experts share common information the more likely they are to have common ground.

4

If the mediation is stalling and you decide to have a review session and identify obstacles to settlement you can highlight the experts’ differing approaches as being an obstacle. 208

Question 30 5

You can call their bluff. ‘So you are telling your client that they are definitely going to win. You are guaranteeing them that that are you?’

Not many experts reply in the affirmative. If they stick to their guns and are adamant that they will be proved right in a trial tell the clients in view of this confirmation that they had better go to trial. What possible benefit is there to them of settling? You are labelling the problem. Do not be afraid of naming and shaming. Can I stop a party bringing an expert? Look at the provisions of your Mediation Agreement. Even if you have the power of veto when your permission is required consider the effect of refusing permission. Discuss with both sides. If there is any hesitation about the desirability of having an expert physically present, suggest that instead of being there in person the experts are available for consultation at the end of a phone or on Skype. If, in your mediation agreement, you have not given yourself the express power of veto or provided that the consent of the other side is required for any attendee then you cannot refuse. Be aware of fighting procedural battles. Rarely are they worth winning. If one of the parties wants to bring their experts let them. By all means ask why they want to do this and reiterate that mediation is not a mini-trial. But if they are going to feel more comfortable in making a decision by having their team around them why not let them? By all means let the parties bring their experts but don’t let the experts take over the mediation. And never ever repeat the Michael Gove quote about people having had enough of experts. You might feel that but you can never express it. Just remind them of Part 35.

Survival kit You will find it helpful to be familiar with the Part 35 Practice Direction. ‘Expert Evidence – General Requirements 2.1 Expert evidence should be the independent product of the expert influenced by the pressures of litigation. 2.2 Experts should assist the court by providing objective, unbiased opinions on matters within their expertise, and should not assume the role of an advocate. 2.3 Experts should consider all material facts, including those which might detract from their opinions. 2.4 Experts should make it clear– (a) when a question or issue falls outside their expertise; and (b) when they are not able to reach a definite opinion, for example because they have insufficient information. 209

Part 2  At the mediation 2.5 If, after producing a report, an expert’s view changes on any material matter, such change of view should be communicated to all the parties without delay, and when appropriate to the court. … 3.2 An expert report must: … (6) where there is a range of opinion on the matters dealt with in the report– (a) summarise the range of opinions; and (b) give reasons for the expert’s own opinion; … (9) contain a statement that the expert– (a) understands their duty to the court, and has complied with that duty; and (b) is aware of the requirements of Part 35, this practice direction and the Guidance for the Instruction of Experts in Civil Claims 2014 3.3 An expert’s report must be verified by a statement of truth in the following form– I  confirm that I  have made clear which facts and matters referred to in this report are within my own knowledge and which are not. Those that are within my own knowledge I confirm to be true. The opinions I have expressed represent my true and complete professional opinions on the matters to which they refer.’ Also useful are these extracts in the Guidance for the Instruction of Experts in Civil Claims issued by the Civil Justice Council. Paragraph 11 says: ‘9 Experts always owe a duty to exercise reasonable care and skill to those instructing them, and to comply with any relevant professional code. However when they are instructed to give or prepare evidence in civil proceedings they have an overriding duty to help the court on matters within their expertise (CPR  35.3). This duty overrides any obligation to the person instructing or paying them. Experts must not serve the exclusive interest of those who retain them. … 11 Experts must provide opinions that are independent, regardless of the pressures of litigation. A  useful test of ‘independence’ is that the expert would express the same opinion if given the same instructions by another party. Experts should not take it upon themselves to promote the point of view of the party instructing them or to engage in the role of advocates or mediators.’ There is a difference between an expert providing advice and providing expert evidence. The Guidance makes it clear at 20(e) that instructing experts must make it clear where proceedings have not been started, whether they are contemplated, and if so, whether the expert is being asked only for advice.

210

Question 30 On the point about the distinction between an adviser and a witness the Guidance says ‘6 Advice from an expert before proceedings are started which the parties do not intend to rely upon in litigation is likely to be confidential; this guidance does not apply then. The same applies where, after the commencement of proceedings, experts are instructed only to advise (e.g. to comment upon a single joint expert’s report) and not to prepare evidence for the proceedings. The expert’s role then is that of an expert adviser. 7

However this guidance does apply if experts who were formerly instructed only to advise, are later instructed as an expert witness to prepare or give evidence in proceedings.’

In a nutshell •

Experts tend to be more dogmatic than pragmatic.

•

Stand up to experts. Remind them of Part 35.

•

Remind everyone mediations are not about defending experts’ reports, opinion and valuations. They are about crafting settlements.

SEE ALSO Q8

211

Question 31

What do I do when one party insists on arguing their legal case?

Core issues •

what is a mediation – a negotiation or a mini-trial?

•

do people make decisions on settlement on the basis of legal analysis and argument or on the basis of commercial considerations and emotions?

Discussion One of the parties tells you they want to present their legal arguments in the Joint Opening Session. Do you discourage them? Always ask them why they want to present their legal points. Find out if they want to do this face to face or through you. The usual stated reason is that they do not think that the other side properly understands their own case. They want to make sure that the other side really do understand what difficulties they face in winning at court. Barristers are particularly prone to saying this. The two usual less overt reasons are: •

The clients want their lawyers to beat up the other side. Often they would like to do this themselves physically but they cannot. We have the rule of law. So they want to use the law as an offensive weapon to inflict grievous bodily harm.

•

Arguing the law is what lawyers, especially barristers, do best. The lawyers are in their comfort zone. Criticising the other side’s legal position is much easier than trying to create a settlement. They probably have prepared for settlement discussions based upon trading insults and criticisms as instead of genuine negotiations. They know where the battleground is. They are not confident about trying to find the common ground.

By the time that most people come to mediation they are thinking of their dispute in terms of legal rights and remedies. Usually they have taken some legal advice even if they are not represented by lawyers at the mediation. At least one of the parties – and sometimes both – tell the mediator that they do not think that the other side has properly understood the legal and evidential issues. If they did understand them properly they would not be disagreeing. They would see the error of their ways. 213

Part 2  At the mediation Lawyers acting for defendants are particularly prone to this. Those acting for insurers seem on occasions to be addicted to this approach. They insist upon being given the opportunity to explain to the other side the enormity of the legal obstacles that they face. They usually want to do this face-to-face in a Joint Opening Session. Having done that and then they realise that the other side has not immediately capitulated after feeling the full force of their forensic display they insist upon doing it again with you as the mediator in the first caucus. Let them. Make sure that they realise that you are listening to them and taking in what they are saying. If you warn of the dangers of the Joint Opening Session degenerating into a mini-trial with both sides arguing their legal cases, they will acknowledge that this happens and can be counterproductive. Some rather disingenuously will assure you that they will not allow this to happen. Others realistically say that they understand the risk but there is a greater risk that if you do not have a Joint Opening Session clients can feel dissatisfied and can never be confident that the other side have really heard them. As mediator, acknowledge this and explain that people who do not think they have been heard will not hear you. Mediators see this happening all the time. But beware: Trying to tell the parties right at the start of the mediation day how to negotiate or represent their client can be counter-productive. By all means ask why somebody wants to do something. Give warnings about possible dangers. Doing your best to dissuade them can put them on the defensive and make them inclined to disengage from the process. But if one side says that they are going to do this you should warn the other side that this is what they can expect. Either they steel themselves and just take it or they engage in hand-to-hand combat. The former is preferable: the latter not always avoidable. If they go ahead and present a contentious and tendentious legal analysis of their case which produces an adverse response resist the temptation to say that you told them so.

One commercial mediation was conducted exactly 22 days before trial. The claimant’s solicitor insisted on reading out 20 key legal points. There were well formulated and forcefully expressed without being in any way offensive. He clearly thought they were good points and that he had delivered them well. He finished and looked expectantly at the other side. They said: ‘Thank you. We know what you say. There’s nothing new. You can make them all again in three weeks’ time before the judge. We are ready for trial. We are here to see if we can settle. If you want to try and settle let’s both make some offers through the mediator.’ Another solicitor read out 55 pages of legal and factual analysis in a low monotone. The mediator saved himself from falling asleep by continuously making notes. Others were not so successful. Heads drooped, eyes wandered and closed and there was much fidgeting. Both mediations settled.

214

Question 31 Will you be my advocate? Many parties and not just their lawyers want to feel confident that you properly understand how strong their case is and how weak the other side’s is. When you, as mediator, have gained this proper understanding you will go into the other room and explain why that room are wrong. In other words they want you to become their advocate in the other room. Some are very overt about this. For example a senior professional indemnity lawyer, described as the doyenne of professional indemnity lawyers, says that’s what she wants mediators to do. Although she or her barrister will have made all their knockout points they need them to be reinforced. They want to use the mediator to adopt them. Other lawyers are less open about what they want you to do but still try to manipulate you in the same way. In other words they are arguing their legal case by proxy. If you are prepared to do this you may want to ask them how they will respond if the other room asks you to do the same thing. They will reassure you that they will not mind. They expect you to be robust in both rooms. They may even say that they do not mind being challenged – in fact they declare that they positively welcome being challenged. Don’t believe it. But beware: Be careful about taking this at face value. It is the same as when people tell you that they welcome feedback. What they want is not feedback, but validation. If you are prepared to put one side’s case to the other side make it absolutely clear that that is what you are doing. Parties sometimes complain that they were not sure whether the points that were being made were the mediator’s or the other side’s. Do not let this confusion arise. It can corrode the parties’ confidence in you. They are in a state of heightened awareness and will be looking for signs that you are taking one side against the other. Once they think that you are partisan you can easily lose the moral authority of being impartial and neutral. An important part of your job as mediator is to make sure each side understands where the other is coming from. You will be encouraging them to see the overall situation from a different perspective. There is always more than one way of looking at a situation. So when you asked if you will be our advocate, you reply: ‘I won’t be your advocate but I will be your interpreter.’ An equally important part of your job is to identify the obstacles to settlement. Quite often you will find that the parties are receiving contrary legal advice on the same facts. How can this be? Remember that there is a difference in what advice their lawyers give in front of you or the other side and what they say to their clients in private (see Q27). In the end most of the advice that you will hear being given at mediations is thinly disguised advocacy. Not many parties or lawyers are prepared to share their unexpurgated objective assessment.

215

Part 2  At the mediation Why not let them argue their legal case? Some mediators are happy to allow the parties to argue their legal case. This is particularly true if the mediators are experienced lawyers themselves. It opens the door to robust reality testing. Some trainers positively assert that part of your job as mediator is to destabilise the parties. In other words you should seek to undermine the parties’ confidence in their legal position. They relish challenging a detailed legal position. As described in Q26 one well-known mediator as a matter of course during his preparation researches the legal basis for the parties’ position papers. He is more than happy to take the lawyers on in hand-to-hand legal combat. Only someone of that experience and standing is likely to feel that it is appropriate for him to do that sort of thing and to expect the parties to accept it.

Another even more renowned mediator is quite open about his propensity to express his legal opinion. After a particularly hard mediation had settled he was walking back from the IDRC with counsel for one of the claimants. ‘Well done’ said counsel, ‘but tell me how did you get the other side to change their mind?’ ‘Oh, quite easily. I told them that their case was rubbish.’

Evaluative mediators are more amenable to allowing parties to argue their legal case and to be part of that process by acting as a party’s advocate in the other room. Facilitative mediators seem to be more troubled by the idea. What happens if one party argues their legal case in the Joint Opening Session? One thing that does not happen is that the other side, having heard the presentation, immediately hoists the white flag of surrender. Most responses fall into a variation of one of three : •

‘Yes. I understand what you say. I have heard it before. I do not agree with you.’ In other words they play a dead bat and give nothing away.

•

‘My clients and I have not come here today to debate legal points. We have come here to try and negotiate a deal. If you want to debate legal points we can do that at trial.’ In other words they deflect the attack.

•

‘I  hear what you say. We do not agree with you and this is why …’. There follows a detailed refutation point by point. In other words they confront and take the attack back to the other side.

The Joint Opening Session comes to an end. Irrespective of which of the three responses was given the mood is probably not upbeat and full of collaborative enthusiasm for settlement. In fact it can often be the opposite.

216

Question 31

At one mediation the solicitor for the claimant in a shareholders’ dispute painstakingly set out his clients’ case. He did it exactly as if opening a trial. Drawing the attention of the mediator and the rest of the room to documents in the bundle. Slowly reading them out. This was all on top of detailed pleadings and position papers replete with legal citations. He soldiered on steadily, losing the room. His own clients looked uncomprehendingly bemused. The other side’s barrister did not respond in kind and was politely dismissive of the last 40 minutes. The mediator was tempted to interrupt to try and curtail the presentation but decided not to given the spikey nature of the inter-solicitor correspondence that he had read and the suspicion that perhaps there was not a wholehearted commitment to mediation. No point in giving someone a pretext for walking out. But it set the wrong mood for the whole day. There was no sense of problem solving or deal making. A cloud of resentment enveloped the mediation suite. Muted but polite mutterings of bad faith were heard. It did not settle. What are your options? •

Bring the session to an end as soon as possible and let all sides go back to their rooms to cool down. You know they will be spending the first caucus in each room trying to bring down the temperature to operational level.

•

Summarise very briefly. Say that both sides are telling their clients that they are going to win. They both can’t be right. One of them and possibly both is wrong.

•

Go to the flip-chart and write down the points in contention. Doing this can bring focus to both sides on what they are really arguing about. What are the really key issues. They are usually fewer than people imagine.

•

Orally summarise without using a flip chart what you understand the main issues to be. Reframing in non-controversial, neutral language can cause parties to reassess what they have just said when they hear someone else replaying it to them.

•

Remind them that you are all here to make peace not war. Deals get done by negotiating, ie  discussing proposals, not by arguing about law and facts all day long.

Replaying the legal case If a party wants to argue their legal case again in caucus you will not be able to stop them. You cannot veto it. You cannot put your hands over your ears or walk out of the room. If you do you will immediately destroy whatever trust and goodwill has been built up. Instead invite them to put their legal analysis into a wider context. •

This will include asking where their clients want to be in three months/three years’ time; what will happen in trial in alternative scenarios if they do not settle; how confident are they that they will win and if they have ever won a case they thought were going to lose? (See Q24/25.) 217

Part 2  At the mediation •

Explain optimism bias.

•

Ask them how they think they going to settle by exchanging legal arguments all day.

•

Ask how they would advise the other side if they had been instructed by them.

•

Ask why they think that the other side are apparently not understanding their arguments and certainly not accepting them.

•

Ask them if they think that you are not delivering the message or presenting their argument clearly and coherently enough. Say if they have any hesitation about this they can go to the other side and present their arguments again.

Three things happen when you issue this invitation: •

They say they do not want to do that and it’s OK for you to carry on. They may well expand on this by saying that this is what they have appointed you for. You are the mediator. Go and do your stuff. Otherwise they could have just had a round table meeting. In other words – adopt my arguments, present them to the other room and they will concede. A nice thought but not likely to happen in practice very often

•

They say they would like to do that but the other side will refuse.

•

They say that they would like to do it. If the other side agrees then facilitate the meeting. Usually there are two outcomes. One side listens to what is being said and does not respond at all. Or the two sets of lawyers whether barristers or solicitors drop their posturing and acknowledge that there are points on each side and seek to explain their tendentious presentations by saying that’s what their clients expect: ‘Those are my instructions’.

Do I mediate problems or people? Some mediators actively discourage the airing of legal arguments. They say right from the start that this mediation is not a mini-trial and they do not want the lawyers to engage in court room behaviour. As one well-known mediation trainer says: you don’t mediate problems, you mediate people. It is a truism amongst commercial mediators that as the mediation day develops it becomes less legalistic and more commercial. Decisions are taken not on legal grounds but on commercial or personal ones. But some mediators say that it is often essential for the parties to go through the stage of discussing the merits and issues. The reasons why they believe this why this is true if it is true are not always clear. But they include: •

Doing this is a habit that has become something of a ritual.

•

People need to vent. If they do not get things off their chest they will not be able to think clearly about settlement. This may be true of emotions and feelings but is rarely true about legal points no matter how penetrating.

• The parties need time to feel comfortable in the mediation environment. Hearing all this legal analysis does not sound very different from being in conference with counsel which is a more comfortable environment for many clients. 218

Question 31 •

Legal points are the lawyers’ comfort blankets. They like to stay in their comfort zone of legal analysis and criticism. They are not being asked to do anything different such as think about settlement or work out deals. Legalities are a sort of displacement activity.

•

As part of a negotiation strategy or style they want to soften up the other side with the heavy artillery of legal analysis. One busy mediation advocate refers to knocking the other side off their perch.

But beware: The biggest danger of allowing a room to repeat its legal arguments over and over again is that it talks itself into believing its propaganda. The people in the room egg each other on. Their room becomes an echo chamber. Point out these dangers. After all even the most facilitative of mediators agree that you are there to give guidance and to help the parties to find their own solutions to their own problems. You risk being accused of bias or not being interested if you attempt to curtail repetition of legal analysis (see Q22). Make sure that you tell them that you have understood and understand the importance of what they are saying. Demonstrate this by reframing, summarising and asking them to make sure that your understanding is correct. Tell them that you believe that the other side understands the points. They just don’t agree with them. If they have any doubt why not go and speak to the other side direct. Let a party argue their legal case. If it promotes settlement all to the good. If, as is more likely, it does not, suggest that you try another approach. After all there are several ways of looking at a problem. The legal analysis framed in terms of rights and remedies is one way. But there is also the commercial or personal analysis. Encourage the parties to take a wider view of the overall situation. Just don’t let them argue their legal case all day long.

In a nutshell •

You cannot gag someone. People quickly resent not being allowed to have their day in court.

• Point out the lack of progress towards settlement when legal points are repeated for the umpteenth time. •

Remind them that they have told you and the other side that they want to settle.

•

Settlement does come from arguing legal cases but from discussing proposals.

SEE ALSO Q22, Q24, Q25, Q26, Q27

219

Question 32

I’m a facilitative mediator. The parties want me to bang heads together. Is reality testing the same as head banging?

Core issues •

how far do mediators go in challenging the parties?.

•

how much of the facilitative model learned in training survives first contact with clients?

•

what does evaluative actually mean?

Discussion There are still mediation trainers who think that evaluative mediation is an oxymoron. There are even some successful civil and commercial mediators who describe evaluative mediation as a cop-out. But even they recognise that the market in the UK is displaying a preference for more evaluative styles of mediation. The difficulty is that the market is unclear what it means by evaluative mediation. Some experienced and sophisticated buyers of mediation services candidly say: •

That no one really wants to be evaluated they just want you to go and beat up the other room.

• If they are not being duffed up they are worried that the mediator is not duffing up the other room either. • They ask mediators be to be evaluative what they really mean is be their advocate in the other room. •

Clients do not want a judicial evaluation. That’s not surprising since they can have that from the judge.

•

Clients don’t want a fresh opinion. They already have all – and possibly more – the opinions that they want or need.

These views are expressed by experienced commercial litigators some of whom also successfully act as mediators. As part of their mediation service they routinely offer mediator recommendations. How can you make a recommendation if you have not been evaluative at least to some extent? On the other hand successful civil and commercial mediators say things such as: •

Mediation is facilitative in training and evaluative in practice. 221

Part 2  At the mediation •

Mediators are facilitative in public and evaluative in private.

•

A lot of evaluative mediation goes on but no one talks about it. It’s a guilty secret.

•

What we do is to have ‘challenging conversations’.

•

Mediators evaluate all the time. They cannot help it. This is just part of being an intelligent human being.

In recognition of this one of the leading groups of successful civil and commercial mediators, Brick Court Chambers, provides in its agreement: 13 ‘The Mediator shall be entitled but not obliged, at any stage in the Mediation, to express his view privately to any Party on the reasonableness or otherwise of any argument or proposal made by that party.’ But what do mediators evaluate? There are three categories: 1

The merits of the case.

2

The feasibility of a settlement proposal.

3

The mediation atmosphere.

The merits of the case This is what lawyers enjoy doing most. It is what they are good at. They want to explain to the mediator why they are correct and why their case is going to win at trial. They also love highlighting the flaws in the other side’s case and explaining why they are going to lose. What they want mediators to do is to adopt their arguments and present them to the other room. They think they will be more persuasive coming from the mediator. Discussing the merits of the case – in particular the strengths of your own case – operates as therapy for clients at mediation. They find it comforting to remind themselves of all their strong points. As a mediator you have to allow people to do that. But you cannot allow them to do it all day and never stop. At some stage they have to confront the reality that a third party may not agree with them. They can find this hard to accept. They don’t expect their opponents to agree with them. But they do expect the judge to agree with them. As mediator you cannot give an evaluation of the case in the way that a judge can. You do not know the case as well as the lawyers do. They have been working on it for months and possibly years. You will have only had the papers a few days. You probably have not been given all the evidence from both sides. You will not have met and spoken to any of the live witnesses apart from those at the mediation. You will not have taken them through their evidence in any critical way (see Q2). All a mediator can do is: 1

Form an impression by relying on your own experience. 222

Question 32 2

Communicate the other side’s points and make sure they are understood.

3

Test the internal logic of what a party is saying and in particular whether what they say about their case is consistent with what they have said they want to achieve at the mediation. For example, in an employment case the client may say that what they want is to start their own business. They are fed up with being employed. What will be useful is, of course, money. They can get that at trial by way of compensation. What would also be useful to them are contacts, recommendations and even some business. All those things are potentially available from their former employer. A judge cannot award them. The employee will have to decide what his priorities are.

After all litigation is only one way of solving a problem or settling a dispute. There is no doubt that even facilitative mediation trainers see it as part of the mediator’s job to de-stabilise the parties. What they mean by this is to shake their confidence in their case. Even to the point of undermining their faith in their own lawyers. Some mediators even tell the parties and their lawyers if they think that they have a weak case. ‘Well your man is bang to rights isn’t he?’ were the immortal words of one highly successful commercial mediator to the defendant’s solicitor after the Joint Opening Session. ‘Well as you know I sit across the road’ (ie the Royal Courts of Justice in the Strand) ‘And let me tell you that if this came before me I would be telling you that …’. were the immortal words of another QC mediator. On a slightly less formal basis one seasoned commercial mediator told a barrister who had urged everybody to be commercial rather than legal that the only reason he was saying this was because his case was hopeless. He was doomed to lose. These remarks are at the extreme end of the evaluative spectrum. The feasibility of a settlement proposal Is it evaluative to say whether or not you think a settlement proposal will find favour in the other room? In one sense of course it is. You are assessing the proposal and giving your opinion about it. But many mediators who do not regard themselves as evaluative mediators would see this as facilitating or giving guidance and coaching. As mediator you are better placed than anybody else in the mediation to provide this sort of input. You have your secret weapon, only you know what is happening in both rooms. Without breaking confidentiality you can steer the parties towards where you think the common ground is. You may be wrong but you are more likely to be right than anybody else. After all being neutral does not mean being neutered. And being impartial does not mean being inert. If you are asked your opinion about a settlement proposal why not give it? If you are not asked, but you do have an opinion you can insinuate your opinion by asking 223

Part 2  At the mediation the offeror room how they think the offeree room will react. And there is always the failsafe question: how would you react if you received this offer? The mediation atmosphere This is two separate things. 1

The mood of the day. As mediator you listen and see what people are saying and doing and inevitably form impressions. Are people enthusiastic and committed about trying to reach a settlement or not? Are they fed up and frustrated? Of course during the day moods change. And it’s an important part of your job to read the mood changes and to react accordingly.

2

The mood in the rooms – the one that you are in and the other room. If you think that the people that you are talking to are being negative or obstructive and not showing much commitment to either the idea or the process of mediation, tell them. Do it politely and with examples. Explain that is the message you are receiving. They may be shocked. It may not be the message they think that they are sending. We all see ourselves differently from the way others see us and the way that we would like to be seen.

With appropriate editing to preserve confidentiality you can give a thumbnail sketch of the mood in the other room. Why not tell people that they have irritated the other room? Or report that the other room seem committed to the process and are discussing ways forward. Be comfortable The important thing is only to do things that you are comfortable doing. Be aware: If you are uncomfortable about something this will show and the parties will pick up on it. Without realising it you display signs of cognitive dissonance. That will not inspire trust and confidence in you. You also appear to lack authenticity. And being authentic is what we are all now enjoined to be. You have to be comfortable both with the philosophy of head-banging (or evaluative mediation) as well as the techniques. You can head-bang without actually being very evaluative. What you are is very analytical and forceful. You find out what the obstacles to settlement are and find a home for them, ie identify who is being obstructive or creating the obstacle. For maximum effect do this in a joint review session. Be polite and neutral. You might find yourself being regarded by the parties as the common enemy, which might help them find common ground. Describe it as you see it. If this is a case where there is a claim and counterclaim and both sides expect to be net receivers of money ask them how they expect to be able to settle. After five or six hours if both are still expecting to be net receivers tell them that as long as they both carry on in this vein they are not going to settle. Is this head banging or reality testing? Are you being interventionist or simply helpful? The essence of head banging is picking out the key questions and 224

Question 32 confronting the parties with them, either jointly or separately. And keeping on doing it until they have come up with sensible responses rather than the selfdelusional propaganda which masquerades as legal advice at many mediations. Consider this: Decide where your comfort zone is. If you find confronting, speaking plainly and receiving adverse reactions difficult, then head banging is probably not for you. If you can cope with all these things then head-bang because many clients want you to do it and will pay you for doing it. But beware: At a professional negligence mediation, the defendant’s solicitors – a wellknown London insurance firm – told the mediator that he had been chosen because he was a head banger At the end of a difficult day settlement was reached after some considerable realignment of the defendant’s position. In their feedback they said that after expressing their satisfaction with the outcome that while they had expected their heads to be banged they had not expected to have to attend A & E for suspected concussion.

At another contested probate a highly experienced and mild mannered barrister mediator started shouting at one party and their lawyers. He expressed his frustration and impatience in strong terms and a loud voice. This did not go down well. Later they heard him shouting even more loudly. Not at the other side but on the phone to his clerk. So it’s not just what you say it’s how you say it that counts. Head banging questions •

Refer to risk assessments make them do the calculations themselves.

•

If it’s a 50/50 chance why not toss a coin for it?

•

If it’s down to oral evidence is it then a 50/50 chance?

•

Focus on priorities. Nail them down: which of these possible outcomes do you prefer?

•

What is the business case for carrying on? So often the law of diminishing returns sets in early.

•

Why would each side spend £150,000 on costs when the gap between them is only £100,000?

In a nutshell •

Head banging and evaluative mediation are not identical twins but they are siblings. 225

Part 2  At the mediation •

They are both more interventionist and proactive than traditional facilitative mediation.

•

Head banging is really just enhanced reality testing.

•

Many civil and commercial clients want to receive a sense of direction from the mediator.

•

Some clients want you to ‘beat up’ the other side. But not many want to be beaten up.

SEE ALSO Q2, Q33, FOLLOW UP Richbell: How to Master Commercial Mediation, Part 2, pp 247–254

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Question 33

One of the parties asks me for my advice, opinion and suggestions. What do I say?

Core issues •

the role of the mediator as negotiation coach

•

the spectrum of mediation styles from facilitative to evaluative via adaptive and indicative.

•

is mediation the same as conciliation?

Discussions In ‘Skyfall’ Javier Bardem taunts Daniel Craig who he has tied up with: ‘How you’re trying to remember your training now’. That is how you, as mediator, can feel when the parties start to ask you what you think they should do or what will happen. Sadly, remembering your training will not really help you. Most mediation training is based on the facilitative model. This emphasises party autonomy and the voluntary and confidential nature of the process. As mediator you are the third party neutral invited in to help the parties find their own solution to their own problem. You do not give your opinions or evaluate cases, options or settlements. You do not predict the outcomes at trial. You are not there to bang the parties’ heads together (see Q32). You are there to help them find their own path to their own settlement (see Q19). There is nothing wrong with the facilitative model. It is the safe model. If you follow it you will not do any harm to the parties or their cases. Nor will you do any harm to yourself or your professional indemnity insurers. You are not giving advice or opinions so you cannot be negligent. The trouble is while mediation is facilitative in training it is evaluative in practice. The current orthodoxy is that there is no binary distinction between facilitative and evaluative mediation. There is a continuum with facilitative at one end and evaluative at the other. Very few mediators, and possibly none at all, are 100% at one end of this spectrum. All are somewhere in between. Where they are depends upon their personality and experience, and the demands of the moment (see Q26/27). 227

Part 2  At the mediation New words, same tune A  new vocabulary has been developed. Mediators now describe their approach as adaptive, indicative, proactive, pragmatic and those in search of more glamour in their lives call themselves ‘heavy-metal mediators’. In other words they say that they will do what is necessary to get the job done. Let us be clear this is not the same as transformative, therapeutic or narrative mediation. Most of the disputes that mediators of this type mediate are civil and commercial ones often with a focus, sometimes an exclusive focus, on monetary issues. One very successful and renowned American mediator who is a self-confessed ‘heavy metal mediator’ denies that he is neutral or impartial. He does not find those concepts helpful. He describes himself as ‘mutually partial’. In other words he sees himself expressly as the negotiation coach for each room. His job is to help each party achieve what they want. He is part of each room’s team (see Q22). This explanation may, in fact, do no more than express in a more transparent and colourful way what many mediators do in practice. When mediators talk about their job being to identify the obstacles to settlement and help the parties get over them or round them are they in fact describing the role of a negotiation coach? To make matters even more difficult for facilitative mediators the market seems to want a more evaluative approach. Parties say that they expect mediators to act as their advocates in the other room. They know that the mediator will also act as an advocate against them. They claim to welcome the mediator’s challenges and robust reality testing. They want mediators to beat up the parties and bang heads together. Lawyers are far more experienced in mediation now. They are more demanding of mediators. They also tend to be more impatient on the mediation day to get on with things and cut to the chase (see Q31). Not all mediators welcome this market trend. In fact many deplore it. They even deny that it is mediation at all. One of the most experienced and respected mediators in the UK is absolutely opposed to the American-inspired evaluative mediation model. Recently he went to the Far East to deliver mediation training in a country that has only recently introduced mediation. When asked how he enjoyed his trip he said that it was wonderful. People really wanted to learn. There were so excited about the new approach of principled negotiation and facilitative mediation. It was, he said, just like the UK 20 years ago. Well, you are mediating in the UK in 2017 but the trainers may still be training for mediation in the UK 25 years ago. The fact is that you will be asked these questions more and more and you have to decide what to do. Is it an option to say I’m a facilitative mediator and I don’t give advice or opinions? Yes it is. Many parties and their lawyers will understand this and will not object on the day. You may, of course, not receive many repeat instructions, but that is 228

Question 33 another matter. Provide some context to your reply otherwise the parties may feel snubbed and think that you are not really doing your job. Consider these responses: When asked to give a view on: The merits of the case ‘Well you have your lawyers. They know more about this case than I can. I’ve only had the papers for a few days. You have been working on the case with them for 12 months.’ ‘We already have 2/4/6 lawyers here we don’t need any more legal opinions.’ or ‘I am not a lawyer I can’t discuss the legal merits with you.’ On tactics ‘Well I think we/you should be thinking about the bigger picture/not just the cost of settlement but the benefits to you of settling now are not having this carrying on. ‘Well you worked out what you want and they have told you what they want – how can these be accommodated.’ ‘Well let’s look at it from their point of view. What you think they want. Why do you think they are not accepting your proposal?’ ‘Well based on what I’ve heard so far I would guess, but I might be wrong, that you have to get yourself above £200,000 and they are going to have to get themselves below £500,000.’ ‘Well they have offered to settle everything if you pay them £350,000. Why don’t you pay it? Can you afford it? If not, what will happen if you go all the way to trial and judge tells you to pay £350,000? How bad will that be?’ ‘So you say you can afford to pay it now but it’s just too much. They’re not entitled to it. By how much is it too much?’ Sequencing offers ‘If they offer £250,000 will you go up to £150,000.’ ‘Can you contemplate an offer in the range £200,000 to £300,000?’ ‘The message I’m getting from the other side is that unless your figure has got a 4 in front of it this will not settle. Now I do not know whether they’re bluffing. You can find out.’ ‘They tell me that this is their final offer. You can always test that.’ 229

Part 2  At the mediation ‘Well you have told me that your final offer is £500,000. Certainly think about how you want to get there. There are always different routes.’ ‘What message do you want to send with this offer? What message do you think they will receive?’ By asking questions like this you are trying to offer guidance or a steer whilst at the same time leaving them with the responsibility for thinking about the answer. When asked for suggestions on what to do Consider saying •

‘Are you able to contemplate splitting the difference?’’

•

‘One of the obstacles seems to be that they are worried that you’re going to develop this land. Have you thought about giving them a personal covenant that does not run with the land that you won’t develop without their written permission?’

•

‘What about suggesting that if you do want to develop the land you would be willing to give them a percentage of the increase in value?’

•

‘You say that you just want to enjoy this land and not develop it. Are you willing to give them a first option to buy it back from you if you want to sell?’

•

‘One thing that is sometimes done is that an indemnity is given to the paying party if there’s any future litigation occasioned by anything that you did.’

•

‘If you want to pursue the claim you will give them a percentage of the net recoveries and they will cooperate with you.’

Do I pretend that it’s my idea? You may be asked to take a suggestion to the other side and give the impression that it is your suggestion and not the offering party’s. Should you do this? You are lending your authority as the mediator. Some mediators positively assert that you should do this. They refer to it as using the mediator’s power. But beware: If you do this be prepared to face the question: have they suggested this or is it your suggestion? If you receive this direct question the best you can say without misleading anybody is that it has emerged from discussions. You are discussing it in both rooms. But even that is sailing a bit close to the wind. You can say: ‘I’m just thinking aloud – what about this? Would this be any good to anybody …?’ What you never do is lie. If it really is your idea say: ‘This is a mediator’s question. Do not read too much into this. I have seen this sort of thing being done in similar situations /at other mediations. What about … .Does this have any mileage for you?’ 230

Question 33 Advice on process If the parties cannot agree the value of a property why not suggest that they adopt one of the usual formulae? ‘Well, ways around this sort of issue in the past have been: •

You go to the President of the RICS and asked them to appoint someone.

•

Or both of you each nominate a valuer and the two valuers then choose a third valuer. From their valuations you take the average of the three.

You may not like the figure that they come up with. Or you can agree the figure now. You may not like it but at least it is your decision and your figure. Or ‘Unless we have movement on both sides in the next 30 minutes we’re not going to settle today. I get the distinct impression that people are coming to the end of their patience and energy. I’ll stay here long as you like with you and the other room but are we going to get anywhere?’ One party asks you: ‘Shall we offer £150,000 or go in a bit lower at £135,000 or a bit higher at £170,000’. What do you do? Many mediators would not be drawn on this at all and say: ’Well it’s up to you.’ If you are confident that £150,000 will be absolutely rejected you can say ‘Well, the message that I am getting is that sort of figure would not be accepted. But you can test it.’ Or If the other side has indicated that they think they are making all the running and have told you that it is about time that the others made a significant step you can tell them that and say: ‘Well, obviously £170,000 is more significant than £150,000.’ Other mediators would have no difficulty in saying: ‘If I were you I would go in at £150,000 and give yourself some room to offer more.’ Tell us where settlement is Be very careful if one party asks you to say where you think that the settlement figure is. One mediator used to pride himself on being able to predict the outcome figure. He used to write it down at the back of his notebook at the beginning of the mediation. At the conclusion of the mediation if someone had asked what his forecast was he would show them. He was nearly always right. He stopped doing this when he sensed that some parties started to think they had been manipulated to that figure. 231

Part 2  At the mediation But beware: Even if you do not adopt this approach, telling the parties what you think the settlement figure will be can still lead them to think that you will manipulate them towards it or make them dig in at something slightly above or slightly below depending whether they are the receiving or paying party. If you are really under pressure to give some sort of forecast always try and give a range not a single figure. Conciliator. Mediator. What’s the difference? The conventional distinction between the two is that conciliators tend to: •

Be more inquisitorial.

•

Bring more of their own knowledge, experience or research into the process and not just rely upon the parties to present information and material to them.

•

Generate options of their own and take the initiative in doing this and not just react to the parties.

•

Play a more central role in the process.

In practice hands-on proactive mediators act in this way to some degree. So in essence the difference between conciliation and mediation may be simply one of degree. In the end ask yourself what’s wrong with being conciliator type mediator? Especially if your customers want it.

In a nutshell •

Give as much advice as you feel comfortable with. Do not be pressured into doing it.

•

Make suggestions. Mediation unlike litigation is about generating settlement ideas and proposals.

•

Be guided by your clients. Do not impose yourself on them. Lead from behind.

SEE ALSO Q19, Q22, Q26, Q27, Q32 FOLLOW UP Richbell: How to Master Commercial Mediation, Part 2, pp 247–254

232

Question 34

I have a multi-party mediation – what do I do differently?

Core issues •

process design

•

joint and several offers

•

parallel negotiations

Discussion Mediating between two parties in dispute is complicated enough. Having multiple parties multiplies the complexity. What are the complexities and what can you do about them? It’s not the number of parties that is the key issue, it is the number of interest groups. You can have ten defendants. That is not the same as having ten different interest groups. Five may all have the same agenda and be aligned. Even when they have separate legal representation defendants can make common cause and form coalitions. This is often seen where there are multiple defendants with different insurers. As serial users of litigation and mediation, insurers know that sometimes co-operating with co-defendants is better than adopting cutthroat defences where everybody blames everybody else. When this happens claimants just sit back and wait for the blooding letting to finish and the cheques to be written. The practical issues that you will have to grapple with are: Logistics With any luck you will be able to leave one of the parties to make the arrangements. But if not, you are need a venue that is used to providing facilities for multi-party events such as IDRC- www.idrc.co.uk Obviously you have to make sure that there is a room big enough to take everybody for a plenary session. You will also need more than one breakout room. This is to allow coalitions to meet and plot. And the coalitions are rarely fixed – they change during the day as the settlement options come and go. As a rule of thumb you need one breakout room per three parties. 233

Part 2  At the mediation Charges If you have a £5 million dispute with two parties, do you charge the same as for a £5 million dispute with five parties? Most mediators set their charges by reference to time and value. The longer a mediation takes, the more they charge. The higher the value; the higher the fees. But if the value element is the same why charge more? Certainly preparation time is usually longer the more parties you have. For example: •

You will have five position papers to read instead of two.

•

The documents for the mediation (the bundle) will be more extensive because there will be correspondence between five firms of solicitors rather than two.

Consider this: If a £5 million, two-party mediation takes four hours preparation it does not mean that a £5 million, five-party mediation will take ten hours. Some mediators charge by the party anyway. So at £2,000 per party their fees are £10,000 instead of £4,000. Nice work if you can get it. Increasingly you cannot get it. There is greater pressure on fees. Mediation is more and more a buyer’s market. Even some of the most successful and prestigious mediators are having to trim their charges. Some mediation providers charge an extra 10% for each additional party over two. So if their fee for a two-party mediation would have been £4,000, they would charge £5,200 for a five party mediation, ie £4,000 + (£400 × 3) Be clear on the following: •

How you are going to charge for preparation. Most mediators now charge an all-inclusive fee. Some charge a standard daily rate which includes some limited preparation time. If you intend to hold pre-mediation meetings remember to specify how you are going to charge for them. Sometimes the charges for the preparation exceeds the charges for the mediation itself.

•

Overtime – the chances of the mediation overrunning are greater with multiparty mediations. You are more likely to be charging overtime.

•

Where you have three parties represented by one set of solicitors and counsel, whether you regard that as three separate parties or one. Generally they are regarded as one.

Multi-party mediations are not a gravy train. Resist any greedy impulses. Instead regard them as an exceptional marketing opportunity. You will be able to impress a lot more people than at a two-party mediation. Preparation This means both preparing all the parties for the mediation – this is essentially process design – and preparing yourself. Inevitably there will be more material to read. Ideally you would like to have a longer lead-in time. By all means request 234

Question 34 it. But be prepared for long days as material is delivered late or even at the last moment. Hence the need for you to be alert as to how you charge for preparation. Process design The more parties you have the more you have to think about the shape of the mediation. While some multi-party mediations will be booked in the first place for more than one day many are not. You as the mediator have to make sure that you will be able to make the best use of the available hours. Pre-mediation discussions with the parties about structuring the mediation day are essential. Sometimes you cannot avoid having a physical preparation meeting. But much can be done through video-conferencing and even by telephone. You always have the problem of synchronising diaries and this inevitably becomes harder the more parties you have. You will in the end probably find that you have to be quite directive. It may be impossible to get everybody physically at the same place at the same time. You collect as many as you can. Those who can’t attend will have to do so by proxy or via video link. Early telephone calls with each of the parties are essential. You can learn how they see the dispute and the structure of the mediation. Expect to hear pointed remarks and comments about the other parties and their legal advisers. Some names will recur as the villains of the piece. One voice or many? Where you have multiple claimants as well as multiple defendants, all separately represented, the landscape becomes much more interesting. The key thing is to find out to what extent any of the parties form same-interest groups. •

Are all the claimants going to negotiate as one group and then divide the settlement figure amongst them or will there be three separate and parallel negotiations on behalf of each of the claimants?

•

Will any of the defendants join with each other to negotiate a joint offer or will there be separate contributions towards a payment pool?

Often you will be told that there have been preliminary discussions. Some more may be planned before the mediation. Happy is the day when people have actually made decisions to cooperate before the mediation. More usually their tentative and provisional discussions are continued at the mediation. If multiple parties have multiple experts the problems multiply. Arrange a premediation joint meeting of experts to try and narrow the issues that will be on the table for discussion at the mediation. All this pre-mediation preparation takes a lot of time and effort. In one recent multi-party construction dispute where there were two co-mediators the premediation preparation time was over 50 hours. The mediation itself lasted less than half that time.

235

Part 2  At the mediation For the sake of efficiency and to minimise confusion you need to impose a little more formality. As a mediator you cannot issue directions in the same way that arbitrators or judges can, but you can certainly send out suggested deadlines. Usually peer pressure and social proof means that people try and stick to what they have agreed to do. There will be slippage. Just accept it and cope with it. Co-mediation Decide very early on whether or not you are going to mediate alone or whether you will have a co-mediator or an assistant. Reasons why you might not want to mediate alone include: •

Time management Time management is always a crucial skill at mediation. In multi-party mediations it is even more in demand. The dangers of leaving people on their own unattended for hours on end are obvious. They switch off or they fire each other up by reiterating their best points. The rooms become echo chambers. This is one reason for having a co-mediator or assistant (see below). On the assumption that you are not able to spread the load with a co-mediator or assistant you will have to manage people’s expectations extremely carefully. It is probably better to have a planning session so at least everybody sees each other and feels part of the process. If you have only been allotted 10 hours for the mediation explain that you will have to push people along. This means that some caucuses will be shorter than you might normally have. You will spend more time just popping in and out of rooms to give people updates. Keeping everyone in the loop is essential. One way of doing this and managing time well is to have parallel sessions. You could be talking to two groups while some of the defendants may be forming coalitions – they can be having their own talks in your colleague’s presence.

•

To help referee Early on ask experts in similar disciplines to meet with the aim of agreeing what issues need to be agreed during the mediation day. A co-mediator or assistant means that that you have someone to referee these meetings. Otherwise they turn into mini-trials where experts try to score points off each other. They never come to any conclusions. You need someone in the room with them to keep them at their task. This does not have to be a lawyer or specialist in the subject matter of the case. But they have to be able to manage groups.

Switching off This is one of the biggest dangers. For the parties sitting in airless rooms with nothing to do except watch the sandwiches curl and nobody coming and talking to them regularly can be dispiriting. Warn people of this and give them things to keep them occupied. There is always something that they can be doing such as: •

Work out alternative scenarios.

•

Work out their risk reward calculations. 236

Question 34 •

Prepare schedules of key points of difference.

•

Draft particular clauses to the settlement agreement.

Group offers To simplify decision-making and time management get early agreement on whether or not there are going to be collective discussions and offers or individual ones. Will the defendants combine and make one offer jointly on behalf of them all or will they make independent offers? Obviously group offers on a joint basis make life much easier. But beware: This may solve only part of the problem because the paying parties still have to agree how to allocate the payments amongst themselves. This is why you can end up having multiple and parallel mediations at the same mediation. Alliance-shifting You will have looser control over the process with more chances of parties having their own chats without you knowing about them let alone being present. Do not get upset about this. Accept it. Parties can always insist on private meetings without you being present. Keeping everyone in the loop In multi-party mediations you need to make good use of time and energy. The one thing that you do have to do is to go into each room after any breakout meetings and make sure that you are debriefed by each of the participants. You need to be clear whether or not they think that the same things have been discussed and agreed. Usually there will be a fair degree of overlap but there will also be discrepancies. It is the discrepancies that usually cause you problems as you try to stitch together a blanket deal. Global/partial deal Early on – and especially in the pre-mediation discussions – try and find out if the consensus is that the mediation will try and come to an overall settlement of all issues amongst all parties. This is the ideal but sometimes a partial settlement is the best that can be realistically expected. Quite often, where there are multiple defendants and a chain of liability with the parcel of ultimate liability being passed on, you may have to achieve sequential agreements rather than concurrent ones. Be prepared for the fact that some of the parties higher up the chain of liability will be prepared to agree a settlement with the claimants subject to other defendants further down the chain contributing a certain amount. You can end up with lots of conditional or ‘in principle’ agreements. It can be like the house-buying chain. Everything is teed up for exchange but nothing happens until the last party is ready. 237

Part 2  At the mediation Confidentiality With multiple parties confidentiality is more of an issue. There is simply more chance of an unguarded disclosure or confusion about who knows what. Although you are under greater time pressure and you want to keep momentum moving in different rooms take time to regroup in private. Collect your thoughts and list what has to be done. Be very clear on what information you have that can be disclosed. If in any doubt double check. No one will object. The problem is aggravated if there are separate and individual negotiations between paying and receiving parties. Often they will not want other parties to know the terms of the settlements that they are discussing. You will come under maximum pressure to reveal a hint or a clue. But beware: Resist it. Tell them bluntly: ‘if I disclosed what someone else was discussing how could you be sure that I  would not do the same thing with your discussions in another room?’ Patience, steady nerves and optimism are the order of the day. Be prepared for parties to start worrying about legal points as they approach the time when they are nearly agreed on the commercial deal and now have to record it in a legally binding document. •

Where you have several defendants they can start to worry about joint and several liability. They have to bear in mind the Civil Liability (Contribution) Act 1978. Section 1 provides that a person who is liable for damages suffered by another may recover a contribution from any other person who is liable in respect of the same damage. This section only applies to a claim for damages and not one for debt. A joint, or joint and several, debtor who has settled the claim by paying the whole amount can recover a contribution from the other debtors by way of restitution. If a party settles a claim it will not cap liability for a contribution to the damages under the 1978 Act. This is why care has been taken in connection to what has been described as sideways litigation. The case of Carillion JM Ltd v Phi Group Ltd [2011] EWHC 1379 (TCC) is an illustration of the problem. You have to be patient as the defendant’s lawyers work through these issues.

•

Claimants’ worries Claimants must be careful not to inadvertently lose or waive their right to a recovery from other potential defendants and worry about section 3 of the 1978 Act.

As mediator stay away from these deliberations. Especially late in the day when everyone is tired, hungry and under the time pressure of the demands of the next day. Mediations about a settlement agreement drafted late at night at an earlier mediation are not unknown. Avoid being caught in the crossfire.

238

Question 34

In a nutshell •

Spend more time on logistics before the mediation.

•

Timetable more strictly, both for pre-mediation work and during the mediation.

•

Take an observer, assistant or co-mediator.

FOLLOW UP Richbell: How to Master Commercial Mediation, Part 2, pp 304–309

239

Question 35

One party wants to clear the air. The other doesn’t. What do I do?

Core issues •

importance of venting at mediations

•

process control

Discussion Clearing the air usually means one side telling the other exactly what they think of them in no uncertain terms. They often express themselves in forceful and emotionally charged terms. Voices can be raised and tears flow. Does this help achieve settlement? YES! 1 ‘Suppressed emotions sabotage settlements’. Until parties have had an opportunity to get things off their chest, say what they really feel and in general vent their emotions they will not be able to concentrate on thinking about settlement. They will be seething with pent-up feelings of grievance, anger and frustration. Once they let all this out they will feel better and things will be easier. 2

Mediators should actively encourage parties to say what they want. One wellknown trainer-mediator says that it is important that each party knows how strongly the other feels about what has happened. How deeply their lives have been affected by what has happened. Anger, tears, raised voices are not to be discouraged. Each side should recognise the other’s reality. In some cases this means that there is a great deal of hurt, anger and high emotion.

3

Disputes are not resolved on the basis of rational thought. People do not act on the basis of their own commercial self-interest or base their analysis on legal arguments. They take decisions based upon their feelings and emotions. They trust their gut instincts. If something doesn’t feel right they won’t do it. They let their hearts rule their heads.

4

In many cases, at least on one side, emotions will be running high. Matrimonial disputes are a classic case. But even in the most money-driven commercial cases there are emotions. One side often feels let down. The mantra is that ‘behind every dispute there’s a broken relationship’. Time must be taken to restore the relationship and heal the breach and fractures. 241

Part 2  At the mediation NO! 1

Venting usually raises the emotional temperature all round. Stress levels rise. People in a state of arousal are not able to think calmly about settlement. Their amygdala highjacks their pre-frontal cortex.

2 Research measuring stress markers suggests that far from expressing anger making people feel better, it makes them feel worse. 3 Mediators often see that people who have passionately expressed emotion feel vulnerable and even rather shamefaced. They worry that they have let themselves down. They have shown a weakness to the other side. They have failed to exercise self-restraint and self-control. This can be useful information to the other side if the matter does not settle and goes to trial. The other side’s lawyers will know which buttons to press in order to make them lose selfcontrol. Loss of self-control rarely impresses the court. Mediators know from their own experience that when parties are crying, shouting, jabbing their fingers or banging the table they are not thinking about settlement. As Dr Gabija Toleikyle concludes: ‘Vomiting over each other is not always a good thing.’ But there is a world of difference between experiencing an emotion and expressing it. The hydraulic theory of emotions, which is that they build up like some sort of pressure cooker, is misleading. In fact there is a lot of doubt about what emotions actually are. YES AND NO! No one denies the importance of emotion in decision taking. How can they in the light of research from behavioural economists such as Daniel Kahneman? Parties at mediation want more than anything else to feel that: •

they have been acknowledged;

•

they have been able to tell their story; and

•

they have been heard.

Obviously they would like the other side to agree with them. But if the other side can’t agree at least it can acknowledge what they have said. Consider this: Mediators know that unless a party feels that you have heard them they will not hear you. What are emotions? There is still no universally agreed answer to this question even 130 years after William James asked it in 1884. Emotions are distinct from feelings and moods. They can be identified by a distinct chemical reaction. There is even disagreement about how many emotions there are. The general consensus seems to be that there are six: 242

Question 35 1 anger 2 disgust 3 fear 4 happiness 5 sadness 6 surprise In order of appearance at mediations they are: 1 anger 2 fear 3 sadness 4 surprise 5 disgust 6 happiness People do sometimes describe themselves as being disgusted at something the other side has done when really they are just angry or annoyed. What are the main mediation emotions? Anger Anger is the most common. There is research suggesting that anger is not a negative emotion. It is a positive one. •

Quite apart from the venting benefits, anger can act as a stimulus to action. The reward centres in the brain are activated. Anger tones up the response system, readying it for fight or flight.

•

It is also a useful signal. Some regard it not as an emotion its own right so much as an emotion which masks other emotions. When you see anger being expressed you are being told that there are some other underlying emotion such as fear.

How do you deal with anger? Label it. Tell the person that you can see that they are angry. Let them express their anger two or three times. Then ask them clearly what they want to do to stop themselves feeling angry or to prevent themselves from feeling angry again in the future. It is when they keep expressing anger you have to intervene and say: “I know. I can see that you’re angry. What do you want to do about it?” Do not pressure them at this stage. Leave them with the question if they do not have a ready answer. Go and see the other room and tell them that the other side is angry. 243

Part 2  At the mediation It will probably be obvious what is making someone angry. They will tell you. Of course it may not be the truth, the whole truth and nothing but the truth but it will be a clue. Do not at this stage be tempted to engage in psychoanalysis. Eventually they will calm down. If they do not, tell them that you will have to bring the mediation to an end. If the anger is directed at you either because you are the stress ball or you have done something that has upset the person keep calm. In fact keep very calm. This will not be easy as your own stress levels will rise. Apologise if you have done anything to cause them to feel angry. Make sure they explain what you have done. Promise not to do it again and keep your promise. Do not try to resist the expression of anger. Do not try to justify yourself. Bend with it. If the mediation carries on, more often than not the parties apologise for their outburst. If the anger turns from an extreme expression of annoyance into insulting and threatening behaviour stop the mediation. Offer to reconvene another time when circumstances are better. You are there to help the parties find a settlement not to provide anger management training. Of course if you are a transformative mediator you may welcome the opportunity for fully exploring extreme emotions and trying to change the parties’ behaviour patterns to facilitate their personal growth. Good luck. Fear People are frightened of the unknown, being humiliated by the other side, going to trial and the consequences of losing. They may be afraid of you, the mediator. Most of these fears are easily handled by discussion and explanation. That is why the pre-mediation chats on the telephone or on the day in person are so important. Don’t skimp. Take as much time as it needs. The fear of going to trial is very common, and in fact is often positively desirable. People who say that they are not afraid of going to trial are trying to deceive themselves and you. There is no need to be alarmist about the prospects of trial. A  calm and comprehensive assessment of options and permutations works wonders. But for most people the prospect is highly stressful. They feel years younger and much better in themselves once the stress has been removed – which is what makes settlement so attractive. Surprise Surprise is usually felt when some unexpected information is produced out of the hat of the mediation. Not all surprises are pleasant. For example, if an unexpected witness makes a personal appearance or the expert’s report produced on the day that undermines a party’s position. You just have to allow the surprised party the time and opportunity to process the new information. Try and agree a timetable with them for doing it but don’t impose deadlines. That will only add to stress levels. Sometimes a surprise is so great that it cannot be assessed there and then. The mediation has to be adjourned. So be it. Try and fix the date for the next instalment 244

Question 35 there and then. Send an email to the parties with suggested alternative dates as soon you are back at your desk. Fix the date while they are still in the mood. Sometimes the surprise is a pleasant one. This usually happens when the parties have exchanged proposals. They see that there is more common ground and overlapping goals than they expected. The receiving party offers to take less than expected or the paying party offers more than previously indicated. This highlights the importance of getting the parties to exchange proposals so that you can see what they really need, and how much common ground that you are able to map out. Are you a stress ball? So in deciding whether or not to allow people to clear the air you have to decide what approach you take to venting. Are you inclined to see it as a therapy or as a problem? The terms are not mutually exclusive. There is a degree of overlap but there is a larger degree of separateness. One of many roles that you fulfil as a mediator is that of stress ball. The parties will take out their stress on you. Sometimes it’s the lawyers that do this. At one mediation about a portfolio of shared properties one of the barristers complained to the mediator when challenged on his risk analysis: ‘That is very un-mediator-like language.’ Later, after the settlement agreement had been signed he said to the mediator. ‘Sorry I was a bit testy with you. Didn’t mean to be. I was just so frustrated with my own clients.’ Just be brave. You will end up absorbing this stress whether you like it or not. The real question is how you deal with it once you have absorbed it. If someone wants to clear the air and the other side doesn’t want to, let them clear the air with you. People need to be heard. Some have a greater need than others. But remember not everybody has the same appetite for self-disclosure. Perhaps it’s not so much that ‘suppressed emotions sabotage settlements’ as it is the expression of emotions that sabotage settlements. Especially the public expression of emotion. It is one thing for a party to express their anger in a caucus to you as the mediator surrounded by their own team. It is quite another thing for them to do it in a joint session with other people, some of whom will be strangers. How much process control do you have? Some mediators exercise a very high degree of process control. One respected mediator who also sits in a judicial capacity in the High Court insists on a Joint Opening Session. He tells the parties that the mediation will not start until there is one and that he is prepared to sit there all day until they agree to have one. This is an unusual interpretation of party autonomy. But he seems to get away with it although he is not as busy as a mediator as he would like to be.

245

Part 2  At the mediation Procedural battles are best avoided. At the least they are a distraction. They also waste time and energy. At worst they poison the atmosphere. Pressurising one party to attend an emotionally charged session with the other to clear the air is not going to endear them to you. The atmosphere in the first caucus will be sour. On the other hand, the party that has asked for the ‘clear the air’ meeting will feel slighted. Or appear to be. Take this scenario. In a family dispute about boundaries and rights of way over farm land the claimants, which included the younger generation, asked for a joint meeting to clear the air. The defendant was not keen. One was very tearful. There had been allegations of bullying in the past. When the mediator told the claimants this, they accepted it, but their barrister did not. He said he wanted to have a joint meeting. He wanted to see what one of the claimants was going to be like as a witness. The joint meeting did not happen. Much later in the day, the lawyers and surveyors having been scoring points off each other, the mediator suggested to both rooms that perhaps a meeting of just the clients with him would be helpful. They agreed. Both sides expressed regret that the situation had got to where it was a month before trial. The two older members, one on each side of the table, started to cry. The younger member started to make his points but his dad stopped him. This was a rare occasion when mutual sadness was expressed. And despite the best efforts of the lawyers and experts on both sides the case settled. Consider this: In the end no one controls the process. You cannot force the parties to do anything. They can simply refuse. Neither side can force the other to do anything. They can make all the threats they like but in the end the other side can refuse. You, as the mediator, cannot force the parties to do what they do not want to do. You can persuade, cajole and even exert moral pressure but in the end you are there by consent. They have appointed you. They can un-appoint you. Lawyers, particularly male ones, are often criticised for being incapable of coping with emotions. Perhaps this is true, but lawyers do in fact have families, partners, colleagues, and clients. You cannot succeed as a lawyer, especially in contentious matters if you cannot cope with emotions whether it be your own or other people’s. You may not be as comfortable at the unrestrained outpouring of strong emotions and intimate details as trained psychotherapists are but so what? You are not there to provide psychotherapy. You are there to help identify the obstacles to settlement and find ways over them or round them so that the parties can reach a mutually acceptable and, ideally, beneficial solution. If you want to restore broken lives and transform people’s view of the world then consider training as a psychotherapist.

In a nutshell •

Expressing emotions rather than suppressing them often hinders settlement. Exercise editorial control. 246

Question 35 •

Many people need to tell their side of the story. This goes beyond a re-telling of the facts and will include expression of their feelings usually framed as intemperate criticism of the other side.

•

Let people vent but not as a displacement activity instead of thinking about constructing a settlement.

•

Everyone loves a new audience, the lawyers much as the client.

•

If you can’t handle emotions, think about another line of work.

•

Remember the tissues.

SEE ALSO Q4, Q10, Q32 FOLLOW UP Randolph: The Psychology of Conflict Watt Smith: The Book of Human Emotions Feldman Barrett: How Emotions are Made

247

Question 36

Do I have to do what the parties tell me to do?

Core issues •

party autonomy

•

process management

•

mediator authority.

Discussion ‘You are both our master and servant’. A well-known personal injury QC used these words to a well-known mediator to describe his role. Do not be put off by the oldfashioned language, the description is in fact accurate (see Q19). Surveys show that what clients, particularly commercial clients, look for in their mediators is direction, structure and energy. Evaluative styles of mediation are increasingly popular. As mediator you are in a leadership (or master) role. Even traditional facilitative mediators emphasise that although mediators do not tell the parties what to do – the problem and the solution belong to the parties – mediators are in charge of the process. The classic definition of mediation emphasises that it is a voluntary (and confidential) process in which the parties invite a third party neutral to help them find their own solution to their problem (see Q1). Mediators give themselves and their clients different rights and obligations in their mediation agreements. These are discussed in more detail in Q3. The obligations on mediators generally include clauses such as: •

Acting fairly and impartially.

•

Having the competence and expertise to mediate the dispute.

•

To consult the parties about the procedure to be followed on the day.

•

To withdraw from the mediation or terminate it if the mediator thinks that there is no prospect of settlement, the parties are behaving in an unconscionable way or the agreement could be unconscionable or illegal.

249

Part 2  At the mediation The relationship is a creature of contract. But if you are being asked to do something that makes you uncomfortable take comfort from what various agreements and codes – see the Survival Kit below. What might make you uncomfortable? ‘Tell the other side this …’ One party instructs you to tell the other side something. Either the information itself or the words they use give you cause for concern. After all you are trying to promote rapport in both rooms and engender a relaxed and cooperative atmosphere. The message that you are being asked to take strikes you as unduly hostile or provocative. You can find yourself being asked to tell you the other side things such as: •

‘They are dishonest and acting in bad faith.’

•

‘They are off the scale.’

•

‘They’re not even on the right planet.’

•

‘We do not think that you understand the law. In fact you are dead wrong.’

•

‘You have behaved in an antagonistic and unrealistic way throughout.’

•

‘If that’s their best offer they can get lost. Do they think we’re mad?’

•

‘Tell them that we will destroy them.’

•

‘I don’t believe that the lawyers have really advised them about their prospects of success.’

•

‘I know that barrister. I’ve used him in the past. He is hopeless. I don’t believe he’s telling them they’re going to win.’

All this is provocative and inflammatory. Sometimes it becomes more extreme, even racist or sexist and is insulting. •

‘Tell them that’s what I expect from people like them.’

•

‘Tell them we’re not in XXXX. We are in the English courts and you don’t do things like that.’

•

‘You may get away with that sort of thing in XXXX, but not here.’

Sometimes it smacks of threatening behaviour •

‘Tell them if they do not do this we’re going to the police’.

•

‘We will put this all over the Internet.’

•

‘What will the regulator say about this?’

•

‘We know where their family lives.’

•

‘We will make sure that they never get another contract/work again in this industry.’

•

‘Tell John we have the photographs.’ 250

Question 36 •

‘Let them know that we tape-recorded the whole conversation.’

•

‘We have had their computer examined and they know what we have found.’

Sometimes it is withholding material information •

‘Our expert has changed his opinion but don’t tell them that.’

•

‘Our figures are much better than they believe but let them think they’ve got the right ones.’

Sometimes they want to make use of your authority as mediator. •

‘Go in and suggest this to them. Don’t tell them that it’s our idea. Tell them that it’s your idea.’

•

‘We won’t show them the witness statements but you can tell them that you read them and that they support our case.’

•

‘That’s our final offer, £150,000. We are not going to accept a penny less’ when you know, because they have told you, that they will accept £5,000 less.

Or they use you as their interrogator •

‘Ask them why they haven’t also sued XXXX.’

•

‘Ask them why they opened three offshore accounts.’

•

‘Ask them how they are paying their lawyers.’

• ‘Ask them if they have told their lawyers about the police investigation/ conviction.’ •

‘Ask them how they feel about having lost their last case.’

Or they ask you to take an offer that you think is ridiculous and is likely to set the process backwards or even incite the other side to walk out. This is discussed in more detail in Q19. How to deal with sensitive confidential information or ‘guilty knowledge’ is dealt with in more detail in Q17. In the end the golden rule is that if someone asks you to do something either agree to do it or make it clear that you are not going to do it. What you must never do is allow them to think that you will do it when you won’t. As a mediator you are there to protect the integrity of the process and that means being fair to both sides. Mediation is not an engine for threats, blackmail or racial or sexual discrimination. Any of these things, apart from being objectionable in themselves, may also constitute criminal offences or give rise to civil claims. If you have any inkling that this might be the case warn the perpetrator before they do or say anything. If they have lawyers present it is relatively easy. However, if they have not, you cannot duck the problem. Advise them to take legal advice. Don’t be overwhelmed by the doctrine of party autonomy and allow yourself to be compromised. In any case you can apply the mirror test: ‘If you want to say that, tell me how you would react if they said it to you?’ A standard mediation technique is to detoxify the language by reframing. If you don’t like the picture reframe it. 251

Part 2  At the mediation But beware: If not done carefully it can come across as patronising and just irritate the aggrieved party more. Always ask whether the message falls into the uncomfortable category or not, what message they want to convey to the other side and what message they think the other side will receive. Remind everyone that ‘it’s not the words you say that matter it’s the words they hear’– Dr Frank Luntz. How you deliver a message is equally important. Your tone of voice is crucial. If it is one of resignation: ‘I’ve been asked to say this’, you are disassociating yourself from it in much the same way as a barrister tells a court ‘So I am instructed Your Honour’. When challenged by the receiver in the following ways: •

‘Are they serious?’

•

‘Is this really right?’

•

‘What sort of offer is that …?’

•

‘Are you suggesting that …’

You can say: •

‘I don’t know whether they are serious. They tell me they are. You can always test it.’

•

‘I don’t know if it’s really right I’m not warranting anything. I’m just passing on a message/the information.’

or •

‘That’s what they say/are telling me.’

•

‘Well I did give both sides my standard health warning about making offers.’

•

‘I am not suggesting anything. If I do suggest something I will make it very clear that it’s my suggestion.’

One side instructs you what to do procedurally: •

‘Tell them we want a meeting now.’

•

‘Go and find out.’

•

‘Go and speak to their lawyer in private.’

•

‘We would like to talk privately.’

•

‘We want a meeting with the other side without you being present.’

Some mediators have more appetite for procedural battles than others. They see them as a way of asserting their authority. They might be if they win them but what if they don’t? The problem is they are a distraction from the main activity of the day which is generating and discussing proposals (see Q13). Pragmatic mediators take the view that you have to work with what you have on the day. This may not be ideal or accord with the textbooks or the training that we have all received but it is how it is. 252

Question 36 You may want to take a firm line and threaten to terminate the mediation (see Q46).

Consider this: Do not mention this option in a way that sounds like a fit of pique or wounded amour propre. You might find it helpful to refer to some codes of conduct to explain your response. Examples are given in the Survival Kit below. This will reinforce your authority and impartiality.

In a nutshell •

In the end you do have to do what the parties tell you to do unless it is illegal or unconscionable.

• If you really do not want to do what they tell you do terminate the mediation. •

Always explain your reasons for being reluctant or refusing.

SEE ALSO Q1, Q3, Q13, Q19

Survival kit IMI CODE OF PROFESSIONAL CONDUCT IMI 3.1 Mediators will always conduct mediation in an impartial manner, avoiding bias or prejudice in favour or against any party. … 4.2.2 Mediators will conduct the process with attention to procedural fairness to all parties. … 4.3.1 The Mediator will ensure that the parties understand that they may withdraw from the mediation at any time by informing the Mediator of that preference (unless applicable law, court rules or contract require otherwise). 4.3.2 Mediators shall withdraw from a mediation if a negotiation among the parties appears to be moving toward an unconscionable or illegal outcome.

253

Part 2  At the mediation CEDR CODE 3.2 The Neutral undertakes: Not to prolong the Process unnecessarily where there is, in the Neutral’s opinion, no reasonable likelihood of progress being made towards settlement of the Dispute through the Process. … 4.1 The neutral will at all times act, and endeavour to be seen to act fairly, independently and with complete impartiality towards the Parties in the Process, without any bias in favour of, or discrimination against, any of the Parties. … 7.1 The Neutral will withdraw from the Process and cease to act as such in relation to that Dispute if that Neutral: As requested to do so by one of the Parties, except where the Parties have agreed to a procedure involving a binding decision by the Neutral to conclude the Process; would be in breach of that Code if continuing to act as the Neutral, or as required by one or more of the Parties to act or refrain from acting in a way which would be a material breach of the Code or in breach of the law. 7.2 The Neutral may withdraw from the Process at the Neutral’s own discretion and after such consultation with the Parties if the Neutral deems it necessary and appropriate (and always subject to the Neutral’s obligations as to confidentiality) if •

Any of the parties is acting to breach of the Process Agreement

•

Any of the parties is acting in an unconscionable or criminal manner

• The Neutral decides that continuing the process is unlikely to result in a settlement •

Any of the Parties alleges that the Neutral is in material breach of the Code.

Both have the right to terminate the mediation at any time. This is the ultimate fallback position for both the mediator and the parties: they can both walk away from the process.

CEDR Model Procedure 7 The mediator will chair and take responsibility for determining the procedure at the mediation, in consultation with the Parties, the nature of the dispute and the need to conduct the mediation with efficiency and expedition. BRICK COURT CHAMBERS 3 the Mediation shall be conducted in such manner as the Mediator considers appropriate taking into account the views of the parties … 254

Question 36 8 The Mediator (b) will determine the procedure at the mediation after consultation with the parties and their advisers … (d) will assess if so requested in drawing any written settlement agreement … 13 The Mediator shall be entitled but not obliged, at any stage in Mediation, to express his view privately to any Part on the reasonableness or otherwise of any argument or proposal made by that party … 20 The Mediation shall terminate in the following events: (c) The Mediator decides that continuing the Mediation is unlikely to result in a settlement or that it is undesirable or inappropriate for any other reason to continue with the Mediation. EUROPEAN CODE OF CONDUCT 3.1 the mediator must conduct the proceedings in an appropriate manner, taking into account the circumstances of the case, including possible imbalances of power and any wishes the parties may express, the law and the need for a prompt settlement of the dispute. The parties may agree with the mediator on the manner in which the mediation is to be conducted, by reference to a set of rules or otherwise. … 3.3 Parties may withdraw from mediation at any time without giving any justification.

255

Question 37

‘We are not here to settle. We’ve come to tick a box.’ What do I do?

Core issues •

the nature of mediation compulsion

•

the risk of cost sanctions

•

the warranty of good faith.

• MEDALOA

Discussion An impasse is never a good way to end a mediation day. It is an even worse way to start one. What do you do when someone tells you that they are only here to tick the box? The first thing you do is to hang onto your critical disbelief. Of course you do not tell them that you don’t believe them. Act assumptively, ie that the mediation will take its normal course and lead to a settlement. Go and see the other room and find out what their appetite for settlement is. If they also tell you that they are only there to tick the box, convene a joint meeting and announce that you have the distinct impression from both rooms that they are here just to tick the box. If they have both paid your fees, ask if they both now want to break up and go home with the mediation over before it has even really started? Or since they have paid you, and looking directly at both sets of clients when you say this, ask them if they want to derive some benefit from their expenditure? Ask each side in turn why they don’t want to try to settle. The usual reasons will be that: •

Both sides are so far apart that trying to bridge the gap will just be a waste of time.

•

One side has made its offer and is not going to move.

•

There is no point in settling because they are going to win at trial. They are entitled to the full amount claimed and all their costs and interest.

Consider this: Think about being bold. 257

Part 2  At the mediation Calculate with each party what the cost of not settling and going to trial will be. Work out the irrecoverable legal costs. That is relatively easy. Looking at the clients ask them to calculate the indirect cost of their business, ie lost management time and business opportunity. Explain that the surveys show that what clients most want is certainty. Not being sure what is going to happen and when it is going happen makes it difficult to plan. Today if they want they can save irrecoverable legal costs, more wasted management time and opportunity costs and get rid of uncertainty. How? They can use MEDALOA. What is that?’ they will ask. You explain. It is derived from baseball negotiations in the US. It stands for Mediation After Last Offer Arbitration. You have a mediation. The mediator listens and discusses both sides’ proposals with each of them. If the parties cannot agree on a proposal they move to the second stage. They write down their last best and final offer – ie the one that they think is the most reasonable outcome. This is the one that you as mediator receive. You now act as an arbitrator. Your function is limited to one thing: you choose which of the two offers you think is the most reasonable. That is it. You do not give reasons. You do not come up with you own decision on what is reasonable. You just pick one of the two proposals submitted by the parties. By reason of you acting as an arbitrator your decision takes effect as a legally binding arbitral award. Job done. Money and time saved. If the parties go for this you must make sure that you have your MEDALOA agreement ready for them to sign. It can be added as an appendix to the Mediation Agreement that they have already signed. Even if they do not agree to try MEDALOA it will free up their thinking. Someone might start to mention MED/ARB or ARB/MED. At the very least you have stimulated them to start thinking about settlement and discussing alternatives to litigation. They are still at the mediation venue and still talking. You have your foot in the door. Keep it there. Why come to mediation just to tick the box? Reasons can be: 1

The gap between the parties is too big. You can dip into your survival kit for more helpful judicial encouragement. In particular the passages cited below from: •

Ali Ghaith v3Indesit Company UK Ltd [2012] EWCA Civ 642

•

Burchell v Bullard [2005] EWCA Civ 358 (Rix LJ)

•

Carleton (Earl of Malmesbury) v Strutt & Parker [2008] EHWC 424

Doing this displays to the lawyers that you know what you are talking about. Reinforcing your authority is rarely a bad thing. You will also be opening their clients’ eyes to a different set of considerations. 258

Question 37 You can also refer to the fact that many mediations start with a claim on one side and a counterclaim on the other. Both sides expect to be net receivers of money 2

One side has made its final offer and it is not going to move. Remind yourself of the wise words of one the country’s most experienced and respected mediators who says that when he hears these words he never believes them. More importantly the process of mediation is very seductive. Parties get caught up in the process. So be prepared to be seductive. But refer to: •

Ali Ghaith v 3Indesit Company UK Ltd [2012] EWCA Civ 642

•

Carleton (Earl of Malmesbury) v Strutt & Parker [2008] EHWC 424

• The warranty to negotiate in good faith contained in your mediation agreement which they have by now signed. Ask them how they know for certain that the other side will not eventually accept their offer? Spend time with them going through the process of how they calculated their final offer. Try and obtain as much detail as possible that you can communicate to the other side. Although it may sound unreasonable to say ‘here is our final offer’ right at the start of the mediation, that figure may in fact be a very sensible and reasonable offer. Until you have been through the decisionmaking process with them you will not know. 3 There is no point in settling because we are going to win at trial. We are entitled to the full amount claimed and all their costs and interest. Refer to •

Ali Ghaith v 3Indesit Company UK Ltd [2012] EWCA Civ 642

•

Northrop Grumman Mission Systems Europe Ltd v BAE  Systems (Al Diriyah C41) [2014] EWHC 3148 (TCC)

Ask the lawyers: •

What they think are the chances of an outsider agreeing with them that their case is overwhelming? Be prepared to go through your risk analysis as described in detail in Q24/25.

•

If they have ever won a case that they thought they were going to lose.

•

Do they accept the inherent risk of mediation – the ‘Mad Judge factor’ – applicable even for the strongest case.

•

On the assumption that they will win as they expect to, what will their clients’ net cash position be?

Ask the clients if there is anything they want in order to move ahead. You can try this in various ways. •

Where would they like to be in three months/three years’ time?

• What they need in order to move on to the next phase of their life/ business? 259

Part 2  At the mediation What you are trying to do is to find out if there is anything that is on the clients’ agenda which the court cannot give them even if they win hands down. Do not forget that clients do not tell their lawyers everything. They may have reasons to settle which they have not yet disclosed or have objectives which they have not discussed. Of the many qualities that mediators need, patience and persistence are the two that you will really have to draw upon today.

Survival kit Ali Ghaith v 3Indesit Company UK Ltd [2012] EWCA Civ 642 Ward ‘The opening bids in a mediation are likely to remain as belligerently far apart as they were in correspondence but no one should underestimate the new dynamic that an experienced mediator brings to the round table. He has an uncanny knack of transforming the intractable into the possible. That is the art of good mediation and that is why mediation should not be spurned when it is offered.’ Burchell v Bullard [2005] EWCA Civ 358 Case involving a small builder. Appeal on costs. Ward LJ, at para 40: ‘Our clients’ position is very clearly set out in counsel’s skeleton argument. The issues are straightforward and although our clients remain willing to listen to any sensible proposals that your client has to make in this matter, we do not see that involvement of the Court of Appeal mediation scheme would be necessary or appropriate.’ The defendant’s refusal to mediate does need careful analysis. Rix LJ said at 50: ‘party cannot rely upon its own obstinacy to assert that there would not have been reasonable prospects of success. I would also add that it may not be able to rely on its own solicitor’s or expert’s advice that it would not (have reasonable prospects of success) Carleton (Earl of Malmesbury) v Strutt & Parker [2008] EHWC 424 KEY Mr Justice Jack on costs and mediation, at para 72: ‘…the situation where a party has agreed to mediate but has then taken an unreasonable position in the mediation. It is not dissimilar in effect to an unreasonable refusal to engage in mediation. For a party who agrees to mediation but then causes the mediation to fail by reason of his unreasonable position in the mediation is in reality in the same position as a party who unreasonably refuses to mediate. …. 260

Question 37 Garritt-Critchley v Ronnan and Solarpower PV Ltd The defendant’s solicitors replied: ‘Both we and our clients are well aware of the penalties the Court might seek to impose if we are unreasonably found to refuse mediation, but we are confident that in a matter in which our clients are extremely confident of their position and do not consider there is any realistic prospect your client will succeed, our rejection is entirely reasonable.’ (para 4) In this case this was a dispute over whether or not a binding contract had been made. The defendant’s counsel described it as an all or nothing case. His Honour Judge Waksman said, at para 14: ‘To consider that mediation is not worth it because the sides are opposed on a binary issue, I’m afraid seems to me to be misconceived.’ At para 22 he said: ‘This gets back to the point about parties being too far apart. Parties don’t know whether in truth they are too far apart unless they sit down and explore settlement. If they are irreconcilably too far apart, then the mediator will say this as much within the first hour of mediation. That happens very rarely in my experience.’ Northrop Grumman Mission Systems Europe Ltd v BAE  Systems (Al Diriyah C41) [2014] EWHC 3148 (TCC) Mr Justice Ramsay acknowledged that, at para 59: ‘The authors of the Jackson ADR  Handbook properly, in my view, draw attention at paragraph 11.13 to the fact that this seems to ignore the positive effect that mediation can have in resolving disputes even when the claims have no merit. As they state, a mediator can bring a new independent perspective to the parties if using evaluative techniques and not every mediation ends in payment to a claimant.’ (para 59) Party 36 offers are too far apart PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288 Briggs LJ, at paras 45 and 46: ‘… it is in my view simply wrong to regard a Part 36 offer, without any supporting explanation for its basis, as a living demonstration of a party’s belief in the strength of its case. As I have said, defendants’ Part 36 offers are frequently made at a level below that which the defendant fears having to pay at trial, in the hope that the claimant’s appetite for, or ability to undertake, costs risk will encourage it to settle for less than its claim is worth. Nor do Part 36 offers necessarily or even usually represent the parties’ respective bottom lines. There was, accordingly, no unbridgeable gulf 261

Part 2  At the mediation between the parties’ respective Part 36 offers, which could not in any circumstances have been overcome in a mediation.’

In a nutshell •

Tactical attendances at mediation just to tick the box are rare.

• Warning signs are if the lawyers are on funding arrangements and the mediation is before issue of proceedings or shortly before trial. •

If you see it, call it. Name and shame.

SEE ALSO Q24, Q25 FOLLOW UP Walker: Mediation: An A–Z Guide, pp 29–30, 280–283

262

Question 38

In the Joint Opening Session one party is provoked by the other and storms out. What do I do?

Core issues How far you as mediator •

control the process,

•

supervise the behaviour of the parties; and

•

coach the parties in mediation/negotiation.

Discussion There are two routes into this question – through the provocation and through the reaction. The provocation Priming the parties is a good place to start. In all your conversations with the parties and their advisors before the mediation drive home the message: we are here to make peace not war. Do this in your early telephone calls with the lawyers. Repeat it during your pre-mediation chats on the day. When discussing whether or not to have a Joint Opening Session at all start to coach a little by reminding them yet again that the purpose is to make peace not war. Tell the parties that they have exchanged position papers so there is no need to repeat everything. Explain that in your experience and that of most mediators: •

The main reasons why mediations do not produce a settlement on the day are lack of preparation (both mental and physical) and lack of engagement on the day. The parties have to join in.

•

Deals get done not by arguing about the law and facts all day long, but by discussing proposals.

•

The parties are not in a court, they are in a negotiation. If they attack each other all that happens is that defences go up. People close up not open up.

Some mediators as a matter of course during their Joint Opening Session statement say that they only have one rule, which is that everybody behaves politely and 263

Part 2  At the mediation courteously to each other. Others go slightly further and talk of the need to show mutual respect. Take care not to overdo this and sound patronising. A party or their advisers may express concern about a Joint Opening Session, saying that either they or their client will not be able to restrain themselves because they feel so angry about what has happened. Or they say that they are concerned that the other side will not be able to stop bullying and swearing, etc. If this concern is mentioned that is your cue for talking about keeping an even keel and not raising blood pressure. Refer to the general tendency that disputants have to demonise each other. We all do it. So you have done your mood setting and priming. The reaction You do not have the same opportunity to prime when it comes to the reaction. When you are explaining the mediation process on the day in your pre-mediation chat you can say it is not a mini-trial and nobody gets cross-examined. If a party expresses concerns about the behaviour of the other side reassure them that you as mediator will not allow proceedings to degenerate into a mini-trial or allow bullying, but remind them that they have their lawyer to look after them. You can insert a mild, but nevertheless relevant reality check. If they are worried that what could be said to them at the mediation will be stressful and upsetting they should think twice about going to court which will be much more stressful and upsetting. During the joint session you will able to see whether one side is antagonistic or provocative. If the other side is legally represented you can rely upon their lawyers to look after themselves and their clients. If parties are not legally represented and especially if they are unsophisticated users of mediation be ready start to intervene early on. You can interject: ‘I did explain that were not here today to have a minitrial.’ It depends on what the provocation is. Here are some actual examples from mediations: •

‘Be under no doubt we think you are a fraudster and we intend to pursue this all the way.’

•

‘If this is not settled you will be going to jail. Your tax affairs are a disgrace. We will make sure HMRC are present in court.’

•

‘You have always told lies and you’re telling lies today. I don’t know how you can live with yourself.’ (Expressed in obscene language and with raised voices.)

•

‘Why don’t you answer?’ (The question is repeated several times usually with a jabbing finger.)

•

‘You haven’t got the stomach for a fight. You never have. We have got a lot more money than you. We will make you and your family bankrupt.’

•

‘You’re just hiding behind your lawyers. We asked for meetings. You’re too scared.’ 264

Question 38 •

‘We’ve had several meetings. You’ve broken your word and gone back on what you said every single time’.

•

‘That document is a forgery and you know it.’

•

‘You won’t dare stand up in court and say that.’

Consider this: If you receive the impression that one party is vulnerable and is worried about what is going to be said and the likely reaction, warn the other side. They may not want to intentionally provoke a hostile reaction. The walkout Is it a slow burn or a sudden explosion? The slow burn The listening party endures a sustained provocative or insulting presentation. They say by way of warning: ‘This is wrong and you know it. If you carry on like this we’re going to leave.’ You intervene as follows: ‘There’s no point just being antagonistic for the sake of it. It’s not going to help us get anywhere near settlement. We might as well finish this session.’ The speaker carries on regardless. The listening party, and maybe the whole team, close their files, stand up and walk out saying that there is no point in carrying on. They are making a clear statement, trying to set the agenda and control the process. Both the reaction and the provocation are considered and to an extent premeditated. The sudden explosion This occurs when someone’s patience snaps. They have simply had enough. They sit back in their chair accompanied by cold fury, hot fury or tears. Cold fury The most difficult to deal with. They just get up. They walk out. There is no verbal context. They go. Usually it is quite certain and decisive. They do not hesitate as they walk towards the door. They do not look back as they close the door. Hot fury This is easier to deal with. They have snapped. They may even swear, bang the table or shout insults. They are telling you they are really annoyed. Tears These are usually slower to appear, and the person may even say: ‘I’m sorry I’ve got to go. I can’t take this any more.’ 265

Part 2  At the mediation

One relatively inexperienced mediator (male), tried to block a man on the way to the door. He physically stood in the way. The walker tried to step around him. The mediator blocked him again and put his hand on the door saying ‘You can’t leave. You mustn’t leave.’ He looked round for help. The walker’s solicitor was half-heartedly getting to his feet. ‘Let me out. I’m leaving.’ said the walker as he clasped the door handle. ‘Okay John’, said the walker’s solicitor to his client, ‘Let’s have a word’. By this time the walker had wrenched the door open and was striding down the corridor. The mediator looked round. A  few blank stares and the odd half smile of sympathy. But his authority had been dented. He never really recovered during the day.

Another mediator tried the same tactic. Unfortunately the walker was nearer to the door. The mediator was not able to position himself quite so solidly and was brushed aside and stumbled against the flipchart and knocked it over. Loss of balance followed by loss of dignity and authority. More sympathy was expressed on this occasion. But the mediation did not even last until lunch time. Would it have made a difference in the first example if the mediator had been female? The walker would probably not have brushed her aside physically. He might well have stopped for a moment on being told in challenging and authoritative terms not to leave the room. But in the end if that is what the walker was going to do that is what he would have done. Moral: never try to physically stop anyone from trying to leave a room. There is nothing that a mediator can lawfully do to restrain someone from leaving the room. Think twice about even trying. It will just aggravate the walker and generally exacerbate the whole situation. If it happens with fury, either cold or hot, and the offended parties have lawyers present ask the lawyer to go and speak to them. If they do not have a lawyer then the standard operating procedure is: •

Call the session to a close. Ask everyone to go back to their rooms. You do not want them to remain sitting there in your absence discussing what has happened, playing the blame game and generally distracting themselves from the main purpose of the day.

•

As quickly and as calmly as you can, go and find the walker. If the walker is female and you are male enlist the help of another woman. If is the other way round ask one of the men to help you. They will.

•

When you find the walker you need to make sure there is no medical reason for the walkout. Sometimes there is. Suggest that you and the walker (with a third 266

Question 38 party if the walker is very upset) go for a walk round the block. Take them away from the mediation suite. A change of physical environment helps promote a change of mental state. As mediator, move towards the counselling end of the mediation spectrum. What you want to find out is how they are feeling, why they are feeling the way they are and what they want to do about it. How far this questioning goes depends upon what their position in the team is. Are they the key witness? Are they the decisionmaker? The crucial question is: can an effective mediation carry on without them being physically present? Ask them if they want to re-join their team in their private room. Usually, they will say they do. But sometimes they ask you to go into the room first to explain the situation. Either way you want to try and re-form the team as soon as possible. You may well have to leave them for a private chat while everybody regroups. Tactical walkouts Not all walkouts are what they appear to be. Some are staged. Perhaps one side wants to send a message to the other side about handling the negotiations carefully and sensitively. They may want to mark out some no-go areas. They may want to load up the other side with moral guilt. You have to make an assessment. When doing this do not forget that people sometimes stage a tactical walkout because from the outset they are looking for a pretext to abort the mediation. You should have been able to pick up any hints of this in your pre-mediation chats either on the phone or on the day. Keep calm and carry on or pack up? If this was a genuine reaction to some misplaced provocation and no one is being oversensitive you will have to simply label it as such with the provoking room. Do not get drawn into a discussion of whether it was a sensible thing for them to have done. Do not be judgemental. Just point out the consequences. Ask if they want the mediation to continue. If they do, ask how they want to proceed. Given the situation that everyone is now in ask if there is anything that they want to do differently. Point out that time and energy is being used up. You can try and reassemble the Joint Opening Session. Probably this is only likely to be worthwhile if the provocation was genuinely unintentional and there is sincere contrition on behalf of the provoker. A sincere and authentic apology in the circumstances can transform the mood and re-launch the mediation on a better track than it started on. If the provocation was intentional just start the process of private caucuses leading to an early exchange of proposals. If the provoker is feeling either contrite or wrong footed this may be an impetus for them to either make amends or recover lost ground. Bad behaviour can have unexpected consequences, especially for the perpetrator. 267

Part 2  At the mediation

Consider the matter of Michael Horne. He was a solicitor who was disciplined by the Solicitors Disciplinary Tribunal. (Case No. 011534-2016). Here’s the extract from their findings: ‘Allegation 1.2 – Conduct in Mediation Meeting 39 The parties in the F  D  Proceedings including the respondent, Mr Morgan and a mediator, Mr Mark Pittaway …. attended a mediation on 19  December 2013. In front of all the parties present, the respondent referred to Mr Morgan as a “smug bastard” and/or “pompous bastard” (or words to that effect) and told him more than once to “fuck off”. In his statement dated 4 July 2016 Mr Morgan stated as follows: “The mediation was attended by the claimant, myself a solicitor for the claimant, Mr Horne (defendant), Mr Mark Pittaway (mediator) and an observer. During Mr Horne’s opening, while addressing Mr Pittaway, Mr Horne referred to me either as a “smug bastard” or a “pompous bastard”, I cannot now be sure which. I then must have said something to provoke him, as he shouted, “Fuck off” at me once or twice from where he stood on the opposite end of the long conference table. In response, I  said words to the effect, “you make me ashamed to be a solicitor”. Then Mr Horne shouted, “Fuck off” one or two more times as he advanced towards the opposite end of the long conference table, to the side where the claimant and I was sitting. Mr Horne stood over me (I remain seated) and I believe that he was about to strike me. At that point, Mr Pittaway spoke up and diffused the situation, and Mr Horne left the room slamming the door behind him. Mr Horne and Mr Pittaway went to a room on this floor above and the claimant and I could hear Mr Horne shouting through the ceiling, however I could not make out the exact words As time passed and it got close to lunchtime I saw (through the window) Mr Horne drive off. Mr Pittaway convinced the claimant and me to wait for Mr Horne’s return, but after about an hour and a half he said that there seemed to be no point in continuing and so the claimant and I left the premises.”’

In a nutshell The golden rules are: •

Move the walker to a different part of the building or even outside it for a private discussion with you.

•

Establish whether their continued physical presence is essential for an effective mediation day. 268

Question 38 •

Do not play the blame game. Remind people of the purpose the day and suggest that everybody pushes forward.

•

Always carry spare clean handkerchiefs and tissues in your mediation bag.

•

Expect the unexpected.

SEE ALSO Q14, Q15, Q35

269

Question 39

In the Joint Opening Session one side’s lawyers insist on crossexamining the other side’s client. What do I do?

Core issues •

process control

•

mediator authority

•

party autonomy

•

court room tactics.

Discussion At mediations, many lawyers still behave as though they were in court. They do this despite the greater use and experience of mediation and all the training now available in mediation advocacy and negotiation skills, Although you have told them in your opening statement that the purpose of being in mediation is to make peace not war and that it requires a different skill set and mindset they did not really take it in. They believe that the route to settlement is undermining the other side. The win-win philosophy is alien to them. They believe in win at all costs. The outcome must be capitulation and surrender. Barristers are particularly prone to this mindset. This is not surprising. Crossexamination is one of their core skills. They receive special training in it. Most barristers will admit that cross-examination is what they enjoy best about being a barrister. There is no doubt that it is a difficult skill to master. Done well it can have devastating effects. Extracting admissions from an evasive and untruthful witness or tying up a determined and self-confident fraudster in knots of self-contradiction is professionally very satisfying. But that is at a trial. There is a public and a judge and sometimes a jury to impress. Not at mediation. Cross-examining someone in court where the witness cannot escape is one thing. Trying to do that in a mediation where at any time the witness can just stand up and walk out is another. But it is not just barristers who think that cross-examination is part of the negotiator’s skill set at mediation. Solicitors also find it difficult to resist the temptation to ask their devastating questions of the other side’s client. Experts, whose role at mediation is at best ambiguous, sometimes cannot resist asking questions of the other side’s expert or client. Is this just the display of 271

Part 2  At the mediation professional and personal ego? Or is it because it is just so much easier to criticise the other side’s case than to explain your own or construct a settlement? Clients also can be bursting with questions. Unrepresented parties think that the way to start negotiations is by attacking people. They jump into cross-examination mode. They can be more lawyerlike than the lawyers. So how do you deal with this risk? Priming In your pre-mediation private chats explain that mediation is to make peace not war. Being at mediation is not like being at trial. Nobody is on trial. Nobody gets cross-examined. No one is under oath. Anybody can leave at any time they like (see Q1). You will see the response from the people in the room to what you say. This is the time when you should be able to pick up if anyone’s barrister is itching to have a go at the other side. Some will expressly say they intend to be aggressive. This is discussed in more detail in Q15. Some parties express concern about what will happen at the joint session. They think that the other side’s lawyers will be aggressive or try to bully them. You can provide reassurance. Looking at the lawyers say that you are sure that their lawyer will be there to protect them and in any case in your mediations you do not allow bullying (see Q14/15/38). But beware: If you do provide this reassurance you must follow it through. Remembering always, of course, that one person’s bullying is another person’s pressure. In your opening remarks at the joint session you will have rehearsed some of the things below, but you may need to reiterate them to the parties or bring them back into peoples’ working memory: •

‘We are here to make peace not war.’

•

Emphasise that mediation is not a mini-trial or a rehearsal for trial and that no one is on trial. You may even go further, if you think it would help, by saying that you are not a judge, there is no jury and there is no cross-examination.

•

Tell the assembled room that most mediations follow three distinct phases: 1

Advocacy phase where you get told all the points the party’s lawyers are going to make to a judge in case there is no settlement agreement at the end of the mediation.

2

Problem-solving phase where you look to see whether or not you have the building blocks to assemble a settlement.

3

Negotiation phase where you decide if you have got the building blocks to build a settlement and the will of the parties to work with you on negotiating the final wording and the final figures. 272

Question 39 The sooner that you can move out of the advocacy phase into problem solving phase the more chance you have of getting a deal done. If one of the lawyers starts to cross-examine don’t rush in. • Check to see what’s happening. They might just be throwing out a few rhetorical or hypothetical questions. Casting their bait upon the waters to see who will rise to it. •

They might be just making a few statements or points. Jabbing away to see what the response will be.

Some cross examination can be overt: •

‘You have forged that document, haven’t you?’

•

‘You know that what you said in your witness statement is a pack of lies, don’t you?’

•

‘You say that my client agreed to release his commission entitlement ( worth £100,000 in the previous year) for 0.005% shareholding in a new company worth at most £50,000. Why would he do that? It makes no commercial sense does it? You deceived him. And you know it.’

Or it could be more along the lines of: •

‘I want to ask you this.’

•

‘We want to know why you did this.’

Sometimes it is lower key: •

‘Can you just help us understand …’

• ‘We are a little confused – in your claim you say X  but in your mediation statement you say Y and your counsel has just said Z? Please explain.’ Usually it is quite obvious and can be quite hectoring, with finger jabbing and accusations. But beware: More difficult to spot is the subtle narrative style of cross-examination. Sharp questions are delivered in a gentle continuous flow with pauses for seeking confirmation. Not many people can do this but there are some well-known mediation advocates who excel at it. Check to see what the other side’s response is. Look at how the interlocutor’s own side is reacting. Are they looking happy, surprised or uneasy? Not all advocates share with their clients what they intend to say in the Joint Opening Session. Even when they do they can go off-piste. Consider this: Try and catch the eye of the other side’s lawyers. Are they looking uneasy? Are they about to say something? If it looks like they are about to speak, leave them to say what they are going to say. If they object to the questioning see how the 273

Part 2  At the mediation interlocutor responds. It is after all the lawyer’s job to protect his client – the bodyguard role (see Q 38). It is your job as mediator to protect the integrity of the process. And it is your responsibility to stop the mediation turning into a mini-trial. But part of what you are trying to do is to create the mood and atmosphere for settlement. And to sustain it during the day. If the other side’s lawyer does object and the interlocutor still wants to raise the questions, intervene. You have to head off a row between the lawyers over procedural matters in front of all their clients. That will create entirely the wrong atmosphere and mood. You are here to make peace. Why start with a preliminary skirmish? Lean forward. Hands on the table. Say: ‘Please. Just a moment. Let’s be clear what we are doing here.’ Turning to the Interlocutor say: ‘XX [use their name], you have some questions. Can I  confirm that you think that these go to issues that need to be addressed today if we are going to achieve a settlement? You have asked them. It’s for YY (and their lawyer and his/her client) to decide how they want to answer them. They have taken delivery of them, they can answer them now, have a break to discuss them or deal with them during the day either through me or direct with you. It’s up to them. Let us finish scoping what we have to deal with today. Sort out the agenda and get cracking on with it.’ A party’s usual responses to hostile cross examination are: •

Studied silence. Just ignoring them. Being passive/aggressive.

•

Annoyance and resistance.

•

A suggestion: ‘We hear what you say. Finish your questions and I will speak with my client and decide how we want to respond.’ Or

•

‘We hear what you say. We will have a private word and come back to you through the mediator.’

•

Detailed note taking and silence.

If the cross-examiner keeps on, call for time out: ‘Let’s take five minutes so that we can all decide how we want to proceed’. Or Stop the Joint Session: ‘I  think that we have taken this as far as we can for the moment. I would like to come and speak to each of the parties in private.’ You might then want to have a cross-caucus just with the lawyers. If you have one ask them bluntly what procedure they want to follow and how they think it will help settlement. 274

Question 39 Agree what questions are going to be put forward and how they are going to be answered. Remind them that there is no obligation on any party at mediation to answer any question either from you, as mediator, or from the other side. Of course refusing to answer a question raises all sorts of potential problems of trust, commitment, etc. But as the day goes on people often become more prepared to disclose further information as they relax into the process. At the start of the day they are often guarded. This is all perfectly understandable and normal – tell the parties this. Whether you are talking to the lawyers jointly or separately it can be helpful to have in mind the guidance/codes of conduct relevant to lawyers/advocates at mediation. A very useful one for lawyers and especially for barristers is that of the Standing Conference of Mediation Advocates (SCMA). You can refer to its antecedents. Set up in 2007 by Andrew Goodman a barrister and mediator as a multi-disciplinary, cross-professional association of practitioners established to promote and deliver best practice and professional excellence in mediation advocacy. Its patrons include Lords Neuberger, Falconer, Goldsmith, Jackson and Faulks, The full SCMA Guidelines are set out in Appendix 1 but the key phrases are: ‘Mediation Advocacy is the technique of presenting and arguing a client’s position, needs and interests in a non-adversarial way.  It recognises the following: •

the  negotiated outcome to a dispute is usually more satisfying, more effective, more workable, more flexible and more durable than an order imposed by a court or other tribunal.

•

the parties to a dispute should control its process and its outcome.

• the parties to a dispute should be assisted by their  professional representatives or advisers in coming to a settlement that both deals with all matters in issue and also meets their true needs and wider interests. •

parties to a dispute should have regard to helping the opposite party secure its needs while at the same time preserving their own.

2.2 Good faith Lawyers and clients should act, at all times, in good faith to attempt to achieve settlement of the dispute. COMMENT (a) A lawyer should advise clients about what it means to act in good faith. A lawyer should not continue to represent clients who act in bad faith or give instructions which are inconsistent with good faith. (b) Likewise, if a lawyer suspects the other parties to the mediation are acting in bad faith this should be raised privately at first with the mediator. 6.1 Skills The skills required for a successful mediation are different to those desirable in advocacy. It is not the other lawyer or mediator that needs to be convinced; 275

Part 2  At the mediation it is the client on the other side of the table. A  lawyer who adopts a persuasive rather than adversarial or aggressive approach, and acknowledges the concerns of the other side, is more likely to contribute to a better result. [emphasis added] COMMENT (a) Arguments should be presented in appropriate terms and language that is appealing to the other party. Legal arguments or language are not always necessary (b) Listening carefully, even to material which may be irrelevant to litigation, is conducive to setting an atmosphere for settlement. It is helpful to summarise arguments made against clients to show that the other party’s position has been heard and understood.’ Are they examining you? Remember that some lawyers will be trying to cross-examine the other side as a way of testing you out as the mediator. They want to see how far they can go. They and their clients may be interpreting the whole exercise as an early test of your competence, authority and professional technique. So make your mark. Remember also that no one said that being a mediator was easy. But don’t be put off.

In a nutshell •

You tell people that mediation is not a trial. To maintain credibility you have to intervene to stop unwanted cross-examination.

•

Don’t jump in too fast – give the clients and their lawyers the chance to deal with things. They might be happy to answer questions across the table in this way.

•

Look out for cues and clues and pick your moment if you see distress or unease.

SEE ALSO Q1, Q14, Q15, Q38

276

Question 40

One of the barristers tells me in a caucus, in front of his solicitors and clients, that he prefers to side-step the mediator and talk directly to the other side. What do I do?

Core issues •

mediator control of the process

•

fighting procedural battles

•

party autonomy

Discussion Requests for direct discussion take place at different times during the mediation day for different reasons. Usually they are made after the mediation has been underway for some time. But sometimes they take place right at the beginning of the day. Lawyers, whether solicitors or barristers, often suggest an early direct procedural meeting with the other side. It is rare for them to object to the mediator being present but sometimes they do. There may be some sensitive matter they do not want to be disclosed to you. This can happen for example: •

Where there is more than one defendant and some are insurers. They want to work out, behind the scenes, an arrangement for sharing the payment that is going to have to be made. Or they want to agree which of them is going to act as spokesman for the various defendants.

•

Where contribution proceedings are planned or ongoing and they want to try and avoid a cutthroat defence with both sides blaming each other. They may take the view that it is better to hang together than to hang separately.

•

Where a sensitive matter has arisen between them that they don’t want their clients to know about. For example, the forceful criticisms, made at a recent hearing by the judge to both sides about their litigation conduct. The clients were not there and the lawyers prefer their clients to remain in ignorance of the judicial disapproval of their own conduct.

More usually requests for a direct meeting usually come from the lawyers when there is a perceived roadblock. One room may be making a point which the other side does not appear to be accepting at all. They are convinced that their point is a 277

Part 2  At the mediation good one – in fact usually they think that it is an overwhelming one – and cannot understand why the other side are not accepting it. Unfair thoughts occur that perhaps it is because you, as mediator, have not understood it, accepted it, or explained it properly. They now want to do it themselves. You cannot object if both sides are happy but there is also no reason why you should not sit in as one lawyer explains a legal point to another lawyer. But on the other hand they may want to blame you for the lack of progress. Accept that one of your roles as a mediator is to be a stress ball. People will take out their frustrations on you. This is one of the reasons why mediation is not a soft option, or as easy as many people think it is, and why you can end up feeling very tired and drained after an intensive day of mediation (see Q35). Requests for direct meetings also often come when one of the parties thinks that they have made a credible offer and the other side is simply making insulting or extreme offers. Barristers rather than solicitors usually do this. Sometimes it is the clients who want to have a private word with their opposite number because they think that the lawyers are bogged down in detail and have lost sight of the commercial realities. Why do barristers do it? •

To give themselves a role that they are used to having in court. What they are really good at is being a hired gun. They are less comfortable with being a bodyguard or coach.

•

They are used to having a word with the opposing counsel outside court. The two counsel meet halfway along the corridor and have a discussion. They return to their clients, summarise what has been said, obtain further instructions and re-join their opposite number. This settlement quadrille can go on for quite a long time. But they are in the driving seat just as they are when they are in court. Many barristers find it difficult to give up this position of control and direction. Sometimes this is because of ego or self-doubt. Sometimes it is because they are not sure that either the client or their solicitor is to be trusted negotiating. They may not make the most of their good legal points or throw away some tactical advantage in the litigation.

•

They just like being in charge. They are born leaders.

•

They prefer talking to other barristers than to mediators, clients or solicitors. They treat the mediation day as an extension of their robing room badinage.

•

They doubt the mediator’s integrity and think that they may not be preserving confidentiality properly and they want to be quite clear what is being said and how it is being said. This can happen if during robust reality checking there has been a full and frank exchange of views. They may be feeling a little sore. Not all lawyers are equally resilient when faced with challenges from mediators in front of their clients.

•

They think that you, as the mediator, in your role as intermediary, are shielding the other side from the full persuasive force of their forensic analysis. Or they think that the other side are hiding behind you and using you as a protective wall to avoid direct contact.

• Barristers who insist on this direct barrister to barrister/solicitor contact are usually old school. Mediation is something they have had to learn 278

Question 40 later in their professional lives. They do it because they have to. They do it conscientiously, but they are not really enthusiastic and much prefer going to court. Occasionally they are new school brought up on mediation and anxious to make the best tactical use of it as they would of litigation. They are barristers who go on mediation training courses with the express purpose not of acting as mediators but to learn how to play the mediator. They can be heard boasting to their clients that they have done lots of mediations and know how the job is done and what mediators get up to. They see their job not just as hired guns to beat up the other side but as bodyguards to protect their clients from the mediator. •

They are using it as a tactic to undermine you, as the mediator, and assert their own dominance over you, the other side, the process, the agenda and the timetable. Lawyers, but particularly barristers, openly talk about gaming the mediator.

What do you do? You allow the meeting to go ahead with good grace. You can advise against it and warn of the dangers but in the end do not resist. There is no point in fighting procedural battles that you cannot win. The parties can always meet whom they want when they want. After all if people don’t want you to be present they can have a meeting without you being there. You cannot physically force your way into the meeting (see Q38). The only sanction that you have is to call the mediation to an end. But what good does that do? You may end up with all sorts of complaints about unreasonably and prematurely ending the mediation (see Q46). If they have already paid, you have a certain negotiating edge. But beware: If they have not, you might find it difficult to get paid at all. But make sure that you do two things: 1

As soon as the meeting has taken place go to both rooms and hear the main points of their debrief. You will be amazed at how different the debriefs can be. See below.

2

Make use of the time. If the lawyers, or some of them, have chosen to go and talk amongst themselves there is absolutely nothing to stop you going in and talking to their clients. Just go and pass the time of day. Build up rapport and test the temperature. See what the mood of the room is. Always be aware that there are often multiple agendas at mediations. Clients’ and lawyers’ interests are not always aligned. These sessions can be useful for intelligence gathering. At one mediation where a rather crusty old school QC insisted on going to talk sense to the ‘young man’ on the other side – who was in fact a partner in a well-known City firm – the mediator chatted with the QC’s client. The client, by his manner, expressed his sympathy for the fact that his barrister had gone off and tried to side-line the mediator, but, as he told the mediator, there was 279

Part 2  At the mediation no way he was going home today without the matter having been settled. The mediator was much comforted by this knowledge when the QC returned full of bluster saying that he was confident that he had sorted out the other side. As it turned out he had not but as his client had predicted settlement was eventually achieved.

Were we at the same meeting? Debriefs You will quite often find that progress has been made in the sense that both sides feel that they have explained their points. One side, usually the one that requested the meeting, feels that you, as mediator, have not been there acting as some sort of distorting filter. But often there is disappointment. After delivering the knockout points the other side is still standing. When you see that the two parties’ recollections of what has been said or even purportedly agreed at the meeting are different you have to say so. Be prepared for one side on hearing this to be so indignant that they insist upon another meeting with their opposite number. Allow it to happen. Follow the same procedure as before. Either the differences in recollection will be ironed out or they will remain. If, as is usual, they remain, at least in part, you will be able to remind them that this is one of the dangers of having separate meetings without anyone present to take an agreed note. At least this side-lining is overt. But beware: Sometimes it’s covert. At one mediation a senior barrister, immensely successful and experienced in litigation, but a novice at mediation, started texting the solicitor on the other side. The mediator only learned of it when the solicitor told him. The barrister admitted that he had texted – he thought that they would all make more progress if he did that. He also wanted the solicitor on the other side to be under no illusions that his clients were not going to change their position. The solicitor on the other side thought that it was rather odd. He happily shared the contents of the texts with the mediator and his own robust advice to his client. The two lawyers met. As so often their debriefs differed. Much indignation was expressed when the mediator revealed this. A second clarifying meeting took place. Another debrief. The differences just kept on multiplying. Another clarifying meeting. In the end the solicitor insisted on a meeting with both the barrister and the mediator. Respective positions were restated. Mutual understanding of each other’s positions confirmed and then summarised in writing by the mediator. Last debrief and further offers followed. 280

Question 40 More harrumphing by the barrister before agreeing that perhaps despite his own strong advice to his clients on his prospects at trial it would be sensible to settle. And so it did. It was, after all, what his client had wanted. Client to client meetings Sometimes, but more rarely, the clients have a private meeting between themselves. This is potentially fraught with danger and you should try to insist on being present. Explain that you will take no part in the actual discussion. Your only job is to make sure that the agreed operating rules for the mediation are observed and to be able to provide an accurate summary to both rooms of what was discussed and possibly agreed. Explain that your reluctance to allow unsupervised meetings of this nature stem from your experience of threats, insults, even unwanted physical contact having taken place in the past at other mediations. People often find it useful if someone is there to hold the ring. Normally they will agree to your being present. But not always. They may discuss very sensitive information which they have not shared with their lawyers and do not wish to be publicly known at the mediation. They may be afraid that at trial it will be disclosed and for the moment prefer to see if things can be permanently kept under wraps. If such a meeting does take place, try and follow the same procedure. Go to each room as quickly as you can to hear the debriefs. They may be rather short and possibly heavily edited. While the meeting is taking place use your free time spend wisely and spend it chatting with the lawyers in both rooms. From your perspective as mediator the more alliances with the various actors on the day that you can build the better.

In a nutshell •

You cannot stop barristers having direct meetings with the other side.

•

You can ask why they have come to mediation. They could have saved their clients money, time and stress by just ringing up their opposite number.

• At all costs don’t let your personal feeling about their tactics become an obstacle to settlement. SEE ALSO Q35, Q38, Q46

281

Question 41

At a mediation between a large company and an unrepresented individual the company’s lawyers negotiate a favourable settlement for their client. I think that their draft settlement agreement is one-sided. What do I do?

Core issues •

how far should you police negotiations?

•

should mediators ensure that settlement agreements are fair?

Discussion This is another area of mediation where there are more requirements than you might imagine. For example: What about the regulations? The IMI Code of Professional Conduct stipulates: ‘4.2 Fairness and Integrity of the process 4.2.2 Mediators will conduct the process with attention to procedural fairness to all parties. The Mediator will take particular care to ensure that all parties have adequate opportunities to be heard, to be involved in the process and to have the opportunity to seek and obtain legal or other counsel before finalising any resolution. 4.2.3 Mediators will take reasonable steps to prevent any misconduct that might invalidate an agreement reached in mediation or to aggravate a hostile environment. Mediators will endeavour to ensure that the parties have reached agreement of their own volition and knowingly consented to any resolution. 4.3.1 Mediators shall withdraw from a mediation if a negotiation among the parties appears to be moving towards an unconscionable or illegal outcome. An unconscionable outcome is one which is the product of undue pressure, exploitation or duress. An unconscionable outcome reflects one party’s 283

Part 2  At the mediation exploitation of an existing power imbalance to the degree that the resulting agreement ‘shocks the conscience’ and violates accepted legal and cultural norms of fairness. The European Code of Conduct for Mediators stipulates that: ‘3.1 Procedure The mediator must conduct the proceedings in an appropriate manner taking into account the circumstances of the case, including possible imbalances of power and any wishes the parties may express, the rule of law and the need for prompt settlement of the dispute… 3.2 Fairness of the process The mediator must ensure that all parties have adequate opportunities to be involved in the process. The mediator must inform the parties, and may terminate the mediation, if: A settlement is being reached that for the mediator appears unenforceable or illegal, having regard to the circumstances of the case and the competence of the mediator for making such an assessment.‘ The CEDR Code of Conduct for Third Party Neutrals 2017 edition provides that: ‘7.2 the Neutral may withdraw from the Process at the Neutral’s own discretion and after such consultation with the parties as the Neutral deems necessary and appropriate.’ The requirements stated in these codes are straightforward and on the face of it readily comprehensible and unexceptionable. But their application in practice is trickier. The underlying principle seems to be that having ensured procedural fairness the mediator must be satisfied: •

that the parties are entering into a settlement willingly and on an informed basis;

and that it: •

accurately and fully reflects the agreement that they think that have made;

•

is on the face of it workable; and

•

is enforceable.

Consider this: 1 If you have any doubt about this consider the position you will be in if an agreement is challenged in court. How will you feel and how would you appear to others if you have to admit that you had doubts about whether the agreement accurately reflected the agreement that had been made or was workable or enforceable? 2

Taking a copy of this book handy for quick reference.

Your role as mediator in drawing up the settlement agreement is discussed in more detail in Q48/49. 284

Question 41 On what grounds could a settlement agreement be unenforceable? A settlement agreement is a form of contract, unless it is contained in a court order when it is an order of the court. The usual grounds to challenge a contract are: Lack of formality No valid agreement – in other words there have to be the usual formalities for the creation of a contract. These are: •

Intention to create legal relations

•

Valid offer and acceptance

• Consideration • Certainty •

Mental capacity

In addition some contracts are required in writing such as contract of sale of land, deeds or consumer credit agreements. Of course many mediation agreements provide that for there to be a legally binding agreement a document recording terms in writing must be signed by all parties. Void/voidable A contract can be set aside if it is void or voidable. The usual grounds of challenge are misrepresentation, mistake, duress, undue influence, and unconscionable behaviour or economic duress lack of authority, illegality, frustration, performance, renunciation, impossibility, or when a party has accepted a fundamental breach through discharge or by a later compromise agreement. Although these grounds may be available to mount a challenge the courts have asserted a public policy in upholding compromise agreements. As the Court of Appeal said in Rothwell v Rothwell [2008] EWCA Civ 1600. ‘… this court should signify that if the parties arrived at a compromise, a clear compromise, through the mediation process, then that compromise will be robustly upheld by this court.’ It is as well to be familiar with the case of Farm Assist Limited (FAL) v Secretary of State for the Environment Food and Rural Affairs (DEFRA) [2009] EWHC 1102 (TCC). This was a case where claimant applied to the court to set aside a settlement made at a mediation. They did this on the grounds of economic duress. The court must be satisfied that there was a contract entered into through economic duress ‘… there must be pressure: (a) the practical effect is that there is compulsion on, or lack of practical choice, for the victim; (b) which is illegitimate; and (c) which is a significant cause inducing the claimant to enter into the contract’. 285

Part 2  At the mediation Unconscionablity Conduct such as threatening to breach a contract, expressions of bad faith, whether the victim had any realistic alternative to entering into the contract or whether a party had made an affirmation of the contract are all factors which will be taken in to account when assessing whether there has been economic duress. In the Farm Assist case it was alleged that duress included a failure to take a structured, reasoned, bilateral, or bona fides approach ‘could and/or bad faith in relation to its conduct of the mediation and/or contents of its mediation statement.’ In that case Ramsay J held that the interests of justice required the mediator to be compelled to attend as a witness. As it turned out the case did not proceed. But it has been suggested by one learned commentator that: ‘the decision to order the mediator to attend tacitly recognises that a mediation agreement may be invalid where it has been obtained by coercion or economic duress which thereby treats it as any other compromise agreement reached through negotiation.’ Brooker, Penny Mediation Law Journey through Institutionalism to Juridification (Routledge, 2013). Why is it a good idea to make sure that contracts stick? What these quotations and citations do is provide you with ammunition to tackle the lawyers representing the large company. Point out that it is not in their client’s interests for the agreement to be potentially unenforceable. Explain your concerns that it might be voidable for lack of informed consent, misrepresentation or economic duress. Point out the requirements in the various codes – which is why it is a good idea to carry copy of this book with you to your mediations. You should also express your concerns to the unrepresented party. You may have to explain to both parties that you will have to withdraw from the mediation. Urge the unrepresented party to take independent legal advice on the settlement agreement. Emphasise that you cannot provide legal advice about the agreement. The advice that you are providing is that they take legal advice. As part of your pre-mediation discussions with the parties it is good practice to encourage the unrepresented party to have a lawyer available for discussion on the telephone or by email. This is especially important when the settlement agreement is being drafted. Do you have your little black book? Make sure that you have the telephone numbers and email addresses of lawyers known to you who are prepared to help in these situations. Some mediators set up an informal network to provide assistance to each other in these circumstances. Usually this is done on a pro-bono basis. If anyone challenges the appropriateness of your intervention you can always refer to the views of one of the most successful and respected mediators, Michel Kallipetis QC who says: 286

Question 41 ‘In short, pointing out potential difficulties in the settlement agreement is a prudent and necessary part of the mediator’s obligations to ensure that the parties are entering into the settlement with full knowledge and informed consent.’ This is a far cry from assessing the fairness of the agreed terms: allowing an agreement to be signed by the parties in the knowledge that, sooner or later, it could be a challenged does not serve the parties’ interests’ Richbell: How to Master Commercial Mediation, p 331. In practice pointing out to the parties the dangers of potential challenges to the settlement agreement on the grounds of unconscionable conduct or economic duress is not always a ‘far cry from assessing the fairness of the agreed terms’ especially where the parties are in an imbalance of power and even more especially when one is not legally represented. But do it anyway.

In a nutshell •

There are always imbalances of power at mediations.

•

You have to address them but not redress them.

•

Warn the vulnerable party of the need to seek independent expert and legal advice to protect themselves.

•

Warn the dominant party of the dangers of undue influence and pressure.

SEE ALSO Q48, Q49

287

Question 42

The mediation has taken a long time to arrange. Everyone is there on the day but one party has not paid my bill in advance despite promising to do so. What do I do?

Core issues •

potential bias

• confidentiality •

commercial policy.

Discussion This problem only arises in practice if you have stipulated in your mediation agreement that you require payment of your invoice in advance. Not everybody does. But most people do and for very good reasons. The reasons often given for not requiring payment in advance vary, but include: •

It smacks too much of trade and they are providing a service as one professional to another.

•

It recognises reality. Many clients, particularly insurance and local authority and government departments, have rigid billing cycles. You, like every other supplier, have to fit in with them.

•

It can cause the instructing solicitors embarrassment if they have to ask their clients for payment in advance for your fees when they would not be doing this for their own.

• Administrative convenience – if you bill in advance you may have to send a supplemental bill after the mediation for preparation time, overtime, disbursements such as room hire and travel, etc. Unless you charge a flat fee that includes everything you often do have to do this. •

The clients are all good for the money.

Reasons for the requirement to pay in advance are: •

The date is less likely to be cancelled.

•

The parties are more likely to be emotionally invested in the process if they are financially invested. If they have not parted with the money before they attempt to settle they may feel less engaged. 289

Part 2  At the mediation •

It avoids bad debts. There is nothing more irritating for a mediator having done a good job than to end up with a bad debt.

•

It improves your cash flow.

•

It prevents subconscious bias. Sigmund Freud, the great pioneer of investigating the subconscious once asked himself why he forgot some patients’ names and not others. He realised that those who paid promptly he always remembered. Those with unpaid bills tended to be forgotten.

•

Sadly you cannot assume that all clients’ solicitors are good for the money.

What are the options on the day? Tell everybody the mediation cannot go ahead? How realistic is that in practice? But beware: If you do this the party who has paid will be furious. Expect complaints for not having warned them. They might start demanding the return of fees and wasted costs both from you and the defaulting party. Not a good idea at all. Do you warn both sides in advance that unless payment is received in cleared funds from both sides that the mediation cannot go ahead? Non-payment will be treated as a unilateral cancellation. All commercially crisp and clear, but is it sound? Will you discourage people from appointing you? After all mediation at the moment in the UK is a buyer’s market. There are far more mediators looking for work then there are disputants looking for mediators. Offering attractive credit terms is a well-used marketing technique. One extremely eminent QC Arbitrator who fancied extending his range into mediation faced this problem the day before the mediation. He gave the defaulting party notice that unless cleared funds were in his account by 12.00 noon he would not be attending the mediation. He told the other side as well. They went ballistic. The money did not arrive. He did not attend the mediation. In fact he did not attend many more mediations and has now reverted to doing only arbitrations. At least if your fees as arbitrator are not paid, you can refuse to publish your award. Mediators, sadly, do not have that leverage. They have to apply more commercial awareness and finesse. If you do decide to extend credit in some way how far you go? Does it raise any ethical questions about equality of treatment between the parties? A very busy litigation firm was acting for a client on two separate matters. One was a personal injury claim where liability was not really an issue but quantum was. They were on a CFA. The other was a family property dispute, essentially a TOLATA (Trusts of Land and Appointment of Trustees Act 1996) claim. 290

Question 42 They asked a well-established entrepreneurial mediator if she would wait to be paid until the conclusion of the personal injury claim. Without hesitation she declined. They asked another even more established mediator if he would. He accepted on the basis that: •

Their clients gave an irrevocable instruction to their solicitors to pay his bill out of the proceeds of the PI action.

•

The solicitors gave an undertaking to pay it out of the money as soon as it was received.

• If the clients dis-instructed the solicitors the bill would be payable immediately. •

If funds had not been received within 12 months then payment was due.

The mediation was an unusually bitter family dispute but it did settle on the day. The mediator was thanked and praised by both sides. He waited over 12 months for his bill to be paid. During that period he received two further appointments from different partners in the same firm. He took the view that there was a risk that he would not be paid. But he was still being paid 50% of his fee, which was not a low one. He was prepared to write it off to his marketing budget if he ended up not being paid.

Equity between parties Contested probate cases are on the increase. More and more come to mediation. Often the parties have no other assets except the expected benefits out of the estate. Increasingly mediators are asked to invoice the estate and wait to be paid until enough assets in the estate are realised. This is often a residential property. In this case all the parties know about the arrangement. No one is being potentially favoured or disadvantaged. This is different from the example of the CFA and the personal injury case. The other side was not aware of the arrangement. Should they have been? The mediator was not acting for free for one party and charging the other. He was charging the same fee to both sides but offering favourable deferral terms to one party. Under his mediation agreement there was no obligation to disclose his commercial arrangements with the other side except for the provision in the agreement that the fee would be split equally between the parties. The mediator did not feel he was obliged to volunteer this information to the other side. Was he right? If the other side had asked if he had received his fee he would have had to say no. He could have said that it was a matter between him and them. Of course the enquiring party would have drawn its own conclusions. Expect to be asked by one party whether the other side has paid their share of the mediation fee yet. They usually explain that they are asking because they have doubts about the other side’s commitment to the mediation process and do not 291

Part 2  At the mediation want to spend money, time and effort on preparing for it if the other side are likely to pull out. They are comforted when you as mediator confirm you have been paid. Certainly late payment can be a warning sign that the mediation may not go ahead. Make sure that you email asking for confirmations that it is going ahead. Remind those who have not paid to settle your invoice. Having your fees paid in advance is just so much more satisfactory all round. What are your options? Back to the mediation day with one side having paid and the other side not having paid. In practice you have the following options: •

If the party is represented by solicitors ask for a written solicitor’s undertaking. If they will not give it, start preparing yourself for not getting paid at all. Usually they will. But there is a caveat. Solicitors’ undertakings are not as fireproof as they used to be. More and more firms default and you can be just another unsecured creditor. Certainly you may have a claim in the liquidation or bankruptcy or be entitled to make a complaint for a breach of professional etiquette. So what?

•

Ask the solicitors or their clients to electronically transfer the money then and there. It can be done.

•

Demonstrate an act of trust and faith, Say something like: ‘Well you’re telling me you’re going to pay tomorrow. That is good enough for me, I trust you.’ If the client says ‘I will arrange it tomorrow or send you a cheque’ you can say the same thing. You might be being naive. They may think that you are naive. But on the other hand you are openly expressing and demonstrating trust in somebody and that is likely to engender a warm feeling and be reciprocated. Reciprocation is one of Professor Cialdini’s Big Six principles of negotiation.

But beware: If you are dealing with shysters then be prepared to put it down to your marketing budget. Console yourself with comforting cliches about halves of loaves. The two options that you do not in reality have are: 1

Aborting the mediation.

2 Having a row with the solicitor and their clients. That will just create a sour atmosphere. This is not conducive to settlement and is unfair on the other room. They are entitled to assume that you are trying to build a peacemaking atmosphere by engendering trust and establishing rapport. It is not their concern that you have not been able to sort out your commercial arrangements.

In a nutshell •

You cannot pull out of the mediation at the last minute unless you have given everyone reasonable warning.

•

If you attend at the mediation with fees unpaid make sure that you have a copy of the invoice and your bank details with you. Electronic banking is your friend. 292

Question 42 •

Avoid having a row – you will poison the settlement atmosphere.

•

In the end you will have to take a punt. If you do not get paid put it down to your marketing budget.

SEE ALSO Q3 FOLLOW UP Walker: Setting Up in Business as a Mediator, Ch 16

293

Question 43

Co-defendants at a mediation blame each other. Each wants to make a separate deal with the claimant but does not want their co-defendant to know what their deal is. What do I do?

Core issues •

co-operative versus competitive behaviour

• confidentiality •

good faith.

Discussion Your first question to the parties at any multi-party mediation is: are they going to negotiate on a joint basis or not? You will find it much easier if they can agree amongst themselves to negotiate as a group – putting forward a single joint proposal at a time on behalf of all the group members. Experienced litigation users, for example insurance companies, usually hold premediation discussions. They try to sort out whether or not to act as a group and if so what the basis of their respective contributions to the settlement pot will be. Surprisingly often such discussions do not produce an agreed basis for proceeding at the mediation. Or they reveal clear and sometimes serious divisions amongst the paying parties. As mediator, therefore, you may end up having the main mediation between the receiving party and the paying parties and a subsidiary one amongst the paying parties. Most receiving parties could not care less where their money comes from. They are happy as long as the amount is right and they receive it in time. They prefer global settlements, ie an overall settlement with all the paying parties rather than several individual deals. The structure is simpler and there is less danger of loose ends. Ideally they do not want to settle with two out of three defendants and leave themselves with on-going litigation against the third. In practice any defendant to litigation can make a Part 36 offer to deal with their potential liability. That puts pressure on the claimant. Any claimant bringing proceedings against several defendants can find themselves having to settle with some and carrying on against the rest. Where there are several defendants sometimes one defendant holds out. They do not want to contribute at all. They think that they are entitled to a clear judgment 295

Part 2  At the mediation in their favour with no liability. This often occurs in multi-party professional negligence cases. Surprisingly often paying parties cannot agree to negotiate on a joint basis. They want to negotiate individual settlements with the claimant. If the claimant is prepared to do this you, as mediator, need to establish clear ground rules. 1

Are the parties negotiating in the expectation that one defendant may make a legally binding settlement with the claimant and leave the others, if they cannot agree terms? Do the defendants want to negotiate individual deals but on the basis that they only become legally binding if all the parties conclude binding settlements? This can be important from the defendants’ point of view if it means that otherwise there will be ongoing litigation and the prospect of contribution proceedings. Claimants will not want to settle with one defendant and have to carry on against other defendants and risk facing the argument that by settling with one defendant they have prejudiced their claims against the remaining defendants.

2

Do the parties want to keep their individual negotiations confidential? If so will they also want to keep their eventual settlement confidential? Or will all be revealed when the final settlement agreement is drawn up? From a practical point of view if there are individual, confidential negotiations there will be individual, confidential settlement agreements. This means additional drafting and extra care to preserve confidentiality.

3 If the parties want to keep their individual negotiations confidential you, as mediator have to be extra careful and scrupulous about how you pass on information. Take care to:

4

•

Spend time with each party making explicit what part of the information they have given you can be disclosed to any other party.

•

Impress upon the claimants that information that you give to them about one of the paying parties must remain confidential to them. They must not share it with the other defendants. This means that you will have to outlaw unsupervised meetings between claimants and defendants. You must insist on being present at every meeting. You are truly, in these circumstances, the guardian of the process.

•

Take extra time in between caucus sessions to process the information that you have been given and to work out what you are going to do next in the other defendants’ rooms. You need to be calm and focused so that you do not inadvertently mix up in your own mind the discussions that you have been having with the claimants about one defendant with the discussions that you are now having about another defendant. In the heat of negotiation, especially as the momentum builds up, it is easy to trip yourself up. Slow down and take time.

Time management becomes more of a problem. The mediation process will take longer than with a joint negotiation. You have to decide whether you are trying to close out one defendant first and then proceed to the other sequentially or are you going to carry out parallel negotiations and try to bring all the defendants along at roughly the same pace? 296

Question 43 Consider this: Parallel negotiations are preferable because they keep more parties engaged for more of the time. With a series of individual sequential negotiations there is a greater risk of parties feeling sidelined and switching off. Make sure that in between substantive caucus sessions you visit each room and give them a weather forecast about what is happening. You do not have to reveal the content of your discussions. Simply tell them that discussions are taking place. 5

How much do they want? Ask the claimants what global figure they want. By agreeing to negotiate individually the claimants are accepting they are not going to receive 100% of this global sum from only one defendant. They must share with you how they intend to allocate the sum to be paid amongst the defendants. This can lead to interesting and unexpected discussions. In one mediation there was a dispute about the purchase of heating equipment. The buyer claimed that it did not work properly and was not producing the predicted savings. They sued both the installer and the manufacturer. The installer was a small local company who had carried out maintenance work for the buyer for several years. Personal relations were good. The paperwork was more informal. The manufacturer was a large international company. This was the first time that they had supplied equipment to this buyer. Their paperwork was more comprehensive and efficient. Their weakness was alleged oral representations made by their sales representative anxious to secure the order from this customer. Everybody recognised that legally the paperwork protected the manufacturer more than it did the installer. The claimant’s counsel said that legally the installer was in the firing line, but morally it was the manufacturer. Relations between the installer and the manufacturer at director level were extremely fraught. There had been a similar, but smaller, contract where a similar dispute had arisen and the manufacturer felt that the installer had got off lightly. They were determined not to let this happen again. One of the recurrent questions that emerges at many mediations made an appearance: recoverability. The manufacturer could afford to pay 100% of the claim, costs and interest but its subsidiary company who had supplied the equipment did not want to do that as it would reflect badly on their figures and budgets. The installer could not afford to pay. If they were ordered to pay the full amount at court they would have to go into liquidation. They did not want that to happen and nor did the claimant. The biggest downside for the manufacturer was reputational risk. The manufacturer’s team was split between the director in overall charge and the sales and technical team. The latter were very keen on settlement. They feared the reputational risk more than the director did. The installer was in reality at the mercy of the claimants. They could put the installer out of business. The manufacturer was prepared to settle, but was determined that the installer should suffer the greater pain. They made offers 297

Part 2  At the mediation such as: ‘We will pay £Y, but only if the installer pays £Y × 2.’ This was largely motivated by the director’s wish for revenge after the previous dispute. During the mediation the manufacturer put the mediator under great pressure to reveal what the installer was offering. They tried persistently to extract information from the mediator about what the installer was offering with statements such as: ‘I’m assuming that the installer is offering at least X’. ‘I’m relying upon you to make sure that I do not end up paying more than X% of the total package’ ‘I expect you to tell me if the claimant is going to accept less from the installer than they are demanding from me.’ The mediator imposed strict self-discipline on body language and facial gestures. All the mediator could say was: ‘Do not assume anything. Do not place any reliance upon me. If you want to obtain reassurance or verification you have to speak to the claimant.’ He also reminded everybody about confidentiality being mutual. All this was compounded by the claimant wanting to be as generous as possible to the installer and seeking to recover the lion’s share from the manufacturer. The only message that the mediator was able to take to both defendants was that the combined total of their proposed contributions was not enough. He asked whether the parties wanted to have mutual disclosure of their offers so they could see what the gap was. The installer was happy to do this but the manufacturer was not. Eventually after a long repetitious exchanging of offers two separate settlements were concluded. Neither defendants knew the terms of the other’s settlement. The mutual suspicion was so acute that the manufacturer insisted on a warranty being inserted into the settlement agreement that it was not paying more than the installer. As legal proceedings were underway a consent order disposing of the case had to be drawn up. Two Tomlin orders with a schedule referring to a confidential document containing the terms of the settlement were eventually drafted.

In this case the claimants were not prepared to settle with one defendant and not the other.

In another case of professional negligence against financial advisers the claimant was suing two previous advisers. The second adviser was made up of former directors and staff of the first adviser. There was confusion and 298

Question 43 disagreement about what responsibilities and liabilities were transferred on the setting up of the second business. In this case both sides had separate professional indemnity insurance. The claimant said that he was perfectly happy to make a settlement with one and leave the other outstanding. Interestingly it was the defendants who insisted upon settlement with both defendants and a complete end to the litigation. Personal relations between the directors of the two defendants were poisonous. Professional relations between the two sets of solicitors were not good with both expressing negative opinions about the other’s competence. As an interesting twist the defendants talked in terms of percentages rather than cash sums. And then switched to talking cash sums. And then one switched back to talking about percentages. This made it difficult for the claimant to decide what the offers amounted to in net terms to himself. In this case the mediator found himself carrying out three rather than two sets of negotiations: one with each of the two defendants and the claimant and the third between the two defendants. And it was this latter negotiation that was the most difficult. Neither defendant’s insurers seemed concerned about the amount that they were paying just so long as they did not pay more than the other defendant. A neat illustration of the comparative theory of satisfaction. It is not how much that you have that matters, it is how much the other person has. The mediator’s job was complicated by having an observer who found it difficult to keep quiet and insisted on discussing things in private with the mediator in a loud carrying voice. The observer was also careless about opening his notebook in meetings with the parties and was oblivious to the attempts by the lawyers to read his notes upside down. But beware: It is a sad fact of modern mediation life that all participants at mediation try and read the mediator’s notebook. Most are quite open about trying to read what you have written down. So every time you enter a caucus start with a fresh page. When you are having these multiple parallel mediations divide your notebook into different sections one for each set of discussions (see Q29). The problem of ‘guilty knowledge’ arises in these situations. What do you do as mediator if you know the terms of three separate deals the defendants are doing and one of the defendants is making an assumption about the behaviour of the others which is not, in fact, accurate. In other words he is proceeding on the basis of a misunderstanding. If he knew the true situation he would not be making the proposal that he is putting forward (see Q17). Is there an obligation on the mediator to warn that defendant? Does the obligation go further – to inform the defendant? Although many mediators take the view that it is not their job to police the conduct of the parties’ negotiations ought they to make sure that any settlement 299

Part 2  At the mediation is a fair one? Or is it for the parties to look to themselves and make their own agreement? There are different ways of looking at this: Ask yourself how you would feel if the misunderstanding eventually emerges. How would you respond if the party who thinks that they were misled asked you if you knew about the misunderstanding? What would happen if the misled party applies to set aside the settlement agreement on the grounds that they were misled through a mistake or worse? How would you respond if the other two parties said that you should have told us about this? Is it part of your duty to help the parties to come to an informed decision about a settlement that cannot be set aside as a result of anything that happened at the mediation (see Q41)? The only safe approach if one defendant is making a certain assumption is that you suggest that they verify that assumption. They can do this by asking a direct question either of the claimant or in this example of their co-defendants. If the response is evasive the enquirer will draw their own conclusions. If the answer is clear than it is for the enquirer to decide what reliance to place upon it and how they protect themselves if it turns out to be inaccurate. Your dilemma arises if you know that the response that has been given by the other party is in fact false. There are two things that you can do. 1

Challenge the responder about his response. Do it gently. ‘I just want to check that I’m not confusing myself. When you answered this question in the other room you said … Previously when we had been speaking about this I thought that you told me something different.’ Either they clear up the apparent discrepancy and there was a genuine confusion or there was an attempt to mislead you or the other side. Trying to mislead you is irritating. Trying to mislead the other side is serious. You point out the dangers of the agreement being set aside. Ask if they want to correct/alter their response. If they do not and it is a serious matter that goes to the heart of the agreement and mutual trust you have to consider your position.

2 Say to the enquirer that if the information that they asked for is important to their decision-making they can always ask for it to be warranted in the Settlement Agreement. Considering your position. In the end this is a matter of individual conscience and values. But you may be subject to various codes. For example the IMI  Code of Professional Conduct stipulates in Clause 4, Mediation Process ‘4.2.3 Mediators will take reasonable steps to prevent any misconduct that might invalidate an agreement reached in mediation… will endeavour to ensure that the parties have reached agreement of their own volition and knowingly consent to any resolution 300

Question 43 4.3 Termination of the process 4.3.2 Mediators shall withdraw from a mediation if a negotiation amongst the parties appears to be moving towards an unconscionable or illegal outcome. An unconscionable outcome is one which is the product of undue pressure, exploitation or duress. An unconscionable outcome reflects one party’s exploitation of an existing power imbalance to the degree that the resulting agreement ‘shocks the conscience’, violates accepted legal and cultural norms of fairness.’ Commercial self-interest You might want to keep the parties happy. You may not wish to withdraw from the mediation and offer to pay back your fee. But in the end the most important thing that you have as a mediator is your reputation.

In a nutshell •

Joint offers are better than individual offers but individual offers are better than no offer.

•

Just go with the flow and be extra careful about leakage of confidential details. Warn the receiving party as well.

SEE ALSO Q17, Q41

301

Part 3 End of the mediation and after

303

Question 44

How do I close the deal?

Core issues •

how far should mediators not just facilitate settlement but encourage or even procure it?

•

does it matter if there is no settlement?

•

what is a successful mediation?

Discussion Mediators disagree about whether success at mediation can only be claimed if a settlement is reached. There are three schools of thought: 1  The settlers Clients come to mediation because they want a settlement. That is what they tell the mediator. They usually qualify this by declaring that they do not want a settlement at any price while confirming they would prefer to achieve it if they can. If settlement is what clients want then a mediation which produces a settlement is a successful one. If you as a mediator want to provide a service that clients want you need to be able to produce settlements. Settlements do not have to be finally concluded on the day. Many disputes that do not settle on the day settle shortly afterwards. As CEDR say in their Model Mediation Procedure ‘Where the mediation does not end in the complete settlement, the mediator may make contact with the parties thereafter to see whether further progress might be possible. Many disputes which do not settle at the mediation settle later, usually as a result of what occurred or was learned at the mediation.’ 2  The empowerers Mediation is not primarily about settlement. Parties need resolution, not simply a solution. Just finding a settlement that deals with the immediate dispute is like sticking a plaster over a wound. It is temporary. Unless the underlying issues are thoroughly explored and resolved, future conflicts and disputes will arise. Mediation is about transforming people’s behaviour and empowering them to 305

Part 3  End of the mediation and after cope with future disputes and hostile environments themselves. Hence the growth in therapeutic transformative and narrative mediation. Success at mediation is measured not by settlement but by the parties feeling that they have been heard, respected and acknowledged and are thereby better able to see the world in a different and more constructive way. In other words it is about promoting better mutual understanding. 3  Middle of the roaders Inevitably there is a halfway position. Success can be measured by opening up the path to settlement even if the parties cannot successfully walk along it to the end on the day. Therefore clarifying understandings, limiting the issues in dispute, correcting errors of communication are all valuable. Doing this makes a mediation successful. Many a party has walked away from mediation without having settled on the day but nevertheless saying that the process has been very useful. Some go further and say that, apart from not settling, it was a success. Some of the judiciary actively encourage mediators to make the judge’s job easier by achieving settlement on some issues if not all. See for example Briggs LJ at paras 37 and 38 in PGF II SA v OMFS Company 1 Limited [2013] EWCA (Civ) 1288. Preparing the ground On the assumption that you are trying to achieve some sort of settlement, total or partial, you need to prime the parties. The three things that you need to consider doing are: 1

Setting the mood and the expectation. Remind them they are there to make peace not war. You do this in your pre-mediation telephone calls and in your pre-mediation chats on the day. This is already discussed in detail in Q1.

2

Sketching out a timetable. Some mediators expressly give milestones in their opening statement during the Joint Open Session. They tell the parties ‘we have until 6 o’clock this evening. It always takes longer than you think to draft the settlement agreement. Unless you are exchanging offers by 2 o’clock and have really closed the gap by 4.30 we are going to run out of time.’ Others try and do the same thing in a more general way using phrases such as ‘We need to be having a first exchange of proposals before the sandwiches arrive’ or ‘We need to be talking turkey or approaching the deal zone by 3.30/4pm’. Having done this you can refer back to it later in the day when encouraging people to try and bridge the gap.

3

Make a progress chart. This is mainly for your benefit. After the Joint Opening Session, and certainly after the first round of caucuses, you will have a much better idea of what the live issues are that have to be tackled during the day. Making a list does two things: •

It helps you keep track of issues so they do not get lost in the fog of negotiation. 306

Question 44 •

You can use it as a checklist of progress. Tick issues off as they are resolved. Gradually during the day you share your list with the parties and they see the structure and the direction of travel.

You will begin to see where the sticking points are. If it looks as though progress is getting bogged down you can share with the parties, jointly or individually, your assessment of what the obstacles to settlement still seem to be. By doing this you are narrowing down what the parties have to think about, showing them the rate of progress and how far people have come during the day towards settlement. This helps generate momentum and keeps optimism levels topped up. You then deploy your deal-closing techniques. Review meeting You can conduct this either in a joint session or individual caucuses. What you want to do is to talk through with the parties where they started and where they have got to. Identify what needs to be done during the rest of the day to close the gap. This allows people to reflect and to step back from the fray of hand-to-hand negotiation. Be prepared to identify the obstacles to settlement. Do not shirk this. Be polite and low-key but be specific and clear. Going to the balcony This is a variation of the review meeting. William Ury uses this phrase when he advises encouraging parties to just step aside from the detail of the discussion, look again at the settlement landscape and the litigation landscape and see which they prefer. Much easier to do when you are not on the dance floor but standing on the balcony. In other words you are encouraging the parties to take a macro rather than a micro-view of their overall situation. It is surprising how often the parties, if not always their lawyers, eagerly grasp this opportunity. Most people do not like the feeling of being bogged down. They want a sense of direction and a way out (see Q2). Parking If you are making good progress on some items but others are proving to be sticky, park them. Reaching agreement on some issues encourages a feeling of optimism, which make it easier to then come back and sort out the parked issues. What you cannot do is ignore them. They will not just go away. But if you end up with only two outstanding issues out of a starting total of 20, people will feel more inclined to make the final effort to sort out the last two. Be aware of the danger of tackling the easy issues first and leaving the difficult ones to the end. This is a matter of your tactical judgement but don’t deceive yourself that you are going to achieve a settlement by agreeing everything else except the money. And of course at mediation nothing is agreed until everything is agreed. There is no legally binding deal until all the terms have been agreed and written down 307

Part 3  End of the mediation and after in a document signed by both parties. There may be psychological agreement, but that is not the same as a legal agreement. During the day people discuss points, moderate demands, change their positions and come to an agreement on a point. They become upset if others try and go back on a point that they had thought previously had been agreed. But in the end everybody will want to see the settlement as a total package. They might be prepared to reduce their financial demands if some other benefit comes their way, eg early delivery. If the parties are in the deal zone but cannot clinch the final figure there are various approaches you can take: Split the difference This is very traditional. People often feel comfortable about doing it in the endgame because it is what everybody does. Nobody tries to score any points any more. They are simply being grown up and doing a deal. Both sides are moving the same amount. Equality sounds like equity. Auto-settler Others do not like splitting the difference precisely because it is the traditional way and requires no skill or thought. They prefer to try and continue to negotiate. One way round this is to use the auto-settler. Both parties have said they made their last offer and are not prepared to move any further. The premise of the auto-settler is they make one final offer before going home with no deal. Whoever moves furthest wins. The move is measured in cash terms not percentage terms. To avoid a tie one side makes its offer in an even figure on the other in an odd figure. The offers are given to you as the mediator. You read them, calculate who has moved the furthest and announce the winner. Here is an example Paying party

Receiving party

Last offer

£100K

£200K

Now offers

£130K

£180k

Paying party has moved by £30K; the receiving party by £20K. The paying party has moved by more than the receiving party. It wins. The settlement figure is £130K The losers are surprisingly equable. They made their move. It didn’t work. Life goes on. Last, best and final offers Both sides give you a sealed last, best and final offer. You do not tell them what each other’s offers are. You indicate whether there has been constructive movement or whether they are still a long way apart. Usually, but not always, the parties want to 308

Question 44 know what the gap is and they agree to mutual disclosure. More often than not the final gap is closed. A variation on this is where the mediator only indicates whether or not the parties are within a specified figure. For example, are they less than £30,000 apart or not? The parties usually ask what happens if the two offers overlap. You have two choices. The settlement can be at the midpoint between the two overlapping figures or you simply give the offers back to each of them and say they have overlapped and they need to think again. Most parties prefer the midpoint solution. Toss a coin This is another face-saving way of closing the gap without anybody trying to score a point. Losers seem to accept the outcome with equanimity. Mediator’s recommendation/proposal/figure This is very common in commercial litigation in the US. UK mediators do not appear to be as enthusiastic about volunteering do this, but increasingly will do so if asked. Sometimes these recommendations or proposals are binding on the parties. One well-known successful mediator gives her decision orally in a joint session. She allows no discussion at all. Another equally successful mediator only does it in writing after the mediation has finished for the day. Again she does not entertain any discussion. Heads of Terms The parties have done all the hard bits. They have an agreement in principle. Some fine detail has to be sorted out but cannot be done there and then. This may be because you have simply too much to do, time is short and people are tired or it is too technical where, for example, conveyancing documents have to be prepared. Be absolutely clear about whether or not the heads of terms are intended to be legally binding or not. If they are make sure that they contain all the elements you need for there to be a legally binding contract under English law (see Q41). These are: • Certainty •

Legal capacity

•

Intention to enter a legally binding arrangement

• Consideration •

Offer and acceptance

In practice problems can arise at mediations over lack of certainty. In the case of Brown v Patel the court when deciding whether there had been a legally binding contract said that the written offers that had been left on the table were not capable, even if accepted, of constituting a legally binding agreement because they did not stipulate how the case was to be disposed of, eg by the withdrawal, 309

Part 3  End of the mediation and after dismissal or consent order, etc. You have to expressly deal with that if there are legal proceedings. Legal capacity can be a problem if people’s authority is required but they are not physically present. Can the agent bind the principal? Can a director bind the company without a specific resolution? All these questions about authority should have been identified before the mediation started or certainly at an earlier stage of the day. They tend to be highlighted when drafting heads of agreement that are intended to be legally binding (see Q48). Extra care has to be taken when any of the parties are not legally represented. Make sure that you explain to them the difference between legally binding and nonlegally binding heads of agreement. In order to protect yourself and their interests you must advise them to take independent legal advice before legally committing themselves. A common problem that arises is where one party has made a comprehensive final proposal. The other side are nearly able to accept it but there are one or two issues which they cannot agree on. The discussions go on and on in their room. The other party starts to lose patience. Give them a done deal One approach is to follow the maxim: the more you give them a done deal the more the deal gets done. In other words the party that is happy with its proposal draws up the settlement agreement for signature. All the details are completed. They sign and date it. You take it to the other party and say there it is. If they want to do the deal all that they have to do is to sign it. If they don’t want to sign fair enough but the other side cannot go any further tonight. More often than not the document is signed that night or the following morning. The offering party has made it very easy for the other side to say yes. Ask: So What? Sometimes you have to spell it out to the clients. You tell them that they say they want to settle. You have done all your reality checking and cost benefit analysis. Ask them to imagine how they will feel waking up the next morning with this dispute settled or with it not settled. Often at the end of the endgame lawyers try to display their professional skills and will hold out for another small tweak or improvement. You just have to ask them: ‘Do you want to lose this deal over another £1000? What difference can it make?‘ If that is what the obstacle is: Name it and shame it. Use the Mediation Record Form Bring in your Mediation Record Form completed showing the names of the parties, the date, the time the mediation started and when it is finishing. Tick to say that the mediation has not settled. Ask them to sign it. This often brings people up short when they realise that it really is over and the dispute has not settled. That is why 310

Question 44 you always take a second copy of your Mediation Record Form so that you can fill it in and have it signed when settlement is finally agreed. One party told a mediator who did this: ‘Well that was a little bit of theatre. But I liked it and it did work’ (see Appendix 2). Ask: What next? Ask the parties if this case does not settle today when will it settle? Listen to the forecasts. Ask: ‘Well when that happens will it be easier or harder to settle than today? And how much more money will you have poured down the litigation funnel rather than the settlement funnel?’ Urge the parties to take these non-monetary considerations into account as well as the ongoing stress, downtime from their business and the risk of recoverability. People talk about settler’s remorse. It is true that some people do regret the settlement that they made. It is a bit like buying houses. As the buyer you probably paid more than anybody else, perhaps even slightly over the odds. You end up with the house. Most people regret the houses that they did not buy rather than the ones that they did buy.

In a nutshell •

Most clients welcome help in closing the deal.

•

Be prepared to suggest and try any of the techniques discussed. Some will appeal to some clients and not to others.

• One of most successful mediators in the UK is praised by solicitors or his doggedness in chasing down the deal. He does not give up even after the mediation has finished without a settlement. SEE ALSO Q2, Q41, Q48 FOLLOW UP Walker: Mediation Advocacy: Representing Clients in Mediation, Ch 9

311

Question 45

The parties have shaken hands. What do I do now?

Core issues • how to conclude a legally binding settlement as efficiently and quickly as possible •

what is the role of the lawyers and the mediator in this?

Discussion The objective is simple: produce a draft settlement agreement as quickly as possible so that the parties can consider it and sign it. You have to decide how far you are going to be involved in this process. Sometimes you will be asked to actually draft the settlement agreement. This usually happens when the parties do not have legal representation present. Whether you should do this is considered in detail in Q47/48. Even if you are not drafting the settlement agreement you have a duty to facilitate it. Can you just sit in your room reading the paper and making telephone calls? No you cannot. You are entering a dangerous phase of the mediation day. Your job is to make sure that the parties cross the line. The danger zone After a long day the parties have shaken hands. The deal is done. Except that it is not. Nearly every mediation agreement stipulates that the parties are not legally bound until they have signed a document recording settlement. However, the clients think that the job is done. They are either: •

relaxing and congratulating themselves on getting a deal.

But beware: The danger is that they now switch off and lose interest. They become impatient and want to go home and celebrate. They exert pressure on their representatives to draft the settlement agreement quickly; or 313

Part 3  End of the mediation and after •

they are carrying out a post-mortem on whether or not they should really have agreed and asking themselves whether the deal can be improved even now.

But beware: They are not switched off. They are switching themselves back on to full negotiation mode. They will be putting pressure on their representatives to improve the deal during the drafting. Mediators know that it always takes longer for the parties to draft the settlement document than they think. This is because: •

The well-established optimism bias leads people to habitually underestimate by about 40% how long it will take them to complete any task;

•

There is a tendency for drafting to just take longer as people concentrate on the detail;

• The tendency, even if there is no pressure from the client to do so, that lawyers have to try and improve the deal for the client in the drafting. While professionals do try and do a good job for their clients, late-night perfectionism creeps in especially amongst Chancery barristers; •

People are tired.

As mediator you have two tasks at this time: •

To facilitate the drafting of the settlement agreement – this is much easier of course if lawyers, especially barristers, are present, as they usually take on the job.

•

To keep the clients engaged and onside. If the lawyers are out of the room drafting the settlement agreement on their computers on the upper floors the client can feel alone and slightly abandoned. Experienced mediators are alert to this danger and go and chat to the clients. Agree with the lawyers that you will try as the mediator to keep their clients entertained. Some will ask you to do this anyway.

First job – sort out who will do the drafting? Here are some ground rules: • If barristers are present on either side they should do it. They are more experienced in drafting settlement agreements and consent orders and they like doing it. •

If only one barrister is present ask them to do it.

•

If no barristers are present then the team with the largest legal representation should do it. If there are two representatives, the more senior can draft the agreement while the more junior keeps chatting to the clients to make sure they stay engaged and onside.

•

If the mediation is being held in the offices of one side’s solicitors or barristers, they, as hosts, usually undertake the drafting because they have readier access to the technology. 314

Question 45 •

If one side has brought a draft agreement that gives them a head start and they should finish off the first draft.

•

If one party is represented and the other is unrepresented, the representative should do the drafting.

•

Drafting by committee is never a good idea. This is true in any circumstances and is particularly true at mediation. A much better way is for one person to prepare a draft for consideration by everyone. Amendments can be discussed and agreed.

•

The Practical Law Company Dispute Resolution section advises that: ‘It may be helpful to convene a joint meeting, to allow the parties to sit at the table and finalise the agreement’. In practice this is not a good idea, for the reasons given above. All that happens is that the negotiations reopen and continue. Once an agreement has been agreed in principle it is essential to have it recorded in writing as soon as possible. When the parties can see exactly what they are agreeing, amendments can be made and details clarified.

Sit on the sidelines Usually mediators do not involve themselves in drafting until there is a disagreement over a particular provision or wording. Help the draftsmen to remember at all times that their clients have come to a settlement. The clients want finality and they do not want to stay all night. Heads of agreement: solution or problem? Most parties when they have reached a settlement at mediation are keen to sign a completed agreement. Clients want to walk away knowing that everything has been done and finality has been achieved. However, this is not always possible. Reasons can be: People run out of time Decision-makers have to leave to catch trains. The case handler at the insurers needs to be telephoned for final consent and they have left for the day. People run out of energy This is far more common than running out of time. People just become too tired. This does not just happen to the clients. Tiredness can afflict barristers and solicitors who are being asked to produce and approve detailed documentation late in the day. This can be especially significant if, as part of the settlement, parties agree to do something different and not just pay money, for example, exchange shares in a company or transfer land. The legal documents required to give effect to these transactions are probably not available at the mediation. Drafting them from scratch even with an online template takes time, concentration and effort. 315

Part 3  End of the mediation and after The unexpected occurs The litigators who are present may not feel sufficiently familiar with the newly relevant area of law to be able to advise their clients. Of course well-prepared representatives will have foreseen this along with every other possibility, but even the best prepared representatives can be caught out by the imaginative twists and turns that negotiations can take. In extreme cases the parties having been in a dispute with a broken relationship effect a reconciliation and decide to enter into a fresh licence agreement or a new supply contract. In their newfound commercial enthusiasm they want the paperwork signed now before everybody changes their minds. The contracts lawyers have all gone home. What to do? Work through the night cobbling something that might work is the usual answer. Hence the need to make sure that you packed everything on your Mediation Checklist (see Q4). People run out of authority It is unrealistic to expect that the representatives of corporate bodies, insurers or funders to have been given unlimited authority to settle. Even if they had been given a limited authority it may still be subject to ratification by a higher level of seniority. In these circumstances the best that can be achieved is a contingent or conditional agreement. Legally binding or not? At this stage someone suggests that Heads of Agreement be signed. The essential question is whether they are intended to be legally binding or not. If they are intended to be legally binding: •

They must be clearer and fuller than if they are not.

•

The advocates have to make sure that they are capable of having legal effect.

•

All the usual formalities and ingredients for a legally binding contract have to be observed and included, ie offer, acceptance, consideration, certainty, and intention to be bound.

If they are not intended to be legally binding what is their purpose? •

They serve as a record of the stage that negotiations had reached.

•

They are an indication of a degree of psychological commitment but there is no legal obligation to complete an agreement on these terms.

Non-binding heads of agreement give the parties the opportunity for second thoughts and renegotiation. Nobody can complain if this happens. Temptation The temptation for both clients and lawyers to improve the deal during the drafting has already been identified and it may be terrible. When facing this temptation advocates and lawyers should remember: •

Most clients think that the deal is done and want to go home. 316

Question 45 •

Some clients will want their representative to effectively renegotiate parts of the deal during the drafting. They must be warned of the dangers of doing this. In the end, advocates must follow their clients’ instructions, but if this happens expect a long night.

•

It is the clients who are paying for the representatives’ time. They may end up paying for the mediator’s time as well if the mediation exceeds the allotted duration.

• In most mediations the process of convergence that evolves during the negotiation towards settlement improves relations which were fractured at the start of the day. Generally people feel better about each other. Draftsmen must be alert to the danger of poisoning relations by prolonged disputes over drafting. The clients may want to do business again with each other in the future or at least be able to nod at each other in the street. • As time passes people become tired. They go round and round in circles about the same issue. There is a danger that the draftsmen start a mini-war and demonise each other. There is a risk of contagion. They start to quarrel and have negative feelings towards each other. This is particularly true if the lawyers think that they have not had sufficient opportunity to display their lawyerly expertise during the commercially influenced day. Their clients may start to be infected. This is where you as mediator need to intervene. Heads of terms: avoiding pitfalls Include all relevant terms Apart from the usual ones about parties, dates, consideration, etc, it is essential to include a provision making it expressly clear how any proceedings are going to be disposed of. This emerged from the case of Brown v Rice [2007] EWHC 625 (Ch).

This was a case between a Trustee in Bankruptcy and the bankrupt’s wife over a property. The case did not settle at mediation but both parties left offers open until the next day. There was a dispute about whether or not an offer had been accepted the next day in a telephone call and therefore a legally binding settlement concluded. The judge found that no legally binding offer could have been made because the terms of the offers left on the table did not specify how the action would be disposed of.

Everyone signs Given the circumstances in which Heads of Agreement and offers are produced – ie late at night when everybody is exhausted – it is a good idea to make sure that all those involved in the decision making sign the document. This includes the clients and legal representatives, including counsel. This makes it harder for anybody to say afterwards that they did not understand what was being said. Sensible draftsmen also include an acknowledgement by the client that they have been advised on the terms and meaning of the agreement and by the advisers that they have in fact given their clients this advice. 317

Part 3  End of the mediation and after ‘Sleep easy’ clause It is a sensible precaution to include a clause that obliges everybody to act in good faith to amend any obvious mistake of omission or commission in the document. This is separate from the clause that imposes an obligation on the parties to perfect the document, for example, by entering into a deed of security in a form to be agreed and in the absence of agreement settled by conveyancing counsel. Wise mediators take with them a selection of these boilerplate clauses so that they are available as and when needed. A selection of suggested clauses can be found under ‘Settlement Agreements’ in the precedents section on the Practical Company Law website. Entire agreement clause In the mediation agreement the parties agree to mediate in good faith. It can be dangerous to assume that everybody is doing that. People do not always tell the truth. The way to deal with this is to provide that all material terms are contained in the agreement and no reliance has been placed on any representations or information not contained in the agreement – in other words include an entire agreement clause. In practice this advice can be difficult to achieve at the end of a hard day’s negotiation. The better approach is to identify the key information relied upon and for it to be warranted as correct. Contingent agreements Occasionally a final settlement agreement can be drawn up, whether as part of a consent order or as a standalone document that is still dependent on another event, for example: •

further approval from the Board of Directors, which has to sign off; or

•

a further step has to be taken, eg, the surveyor may have to draw up a detailed plan before the contractor can replace the garden fence.

In these circumstances a warranty can be given by the party taking the further step that they will do it within a specified time and that, if it is a case of seeking approval, they will recommend that approval be given. Where a further step has to be taken jointly, for example, instructing a surveyor, both parties can warrant that they will co-operate in good faith to do this by a fixed date. If one of the parties does not co-operate, they are deemed to have consented to the choice or instruction of the other party. Conditional agreements These are distinguished from contingent agreements. Here the provisions are triggered by something. As soon as it is triggered, everything else flows, for example, a pension provider agrees to start making payments as soon as the claimant’s financial adviser tells them of the identity of the new provider. 318

Question 45 The draftsmen will want to be as certain as they can that the condition can be met, but they will provide a backup provision if the condition cannot be met. This usually happens because of an unexpected change in circumstances, for example, a government change to the rules for pension transfers, which no one had foreseen. Always have a Plan B. Pre-action mediations If proceedings have not been started, the settlement document will have to be a standalone settlement agreement which will not be incorporated into a consent order of the court. This means that the default provisions will have to be drafted differently because the parties will not have the benefit of the enforcement methods under for example, a Tomlin Order. Post-action mediations The usual form of consent order is a Tomlin Order. This has the advantage for the parties of not being a judgment. This can be particularly useful to the paying party who does not want a judgment registered against him or have to disclose it to a potential lender if he is going to have to raise finance to fund the settlement (see Q49). For the receiving party, the two advantages of a Tomlin Order are conventionally: • It is not necessary to commence a fresh action in order to enforce the settlement. The usual wording provides that: ‘All proceedings be stayed except for the purpose of giving effect to the terms of the schedule.’ •

The terms can be confidential. In a Tomlin Order the order is on the face of the document and refers to the terms contained in a schedule. The schedule is always attached to the order. Although it can be expressed to be confidential, it is kept on the court file. In fact because it is open to public inspection confidential schedules are often disclosed.

The solution to this problem is to refer in the schedule to a document signed and dated by the parties. That is not filed at court. This procedure is now incorporated into the standard procedure for Tomlin Orders by some courts. The schedule is identified as the terms contained in a document dated and retained by a named firm of solicitors, usually the claimant’s solicitors. There is no need to send the schedule to the court and in fact some courts will return the draft order if it is sent for sealing with a schedule attached. The usual wording is: in the order: ‘on the terms of settlement contained in a document signed by the parties and dated [ DATE ] retained by Messrs [ NAME ]’ on the document: ‘this is the document containing the terms of settlement referred to in a consent order signed on [ DATE ] ’ signed by [   ] and [   ] dated [   ]. 319

Part 3  End of the mediation and after Interest The receiving party should be aware that interest does not automatically accrue on any late payments due under a Tomlin Order. This is because it is not a judgment. If there is default in paying and judgment is entered, interest will automatically accrue. It is therefore important to provide the interest will be payable on any late payments in any event. Sealing the order There is a fee to pay to court on the sealing of the order. There is no point in arguing about who is going to arrange for the order to be sealed. Usually the claimant is the receiving party and is anxious that the order be sealed as soon as possible. It is slightly demeaning to suggest that the other side can pay the fee.

In a nutshell •

You are still on duty even if the parties have shaken hands and their lawyers are drafting agreement.

•

The price of a concluded settlement, like that of liberty, is eternal vigilance. Do not let your eyes close; keep them on the prize.

•

Gently, but constantly, monitor the drafting and keep chatting to the clients.

SEE ALSO Q46, Q47, Q48, Q49

320

Question 46

When can I bring a mediation to an end?

Core issues •

how far does the mediator control the process?

•

party autonomy

•

party conduct.

Discussion In a simple sense the mediator can bring a mediation to an end at any time. You simply say that is what you are doing and leave the building. The real question of course is would you be in breach of your contract if you do that. The answer depends on two things: •

Why you are doing it.

•

What your mediation agreement says.

What happens if your agreement does not say very much about termination? The circumstances in which you can safely terminate the mediation are: •

You started at the agreed time and the agreed finish time has now arrived. In other words the mediation period has expired. Is there any obligation on you to stay beyond that time? In the absence of any agreement on this point the answer is no.

•

One of the parties walks out.

•

Both parties say they want to terminate.

•

Some unforeseen emergency, such as you feel unwell or have to go home as quickly as possible because your child has been rushed to hospital.

Can you decide to terminate because you think the mediation is going nowhere? Not unless you have given yourself express right to do this. So what do you say in your mediation agreement? 321

Part 3  End of the mediation and after Most mediation agreements provide that the mediation may terminate in various circumstances: •

The parties have made a written agreement.

•

The parties have made an agreement in principle or signed heads of terms.

• The mediator has advised the parties that a settlement cannot be reached today. •

One of the parties wishes to leave the mediation. Some agreements provide that the party which wishes to withdraw must give written notice to the mediator that they wish to withdraw.

•

By an agreed adjournment.

•

By the mediator producing a written recommendation/your mediator’s proposal as requested and agreed by the parties.

•

By the unilateral withdrawal of the mediator.

What sort of circumstances permit you to unilaterally withdraw? Here are some examples. Brick Court Chambers provide: ‘The Mediator decides that continuing the Mediation is unlikely to result in a settlement or that it is undesirable or inappropriate for any other reason to continue with the Mediation.’ Clause 20 (C) Some providers go further and impose a positive obligation on the mediator to withdraw in certain circumstances. For example CEDR in its Code of Conduct for Third-party Neutrals provides at clause 7 that: ‘• The Neutral will withdraw from the Process and cease to act as such in relation to the Dispute if that Neutral: •

Is requested to do so by one of the parties, except where the parties agree to a procedure involving a binding decision by the Neutral to conclude the Process;

•

Would be in breach of the code to continue to act as Neutral; or

•

Is required by one or more of the Parties to act or refrain from acting in a way which would be in material breach of the code or in breach of the law.

‘7.2 The Neutral may withdraw from the Process at the Neutral’s own discretion and after such consultation with the Parties as the Neutral deemed necessary and appropriate, and always subject to the Neutral’s obligations as to confidentiality if: •

Any of that Parties is acting in material breach of the Process Agreement

•

Any of the Parties is acting in an unconscionable or criminal manner

•

The Neutral decides that continuing the Process is unlikely to result in a settlement 322

Question 46 •

And if the parties alleges that the Neutral is a material breach of the Code’

Others adopt a much simpler approach. For example Clerksroom in its Mediation Agreement at clause 6.6 says: ‘The parties or the Mediator may end the mediation at any time without giving a reason.’ Giving yourself the right and possibly the obligation to terminate a mediation before the stipulated time is one thing. Dealing with the consequences is another. A mediator arrived for a mediation, slightly late. He had driven from his home, which was on the other side of the country from the venue. He was therefore under a bit of time pressure. The mediation had been arranged by one of the main mediation providers. It had been booked from 10.00–18.00. By about 14.45 the parties were getting very close to a settlement. In fact terms had been agreed in principle but had not been written down and there was still some fine detail to be bottomed out. As part of the documentation provided by his provider, the mediator had a Mediation Record Form. This recorded the date and name of the mediation. It also provided a space for the start time and the finish time to be entered. There was a tick box section. One of the questions asked if the mediation had settled. There were signature blocks for all the participants, their legal representatives and the mediator. The mediator came in with the Report Form and said as far as he was concerned the mediation had settled and he was going to leave now. He had a long drive back. This was is about 15.00. He completed the form, wrote in the time and ticked the box saying the case had settled. All the parties and their lawyers signed the form. No one actually objected at the time. Later a furious complaint was received from the solicitors for the receiving party. The settlement agreement, which was still being drafted when the mediator left, had not been finalised and signed. No settlement was achieved. Apart from complaining that throughout the day the mediator seemed to be under time pressure they objected to the fact that the mediator had left the mediation about three hours before the stipulated finish time. Their complaint had two main strands: 1

They thought that if the mediator had stayed his continued involvement would have brought about a concluded agreement. Once he left the momentum dissipated and the paying party thought that they could just go through the motions and were not really taking things seriously.

2 The mediator had contracted to be the mediator from 10.00–1800. In leaving the way that he did he was in breach of his contract. They demanded a return of fees and compensation for wasted costs and expense. They argued that their signature on the Mediation Record Form merely recorded that the mediation had terminated at 15:00 hours. Their consent to it being terminated was not to be implied. Ticking the box 323

Part 3  End of the mediation and after saying that the case had settled proved nothing. The mediation had, in fact, not settled. It could not have settled because the Mediation Agreement, which the mediation provider had supplied and the mediator had signed, expressly stipulated that there was no legally binding settlement until both parties had signed a document incorporating the terms of the settlement. The mediator knew that this had not been done at the time he left. He knew that there had been no settlement. The mediator, who was a lawyer, denied everything. His position, and that of the mediation provider, was slightly undermined when it emerged that he had been in court the following day. Hence no doubt his need to get back in good time. The provider apologised and refunded the fees. The mediator refused to return his fee to the mediation provider. He was removed from their panel. The lessons to be learned from this are obvious: if the mediation agreement stipulates the formalities for concluding a legally binding settlement they have to be complied with before a settlement can be said to have been achieved. Leaving the parties to agree the wording and sign the document creates a very difficult situation for the parties potentially for you as mediator. •

Has the mediation actually terminated? If it has, what about the Mediation Agreement? Do its provisions still apply? There are express provisions about confidentiality, the formality for making agreement, undertakings to act in good faith etc. The mediator has left the building and the process. Does that automatically terminate the mediation agreement?

•

If a form is signed by all the parties and their lawyers saying that mediation started at 10.00 and finished at 15.00 is it proof of the fact that it then came to an end and the mediation agreement ceased to have further effect? If the parties remain at the mediation venue trying to finalise the settlement document do the confidentiality provisions still apply to their discussions?

•

Are the parties entitled to insist that the mediator stays for the contracted period of time? If you have paid for eight hours of the mediator’s time, why are you not entitled to have eight hours?

A much more well-known and successful mediator took a different and bolder approach. He was booked for a two day, big-ticket, multi-party mediation with a gratifyingly large five figure fee. After the mediation was underway he went round each of the parties’ rooms and spoke to them. This took about two and half hours. He then announced shortly before lunch that there was no way that this mediation could settle and therefore he was terminating it. The parties were flabbergasted but he left. He was that sort of character. There was a massive row afterwards. The reputational damage was obvious but the mediator did not care. It takes a lot chutzpah to do that sort of thing. And he had a lot – perhaps too much. The question of whether mediation has come to an end has been litigated in Mrs AB and Mr AB v CD Limited [2013] EWHC 1376 (TCC). The mediator gave evidence at trial. The court held that the mediation process will normally end at the conclusion

324

Question 46 of the hearing. A not entirely helpful finding but based on some confused wording of the mediation agreement. The upshot is that if you are going to terminate the mediation you had better have an excellent reason. Although your mediation agreement will provide that you don’t have to give your reasons, if the parties challenge your actions you will have to. The only exception of course is if you have to make a disclosure under the Proceeds of Crime Act 2002. This is discussed in more detail in Q7/16.

In a nutshell You can terminate: •

At any time if you have an express term in your Mediation Agreement giving you the right to terminate at any time without giving a reason.

•

When the parties have lost confidence in you.

•

When you are being asked to do something illegal or unconscionable.

•

Be aware of the dangers of premature termination- you might have to rebate your fees.

SEE ALSO Q3, Q7, Q16, Q19, Q22, Q36, Q47, Q48

325

Question 47

After ten hours the lawyers are drafting the settlement agreement. One party announces that it cannot sign the agreement today – they have to obtain sign-off from the Main Board. What do I do?

Core issues • authority •

good faith

•

after sales service.

Discussion When this happens you become a salvage expert. You have to keep the mediation show on the road. You can expect indignation, criticism, recrimination and possibly guilt. What you cannot do is to let all these very understandable feelings get in the way of concluding the deal. This is where your job as process manager really comes into play. The biggest problem that you face is derailed expectations. The parties will have signed a mediation agreement (see Q3). A  well-drawn one will include a clause such as the following examples: Brick Court Chambers: ‘2. The Parties will attempt to settle the dispute by mediation. The parties undertake to participate in the mediation in good faith. … 5. The parties’ representatives must have the necessary full authority to settle the dispute and shall immediately inform the Mediator if it becomes apparent, prior to or during the mediation hearing, that a restriction or limit on their authority might reasonably be expected to adversely affect the mediation.’ CEDR Model Mediation Procedure: ‘4. The parties will: •

ensure that a lead negotiator with full authority to settle dispute attends the mediation to sign the mediation agreement and any potential settlement agreement; 327

Part 3  End of the mediation and after • alternatively notify the mediator, CEDR and (unless a very good reason exists to the contrary) the other parties of any limitation on authority to settle, for instance lack of legal capacity, or the need for ministerial committee, court approval or board ratification, in which case the lead negotiator will need to have power to recommend acceptance of any settlement. Late disclosure of limited authority to settle can call into question that party’s good faith involvement in the mediation process, and have detrimental effects on the prospects of success of any mediation. The party who has authority will refer to this clause. There will be talk about breach of contract and claims for abortive costs. There will also be blood curdling predictions that if the case does not settle and goes to trial what has happened will be brought to the court’s attention on the question of costs whatever the outcome of the trial. The wrath of the judge will be visited upon the naysayer in a monstrous adverse costs order. Reference will made to the Malmesbury case – Carleton (Earl of Malmesbury) v Strutt & Parker [2008] EHWC 424. Mr Justice Jack on costs and mediation said, at para 72: ‘As far as I  am aware the courts have not had to consider the situation where a party has agreed to mediate but has then taken an unreasonable position in the mediation. It is not dissimilar in effect to an unreasonable refusal to engage in mediation. For a party who agrees to mediation but then causes the mediation to fail by reason of his unreasonable position in the mediation is in reality in the same position as a party who unreasonably refuses to mediate …. This is something which the court can and should take into account of in the costs order in accordance with the principles in Halsey. Coming to mediation without full authority as required in the mediation agreement and not disclosing the lack of authority until late in the day is unreasonable conduct. Consider this: You have two parallel jobs, which you have to try and carry on simultaneously: 1 Persuade the lawyers to carry on drafting while you see whether or not authority can be obtained. Do not let them become distracted and revert into adversarial mode as they attack and defend each other’s clients. Inevitably the drafting process will become more fraught as the mutual irritation is expressed through discussions about the precise wording of the settlement agreement and the relative aptness of colons and full stops. Emphasise to them that the more the deal is done the easier it is to get a done deal. A half-drafted agreement is of no use to anybody. 2

Scope with the non-authorised party exactly what is the ambit of their authority. Do this confidentially and in private. Find out what can be achieved today by way of emails and urgent telephone calls. What is the earliest that authority could be obtained if it was expedited? What is the earliest that authority could be obtained if the normal procedure was followed at the usual pace?

Try and establish to what extent those who have to sign off will follow the recommendations of the representative at the mediation. 328

Question 47 The following options are usually available: • The settlement can be renegotiated to come within the authority of the representative so that a binding agreement can be made on the day. This often happens in insurance cases where the representative has authority up to a fixed sum. Above that figure they have to obtain authority from the claims director at the insurer. Sometimes the receiving party has to take a hard choice. Is it better to take a smaller sum now for certain or hope that the negotiated settlement for the higher sum will be authorised? •

Think about slicing and dicing. Are there any points that can be agreed and disposed of? If there are why not sign a legally binding agreement dealing with them? That, at least, reduces the scope of the dispute.

• The settlement can be divided into two tiers. The part that is within the authority is settled and signed off (Part A). The part that exceeds the authority is drafted as an agreement subject to final approval (Part B). If it is not given the party with authority has the choice to rescind the Part A agreement. The party that needs to seek sign-off does not. Procuring If the representatives are very confident that authority will be given they can give an assurance to this effect. Sometimes internal procedures require that a senior person who has not been party to the dispute has to sign off. Or an associated company may have to sign off, eg the settlement agreement includes related parties who are not parties to the mediation. Sometimes a legal entity which was not party to the dispute but is a party to the settlement is not legally present. One of those present may nevertheless have sufficient influence or indeed legal control of that entity to give an assurance that its authority and consent will be given. The representatives at the mediation warrant in the settlement agreement that they will actively recommend that the settlement is authorised or ratified. Mediators are sometimes asked to provide a recommendation that the settlement be approved and signed off. One well-known mediator was asked if he would be prepared to certify that the settlement was a good one, ie  that it should be accepted by the party that needed ratification. He did. At the very least a timetable for obtaining authority or ratification should be agreed. Hence the importance of you scoping with the unauthorised party the steps to be taken. The party who does have authority to sign should sign the agreement. This will make it easier for the party seeking authority to conclude the agreement. All they need to do is to obtain a signature. Of course the aggrieved party may wish to reserve its right to walk away from the deal. This is where you have to ask them: ‘If the deal is a good one today why would it not be a good one tomorrow?’ In the end any party is entitled not to sign the settlement agreement. Although it may be compulsory to attend mediation it is not compulsory to agree a settlement at mediation. As is acknowledged in the Jackson ADR Handbook 329

Part 3  End of the mediation and after ‘Although the court can encourage the parties to use ADR and make orders facilitating the use of ADR…. it cannot make them reach a settlement in that process.’ 9.06 When a mediation has not produced a final settlement your primary objective as mediator is to make sure that it ends in such a way as not to set back the process of settlement. Nearly always some progress has been made. You want the parties to leave feeling that further progress could be made and that the channels of communication are open either directly or through you. You have to be at your most diplomatic. But in the end you have to convey this message to crystallise the reality of the situation. You may just have to tell them: ‘The fact is we cannot conclude a legally binding agreement today. If the agreement is a good one today it will still be a good one tomorrow. The parties that are present have done all they can to make sure that it will be signed off. Let’s all do what we can to make sure that it is signed off tomorrow/ next week. I will be touch with each of you on XX’

In a nutshell •

Embrace the motto (unofficial) of the Royal Marines: suck it up and crack on.

•

Avoid dramas, recriminations.

•

Produce as complete an executed agreement as you can.

•

Progress chase.

SEE ALSO Q3, Q44

330

Question 48

They want me to draft the settlement agreement. What do I do?

Core issues •

the mediator’s role in delivering a binding settlement agreement

•

mediator liability

•

process management.

Discussion What happens in the red zone between the parties shaking hands, literally or metaphorically, is vital. Q45 deals with what you do in more detail. This question is concerned with a specific request to you to draft the settlement agreement. Most civil and commercial mediators are advised not to draft the settlement document. This is a job for the parties’ lawyers not for the mediator. Nonlawyer mediators are understandably more nervous about being asked to draft a legal document. But many lawyer mediators, including experienced and highly competent QC mediators, say that it is not their role. Whose role is it? The CEDR Model Mediation Procedure 2017 edition provides: 9 ‘The mediator will facilitate the drawing up of any settlement agreement, though the drafting is normally done by the lawyers representing each of the parties.’ Brick Court Chambers mediation agreement provides that: 8 The Mediator: … (d) will assist, if so requested, in drawing up any written settlement agreement The Jackson ADR Handbook, para 15.26, says: ‘if the parties are represented by lawyers, they will have the task of drawing up the settlement agreement.’ But it also says at para, 15.25 ‘Whatever form 331

Part 3  End of the mediation and after the settlement agreement takes, the mediator will usually ensure that the parties do not leave the mediation until the agreement has been recorded in writing and signed by the parties and the mediator as their input is frequently required as the fine points of detail are hammered out between the lawyers.’ You can find yourself being asked to take part in the drafting in different scenarios: 1

Neither party has legal representation.

2

One party has legal representation and the other does not.

3

The drafting has stalled and the lawyers want your help with the difficulty.

Neither party has legal representation. Jackson, para 15.27, says: ‘If the parties are acting in person, the mediator may suggest that the parties draw up the heads of agreement, a memorandum of agreed terms or a memorandum of understanding and sign it so the legal representative of each party can then draw up the formal settlement agreement after the mediation.‘ Jackson, para 15.28, also says: ‘Once the final terms of the settlement agreement have been drafted, a mediator will usually oversee the signing of the parties’ agreement. Some mediators take the view that the content of any settlement agreement is a matter solely for the parties and their lawyers, on the basis that the mediator cannot owe a duty of care to both parties.’ If not you then who? There are two distinct roles here, at least in theory. 1

Scribe. All you do is write down in as intelligible English as you can manage what the parties tell you they have agreed. You do not advise upon it. You do not pass any comment. You may ask clarifying questions to make sure you have understood what they are saying they have agreed. And that is it.

2

Draftsman. You actually draw up, ie draft, the Agreement and not just write it down. In that case you will be interpreting what the parties tell you that they have agreed. We all know that the devil lies in the detail. The temptation for any draftsman is to try and improve the deal for their client in the drafting. You cannot do that. You don’t just have one client at this stage of the mediation: you have two, ie both sides in the dispute.

You owe them a duty to act impartially and fairly. You cannot favour one against the other. You cannot advise them on the content of the document, ie whether or not it represents a fair or good bargain. You can explain what the agreement means, as you understand it. You must make sure that all parties do in fact agree to the terms that you are writing down as they tell you them. Do they understand the implications of what you have written? You have to make sure. This is an onerous task. You will find it even more difficult when you have unsophisticated parties. There may not be used to dealing with legal documents 332

Question 48 or concepts. Their first language may not be English. Although they can speak it well enough for daily life, reading and writing it is something very different. Occasionally you encounter clients who are illiterate, whether their first language is English or not. This is not unique to mediators. Other professionals, especially solicitors, encounter these problems. You need huge patience and perseverance. You must also record in writing the steps that you took to make sure that everyone understood what they were telling you, what you had written down and explained to them and what they signed up to. If the end if there is any doubt there is no doubt as to what you should do – just write up a draft. Mark it as a draft with clear wording: ‘Subject to Contract and Legal Advice.’ Do not put yourself in the liability firing line. As we all know very few good deeds go unpunished. In the circumstances, whether you agree to draw up the agreement either as a scribe or as a draftsman depends upon how much you want to help the parties and how much risk you are prepared to incur. But beware: Be under no illusions. You are potentially liable if the agreement either does not reflect what the parties say they agreed or is unenforceable because it omitted a key term or was too vague or uncertain. See Frost v Wake Smith & Tofields Solicitors [2013]  EWCA  Civ 772 where the court held: ‘It would be regrettable if any decision of this court were to cause practitioners to approach the process of mediation with anything other than maximum flexibility, although I need hardly emphasise that it will normally be part of a solicitor’s duty to advise his client, especially a lay client as opposed to a professional litigator such as a liability insurer, of the nature of the process and of the status of any agreement reached as a result.’ The question to bear in mind is if you as mediator in drawing up the agreement start to assume some of the duties of a solicitor in similar circumstances. You can take some steps to protect yourself. Include a clause such as: I, xxxxxxxxxx, as mediator have been asked by the parties to record in writing what they have agreed. •

They have told me what they have agreed and I have to the best of my ability faithfully recorded what they have said to me.

• I  have given no advice as to the contents of this document and in particular whether the terms of the agreement are fair, workable or enforceable. •

I  accept no responsibility or liability of any nature in relation to what I written down as it is a true reflection of what the parties have told me.

•

I  have explained this to the parties. They have confirmed to me that they have understood what I have said and accept that I have no legal responsibility or liability to them. 333

Part 3  End of the mediation and after • I  have also advised them to take independent legal advice before concluding a legally binding agreement. •

I have read this document out loud to the parties. They have confirmed that they have understood what I have said and they agree with what I have written.

If you act as draftsman you will not be able to give yourself such a blanket release. But you can still make it clear that: •

You have not advised them on whether the terms are fair.

•

The parties have confirmed to you that they have not received advice about the contents of the agreement that they have made.

•

You have advised them to take independent legal advice.

•

The parties confirm that you have read the document out loud to them and that they understand it and agree with it.

A preferable alternative for you is to draw up a document but expressly provide that it is not legally binding and it is subject to contract. Use the words: ‘subject to contract’. In other words this gives the parties an opportunity to take legal advice. You can even expressly provide that the agreement will have no effect until the parties have taken legal advice and the legal advisers have countersigned the document confirming that advice has been taken. As another variation you may confine yourself to drawing up Heads of Terms or Heads of Agreement. Again, you expressly state they are not intended to be legally binding, but are for the assistance of the party’s legal advisers in drawing up a formal legal settlement document. Heads of Agreement and Heads of Terms are discussed in detail in Q45. The difficulty with these two alternatives is that there is no legally binding agreement. Either side can change their minds. Take special care to make a note in your notebook of what you have done and advised and what the parties’ responses were. Don’t throw away your notebook. In all cases have a look at the Check List in the Survival Kit at the end of this section. One party has legal representation and the other does not. This puts you as mediator in a more difficult position than if neither side has legal representation. The obvious danger is drifting into being an adviser to the unrepresented party or be seen by the represented party as being the other side’s adviser. You want to avoid both of these things happening. Ask the lawyer to draft the settlement agreement. Go through it in joint session with both parties and the lawyer. Ask clarifying questions so that you can be as certain as you can be that the unrepresented party understands what they are being asked to sign. 334

Question 48 Say out loud what you understand the terms to mean. Make sure both sets of clients can hear what you say. Ask the lawyer to confirm that what you are saying is correct. Confirm again your advice to the unrepresented party to take independent legal advice before signing the agreement. Try and avoid discussing the agreement in private with the unrepresented party. If you do discuss it in private the represented party will assume that you are giving advice to the unrepresented party. If they think that the unrepresented party is being advised by you they may be tempted to be more demanding in the drafting. Very few draftsmen can resist the temptation to improve the deal. Or they could start having concerns about your even-handedness and impartiality. You need to keep everyone’s trust at this late stage just as much as earlier in the day. Again make sure that you take careful notes about what has happened and who said what to whom. Make sure that you take the clients through the settlement agreement line-by-line and that they understand it. Try and do this in the presence of a third party such as the other side’s counsel or your assistant. Mark the copy that you have been through with the client to the effect that you did this and note the date and time on it. Both parties have legal representation but one of the lawyers asks you to help in drafting the document not just in resolving difficulties with the other side. This does sometimes happen usually with junior or inexperienced lawyers. Especially if they have demanding clients or more experienced, and possibly overbearing, lawyers on the other side. What do you do? You can decline. But beware: All that does it make you appear unhelpful which is not a good thing for your mediation practice. It may also slow down the production of the final settlement document. Do you tell the other side about the request? Or do you just go into the room take your pen out and do it? The ideal solution is: Find out from the room that has asked for your help precisely what the problem is? 335

Part 3  End of the mediation and after Is it just finding a form of words? That is relatively easy. Retain copies of settlement agreements so that you can build your own library of templates and precedents. Try a couple of alternatives and then discuss with the other side. More likely it will be a question of how to structure the documents. Will there be a separate contract for the sale of land? What do we do about the joint instruction to the valuer, etc? How will the timetable of steps work? There is no doubt that the experienced lawyer or contracts negotiator will find this easier than a novice mediator. Their difficulty is stepping outside their competence zone. Sometimes all that you can do is draft an agreement subject to contract. But sometimes the help with drafting is in reality help with re-negotiating. This is a real dilemma for you as the mediator. There can be a fine line between drafting and negotiating. You might not always be able to make it out distinctly but you will know when you have crossed it. Do not cross it. The best that you can do is to make a list of all outstanding points on the documents, call a joint meeting and work through them. Divide them into: •

Lawyer’s points – usually trying to find the correct form of words.

•

Points of principle – usually about default provisions, eg what happens if one of the conditions is not met? Is the entire agreement at an end and is everyone is back to square one? Or does some replacement mechanism kick in?

•

Practical points – usually timing issues.

People are tired and fed up by now. Keep smiling. Hand round more chocolate biscuits and try and identify if any of the points are deal breakers (see Q4). Be prepared to make suggestions and think aloud. Use lots of ‘What if …?’ and ‘How about …?’ ‘Would this work …?’ Keeping the momentum going. Always be alert to the danger of pressurising a reluctant or vulnerable party. This is where you really earn your money as a mediator – helping stumbling parties across the line. Draftsmen should remember at all times that their clients have come to a settlement. The clients want finality and they do not want to stay all night. To conclude: •

Make sure that someone with the necessary authority to sign is present.

•

Make sure that you take the clients through the settlement agreement line-byline and that they understand it. Try and do this in the presence of a third party such as counsel or an assistant.

•

Mark the copy that you have been through with the client to the effect that you did this and note the date and time on it.

•

Make sure that your professional indemnity policy is up-to-date and renew it for the next six years.

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Question 48

In a nutshell •

Learn how to draft a settlement agreement.

•

Install templates on your iPad or laptop.

•

Take your copy of this book with you.

•

Draft the settlement agreement.

•

If you can’t draft a settlement agreement what are you doing mediating?

SEE ALSO Q4, Q45, Q49

Survival kit Checklist for Settlement Agreement Who is to be a party to the agreement? Who is the client settling with? Are there other parties who you would like to bind into the settlement? For example, a defendant should endeavour to ensure all claimants and potential claimants are tied in. As with defining the parties to the mediation agreement, particular care should be taken with identifying group companies. Otherwise the benefits of reaching a settlement may be lost when a similar claim comes in from a related, but not explicitly identified party. Third parties What about any relevant third parties, for example, joint tortfeasors? Are they to be released from future claims or are rights to bring claims against others being preserved? What about sideways litigation, where the parties to the settlement become involved in further litigation when one of them takes action against a third party, who joins in the other? Consider including non-sue clauses, or at least an indemnity from the litigating party for all costs, expenses, damages, etc. What is the scope of the claims being settled? What claims does the settlement agreement cover? For example, how do you deal with existing, but unknown claims and future claims?

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Part 3  End of the mediation and after Formalities What formal requirements are necessary to ensure a binding settlement? For example, does the agreement need to be in writing or in a deed (for example, where no consideration is passing)? Consider execution formalities and whether the execution clause will be effective to bind the parties. Disposal of court proceedings Deal with notification to the court and formalities required to dispose of any court proceedings. Is the action being stayed, dismissed, discontinued or discontinued on agreed terms (so that enforcement can take place within the existing court proceedings)? Warranties One or both of the parties may have relied upon information provided by the other or an assumed set of facts or circumstances when deciding whether or not to make this settlement agreement. If this was fundamental to their decision consider including a warranty that the information was accurate and complete. A very common example is when the paying party pleads poverty. The receiving party relies on this information when assessing the recoverability risk. The paying party is often asked to warrant that its statement of assets and liabilities is true. Is settlement conditional or unconditional? Settlement may be, for example, conditional on payment so that the settlement agreement only becomes binding and effective on the payment of the settlement sum. Default provisions Will the innocent party be able to enter judgment for the full amount relief claimed in the proceedings if there is breach of the settlement terms? Payment arrangements What about the method and timing of payments? For example, it may take time for the paying party to raise the settlement funds and/or have the payment approved, but the timing of the payment may be highly significant to the client. How will payment by instalments be structured? Are express provisions for interest on late payments needed? Tax implications of the settlement Check whether the settlement payment attracts VAT or has any further tax implications.

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Question 48 Legal costs Make express provision for the parties’ legal costs under the settlement, remembering to deal with any existing costs orders in the proceedings. Confidentiality Is an express confidentiality provision required in the settlement agreement? Should there be a carve out? In some cases an agreed form of joint public statement, to be issued on conclusion of the settlement, can be beneficial. Governing law and jurisdiction As with any contract, issues of jurisdiction and governing law of the contract and the forum for any claims should be carefully considered. Capacity and authority to settle Ensure that the person(s) who will be signing the settlement agreement has/have authority to bind the company and to enter into the agreement, and include relevant provisions in the settlement agreement dealing with this. Resolving disputes The whole point about having written agreements is to remove the chances of further argument and dispute. Sometimes, even with the best drafted agreement, there can be genuine disagreement about what it means. Some mediators volunteer to adjudicate on any such disputes. If that is what the parties want, then: •

it must be included in the settlement agreement to have binding effect; and

•

the mediator’s charges should be defined and the power, if any, he has to make a decision as to who should pay his charges.

Joint and several liability If the parties have joint liability they are each liable for the full amount. If they have several liability they are only liable for their respective share. Joint and several liability is a hybrid; the defendants are jointly liable to the claimant, but as between themselves their liabilities are several. Therefore, if the claimant pursues only one defendant and recovers the whole amount that is due, that defendant can pursue the other defendants for their contribution. Several defendants The question of joint and several liability is more likely to be of interest to the defendants than the claimants in practice. Those advising defendants should bear in mind the Civil Liability (Contribution) Act 1978. Section 1 provides that a person who is liable for damages suffered by another may recover a contribution from any other person who is liable in respect of the same damage. 339

Part 3  End of the mediation and after The term ‘liable in respect of the same damage’ is given its natural and ordinary meaning not the extended meaning previously given by the courts until the case of Royal Brompton Hospital NHS Trust v Hammond (No 3) [2002] UKHL 14. Section 1(4) of the 1978 Act provides that a person who has made or agreed to make a payment in a bona fide settlement of any claim against them in respect of any damage is entitled to recover a contribution from a person who is liable for the same damage, provided that the former ‘would have been liable assuming that the factual base of the claim against him could be established’. It is essential to remember that this section only applies to a claim for damage and not one for debt. A joint or joint and several debtor who has settled the claim by paying the whole amount can recover a contribution from the other debtors by way of restitution. Advisers must be careful when making settlement in a multi-party action, if the paying party intends to recover some or all the settlement from other parties, then a settlement may subsequently be held to have been unreasonable if the action for a contribution is defended. The case of John F Hunt Demolition Ltd v ASME Engineering [2007] EWHC 1501 (TCC) illustrates this. Advisers also need to remember that if a party settles a claim it will not cap liability for a contribution to the damages under the 1978 Act. This is why care has been taken in connection to what has been described as sideways litigation. The case of Carillion JM Ltd v Phi Group Ltd [2011] EWHC 1379 (TCC) is an illustration of the problem. Claimants beware Claimants’ advisers must be careful not to inadvertently lose or waive their right to a recovery from other potential defendants. Section 3 of the 1978 Act provides that: ‘Judgment recovered against any person liable in respect of any debt or damage shall not be applied to an action, alter the continuance of an action, against any other person who is (apart from any such bar) jointly liable with him in respect of the same debt or damage.’ It is thought that ‘judgment’ includes a consent order. Section 3 will not apply if a settlement is reached, but there is no subsequent judgment. If this happens, release of one jointly liable tortfeasor or contractor will release all the others unless there is an express or possibly an implied reservation of the claimant’s rights to pursue them.

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Question 49

I’m not a lawyer. What does a Settlement Agreement look like?

Core issues •

care has to be taken when drafting settlement agreements especially late in the day after hours of negotiating with tired and impatient clients wanting to go home

•

having a template makes the job easier.

Discussion Most settlements are recorded either in a stand alone settlement agreement or in some sort of order if litigation or arbitration has been started. If legal proceedings have been started you will need to dispose of them in some way. This is done in one of two ways: 1  A Tomlin Order This is the usual way. This is a form of consent order made by the court. Its special features are: •

It does not count as a judgment. This can be important if the paying party needs to raise money to make payments under the settlement.

•

It imposes a stay on the proceedings but does not dismiss them. They are still live but dormant. The order provides that a party can apply to the court to revive them for the purpose of enforcing the settlement. It is not necessary to start new proceedings in order to enforce the settlement.

• The terms of the settlement are set out in a schedule which can be kept confidential. The settlement agreement can form the schedule to the Tomlin Order (see Q45). 2  A consent order This is an order in which the action that forms the legal proceedings is either dismissed, withdrawn or discontinued. This is done on the terms set out in the settlement agreement. The settlement document is either an agreement or a deed. 341

Part 3  End of the mediation and after Contracts A contract is a legally enforceable agreement. You want the settlement agreement to be legally enforceable. In which case it has to meet the requirements for a legal contract under English law (see Q41). These are 1

Consideration – this means something of value promised to another. It can be payment of money, provision of a service or a promise to do something or not to do something.

2

Legal Capacity – the parties must be of sound mind and legal age.

3 Intention to create legal relations – the parties must intend to enter into a legally binding arrangement. 4 Offer and Acceptance – there must be unconditional acceptance of an unconditional offer. 5

Certainty – the terms must be complete and certain.

6

Formalities – some contracts have to be in writing or by deed.

A contract which meets all these requirements may still not be enforceable if it is tainted by illegality – either it was for an unlawful purpose or was made in an illegal way, eg a signature is forged. A contract, generally, needs only to be signed by the parties or their representative. No special formality is required. A  signature does not have to be witnessed, although it can be. A  signatory who is signing on behalf of someone else or in a particular role, eg under a power of attorney or a director of company, must specify this. Deeds A deed is a special form of agreement. The key differences are: •

There is no requirement for consideration.

•

A claim for breach of contract in a deed can be brought within 12 years and not 6 years as for an agreement.

•

It has to be signed by two people: the signatory and a witness or in the case of a company by a director and a witness or by a director and either another director or the company secretary. There is no need for it to be executed under seal any more.

Help is at hand Do not panic if you are asked to draft a settlement agreement. Here is a template with commentary.

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Question 49

Settlement agreement THIS AGREEMENT/DEED is dated [DATE] Parties (1) [NAME OF PARTY] (Company number [NUMBER]) whose registered office is [ADDRESS] (Party A). (2) [NAME OF PARTY] (Company number [NUMBER]) whose registered office is [ADDRESS] (Party B). Background The parties were in dispute and attended a Mediation on DATE and have agreed settlement terms which they wish to record in this Agreement/Deed. OR Court proceedings were commenced on [DATE] in the [COURT] (with claim number [CLAIM NUMBER]) (Proceedings) by Party A against Party B. THIS DEED is dated [DATE] Parties (1) [NAME OF PARTY] (Company number [NUMBER]) whose registered office is [ADDRESS] (Party A). (2) [NAME OF PARTY] (Company number [NUMBER]) whose registered office is [ADDRESS] (Party B). Background THIS DEED is dated [DATE] Parties (1) [NAME OF PARTY] (Company number [NUMBER]) whose registered office is [ADDRESS] (Party A). (2) [NAME OF PARTY] (Company number [NUMBER]) whose registered office is [ADDRESS] (Party B). Background [A dispute has arisen between the parties relating to [GIVE A DESCRIPTION OF THE DISPUTE] (Dispute). Use this where there are no proceedings. OR (A) Court proceedings were commenced on [DATE] in the [COURT] (with claim number [CLAIM NUMBER]) (Proceedings) by Party A against Party B regarding [DESCRIBE ALLEGATION AND ANY RELEVANT AGREEMENT] (Dispute).] 343

Part 3  End of the mediation and after (B) The parties have settled their differences and have agreed terms for the full and final settlement of the Dispute. They wish to record those terms of settlement, on a binding basis, in this deed. Use this where there are proceedings. Agreed terms Definitions and interpretation In this deed, unless the context otherwise requires, the following words and expressions have the following meanings: Related Parties: a party’s parent, subsidiaries, assigns, transferees, representatives, principals, agents, officers or directors. [ADD ANY FURTHER APPROPRIATE DEFINITIONS] Effect of this deed [The parties hereby agree that [on [CONDITION]] this deed shall immediately be fully and effectively binding on them COMMENT If you want the deed to be effective immediately insert as the CONDITION on signature by the Parties OR Unless and until [CONDITION], this deed shall be of no effect. Payment Party B shall pay to Party A the total sum of £[AMOUNT], divided into instalments payable by way of bank transfer to [BANK DETAILS] as follows: •

the amount of £[AMOUNT] to be paid on or before [DATE];

•

the amount of £[AMOUNT] to be paid on or before [DATE]; and

•

the amount of £[AMOUNT] to be paid on or before [DATE].

Interest shall accrue and be payable by Party B on any part of the £[AMOUNT] that is not paid in accordance with clause 3.1 at the rate of 2% per annum above the base rate for the time being of [NAME OF BANK]. OR Party B shall, within [NUMBER] days of the date of this deed, [time being of the essence,] pay to Party A the total sum of £[AMOUNT] by way of bank transfer to [BANK DETAILS]. 344

Question 49 COMMENT The point about making time of the essence is that the receiving party can terminate the settlement agreement at once is the payment date is missed. Although late payment is a breach of contract it may not be a repudiatory breach ie to allow the receiving party to terminate the agreement if it is remedied within a reasonable time. Most paying parties resist time of the essence provisions. Stay OR Dismissal of action [The parties hereby consent to, and shall take all necessary steps to obtain, an Order in substantially the form of the draft Order in [ANNEX B] COMMENT This is the usual provision and the draft Order is a Tomlin Order. OR The Proceedings shall be dismissed [with no order as to costs] and the parties hereby consent to, and shall take all necessary steps to obtain, an Order in substantially the form of the draft Order in [ ANNEX B] Release This deed is in full and final settlement of, and each party hereby releases and forever discharges, all and/or any actions, claims, rights, demands and set-offs, whether in this jurisdiction or any other, whether or not presently known to the parties or to the law, and whether in law or equity, that it, its Related Parties or any of them ever had, may have or hereafter can, shall or may have against the other party or any of its Related Parties arising out of or connected with: •

the Dispute;

•

[the underlying facts relating to the Dispute;]

•

[the Proceedings;]

•

[any agreement between or act by the parties or their Related Parties or any of them; and]

•

[any other matter arising out of or connected with the relationship between the parties.]

(Collectively the Released Claims.) COMMENT This is a very wide clause. It is mutual release of all claims. Sometimes the parties will want a narrower release if they are going to business in the future because this wording applies to future claims. It includes counterclaims, and any claims by or against third parties who may be a related party but are not themselves a party to the dispute or the Mediation Agreement. 345

Part 3  End of the mediation and after Agreement not to sue Each party agrees, on behalf of itself and on behalf of its Related Parties not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its Related Parties any action, suit or other proceeding concerning the Released Claims, in this jurisdiction or any other. Clause 5 and clause 6.1 shall not apply to, and the Released Claims shall not include, any claims in respect of any breach of this deed. Costs The parties shall each bear their own legal costs in relation to the Dispute and this deed. This clause 7 supersedes and overrides any and all previous agreements between the parties and any court order regarding the legal costs in relation to the Dispute [and the Proceedings] and in relation to this deed (including the implementation of all matters provided by this deed). COMMENT This assumes the costs have been included in the settlement sum to be paid under clause 3. Sometimes costs are paid separately and in addition to the settlement sum. A provision such as Party will pay to Party legal costs in the sum of £XXXX by DATE. OR Party will pay to Party legal costs to be assessed on the standard/indemnity basis if not agreed. Warranties and authority Each party warrants and represents that it has not sold, transferred, assigned or otherwise disposed of its interest in the Released Claims. Each party warrants and represents to the other with respect to itself that it has the full right, power and authority to execute, deliver and perform this deed. COMMENT In addition sometimes warranties as to the accuracy of information supplied during negotiations is required. eg Party A warrants that the information that it has supplied to Party B about its financial affairs is complete and accurate in all material respects. 346

Question 49 Indemnities Each party hereby indemnifies, and shall keep indemnified, the other party against all costs and damages (including the entire legal expenses of the parties) incurred in all future actions, claims and proceedings in respect of any of the Released Claims which it or its Related Parties or any of them may bring against the other party or its Related Parties or any of them. COMMENT This acts as an incentive to both parties to make sure that no further litigation is commenced in breach of Clause 5. No admission This deed is entered into in connection with the compromise of disputed matters and in the light of other considerations. It is not, and shall not be represented or construed by the party as, an admission of liability or wrongdoing on the part of either party to this deed or any other person or entity. Severability If any provision or part-provision of this deed is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this clause shall not affect the validity and enforceability of the rest of this deed. Entire agreement This deed constitutes the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter. Each party agrees that it shall have no remedies in respect of any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this deed. Each party agrees that it shall have no claim for innocent or negligent misrepresentation [or negligent misstatement] based on any statement in this deed. Confidentiality The terms of this deed, and the substance of all negotiations in connection with it, are confidential to the parties and their advisers, who shall not disclose them to, or otherwise communicate them to, any third party [without the written consent of the other party] other than: •

to the parties’ respective auditors, insurers and lawyers on terms which preserve confidentiality; [and] 347

Part 3  End of the mediation and after •

pursuant to an order of a court of competent jurisdiction or pursuant to any proper order or demand made by any competent authority or body where they are under a legal or regulatory obligation to make such a disclosure; [and]

•

as far as necessary to implement and enforce any of the terms of this deed; [and]

•

to issue an agreed statement in the following terms (or terms substantially similar): [SET OUT TERMS OF AGREED STATEMENT].

[The parties are entitled to confirm the fact of, but not the terms of, settlement of the Dispute.] Governing law This deed and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the law of England and Wales. Jurisdiction Each party irrevocably agrees that the courts of England and Wales shall have [exclusive OR non-exclusive] jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this deed or its subject matter or formation. Contracts (Rights of Third Parties) Act 1999 [[THIRD PARTY] may enforce the terms of this deed subject to and in accordance with this clause and the Contracts (Rights of Third Parties) Act 1999. The parties may not rescind, or otherwise vary, the terms of this deed in such a way as to extinguish or alter [THIRD PARTY’S] rights hereunder without the prior consent of [THIRD PARTY]. Except as expressly provided in clause16.1 a person who is not a party to this deed shall not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this deed. [The rights of the parties to terminate, rescind or agree any variation, waiver or settlement under this deed are not subject to the consent of any other person.] OR The parties agree that the terms of this deed are not enforceable by any third party under the Contracts (Rights of Third Parties) Act 1999.] COMMENT It is usual to exclude the rights of any third parties under settlement agreements. 348

Question 49 Co-operation The parties shall deliver or cause to be delivered such instruments and other documents at such times and places as are reasonably necessary or desirable, and shall take any other action reasonably requested by the other party for the purpose of putting this deed into effect. Counterparts This deed may be executed in any number of counterparts, each of which when executed [and delivered] shall constitute a duplicate original, but all the counterparts shall together constitute the one deed. For the purposes of completion, signatures by the parties’ legal advisers shall be binding. [Transmission of [an executed counterpart of this deed (but for the avoidance of doubt not just a signature page) OR the executed signature page of a counterpart of this deed] by (a) fax or (b) e-mail (in PDF, JPEG or other agreed format) shall take effect as delivery of an executed counterpart of this deed. If either method of delivery is adopted, without prejudice to the validity of the deed thus made, each party shall provide the others with the original of such counterpart within [TIME PERIOD] of completion.] [No counterpart shall be effective until each party has executed [and delivered] at least one counterpart.] Variation No variation of this deed shall be effective unless it is in writing and signed by the parties (or their authorised representatives). This document has been executed as a deed and is delivered and takes effect on the date stated at the beginning of it. Executed as a deed by [NAME OF PARTY A] acting by [NAME OF FIRST DIRECTOR], a director and [NAME OF SECOND DIRECTOR OR SECRETARY], [a director OR its secretary]

………………………………… [SIGNATURE OF FIRST DIRECTOR] Director ………………………………… [SIGNATURE OF SECOND DIRECTOR OR SECRETARY] [Director OR Secretary]

OR

349

Part 3  End of the mediation and after Executed as a deed by [NAME OF PARTY A] acting by [NAME OF DIRECTOR], a director, in the presence of: …………………………………

………………………………… [SIGNATURE OF DIRECTOR] Director

[SIGNATURE OF WITNESS] [NAME, ADDRESS [AND OCCUPATION] OF WITNESS]

Executed as a deed by [NAME OF PARTY B] acting by [NAME OF FIRST DIRECTOR], a director and [NAME OF SECOND DIRECTOR OR SECRETARY], [a director OR its secretary]

………………………………… [SIGNATURE OF FIRST DIRECTOR] Director ………………………………… [SIGNATURE OF SECOND DIRECTOR OR SECRETARY] [Director OR Secretary]

OR

Executed as a deed by [NAME OF PARTY B] acting by [NAME OF DIRECTOR], a director, in the presence of: …………………………………

………………………………… [SIGNATURE OF DIRECTOR] Director

[SIGNATURE OF WITNESS] [NAME, ADDRESS [AND OCCUPATION] OF WITNESS]

Annex A Tomlin order This is a Tomlin Order, used in the courts of England and Wales to bring an effective end to proceedings without entering judgment, but enabling agreed obligations to be enforced by court order within the old action if not performed as agreed and avoiding any need to start a fresh action

350

Question 49 [Action heading] UPON the Parties to this Action consenting to the terms set out below BY CONSENT IT IS ORDERED that 1 All further proceedings in this case be stayed upon the terms set out in the Settlement Agreement between the Parties dated ….., an original of which is held by each of the Parties’ solicitors [OR CEDR/the Mediator] OR set out in the Schedule to this Order except for the purpose of enforcing the terms of that Agreement. 2

Either Party/Any of the Parties may apply to the court to enforce the terms of the said Agreement [or to claim for breach of it] without the need to commence new proceedings.

3

There be no order as to the costs of this action

OR [A/B] do pay [B/A]’s costs of this action on the standard/indemnity basis subject to detailed assessment if not agreed]1. WE CONSENT to an order in these terms …………………………………………………… [Black & White], Claimant’s Solicitors ………………………………………………… [Red & Green], Defendant’s Solicitors Annex B Dismissal order [INSERT DISMISSAL ORDER] [INSERT DISMISSAL ORDER]

CEDR Model Settlement Agreement 2017 Edition Date ……………………………………………………………………………………… ……………………………………………………………………………………………… Parties ……………………………………………………………………………………………… …………………………………………………..(Party A) 1

A consent order has to contain whatever is agreed as to the costs of the action in the main body of the Order, to provide the basis for detailed assessment of costs if required in the event that the amount cannot be agreed

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Part 3  End of the mediation and after Address2…………………………………………………………………………………… …………………………………………………………………………………..(Party B) Address3…………………………………………………………………………………… ……………………………………………………………………………..(Party C, etc)4 (jointly ‘the Parties’) Background •

The Parties have been in a dispute in relation to [set out brief details] (‘the Dispute’)5 [which is being litigated/arbitrated [court/arbitration reference] (‘the Action’)]6

• The Dispute has been the subject of a CEDR mediation (‘the Mediation’) conducted under an agreement (‘the Mediation Agreement’) between the Parties and [………………..……] (‘the Mediator’) and CEDR; •

The Parties have agreed to settle the Dispute on the terms set out below (‘the Settlement Agreement’);

•

[see footnote 4 and set out any key facts or representations]

Terms of the Settlement Agreement It is agreed as follows: 1

[A will deliver ………. to B at ………. by not later than 4 o’clock on 25 December …..]7

2 [B  will pay £ ………. to A  by not later than 4 o’clock on 25  December ….. by direct bank transfer to ………. bank sort code ………. account number ……….] 3 [Any other terms] ………………………………… A The Action will be stayed and the parties will consent to an order in the terms of the attached Order [see attached form of Tomlin order8]. B OR [A/B] will discontinue the Action on [B/A]’s undertaking not to claim [B/A]’s costs of the Action against [A/B].

2 3 4 5

6 7 8

Not strictly necessary Not strictly necessary Note that the mediator should not be a party or even a witness to the settlement agreement, even though properly a party to the mediation agreement While it is not essential for the factual background to be recited, any facts and representations the truth of which form the crucial foundation for the terms of settlement should be set out here to eliminate or at least minimise any later allegations of misrepresentation Omit this wording and paragraph 4 if there are no court or arbitration proceedings Be as specific as possible, for example, how, by when, etc. This is the commonest method of implementing a settlement where proceedings already exist: where there are no proceedings, the settlement agreement stands as an actionable contract where all parties intend that it should be legally enforceable: if a cross-border dispute, and all parties agree, application can be made to the Court for a mediation settlement enforcement order

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Question 49 C OR Judgment will be entered for [A/B] on their [counter] claim with an order that [B/A] pay [A/B]’s costs on the standard/indemnity basis subject to detailed assessment if not agreed. D OR The Action will be dismissed with no order as to costs. 4

This Agreement is in full and final settlement of any causes of action whatsoever which the Parties [and any subsidiaries ………. of the Parties] have against each other [it is important that such a clause is only included after a careful check has been made as to whether there are any other possible outstanding causes of action between the Parties which can safely be compromised (or ought not to be compromised) in this way].

5 This agreement supersedes all previous agreements between the parties [in respect of all matters relevant to the Dispute] except for those terms of the Mediation Agreement of continuing effect including the confidentiality of the mediation process, the Parties’ undertaking not to call the mediator or CEDR to give evidence and the liability of the Mediator and CEDR.9 6

If any dispute arises out of this Agreement, the Parties will attempt to settle it by mediation10 before resorting to any other means of dispute resolution. To initiate any such mediation a Party must give notice in writing to the Mediator and to CEDR. Insofar as possible the terms of the Mediation Agreement will apply to any such further mediation. If no legally binding settlement of such a dispute is reached within [28] days from the date of the notice to the Mediator and to CEDR, either party may [institute court proceedings/refer the dispute to arbitration under the rules of ……].

7 The Parties will keep confidential and not use for any collateral or ulterior purpose the terms of this Agreement except insofar as is necessary to implement and enforce any of its terms or as otherwise agreed in writing by the Parties. 8

This Agreement shall be governed by, construed and take effect in accordance with [English] law. The courts of [England] shall have exclusive jurisdiction to decide any claim, dispute or matter of difference which may arise out of, or in connection with this agreement.11

Signed ……………………………………………………………………………………………… ……………………………………………………………… for and on behalf of12……………………………………………………………………… ……………………………………………………………………………………………… ………………………………………………………………

9 Only necessary if there have been previous agreements 10 Alternatively, negotiation at Chief Executive level, followed by mediation if negotiations do not result in settlement within a specified time 11 Usually not necessary where parties are located in same country and subject matter of agreement relates to one country 12 Not necessary where the party signing is an individual

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Part 3  End of the mediation and after for and on behalf of13……………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………… This Model Agreement (and accompanying consent order) is for guidance only. Any agreement based on it will need to be adapted to the particular circumstances and legal requirements of the settlement to which it relates. Wherever possible any such agreement should be drafted/approved by each party’s lawyer. Although the mediator may occasionally be involved in helping the parties to draft acceptable terms, the mediator is not responsible for the drafting of the agreement and should never be a party to it. [See also the provisions of the mediation agreement which, if it is based on the CEDR  Model Mediation Agreement, will deal with mediator liability, confidentiality etc. and may not need to be repeated in this agreement, unless the scope of confidentiality is either extended or defined by agreement between the Parties to allow for non-parties with a proper interest in the outcome to be informed, or an agreed Press release to be issued.]

13 Not necessary where the party signing is an individual

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Question 50

One side rings up after a successful mediation and asks what I think the mediation agreement means. What do I do?

Core issues •

when does a mediation finish?

•

when are our mediation duties fulfilled?

•

do the provisions of the Mediation Agreement still apply after the mediation?

Discussion The question of continued mediator involvement after the mediation day usually arises where there has been no mediation settlement made on the day. The parties decide that they want to try and bridge the gap and invite the mediator to continue to help. That raises all sorts of questions about: • status • remuneration •

formalities of making agreement

•

the continued application of the terms in the Mediation Agreement

•

whether the mediation is being continued or something new has started.

These are considered in Q44, Q46, Q48. Your decision about becoming involved in interpreting the Settlement Agreement will depend on the circumstances. For example: •

Did you play any part in the drawing up of the mediation settlement agreement? If so you might be able to cast some light on what the document that you helped draft actually means. You may think that you have some obligation or responsibility for the drafting.

• Are any of the parties unrepresented? Is the party telephoning you unrepresented, but the other party legally represented? The reason why this is important is that there is an European code for mediators to address imbalances obligation continue after the formal cessation of the not legally, but morally you do have an obligation to guidance to an unrepresented party. 355

obligation under the of power. Does that mediation? Arguably provide some sort of

Part 3  End of the mediation and after Consider this: Commercially you might want to provide an after-sales service to any party. Doing that shows that you are user-friendly. But ask yourself if you want to charge for any time spent in dealing with such an enquiry. See below. •

The party asking you tells you that there is difference of opinion about what the agreement means. You had no part in drawing it up. Both sides were legally represented. But they now have a difference of opinion. What do you do? One of the UK’s best-known and most successful mediators inserts as a matter of course into settlement agreements made at his mediations, a clause providing that if there are any disagreements that arise between the parties about the interpretation of the settlement agreement, they will be referred to him. Naturally he will first try and resolve the difference of opinion by discussion, ie mediation, but in the end he will take a decision which is binding on the parties. The idea behind this clause is to avoid future satellite litigation. This all sounds very helpful and useful. It is also good for business. This after-sales service is not usually free of charge. With such a clause you are doing two things. 1 You are taking a preventative step to forestall further disputes or even satellite litigation. A most sensible idea. 2 Stipulating an automatic step for the parties to take avoids uncertainty about what to do next and provides you with more fee-paying work. Most settlement agreements do not include such a policing clause.

Why are they calling you? If you receive such telephone call, switch on your self-preservation sensors. Is there an expression of dissatisfaction or even a claim coming your way behind this innocent enquiry? Make a note of exactly what is said. Double-check your professional indemnity insurance policy. If you think it might be an expression of concern about your involvement or even an accusation of blame notify your insurers immediately. Do not delay; just tell them (see Q11). When are they calling you? When you receive the call is important. Is it within a couple of days of the agreement being made or sometime later? The sooner after the mediation and the signing of the settlement agreement it is the easier you will find it to remember the circumstances. What about my notes? You may have kept notes but you may not have done. If you are asked point-blank if you kept any notes the safe, but honest answer is: ‘I kept some but I cannot recall what. I’ll have to go and check. I can ring you back later. But please tell me what the point is.’ 356

Question 50 What notes you actually take and the separate question of what notes you retain are one that you have to think about carefully as a mediator. This is discussed in more detail in Q29. Notes that you might have retained will be of different types: •

Offers and counter offers leading up the settlement

•

Draft wordings of particular clauses

•

Outline heads of terms

•

Versions of the settlement agreement

•

Notes of discussions made in joint meetings

•

Notes of discussions made in private caucuses

Be aware: Confidentiality will attach to your notes of private caucuses and possibly to any draft wordings of particular clauses. So you have to be extremely careful not to disclose anything confidential to the other side. Also there could be undocumented discussions. Again switch on your antennae and be extra scrupulous in maintaining confidentiality of private discussions. If there is a disagreement between the parties about the interpretation of the settlement agreement you do not want to get drawn into the cross-fire as a witness. Always ask the party calling if they have told the other side that they are speaking to you. If they say that they have you will be able to send an email to the caller confirming the conversation, just the fact of it, and copy it to the other side without any worry. Whether you can refer to the contents of the conversation depends on whether it was a confidential one or referred to confidential discussions that you had at the mediation. If they say that they have not told the other side, consider whether it is appropriate that the other side know of the conversation. It is not easy to think of any legitimate reason not to tell them of the fact of the conversation having taken place even if you are not able to tell them what was discussed. If the caller demurs, feel free to tell them that you cannot speak to them. Remind them that you have to be even handed and that your mediation agreement provides that any post-mediation communication with you is confidential. Disputes often arise over: 1

The calculation of dates and deadlines. These are often disputes about whether ‘day’ means a calendar day, working day, clear day, etc. These are usually the results of some slightly slipshod drafting.

2

Loose phraseology such as ‘costs to date’. An agreement to pay the receiving party’s costs to date may have been based upon information provided at the mediation in the form of a costs schedule prepared by the receiving party’s solicitors. 357

Part 3  End of the mediation and after

In one egregious example an unrepresented party agreed to pay costs to date. The receiving party’s solicitor who was present at the mediation with counsel had prepared a detailed schedule. After the mediation there was a dispute about whether costs that had not been included in the schedule provided at the mediation but had allegedly been incurred fell within the definition of costs to be paid. The parties asked the mediator to give a ruling, which they agreed to be bound by. He agreed to do this without charge. He made his ruling in favour of the unrepresented paying party. The receiving party received it with silent good grace having appointed this mediator on two previous occasions. But they never made contact with him again. The barrister appeared in a different mediation several years later. There was an initial wariness which happily dissolved during the day and a settlement was achieved. 3 A more difficult area is where you are asked to confirm that something was said in the course of discussions leading up to the settlement. Inevitably in any negotiation people say things to each other and make certain assumptions implicitly. Sometimes of course they are made explicitly and even put in writing in the settlement agreement. Whether or not discussions before the document was drawn up can be an aid to interpreting the document is always a moot point. And there is no Hansard to help you. We all remember what we want to remember. People can have honestly held different recollections. Consult your conscience as to whether you say that you have no recollection or whether you say that you have one and are keeping it to yourself. Usually your recollection will support one party’s interpretation rather the others. Sometimes of course what you have to say is of no use to anybody. Just accept that if you do give your recollection you are likely to upset somebody and not receive future appointments from them. Whenever you have any post-mediation discussions with a party make clear whether or not they are on the same basis of confidentiality set out in the mediation agreement. Many mediation agreements, including the template at the Survival Kit in Q3 expressly provide that any post-mediation discussions or communications involving the mediator are still covered by the same confidentiality provisions. Be aware if you become involved in post mediation discussions of the dangers of forwarding communications from one side to the other as a post-box. See the case of Ferster v Ferster [2016] EWCA Civ 717. Here the court found that an email sent via a mediator after a failed mediation over share sales still amounted to blackmail even though it was routed through the mediator. Never suspend your critical faculties or switch off your self preservation antennae.

In a nutshell •

You cannot ignore post-mediation contact.

•

Make sure that it is on a confidential basis until either you or the party that you are in contact with agrees otherwise. 358

Question 50 •

Make sure that the other party knows that you have been contacted unless you are expressly asked not to for a good reason.

•

Do not charge for the time you spend – it’s part of your after-sales service.

SEE ALSO Q3, Q11, Q16, Q29, Q44, Q46, Q48

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Appendix 1 SCMA GUIDELINES FOR LAWYERS IN MEDIATIONS INTRODUCTORY NOTE The SCMA wishes to express its gratitude to the Law Council of Australia for permission to reproduce and adopt for this jurisdiction these guidelines which were developed to give assistance to lawyers representing clients in the mediation of civil and commercial disputes. It is not intended that the guidelines derogate in any way from the usual obligations imposed on lawyers by law or any ethical rules or standards of required professional conduct. It is expected that the guidelines will be reviewed from time to time. 1. ROLE A  lawyer’s role in mediation is to assist clients, provide practical and legal advice on the process and on issues raised and offers made, and to assist in drafting terms and conditions of settlement as agreed. A  lawyer’s role will vary greatly depending on the nature of the dispute and the mediation process. It may range from merely advising the client before the mediation, to representing the client during the mediation and undertaking all communications on behalf of the client. 2. ETHICAL ISSUES 2.1 Confidentiality As with all dealings with clients, anything that is said or done in a mediation is strictly confidential. In addition, subject to the requirements of the law and any relevant Rules of Court, a lawyer must maintain the confidentiality required by the parties and by any mediation agreement. COMMENT (a) A  lawyer must not disclose any information disclosed during the mediation unless all parties to the mediation agree, or if required to by law. (b) Without prior permission of the mediator and the other parties a lawyer must not reveal any information disclosed by the mediator during private sessions to the other parties or their legal representatives. (c) All information and documents disclosed during the mediation, including any settlement or draft offers/counteroffers, are confidential and privileged between parties to the mediation and their legal representatives. 361

SCMA guidelines for lawyers in mediations (d) A lawyer should consider rules about confidentiality (which may vary from jurisdiction to jurisdiction) before attending a pre-mediation conference so that they may be established by the parties and the mediator at the pre-mediation conference. 2.2 Good faith Lawyers and clients should act, at all times, in good faith to attempt to achieve settlement of the dispute. COMMENT (a) A lawyer should advise clients about what it means to act in good faith. A lawyer should not continue to represent clients who act in bad faith or give instructions which are inconsistent with good faith. (b) Likewise, if a lawyer suspects the other parties to the mediation are acting in bad faith this should be raised privately at first with the mediator. 3. WHEN TO MEDIATE Timing is an important factor in establishing a framework conducive to settlement. There is no conclusive rule as to whether, or when, a case is suitable for mediation. Various factors should be considered, including the nature of the dispute and the mindsets of the parties. COMMENT (a) Most cases are suitable for mediation at some point in time. Costs of litigation are a persuasive factor in favour of mediation. (b) Mediation may be undertaken at any time and should be considered: (i) before proceedings are commenced; (ii) after statements of case have closed, but before the costs of disclosure are incurred; (iii) before an action is set down for trial and trial costs are incurred; and (iv) after a trial and before judgment. 4. SELECTING THE MEDIATOR Choosing the right mediator will enhance clients’ settlement prospects in the mediation. COMMENT When selecting a mediator: (a) first look to a mediator’s skill and experience as a mediator, and then to any additional qualifications that may be helpful, such as expertise in the subject matter of the dispute or law; (b) consider the role of the mediator and whether a particular style of mediation may be better suited to the dispute. 362

SCMA guidelines for lawyers in mediations 5. PREPARING FOR THE MEDIATION Preparation for a mediation is as important as preparing for trial. A lawyer should look beyond the legal issues and consider the dispute in a broader, practical and commercial context. COMMENT (a) Litigation defines the issues by statements of case. Before a mediation, a lawyer should, as well as assessing the legal merits of the case, consider the dispute in commercial terms and, in the light of the client’s business, personal and commercial needs, generate possible practical options for resolution. 5.1 Preparing your client A lawyer’s primary task is to help prepare clients for a mediation by: (i) undertaking a risk analysis and linking risks to the client’s interests; (ii) explaining the nature of mediation; (iii) identifying interests; and (iv) developing strategies to achieve final outcomes. COMMENT (a) Assist clients to complete a risk analysis. A  draft risk analysis may be discussed with clients and then reviewed with the legal team. A  risk analysis will assist in determining a range of options for settlement. (b) Discuss and explain the mediation process and role of the mediator to the clients. In  particular, discuss issues such as confidentiality and the nature of ‘without prejudice’ negotiations. (c) Help clients identify positions and interests and the best ways to achieve outcomes. It is useful to consider the interests of other parties and ways to overcome any tactics or objections likely to arise. (d) Decide who will do the talking in the mediation. Often, with appropriate preparation, clients will be in the best position to convey facts and other non-legal issues. If so, a lawyer may need to assist clients with preparation for their involvement. 5.2 Conference with the mediator Pre-mediation conferences convened by the mediator are a good opportunity to establish a relationship with the mediator and arrange any practical matters relevant to convening the mediation. COMMENT (a) The first mediation conference is usually between the lawyers and the mediator and covers details of the mediation such as the date, time, place, fees, persons attending, the mediation agreement and documents to be exchanged or brought to the mediation. Rules about confidentiality 363

SCMA guidelines for lawyers in mediations must be established and documented. One option is to agree that confidentiality commences at the time of the preliminary conference and relates to the entirety of the mediation process from that time, including correspondence and post-mediation reporting requirements. (b) A second preliminary conference can take place immediately before the mediation at which the mediator can meet individually with the parties and their lawyers. This conference enables the mediator to establish a relationship with clients, explain the process, format and structure of the mediation, and answer any questions before the mediation commences. 6. AT THE MEDIATION Mediation is not an adversarial process to determine who is right and who is wrong. Mediation should be approached as a problem-solving exercise. A lawyer’s role is to help clients to best present their case and assist clients and the mediator by giving practical and legal advice and support. 6.1 Skills The skills required for a successful mediation are different to those desirable in advocacy. It is not the other lawyer or mediator that needs to be convinced; it is the client on the other side of the table. A lawyer who adopts a persuasive rather than adversarial or aggressive approach, and acknowledges the concerns of the other side, is more likely to contribute to a better result. COMMENT (a) Arguments should be presented in appropriate terms and language that is appealing to the other party. Legal arguments or language are not always necessary. (b) Listening carefully, even to material which may be irrelevant to litigation, is conducive to setting an atmosphere for settlement. It is helpful to summarise arguments made against clients to show that the other party’s position has been heard and understood. 6.2 Offers and settlement A  primary aspect of a lawyer’s role is to help formulate offers, assess the practicality/reasonableness of offers made by other parties and assist in drafting settlement terms and conditions. COMMENT (a) Never mislead and be careful of puffing. (b) Be cautious about making a ‘final offer’ or delivering ultimatums which can limit future options and damage credibility for future negotiations. (c) If possible, bring a draft settlement agreement to the mediation, or at least have a draft available on-line. (d) If it appears that the mediation will not produce a full settlement, try to obtain a written agreement on as many issues as possible. This may advance future negotiations or shorten a trial and leaves parties feeling 364

SCMA guidelines for lawyers in mediations like they have at least achieved something useful. It is also useful for future purposes to draft a list of issues on which agreement has not been reached. 7. POST-MEDIATION Generally, lawyers should report on mediations in writing to clients. Lawyers may also need to address with clients (before the mediation) any reporting obligations the mediator may have to courts, government departments or other organisations. COMMENT (a) A lawyer should be aware of any post-mediation reporting obligations (which may vary from jurisdiction to jurisdiction) before attending a premediation conference. (b) A lawyer should address, with the mediator and with the other parties, any objections clients may have to the scope of what is reported by the mediator. These guidelines are based on the work of the members of the Alternative Dispute Resolution Committee of the Law Council of Australia: Mary Walker; Alan Limbury; Michael Hollingdale; Michael Klug; Nadja Alexander; Henry Jolson QC; Laurence Boulle; Phillip Theobald; Joanne Staugas; Ian Hanger AM QC; Geoff Gronow.

365

Appendix 2 MEDIATION RECORD FORM Please sign and return this Form to the Mediator once the Mediation has concluded.

Case name: ............................................................................................................ Date of Mediation................................................................................. Time Mediation Commenced ............................................................... Timed Mediation Concluded................................................................ Did the Mediation Settle?

Yes/No

If the Mediation did not settle, will a further mediation session be required? Yes/No Does the Mediator anticipate charging for any post mediation support? Yes/No Signing this document confirms agreement to the above details:

Claimant Signed.................................................................................................. Printed..................................................................................................

Claimant’s Representative Signed ................................................................................................. Printed .................................................................................................

Defendant Signed.................................................................................................. Printed.................................................................................................. 367

Mediation record form

Defendant’s Representative Signed.................................................................................................. Printed..................................................................................................

Mediator Signed.................................................................................................. Printed..................................................................................................

368

Appendix 3 Mediation Terms and Conditions These terms and conditions must be read in conjunction with the Mediation Agreement sent to the parties and are incorporated into the Agreement. If there is any conflict between these terms and conditions and the Mediation Agreement the latter shall prevail.

Liability for the mediation fees 1

Unless the parties agree otherwise, they will pay in equal shares the mediation fee and any other expenses.

2

Responsibility for the fee and expenses rests with the solicitors where instructed, or with the individual party if unrepresented.

3 The amount in dispute will be calculated as the value of the claim and any counterclaim including interest and costs. The fee will be set accordingly. If during a mediation it becomes apparent that the amount in dispute is higher than the amount notified, I reserve the right to invoice the parties for any additional mediation fees payable.

Cancellation policy The following charges are payable. If the mediation is: 1

Postponed but re-booked within 4 weeks only irrecoverable expenses such as venue cancellation fees or travel costs already incurred will be charged.

2 Cancelled more than 7 business days before it is due to take place, there will be no cancellation fee, except for any irrecoverable expenses (eg venue cancellation fees) and any preparation time already spent by me. 3 Cancelled less than 7 business days before it is due to take place, any irrecoverable expenses (eg venue cancellation fees) and 100% of the Deposit. 4

Preparation time is charged at the hourly rate for additional time shown in the mediation agreement.

Invoicing 1

In most mediation instructions, two invoices will be issued. •

Deposit invoice – for the costs of the scheduled period or fixed fee and any venue costs. 369

Mediation Terms and Conditions •

Balance invoice – for any additional mediation time or venue fees if not previously invoiced.

2

The Deposit invoice is payable no later than 7 working days in advance of the mediation or in full upon receipt if issued within 7 days prior to mediation, as a precondition to the mediation taking place.

3

Where a Deposit invoice is not settled in full prior to the mediation I may allow the mediation to proceed subject to the instructing solicitor undertaking in writing to settle the full amount of the invoice, if still unpaid by the client, within 2 days of the date of the mediation.

4

All other invoices (including the Balance invoice) are payable in full within 7 days of the date of issue, unless agreement is reached to the contrary.

5

All fees are exclusive of VAT.

370

Index Advance payment of fees see Fees Advertising services/experience in misleading/ false way, 84 Advice see also Lawyer’s advice negligent, 84–85 tackling, 189–195 previous, 125–126 response to request for, 227–232 Age, 195–196 Anger see Clearing the air; Frustration and anger Appointment European Code of Conduct, 90 IMI Code of Professional Conduct, 91 Appropriate dress, 79–80 Arguing legal cases, 213–219 allowing, 216 one party to JOS, 216 options, 217 problems or people mediated, 218–219 replaying, 217–218 Authority to settle double checking, 51 lack of, 51 pre-mediation telephone calls, 49–52 signing-off settlement agreement, 327–330 procuring, 329–330 unlimited corporates, 50 insurers, 49–50 Barristers direct discussion requests, 277–281 client to client meetings, 281 debriefs, 280 reasons for, 278–279 response to, 279 dominance behaviour, 159–161 Behaviour see Dominance behaviour; Informal/friendly behaviour Bias accusation, 153–157 knowledge of parties/their lawyers, disclosure, 90–92

Breach of confidentiality insurance, 83–84 Breakout sessions notes, 202–203 Brick Court Chambers’ mediation agreement, 91, 254–255, 322, 327–328, 331 CEDR Code of Conduct for Third Party Neutrals, 70, 92, 254, 284, 322–323 CEDR Model Mediation Procedure, 147, 254, 305, 328, 331 Charges see also Fees multi-party mediation, 234 Checklists settlement agreement, 337–340 things to take to mediation, 41–42 Clearing the air, 241–247 approach to venting, 245 emotions, 242–243 anger, 243–244 fear, 244 surprise, 244–245 process control, exercise, 245–246 Clients dominance behaviour, 162–163 Closing the deal see Settlement Co-defendants see Multi-party mediation Co-owners and chargees third-party approval, 50 Communications confidential, 3–9 written, 6 Conciliator mediator, distinction, 232 Confidentiality, 115–121 breach of, 119, 121 insurance, 83–84 carve out, 20 contractual, 115–116 correspondence, 3–9 covert recording see Recording exceptions, 120 external, 119–120 internal, 118–119

371

Index Confidentiality – contd multi-party mediation, 238 without prejudice, 116–117 Conflict of interest failure to disclose, 83 pre-mediation checks and knowledge of parties/their lawyers, 89–95 Consent order, 341 Contracts, 342 Contractual confidentiality, 115–116 Control of process, 135–139 exercise, 245–246 Corporates unlimited authority, 50 Covert recording see Recording Cross-examination Joint Opening Session (JOS), 271– 276 Cultural differences, 197 Deafness, 196 Decision trees, 168–169, 175–176 Deeds, 342 Direct contact with clients, 8–9 barristers, requests for see Barristers Disclosure see also Information pre-mediation checks and knowledge of parties/their lawyers, 89–95 Documents reading of papers, 11–15 charge and time spent, 13 fields of independent research, 13–15 Dominance behaviour, 159–165 barristers, 159–161 clients, 162–163 experts, 163–164 solicitors, 161–162 third parties, 164 Dress, appropriate, 79–80 Emotions see Clearing the air; Frustration and anger European Code of Conduct for Mediators, 70, 90, 255, 284 Evaluative mediation, 221–226, 227 categories feasibility of settlement proposal, 223 mediation atmosphere, 224–225 merits of case, 222–223 head banging questions, 225

Evidence, 126 Experience, 69–73 advertising in misleading/false way, 84 ‘experienced’, 70–71 profile, 69–70 relevant, types, 69 Expert witnesses, 66–67 Experts attending mediations, 205–211 advantages, 208–209 CPR Pt 35 and relevance, 206–207 disadvantages, 205 length of stay, 208 stopping, 209–211 stroppy experts, 207 types of expert, 208 dominance behaviour, 163–164 report changed, weakening of case, 123–128 signing, 97–98 External confidentiality, 119–120 Facilitative mediator see Mediators Fees, 20 advance payment, 289–293 equity between parties, 291–292 extension of credit, consequences, 290–291 reasons for not requiring/ requiring, 289–290 receipt in cleared funds, consequences of requesting, 290 Fraud, committing, 84 ‘Fronts’, 198–199 Frustration and anger, 198 Good faith, 123–124 Head banging see Evaluative mediation Hunger, 198 Illegal activity, 128 IMI Code of Professional Conduct, 83, 91, 253, 283–284, 300–301 Impartiality, 78–79, 89 Brick Court Chambers’ mediation agreement, 91 European Code of Conduct, 90 IMI Code of Professional Conduct, 91 372

Index Independence European Code of Conduct, 90 CEDR Code of Conduct for Third Party Neutrals, 92 Informal/friendly behaviour, 75–80 addressing people, 75–77 behaviour, 77–78 dressing up or down, 79–80 impartiality, 78–79 multi-partiality, 78 omni-partiality, 78 Information acquisition and dislclosure, 124–127 Instructions whether/how to act on them, 249–255 messages falling into uncomfortable category, 250–253 Insurance, 81–85 advertising services/experience in misleading/false way, 84 breach of confidentiality, 83–84 committing fraud, 84 failure to disclose conflict of interest, 83 insurers, unlimited authority, 49–50 likelihood of being sued, 82–83 negligent advice, 84–85 Internal confidentiality, 118–119 Joint Opening Session (JOS), 103–108 aggression, 109–113 asking questions or summarising/ reframing as you go along, 111–112 coaching, 111 deflecting, 112 caucuses, perceived merits, 104 cross-examination, 271–276 difference of opinion, 103–104 legal arguments see Arguing legal cases merits, 105 need for, 110 options, 107–109 provocation see Provocation purpose, 106–107 reasons for not having, 106, 108 types, 106 Lack of authority, 51 Language difficulties, 196–197

Lawyer’s advice acceptance of offer, 141–146 Legal advice see Advice; Lawyer’s advice Legal costs, 125 Legal representation parties with/without, 7–8 Limitations on liabilities, 21 MEDALOA (Mediation After Last Offer Arbitration) agreement, 258 Mediation agreement, 17 amendments, 17–36 common requests, 19–21 analysis of standard form clause by clause, 22–36 direct appointments, 18–19 inclusions, 18–19 panel appointments, 17–18 refusal to sign, 97–101 barristers, 100–101 experts, 99–100 late arrivals, 101 officeholders, 100 regulators, 100 requirement to sign, 98–97 Mediation process advice on, 231 control, 135–139 exercise, 245–246 different approaches where party has law and facts wrong, 181– 187 lack of understanding and implications, 195–200 age, 195–196 cultural distance, 197 deafness, 196 ‘fronts’, 198–199 frustration and anger, 198 hunger, 198 language difficulties, 196–197 medication, 196 numbers count, 199 overload, 197–198 unfamiliarity, 197 wrong or negligent advice, 189–195 Mediators advice, opinion and suggestions, 227–232 conciliator and mediator, distinction, 232 facilitative, 227 373

Index Mediators – contd facilitative – contd head banging see Evaluative mediation response on request for advice or opinions, 228–230 role, 37–38 drafting of settlement agreement, 331–340 tackling wrong or negligent advice, 189–195 things to take to mediation, 37–47 checklists, 41–42 hardware, 38–39 necessities, 40–41 phone numbers and emails, 39–40 software, 39 stationery, 40 Medication, 196 Multi-partiality, 78 Multi-party mediation, 233–239 alliance-shifting, 237 charges, 234 co-defendents and relevant issues, 295–301 co-mediation, 236 confidentiality, 238 global/partial deal, 237 group offers, 237 keeping everyone informed, 237 logistics, 233 one voice or many, 235–236 preparation, 234–235 process design, 235 switching off, 236–237 Negligent advice, 84–85 tackling, 189–195 Neutrality, 78–79, 89 CEDR Code of Conduct for Third Party Neutrals, 92 Notes, 201–204 breakout sessions, 202–203 destroying, 204 Offers, 129–146 acceptance, lawyer’s advice, 141– 146 first to make offer, 131–132 looking forward, 130–131 opinion, 133–134 pre-mediation, 133 sealed, 132–133

Offers – contd taking to other side, 135–139 time for making, 129–130 tea time offers, 131 Omni-partiality, 78 One-sided draft settlement agreement, 283–287 Online dispute resolution (ODR), 53–56 Opinion offers, 133–134 response to request for, 227–232 Post-mediation contact with parties interpretation of settlement agreement, 355–359 Pre-mediation conflict checks knowledge of parties/their lawyers, 89–95 Pre-mediation contact with parties, 4 telephone calls and authority to settle, 49–52 Pre-mediation meetings, 7 Pre-mediation offers, 133 Prejudice knowledge of, disclosure, 90–92 Previous advice, 125–126 Priming, 272 Provocation, 263–264, 268–269 reaction, 264–265, 268–269 keeping calm and carrying on or packing up, 267–268 walkouts, 265 slow burn, 265 sudden explosion, 265–267 cold fury, 265 hot fury, 265 tears, 265 tactical, 267 Reaction to provocation see Provocation Reading of papers see Documents Recording covert, 147–152 English law, 148 impact, 148–152 Risk-ayalysis techniques, 173–179 Risk-reward calculation refusal to discuss, 167–172 SCMA (Standing Conference of Mediation Advocates) Guidelines, 272–276, 361–365

374

Index Services advertising in misleading/false way, 84 Settlement, 125 closing the deal, 305–311 auto-settler, 308 giving a done deal, 310 going to the balcony, 307 heads of terms, 309–310 last, best and final offer, 308–309 mediator’s recommendation/ proposal/figure, 309 parking, 307–308 preparing the ground, 306–307 review meeting, 307 shaking of hands and drafting of settlement agreement see Settlement agreement splitting the difference, 308 success, schools of thought, 305–306 tossing a coin, 309 using Mediation Record Form, 310–311 concluding and producing draft agreement see Settlement agreement forecast of figure, request for, 231– 232 Settlement agreement, 341 checklist, 337–340 consent order, 341 contracts, 342 danger zone, 311–314 deeds, 342 draft, 311–320 heads of agreement solutions or problems, 315–317 heads of terms and avoiding pitfalls, 317–320 one-sided, 283–287 responsibility for, 314–315 specific request to mediator, 331–340 signing-off authority, 327–330 procuring, 329–330 interpretation request following successful mediation, 355–359 making sure contracts stick, 286 unrepresented parties, having known lawyer’s contact details to hand, 286 regulations, 283–284

Settlement agreement – contd template with commentary, 342–354 Tomlin Order, 341 unenforceable, 285 lack of formality, 285 unconscionability, 286 void/voidable, 285 Solicitors dominance behaviour, 161–162 Statements of independence, 20–21 Suggestions response to request for, 230 Tactical appearances see Tick-box apperances Tactical walkout, 267 Tax issues HMRC-specific, 60–61 structure of settlement/conduct of parties, 57–60 Telephone mediations see Online dispute resolution (ODR) Termination, 321–325 mediation going nowhere, 321– 322 reference to in agreement, 321 unilateral withdrawal, circumstances, 322–325 Third parties dominance behaviour, 164 Tick-box appearances, 257–262 MEDALOA agreement, 258 reasons, 258–260 Tomlin Order, 341 Unenforceable settlement agreement see Settlement agreement Unfamiliarity with process, 197 Unreasonable conduct effect of, 124 Video systems see Online dispute resolution (ODR) Walkouts, 265 slow burn, 265 sudden explosion, 265–267 cold fury, 265 hot fury, 265 tears, 265 tactical, 267 Without prejudice confidentiality, 116–117

375

Index Witness statement, 126 Witnesses, 63–68 expert witnesses, 66–67 party autonomy, 67–68

Witnesses– contd powers, 67 witnesses of fact, 64–66 Wrong advice see Negligent advice

376