Resolve Your Disputes Through Mediation

We’re now ready to look at the second key building block for ADR, which is called Mediation. And I’d like to start with a couple of very short clips that will give you a taste of what mediation is like. And then we’ll look at a longer clip that will allow us to analyze a business type mediation. So here is the first short clip.

I want you to cut down your horrible trees. » [SOUND] » I can’t suntan anymore. » [SOUND] » I just can’t communicate with him. » Allow me, I speak argue. [SOUND]

[SOUND] » Excuse me? » And here is the second short clip illustrating another mediation situation.

[SOUND] » Aah! » Aah! [SOUND] » Hi. I’m your mediator.

I’m really glad we could be adults about this. » Now we’re going to turn in a minute to a longer mediation, again involving a contract dispute. And as you watch this mediation, I’d like you to consider these questions. First of all, how does mediation differ from negotiation? Second, what type of mediation is involved in this film clip? Is it evaluative, facilitative, or transformative? And finally, how would you rate the mediator, in a scale of one to ten? Did she do a good job or not, and why? Before we start the clip, just a few words of background on the types of mediation.

Traditionally, mediation was considered a problem solving process, and there were two fundamental types of Mediation, Facilitative, and Evaluative. With facilitative, the goal of the mediator was to facilitate conversation, discussion and negotiation between the two sides to reach a settlement. With evaluative mediation, the mediator would do the same thing. Except also, would be asked to give an evaluation of the meditation to provide certain expertise. What has happened in more recent years is the addition of another type of mediation called transformative. And the goal of transformative is not necessarily to solve a specific problem, although that might be one of the results. But it’s also to transform the relationship between the parties.

To give, especially one party who might lack power, might lack a voice, more of a chance to express his or her feelings. Here’s an example of the use of transformative mediation. Huge organization, the US postal service, this time had 800,000 employees. And in 1997, they had 14,000 formal complaints with the Equal Employment Opportunity Commission. So in 1998, they started to use transformative mediation for these complaints. And these are the results over the first roughly two years. They resolved over 17,000 informal disputes. They had a 30% drop in formal complaints. They saved millions of dollars in legal costs and improved productivity. And the disputants to a large extent, 90% were satisfied with the process.

Now one of the problems with these studies is, that it never gives you real life stories about how this process might work. So I sent an email to one of the leading researchers on transformative mediation in the country. And I asked her to give me some flesh and blood examples of transformative mediation. This is one of the examples she sent me. This is one of the postal cases. Got a female employee, small, she’s a letter carrier, files a sexual harassment complaint against her supervisor claiming that he addresses her by her route number instead of by her name.

When they get involved in transformative mediation, and she’s allowed to express her feelings, the parties realize he addresses every letter carrier by route number. He had no clue that people found this dehumanizing or offensive. He had no idea until the mediation that this was the reason for the sexual harassment complaint. He started greeting people personally, apologized for the past conduct and the employee withdrew the complaint. So now we’re ready to look at the video, and let me give you a little bit of background information about the video. This is a dispute between a company called Compuplast and PM Limited. Basically, Compuplast has a great to provide robotics software to PM Limited.

However, it looks like the delivery date will be delayed. And PM Limited is very upset because PM Limited produces door handles for the auto industry. And if they don’t get this robotic software, they’re going to lose a lot of business. So they cancel their contract with Compuplast and both sides have threatened to sue. It’s a very emotional hostile environment for the mediation. One challenge that you have in watching this mediation for those of you from the United States, is that the mediation is in a foreign language. It’s in English. So, try to do what you can to understand this British mediation. So again, these are the questions. How does the mediation process differ from negotiation?

What type of mediation is this, evaluative, facilitative, and transformative? And how do your rate the mediator, and why? And with regard to that last question, remember that many of you will be serving as mediators and resolving disputes on the job or perhaps even in your family. So watch the techniques used by the mediator, I think there’s some great learning watching her in action. So this is our mediation video.

Now what about this headache. Let me introduce you to a robot. Its job is to make plastic door handles for cars. There’s just one snag. The latest computer software needed to make the robot work hasn’t arrived at the factory, PM Limited. The software designers and suppliers Compuplast, have failed to meet a deadline, and that failure is leading to enormous financial difficulties. Both for PM Limited and for the car company which needs the door handles. Indeed Compuplast themselves have a lot to lose. Once again, it looks like a dispute heading for court. Thousands, perhaps, hundreds of thousands of pounds in litigation costs, and the breakdown of a hitherto friendly and profitable business relationship.

But, does it have to be like this?

Even as the lawyers are treading their expensive path up the courtroom steps, they know that there’s a chance that the matter will be settled out of court. But in the meantime, costs to their clients have risen, sometimes frighteningly so, and that is no good to anyone. A financially undermined client is never a happy one. If you’re a lawyer, then you might think, well, my client has contractual rights that need to be upheld. If that means going to court, so be it. After all, costs might be recoverable down the line. But increasingly, that attitude is not being accepted by clients.

They want to know if there are other ways of ensuring that they don’t lose out, and if there’s a way of keeping a business relationship going, rather than find relationships so soured by the litigation experience that a previously happy business partner now finds himself permanently at daggers drawn. This, ladies and gentlemen, is where ADR comes in.

Let’s consider the dispute involving a robot, a plastics manufacturer, PM Limited, a computer software firm, Compuplast, and a car company. Because of the delayed arrival of software this robot isn’t able to produce enough car door handles to satisfy the contractual arrangements entered into by PM Limited. They promised to supply the handles within a week. Because of Compuplast’s failure, PM has cancelled a half million pound order for more software from Compuplast, a move which could mean the end of the company. » I’d like to think you all for coming this morning to help to try to resolve this dispute. My name is- » Compuplast has asked a mediator, Elizabeth Rivers, to see if there’s an alternative solution to this dispute.

One that won’t lead to enormous litigation costs, and one which will help all parties reach a satisfactory solution. While their decision has led to roundtable talks between PM and Compuplast both of whom have brought along their lawyers, by watching this mediation process you’ll see exactly how ADR works. Elizabeth, a London lawyer, is a trained mediator. Her brief is simply to try to enable the two sides to reach a solution. The two sets of lawyers have been asked long to ensure that neither PM nor Compuplast make a legal fool of themselves. Let’s follow the action. » Now, I understand that your lawyers have sent to cede a signed mediation agreement. I’d like just to clarify what my role is here today.

Firstly, I want to stress that I am not here to impose any sort of solution upon you, and I have no authority to make any sort of binding ruling. This is your dispute. I’m simply here to help you to try arrive at your own solution and to facilitate communication between you. The process is entirely voluntary. You can leave at anytime if you’re not happy, and it’s non-binding unless and until an agreement is reached. I’d like to explain a little bit about the procedure which we we’ll adopt this morning. Firstly, each party will have the opportunity to make a statement of their position. And they’re permitted to do that without any interruption from the other side.

And I’d like to ask you two to hear one another out and not interrupt while the opening statements are being made. At the end of those statements, I will then attempt to summarize what you’ve said to me. After that, we’ll break up into private meetings where I’ll see you each individually with your legal representatives. And those meetings are an opportunity for you to speak to me as frankly as possible and in confidence about your concerns about this dispute. » Shortly, the two sides will speak separately to the mediator in so-called caucus meetings, which are entirely confidential. But first, the opening statements. » As Compucast have called me in as mediator, I suggest that Ms Carter make the first opening presentation.

Okay, okay, right. Well, Compuplast is a small computer company. We produce computer software in the plastic molding industry. Last year, we were approached by PM, Mr. James, and asked to design a program of software to enable him and his company to speed up the robot-controlled plastic molding system. And at considerable expense to us, we did design a range of software that could do this, and it seemed set to revolutionize the industry. On the strength of this success, PM had come back to us and asked us to design more new computer software. But they also came back and asked us to modify the original software, which we agreed to do.

They set us a deadline, which unfortunately, due to unforeseen business circumstances, we can’t reach. Now PM has threatened to withdraw their orders for the software. Should they do that, we’ve got no option but to sue. Our investment was based on their orders. We think we’ll succeed in an action against PM. We know that we can provide the modified software they want, but we need more time. Because PM asked for those modifications, it’s their fault there’s a delay, and not ours. We think that it’s all PM’s fault. » Mr. James, would you like to make your presentation now? » Yes, certainly. We’re a plastic molding company producing parts for the automotive industry.

Quite recently, we won a very large contract to supply a major car producer with outside door handles. We gave a contract to Compuplast to design the software for this system. They totally failed to meet the deadline. This means we cannot supply parts to our customer. The result of all of this is the fact that, first of all, we’ll certainly lose the current contract. It’s doubtful we will ever get a contract again from our customer. And thirdly, the worst case, they will probably take us to court and sue us. This is a result, totally, of Compuplast’s incompetence and inability to meet the deadline. Our position’s quite clear. We’ve cancelled orders of software from Compuplast.

There’s no guarantee they’re going to meet future deadlines. Furthermore, we will take Compuplast to court on the basis they’re in clear breach of contract. They must know this position they’re in is quite serious, and their abject failures place us in an intolerable position. » Thank you for those presentations. I’d now like to have a caucus with Compuplast. So perhaps, Mr. James and your lawyer, Mr. Barra, could step outside and wait in the adjoining room. » [INAUDIBLE] » The mediator has heard Compuplast’s public position. She understands their posture. But how, privately, do they assess their position?

In your opening presentation, you said that you would be able to provide the software, but simply, that you couldn’t provide it within the deadline set by PM. » Yeah, right. » Mm-hm. » Realistically, how quickly do you think you can provide the software?

Well, probably within ten days of the deadline, I would think. » Right. » But we could probably produce it within the deadline if we had some more help, if we could employ some more staff. But I also must counter you that, really, we have to be cautious about tying deadlines until we’re quite sure of the work involved. » We feel that we’ve gone out of our way to help them, and if they want us to meet this new deadline they’ve issued us with, then they’ve got to help us. » Yes, I think we hadn’t actually reached that deadline yet, and really, Miss Carter’s been very good by advising them of the problems before they actually take place.

And we’d hoped that we might get a better hearing and a little bit more Tolerance. I thought Mr. James was very emotive in his approach, and that was a little bit distressing. » Yes, certainly, we didn’t expect him to automatically threaten to sue us. I think they went completely over the top. » Yes, I mean, we hoped that he would actually help us help him. » Right, well I’m pleased to hear that you think you can meet the deadline. You mentioned that you would need assistance from PM. Can you be more specific about precisely what you would need? » Well, I’ve talked to you about this, Nick.

I mean, really, our problem is, and I would prefer that you didn’t disclose this to them, is that we actually need money to employ someone. We just haven’t got sufficient money to hand to be able to employ the sort of person that we need on such short notice. We just haven’t got it. So if we’re going to be able to meet this deadline, then we need some help financially to employ the quality of staff needed to produce this software. We might even need 2 people, so we’re talking at least 25,000, I would think. » Right, I see.

So to summarize, without any extra assistance you think you could provide the software, but it would be ten days after the deadline which has currently been set. » Mm-hm. » However, if you were able to employ additional staff, you think you could still meet the deadline. » Mm. » But you don’t have the funds, if I’m correct in saying you don’t actually have the funds at the moment to employ- » No. » Additional staff, so you would need some sort of injection of cash to do that. » Mm. » And you’d be looking in the region of 25,000 pounds. » Yeah, yeah. » Mm-hm.

All right, is there any way the PM could help you with your cash flow, for example, by making some sort of accelerated payment? » Well I think, yes, that they certainly could. If they could give us 25,000 now then we’d be happy with that, and then the remaining payment at the deadline. » All right, all right. Can I confirm with you that I’m authorized to disclose that to PM? » Yes, I don’t think that would prejudice our position. » Thank you, I’d now like to talk to PM privately- » The mediator’s probings have identified the potential for a settlement. But will this match PM’s aspirations?

Well, the way I feel at the moment is they created this problem, and I’m prepared to go all the way to the courts to sort it out. » Right. » I don’t feel like compromising at all. » I see, I’ve no doubt that you’ve discussed with Mr. Barra, your solicitor, what the likely outcome would be if you went to litigation. » The mediator has a difficult job on her hands. At this point, PM and their legal advisors discuss the reality of a complex court case. » You said in your opening presentation that if you don’t meet the deadline for your car supplier that you will lose that contract, future orders, and possibly also be sued by the car manufacturer.

Yes. » Now realistically, do think there is any flexibility with that deadline? » I don’t think there’s any flexibility with the deadline at all, no. » Right, so it is crucial that deadline is met? » Absolutely. » Right, I see. What Compuplast had said to me is that they could meet the deadline, but that they need extra staff to do that. Now it seems to me that it’s probably in your interests, whatever the rights and the wrongs, legally, in this case is, to try to work together with Compuplast to meet the deadline, if possible. » Well, I think if they need more staff that’s really their problem. They committed to a deadline.

It’s their problem how they achieve that deadline, and not PM’s. » Certainly, I can see that there’s a matter of contract law, that’s the case. But I think given the knock-on effect of their inability, it seems, to meet the deadline at the moment, effectively, it becomes your problem as well. So I think the spirit, really, of mediation is that everybody tries to work together to arrive at a solution to this problem. » I share your concerns as well. I mean, here we have a company, in fact, that contracted to deliver a product at a particular time. That time of the essence was made plain enough to [CROSSTALK]. » Okay, what sort of figure are they talking about?

Well, what they’ve said to me is that in order to meet the deadline, they need to take on some additional staff. » Mm-hm. And they’re looking at a figure in the region, let’s say, of 25,000 pounds. » What concerned me, actually, if we’ve already contracted for them to deliver a product and they haven’t been able to meet the deadline, and yet, they want another 25,000 pounds from my client. » I can see, obviously, that you do feel very strongly about this. And I can see that this has caused you a very serious problem for your business. » It certainly has. » And the loss of goodwill with the car company is obviously very serious, so I do see that.

Okay, we’ll give it some consideration then. » Right, so you will check the contract and see what payments are outstanding. » Yes. » Several hours have gone by. The mediator has established that PM owes Compuplast 18,000 pounds. That could be released immediately. A range of other possibilities are also discussed. What was a legal argument has become a commercial negotiation. Through shuttle diplomacy and direct bargaining, an imaginative solution is reached, one which avoids the court. » I’ve called you all back together because I think we’ve now been able to reach an agreement. I’d like to summarize the terms which have been agreed. Firstly, PM will make an immediate payment to Compuplast of 18,000 pounds in respect of its unpaid invoices.

Secondly, there will be a meeting in one week’s time between PM and Compuplast to monitor the progress of the development of the software. If PM is satisfied that the deadline will be met, then they will release a further 7,000 pounds. In addition, PM’s software license from Compuplast is to be extended for a further two years at no extra cost. And finally, if PM places any further orders in the future with Compuplast, they will have a 10% discount. Does everybody agree that I accurately summarized the terms of the agreement? » Yes. » Yes. » I’ll now write those terms out, and I’ll ask you all to sign it, signifying your agreement. Okay, can we agree to a meeting now?

Certainly, yes. If you want to fix a date now. Yes, that’s fine. » Okay. » So that’s the way the system works.

The next segment, we’ll look at the questions I described earlier as well as some other matters relating to a mediation.