1. WHAT EVERY BUSINESS EXECUTIVE NEEDS TO
KNOW ABOUT DISPUTE RESOLUTION
Part I: Mediation and Arbitration
© 2009 by Ronald W. Brown

2. In the Past, Dispute Resolution Took Many Forms
And the Outcome Could Be Uncertain

3. Today Dispute Resolution Can Also Take Many
Forms, The Outcome Can Be Less Uncertain Using
Alternative Dispute Resolution
• Mediation (ADR)
• Arbitration (ADR)
• Negotiation (ADR)
• Litigation

4. Business Executives Should Understand Four
Available Options For Resolving Disputes
• Mediation
• Arbitration
• Negotiation
• Litigation
Remember the 90/10 Rule: 10%
is what happens to us and 90%
is how we choose to react to it.

5. Four Processes In Dispute Resolution
• Mediation: In this private process, the negotiation is
conducted by an independent and neutral third party to help
the parties reach a mutually acceptable settlement. The
parties craft their own solution to the dispute.
• Arbitration: In this process, an arbitrator or arbitral
tribunal mutually acceptable to the parties makes a
determination (“award”) that is binding on the parties.
• Negotiation: In this process, the parties discuss the
dispute among themselves and attempt to reach a negotiated
settlement with or without the assistance of a third party.
• Litigation: In this adversarial and public process, the
rules of discovery and evidence govern. A judge decides
whether the plaintiff or defendant “wins” or “loses”. The
decision is binding and enforceable, subject to being
appealed.

6. The Importance of a Future
Relationship
• “Often the choice of an alternative for
resolving disputes turns on whether the
parties care about the future of their
relationship. Negotiation and mediation, for
example, are thought to be superior to
adjudication (arbitration or litigation) when a
future relationship matters.”
The Effect of 209/11 On The Field of Conflict and Dispute Resolution”, Remarks of
Professor Calvin Sharpe, John Deaver Drinko-Baker & Hostetler Professor of
Law and Director, Center for the Interdisciplinary Study of Conflict and Dispute
Resolution, September 11, 2006.

7. Some Overlooked “Collateral Damage” Aspects of
Disputes
• Uncertainty is damaging to a company in many, many
ways. Depending on the size of the conflict, it could make
lenders less interested in lending, customers concerned
about the future, etc.
• It is challenging for the owner-of-a-dispute to
compartmentalize a conflict to the point that it does not
spill over into the business executive’s personal life and
their effectiveness as a leader of the business.
• Any method of dispute resolution can be misused, for
example as a delaying tactic or method of preventing
forward progress, using up resources such as time and
money. Recouping this lost opportunity cost is nearly
impossible.

8. ADR Methods
The court system gives a lot of power to judges. ADR techniques return the power to the
parties. Some processes return more control to the parties than others. Further, each
technique can be adjusted to give more or less control to the parties. Each method has
advantages and disadvantages.
Control vested in the parties
Unassisted Partnering Conciliation Facilitation Mediation Evaluative Arbitration Court
Negotiation Methods
Evaluative
Facilitative
Mediation
Mediation
http://adr.navy.mil/adr/slideshows.asp

9. AN ALTERNATIVE DISPUTE RESOLUTION
Continuum
http://www/nycourts.gov/ip/adr/What_is_ ADR.shtml

10. Alternative Dispute Resolution
MEDIATION

11. Forms of Mediation: Facilitative
Mediation
• Facilitative Mediation—”Is based on the
belief that, with neutral assistance, people
can work through and resolve their own
conflicts. In facilitative mediation the
mediator will take an active role in controlling
the process, asks questions to identify
interests of the parties, helps the parties
explore solutions that are win/win”
http://www.peoples-law.org/core/mediation/adr_directory/mediation_approaches.htm

12. Forms of Mediation: Transformative
Mediation
• Transformative Mediation—”Is based on the belief that
conflict tends to make parties feel week and self-absorbed.
Transformative mediators try to change the nature of the
parties conflict by helping them appreciate each other’s
viewpoints (‘recognition’) and strengthening their ability to
handle conflict in a productive manner (‘empowerment’). The
mediator will intervene in the conversation between the
parties in order to call attention to moments of recognition
and empowerment. Ground rules for the mediation are set
only if the parties set them. The mediator does not suggest
solutions.”
http://www.peoples-law.org/core/mediation/adr_directory/mediation_approaches.htm

13. Forms of Mediation: Evaluative
Mediation
• Evaluative Mediation—”Is based on the belief that mediators
with expertise in the issues I conflict can help the parties to
assess the strengths and weaknesses of their legal or other
positions and work to achieve settlements. The mediator
controls the process and suggests solutions for resolving the
conflict. Individual meetings between the mediator and one
party at a time (called ‘caucuses’) are a major component of
evaluative mediation. The mediators will make their best
efforts to get the parties to compromise, if necessary, to
achieve a result.”
http://www.peoples-law.org/core/mediation/adr_directory/mediation_approaches.htm

14. Observation About Types of Mediation
• Some mediators prefer to use only one
style while other mediators prefer to use a
blend of styles.
• If you have a preferred style, ask the
mediator if he/she uses your preferred
style.

15. Each Mediation Is Unique
• “Each mediation presents its own set of
challenges with its unique issues,
personalities, sensitivities and
impediments to settlement. Who is at the
table, what is on the table, when the
discussions should take place, the
sequence and manner in which parties
and issues are addressed, all have
tremendous impact on the likelihood of a
successful resolution.”
Edna Sussman, “The Reasons for Mediation’s Bright Future”

16. NINE GOOD THINGS THAT MEDIATION DOES
1. “Encourages direct communication between the
parties.”
2. “Helps people decide for themselves.”
3. “Allows for the expression of emotions.”
4. “Defuses anger.”
5. “Explores creative means of solving problems.”
American Bar Association, Division for Public Education, Mediation,
http://www.abanet.org/publiced/courts/courtsmediation.html

17. NINE GOOD THINGS THAT MEDIATION DOES
• “Promotes cooperation.”
• “Preserves the strengths of an ongoing
relationship.”
• “Helps people accept the consequences of their
own decisions.”
• “Develops a model for resolution of future
conflicts.”
American Bar Association, Division for Public Education, Mediation,
http://www.abanet.org/publiced/courts/courtsmediation.html

18. Five Advantages of Mediation Over
Litigation
1. Mediation is
voluntary and takes
significantly less
time than litigation.
2. Mediation is less
costly than litigation.
3. Mediation is private,
not public, and thus
more confidential
than litigation.

19. Five Advantages of Mediation Over
Litigation
• 4. In mediation, the
parties have greater control
over the resolution of the
dispute because they
negotiate their own
settlement, facilitated by a
neutral and impartial
mediator. In litigation, the
rules of civil procedure
apply and the outcome of
the dispute is determined
by the trier of fact applying
legal principles and rules.

20. Five Advantages of Mediation Over
Litigation
• 5. Mediation enables
greater creativity in
exploring solutions to
the dispute.

21. Eight Things You Should Look For In Selecting
A Mediator. Someone:
• Who is an experienced
facilitator.
• With whom you are
comfortable and that
you feel will maintain
the trust and
confidentiality of the
mediation process.
• Who listens well.

22. Eight Things You Should Look For In
Selecting A Mediator. Someone:
1. Who has demonstrable
strengths that are the
“right fit” for resolution
of your dispute.
2. Who is intelligent.
3. Who is insightful.

23. Eight Things You Should Look For In Selecting
A Mediator. Someone:
1. Who gives you her/his
focused attention, maintains
eye contact when you
speak, and actively listens.
2. Who recognizes and is able
to fulfill their responsibility to
stay neutral, who does not
take sides and try to decide
who is “right” and who is
“wrong”.

24. Five Things A Mediator Needs A Party To Be
Able to Do
1. Listen to the mediator
explain the mediation
process.
2. Understand the role of the
mediator and what is
expected of each party.
3. Be willing and able to
communicate a position but
also be able to focus on
interests and needs and
options in seeking resolution

25. Five Things A Mediator Needs A Party To Be
Able to Do
1. Be honest, open, not
interrupt the other party.
2. Send someone to the
mediation who has the
authority to reach a
settlement or who is able to
reach someone by phone
who has that authority.

26. Mediation: How Long and How Much?
• How long depends on many factors including the
type of mediation, and positions of the parties.
The time can range from hours, to days, or
longer.
• Costs can range from an hourly rate to a flat fee
per day.

27. An Example: The Mediation Process In Ten Steps
1. The parties agree to mediate.
2. A mediator, time, place, and location are
selected.
3. The parties meet and the mediator explains
the process (including confidentiality;
nothing in mediation can be used outside
mediation, etc.) and insures the parties
understand that process and agree to it.
The process may include separate
caucusing with each party.

28. An Example: The Mediation Process In Ten Steps
1. Party “A” makes an opening statement about
the issues as Party “A” sees them, the position
of Party “A” on those issues, and solutions
Party “A” would accept.
2. Party “B” makes an opening statement about
the issues as Party “B” sees them, the position
of Party “B” on those issues, and solutions
Party “B” would accept.

29. An Example: The Mediation Process In Ten Steps
1. Using neutral language, the mediator attempts
to summarize the statements of the parties.
2. The mediator next attempts to prepare a topic
agenda of issues so that the parties can try to
start talking about issues and options. The
mediator reminds the parties to try to focus on
interests and options, both “within” and “outside”
the box of the parties positions.

30. An Example: The Mediation Process In Ten Steps
1. As explained by the mediator in step #3
above, the mediator may ask the parties to go
to separate rooms where the mediator will
meet with one party and then go to the other
room to meet with the other party. In caucus
a party may discuss with the mediator
something the party is not prepared to discuss
in the joint meeting and may authorize the
mediator to air a proposal to the other party
on behalf of the authorizing party. The
mediator may also suggest solutions in
caucus.

31. An Example: The Mediation Process In Ten Steps
1. Options are explored and solutions are offered,
either in the separate caucus or in session
where both parties and the mediator are in the
same room.
2. If the parties agree on a solution, that solution is
memorialized in a writing signed by the parties.

32. Sidebar: To Caucus or Not To
Caucus
• Some mediators and parties are
comfortable with using a sidebar
caucus and others are not.
• Selecting which party to caucus
with first can be perceived as
favoring that party. Also taking
longer to caucus with one party
can result in the same perception.
Logistics of where one party waits
while a caucus takes place can also
present a challenge, for example
one party waiting in a hallway while
the other party is in a caucus room.

33. An Example of Institutional Mediation: The
American Arbitration Association
• If a matter submitted for mediation is withdrawn or
cancelled or results in a settlement after the agreement to
mediate is filed but prior to the mediation conference the
cost is $250 plus any mediator time and charges incurred.
• Parties are billed equally for all costs unless they agree
otherwise.
• All expenses of the mediation, including required traveling
and other expenses or charges of the mediator, are borne
equally by the parties unless they agree otherwise. The
expenses of participants for either side are paid by the
party requesting the attendance of such participants. “

34. Alternative Dispute Resolution
Arbitration

35. Arbitration (JAMS)
• “Arbitration is the most traditional form of private dispute
resolution. Arbitration is a binding procedure. It is often
“administered” by a private organization that maintains lists
of available arbitrators and provide rules under which the
arbitration will be conducted. Such organizations can also
manage the arbitration in whole or in part. Parties often
select arbitrators on the basis of substantive expertise.
• Arbitration is adjudicatory, as opposed to advisory, because
of the fact that the arbitrator (usually a retired judge or
attorney) renders a decision at the end of an arbitration
hearing, and that decision is final and binding, subject only
to a very limited court review. Arbitration is sometimes
referred to as “non-binding” if the parties agree to make it
so, but that is really a misnomer. Think of arbitration as a
binding, adjudicatory process.”

36. Ten Steps In Arbitration
• Dispute arises.
• Initiation of Arbitration. A contract clause may require settling a
dispute through arbitration.
• Selection and Appointment of arbitrator(s). The parties may have
pre-determined the number of arbitrators and how the arbitrator or
arbitrators will be selected and appointed.
• Scheduling and holding a preliminary hearing. This may be done
through a telephone conference call.
• Date, time, and place of first arbitration meeting set.
• Statement of Claim and Response
• Discovery, production and inspection of documents
• Hearing and Offering of material and relevant evidence. The
arbitrator determines the admissibility, relevance, and materiality
of evidence.
• Award
• Enforcement

37. Arbitration vs. Mediation
Arbitration Mediation
• Arbitrator decides the • Parties select mediator
matter. and decide the matter.
• Formal. • Informal.
• Less expensive than • Less expensive than
litigation. More expensive litigation or arbitration.
than mediation. • Relationships likely to be
• Relationships can become maintained.
strained. • Parties participate in
• Binding resolution, upheld process and shape
by courts except in very resolution. If mediated
narrow circumstances. resolution, parties can
reject it.

38. ARBITRATION:PROPOSED
LEGISLATION IN CONGRESS
•More than 30 Bills have been proposed dealing with arbitration.
•Most recent proposals: (A) Senator Russell Feingold’s The Arbitration
Fairness Act of 2007 which “Declares that no pre-dispute arbitration
agreement shall be valid or enforceable if it requires arbitration of (1) an
employment, consumer, or franchise dispute, or (2) a dispute arising under
any statute intended to protect civil rights or to regulate contracts or
transactions between parties of unequal bargaining power.” (B) Senator
Sessions Fair Arbitration Act (and would cover all arbitrations, domestic as
well as international.)