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mediation

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When is early mediation the right move?

As a mediator, there are sound business reasons why I should be encouraging everyone to engage in mediation as soon as possible in every single dispute. It’s tempting to claim that early mediation always works, but there are cases where an early mediation can be a waste of time and money, and it can even make it harder for a subsequent mediation to succeed.
Here’s a few questions to consider when deciding whether to arrange an early mediation.

1. Does your client have a clear understand of the strengths and weaknesses of their own case?
Generally, a client walks into their lawyer’s office for the first time with a pretty clear opinion of their own case. A claim will often seem compelling when they have not heard what the defence will be, or stopped to think about how they will prove it.

A client will sometimes react with annoyance when advised that the Court will not immediately be able to understand that the claim is clearly correct, or that a Court may actually believe the other party’s version of a particular conversation. A client’s usual response to such advice is to state unequivocally that the other party would have to lie in order to dispute the client’s version of events. Until a client understands that it is possible for two people to genuinely have a different recollection of the same conversation, and that even if the other person is lying, the Court cannot always tell, they will probably have an unrealistic view of their chances of success.

2. Do you have enough information to provide advice to your client?
Some cases cannot realistically go to mediation until the parties have gone through the discovery process. A shareholder who believes that the company is not correctly reporting its profits will not be able to put forward a clear claim unless they have a chance to take a detailed look at the books. A person seeking a financial settlement with their partner following a separation will not be able to tell if an offer is good or not unless they have seen proof of their partner’s income and copies of their bank statements and superannuation statements.

Clients often need a little bit of persuading to accept a settlement, even when you clearly know that it is in their best interests. It is very hard to persuade a client to accept a settlement if neither of you know whether it is in their best interests. For obvious reasons, I don’t recommend that you even try.

In other cases, it will not be possible to have a sensible conversation about settlement without an expert report. Parties often try to agree on the cost to buy out the other person’s share of a property or a business when they have wildly differing ideas of what that asset is worth. They may think they are saving money by avoiding the cost of engaging an expert, but in most cases they are instead incurring the cost of a mediation that is doomed to fail.

If your client is cost sensitive, there is often the possibility of jointly engaging an expert and agreeing to accept that expert’s opinion as conclusive. This is often a very useful step in the right direction, so long as the client understands the obvious risk that the expert may not share the client’s optimistic views on what a given asset is worth.

3. Does your client understand the alternatives to settling?
As we all know, lawyers are required to give advice at the outset of a dispute about what it might cost to take the case to Court. They also have to advise on the costs that might be recovered if they are successful, and how much their client might have to pay to the other side if the case does not go as planned.

Unfortunately, another thing that we all know is that some of our clients do not even read the Disclosure Statements that we send them, and those who do read them do not always understand them.

Experience suggests that early on, a client will probably feel confident in their case and they will probably focus more on the likely benefits of pursuing the case. Many clients will not want their lawyer to spend too much time talking about the costs and the risks involved. They may feel that their lawyer secretly lacks confidence in their case if the lawyer spends too long on the negatives.

The result of all this is that both sides come to an early mediation with a firm belief that it is not risky for them to go to Court because they have a strong case and they will recover most of their legal costs at the end. They may reluctantly move a small distance from their starting positions, but that will still usually leave them several miles apart.

Even though it may upset your client, they have to be told, sometimes quite bluntly, that there are no guarantees in litigation, that every case involves some degree of risk, that the risk is probably higher than they think, and that no costs order will ever cover all of their costs (unless you are doing the case at an amazingly generous hourly rate)

4. Is your client ready to settle?
Some cases are only about money, but most cases have some degree of emotion to them. We expect emotion in a family law case, but often a fight over a Will, or a fight between old friends who went into business together, will also be driven by emotion.

A person who has not accepted that their relationship is over may not be willing to settle no matter how good an offer looks on paper. In a dispute between business partners, at least one of them may see the business they started as their dream, and they may not be ready to accept that the business needs to be sold. Even in a case where the parties barely know each other, your client may believe that there is a point of principal at stake, or they may simply be too proud to admit to themselves that they need to settle.

We know that the vast majority of cases are settled at mediation, but sometimes a client needs time to get to the point where they are ready to consider this. Unfortunately, sometime a client has to find out for themselves just how unpleasant the litigation process is before they accept that compromise is a better option than the often hollow satisfaction of having their day in Court.

If you bring any case to me I will always do my absolute best to help your client settle it. Sometimes having an independent third party asking some pointed questions about the case is the quickest way for a client to get a clear picture of their position. However, we can achieve much better results if everyone has the information they need, you have been able to give them detailed advice, and they have accepted that settlement is their best option.

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Mediation Needs Secrecy Like a Fish Needs a Bicycle

Like many lawyers who started our careers in the ’90s, I was taught to value secrecy.  I was always told to give away as little information as possible in any dispute.

The reasoning was simple.  All cases have weaknesses, but we should make it as difficult as possible for our opponents to find out about them.  If the case could be settled without anyone ever finding out about those flaws, results would be better.  I was taught that we were not allowed to break the rules of discovery, but we should always find a way around those rules if we could.

To be fair, it’s not only lawyers who think this way.  Many clients have asked me how to go about withholding key information until the start of a trial so we could ambush our opponents with it.  I even had one client who instructed me to proceed on the basis that the document he was holding in his hands at that exact moment did not exist. This was, of course, the end of our lawyer-client relationship.  Unfortunately, that client was not the only person who has ever asked me to ignore or conceal a document.  He, was, however, the only person who has ever tried to remove a document from my possession by taking away a paper copy of an email when the original was still in my inbox.

There are many reasons why a secretive approach to disputes is not a good idea, including the additional costs that get wasted while lawyers fight over whether a document has to be disclosed, to the specific penalties for such behaviour set out in the Civil Procedure Act 2010.  In this article, I want to focus on how such tactics are harmful to the mediation process.

It is usually pretty obvious when a party is trying to avoid disclosing documents, or where their approach is to give as little information as possible.  If a party feels that their opponent is trying to mislead them, this creates anxiety and other negative emotions.

Psychologists believe that those negative emotions can cause a person to engage in adversarial behaviour and that when one party takes an adversarial approach, it is more likely that that the other party will also become more adversarial.

The end result can be a feedback loop where each party’s approach becomes more adversarial until one of them walks out.

I know it goes against what a lot of lawyers have been taught, and it may go against our clients’ expectations, but research, and experience, suggest that a free and frank exchange of information and documents is actually the best way to prepare for a mediation.

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A mediator’s guide to the AFL trade period

It’s a great time of year for football.  The AFLX, whatever that was, is over.  The AFLW is in full swing, and we are nearly as far as it is possible to get from the horror that is the yearly trade period.

Even for those of us who really like football, the AFL trade period is terrible. It consists of 11 days of waiting for something to happen followed by about four hours where you might see a few trades completed, and then it’s over.

If you follow the trade period each year, I’m sure you always ask yourself the same question as I ask myself, which is “How can we use the lessons we learn from this to improve the way we do mediations?”

Here’s three things I think we can learn from past trade periods that might be useful next time you need to negotiate a settlement. I apologise in advance for using a whole bunch of examples involving the Collingwood football club, but those are the only trades I really care about.

 

It’s possible to find a win-win solution

On a good day (usually around 1pm on the last day of the trade period) it’s possible to spot a good outcome.  Perhaps the best one in recent history was the Heath Shaw/Taylor Adams trade in 2013.

Collingwood had a rare talent in Heath Shaw (we will never forget that smother in the 2010 Grand Final replay) but it seemed pretty clear that he was no longer happy at the club and he needed a fresh start. Meanwhile, Collingwood seems to have taken the view that  that the premiership window had closed much sooner than they expected so it was time to recruit some younger players.

Taylor Adams for Heath Shaw was a great deal for both clubs.  GWS got a talented, experienced player who could provide leadership for their developing group.  Sure, it is sometimes painful to watch Heath Shaw in All-Australian form and possibly playing the best football of his life for the Giants, but we all know he wouldn’t be playing like that if he was still at Collingwood.

Meanwhile, Collingwood picked up a solid midfielder and future leader who will, one day, probably play in a Grand Final.

Comparing apples and oranges is never a good idea, and it’s almost equally hard to compare Taylors and Heaths.  However, you will get much better outcomes in mediations if you worry less about a direct comparison between the value of what you get and what you give away, and more on how the agreement directly benefits you.

 

Don’t judge the outcome too soon

In 2014, Dayne Beams needed to get back to Brisbane for family reasons.  There was no point in trying to force him to play out his contract, knowing he wanted to be elsewhere, so really, Collingwood had an awful bargaining position and just had to make the best of it.  In that situation, picking up draft picks 5 and 25 wasn’t a bad outcome, but they also picked up young midfielder Jack Crisp.

At the time, reaction to this trade was not particularly kind to Crisp, with the term “steak knives” getting thrown around a fair bit.  However, at the end of his first season at Collingwood, Crisp finished third in the Club’s best and fairest, with more votes than anyone expect Dane Swan and Scott Pendlebury.

Meanwhile, Collingwood traded pick 25 for Levi Greenwood and used pick 5 to recruit Jordan De Goey.  At the time of writing, Levi Greenwood is battling injury and Jordan De Goey has managed to get himself suspended again, this time indefinitely.

In hindsight, picking up Jack Crisp in that trade was a great outcome.

It’s not always so clear cut.  Injuries aside, Levi Greenwood has clearly been an asset to Collingwood.  Meanwhile, North Melbourne used the draft pick they received for Greenwood to recruit Daniel Nielson.  I only know this because I looked it up while I was writing this article.  It turns out Daniel Neilson has played seven games for North Melbourne since making his debut in 2017.  Is he better than Greenwood?  It’s far too early to say.

It’s important to accept that in any mediation, there will be some degree of uncertainty.  If you will only accept a deal when you can unequivocally say that it is better than the alternatives, the deal will not get done.  However, if you use your best judgment at the time, there’s a pretty good chance that the eventual outcome will turn out to be better than the alternatives, even if it’s not for the exact reason as you initially thought.

 

Focus on key goals, not trivial side issues

The main reason why I hate trade week is that it can take forever for really obvious deals to get done. I can’t really say why this happens, but I suspect that it’s often because both parties are trying to get a few extra concessions so they can say that they “won” the trade.  Often, those concessions are actually worthless.

Adam Treloar’s trade to Collingwood was described in The Age as the most prolonged and acrimonious of the 2015 trade period.  In the end, Collingwood got Treloar and pick 28 in exchange for pick 7, a first round pick for the following year, and pick 65.  What did the Giants do with pick 65?  Nothing. As far as I can tell, they literally did not use it.

There are many more examples of absurdly high draft picks being traded to get a deal done.  I didn’t even mention that the Dayne Beams trade also involved Collingwood giving Brisbane Pick 67, because it really didn’t matter. For the record, Brisbane used it to recruit Josh Watts, who never played a senior game for them.

I don’t have any data on how many trades have fallen over because people were arguing about late round draft picks.  It does seem like a lot of big trades get held up until the last possible minute, which probably means other deals can’t get done before the deadline.  The whole process could be improved if less time was spent on trading draft picks that will probably never make any difference to the club that receives them.

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I strongly suspect that the 2018 trade period will play out exactly like every other trade period before it, and this article would make no difference to this even if every club in the AFL reads it.   However, I hope that if you go into your next mediation knowing what you want and what it’s worth to you, keeping an open mind about the potential benefits of a deal, and determined to focus on what really matters, your mediation experience will be better, and quicker, than an AFL trade period.