One of the fundamental misconceptions relating to the various alternative dispute resolution (ADR) options available is that negotiation and mediation are the same.
However, they are in fact two very different ways of resolving a dispute, and it is key to know their differences when deciding what is the best route to facilitate discussions and reach an outcome which is acceptable to both parties.
Negotiation
Negotiation provides a forum where the parties rely on each other, rather than a third party, to reach a resolution.
It does not require a special skill, or particular expertise, although experience and an open mind will generally assist. Indeed, most parties will find themselves negotiating at various points during the course of a project, even if they are not specifically aware of it at the time. Negotiation can be the best way of resolving a dispute, as sometimes it is a matter of more open lines of communication which helps to secure an agreement.
However, in order to have a reasonable chance of success, negotiation requires the parties to engage with one another openly, and to organise the meeting in a way that allows their discussions to flow, as there is no neutral party to aid the meeting, and facilitate those interactions. On the positive side, the lack of a third person offers flexibility to the parties to manage the meeting on their terms and in line with their timescales. The process is often quicker as a result, as it requires only the parties and the meeting itself to be organised, avoiding the processes and procedures that are required to arrange a mediation, or other similar forms of alternative dispute resolution.
Another benefit of negotiation is that it is often a very cost-effective method of resolving disputes, as it disposes of the need for third party fees and for the resulting meeting room facilities, relying on just the two parties talking at a venue to suit their requirements. However, for all its inherent advantages, it is important to remember that, with negotiation, personal feelings and emotional responses can often get in the way of making progress on the matters in dispute. The absence of an independent third party means that parties might find themselves arguing endlessly about one particular issue, without making progress, and without seeing the bigger picture and understanding what might be required to reach a resolution.
Another major problem with negotiation arises when there is an imbalance of power between the parties, with a smaller firm pitted against a larger or more powerful organisation, or where the revenue of one party is heavily dependent on continued workflow from the other party. In these kinds of circumstances, one party might find itself agreeing to unfavourable terms due to pressure or a lack of time and/or resources to take the discussions further.
In summary, the lack of a neutral person facilitating discussions between the parties can be seen as a disadvantage of negotiation. However, that same reason offers the parties the freedom to construct the discussions on their own terms. Furthermore, the parties are in control of these discussions, which can lead to an agreement and this means they make the choice to bind themselves at the end of the process, if an agreement has been reached.
Mediation
Mediation is facilitated through the guidance of an official mediator, who is trained and experienced in the art of helping the parties to reach an agreement (or compromise) and settle the dispute at hand.
Mediation can be a good next step if negotiations are unsuccessful, as a mediator can help guide previously stalled conversations in a positive way and limit the negative effects of personal emotions, with regards to the dispute. A mediator can prevent time being wasted and an unproductive meeting occurring, by helping both parties to establish their common ground and the workable solutions they can adopt.
Mediation is a good form of alternative dispute resolution if flexibility is required, as the process can be adapted to suit the needs of the parties as well as the matter(s) in dispute. It permits the parties to meet separately, with the mediator going back and forth between the two parties in order to, amongst other things, understand the wants and needs of each party together with the boundaries in which settlement can be made; or to meet in the same room with the mediator there to facilitate discussion.
Before this process can start, the mediator will likely require a brief mediation statement from both parties, as a starting point to the discussions by understanding what each party would like to achieve from mediation. In some cases, there is assistance from lawyers, consultants and possibly experts. More often than not, a mediation involves a combination of the four processes listed above to reach an effective and agreeable solution. One potential issue with mediation which the parties must consider, is that, whilst negotiation gives the parties the freedom to construct the discussion on their own terms, this is not the same for mediation. In this regard, the parties must agree to the core element of mediation, which gives the mediator the freedom to help them arrive at an agreed conclusion. One element that aligns with negotiation is that it is the parties, not the mediator, who have the power to make a final binding decision. Mediation further assists this element, by ensuring that both parties have in attendance someone with the power, to make a final binding decision. It is often the case therefore, that the parties elect to reach a contractual agreement to bind themselves to the outcome of the mediation, so that the efforts of the mediator and the parties is not lost through a subsequent change of heart. Agreement and the conclusion of the settlement agreement is often achieved in one day; although this is typical in the UK, it can take much longer in other countries.
A further consideration in relation to mediation is the preparation which is required for a successful mediation to take place. Both parties need to have given due consideration to the substantive elements of their respective positions, as well as to have reached agreement internally as to what can, and cannot, be agreed during a mediation. Getting the parties to reach agreement as they edge closer to their respective “red lines” requires skill and experience, as well as an understanding by the parties as to the increasingly limited (and more expensive) options available to them should agreement not be achieved.
To summarise, in any form of alternative dispute resolution, which involves a neutral party, that neutral party helps to mitigate situations whereby two parties are trying to resolve a dispute, unsuccessfully, between themselves. However, that neutral third party comes at a financial cost, and with a timetable which may not suit the parties.
It also moves control of the dispute away from the parties themselves, and towards an individual with no vested interest in the outcome, which some parties may find difficult to accept.
When considering whether negotiation or mediation (or indeed another form of alternative dispute resolution) is most appropriate, it is important to consider a number of different factors, including the time and cost involved, the status of any previous discussions which have taken place, commercial decisions as to matters such as business relationships and future workload, and the realistic opportunities for an agreement to be reached.
There is no “one size fits all” approach, and the parties must think carefully about how to achieve the most acceptable outcome in the circumstances.
Author: Laura Geary, Consultant, Driver Trett London.
This article was written for issue 20 of the Driver Trett Digest, to browse the issue, click here.
For information on the dispute resolution services that Driver Trett offer, please visit:
www.driver-group.com/europe/services-dispute-resolution