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A Perfect Storm is Gathering

by Michael Leathes
February 2009 Michael Leathes
This article is jointly written by a group of twelve institutional users of mediation services.

Co-authors: Jan Eijsbouts, Hans Peter Frick, Bengt Gustafson, Marina Kaldina, Wolf von Kumberg, Michael Leathes, Deborah Masucci, Erik B. Pfeiffer, Philip Ray, Roland Schroeder, Steve Weatherley, R. Bruce Whitney

The future ain’t what it used to be

- Yogi Berra, Former Coach, New York Yankees

A Perfect Storm is gathering, comprising the effects of severe economic downturn, the alacrity with which corporate law departments seek greater transparency and outcome certainty, and new tools in the field of information and communication technology.  This convergence provokes serious changes in attitude and approach by all dispute resolution stakeholders – especially trial lawyers, mediators and mediation provider organizations.  The status quo has had its day.  Good news for those nimble enough to adapt quickly.

Money is a scarce commodity.  Traditional litigation is a money-consumption machine.  Technology can disseminate, instantly and globally, useful feedback about dispute resolvers’ styles, making the mediator best suited to resolve a dispute easily identifiable.  The dire economic climate and the increasing growth of mediation have made the early use of mediator not just good practice, but economic necessity.    A wonderful snippet of homiletic wisdom is found in the writings of Og Mandino, author of The Greatest Salesman in the World. It was so obvious we were bound to ignore it. Do not allow yesterday’s success to lull you into today’s complacency, for this is the great foundation of failure.  Never have these words rung more true, and demanded more attention and action, than in 2009. 

The hurricane of an economic and financial turmoil of unprecedented proportions is roaring into every vested domain.  Gone are the days when corporate leaders can feel at liberty to play Russian roulette with shareholder – now read stakeholder – interests and get their way mainly by force and bluster.  The economic meltdown of the last eighteen months has left an empty theater.  Enter, stage right, the eight choreographers of the New Economy – responsibility, transparency, authenticity, trustworthiness, certainty, competency, sustainability, and frugality. 

These are critical factors that, in the post-meltdown world are capable of injecting confidence into markets, trust into businesses and value into stock markets.

Simultaneously a second wind of change is blowing, bringing a deepening cold front to the legal professional services industry: more demanding in-house counsel.  Under corporate governance pressure to manage legal risks, General Counsel and their Corporate Law Departments (CLDs) face severe “in control” requirements.  Expected to deliver positive outcomes and therefore cut costs while enhancing (not just protecting!) the corporation’s reputation, CLDs are becoming intolerant of service providers that milk their clients’ predicaments for their own fee earning benefit.  The days when CLDs are happy to delegate and even abandon a case to a law firm with instructions to let it follow its path, are history.  Now they want transparency and greater control.  Lawyers who are reluctant to give clients a clear vision of the risk and cost consequences, or who delay proposing alternative strategies to the desired outcome, will face a reducing workload at a time when their income streams are under pressure.

And there is a third tempest, converging at the very moment the first two collide.  Information and communication technology is eroding traditional legal work.  An increasing proportion of legal work is now commoditized.  Document assembly systems and e-Discovery are big business, creating cost-saving opportunities.  Better, quicker, simpler and less costly ways are emerging for accomplishing many traditional tasks.  ODR – online dispute resolution – was one of the big growth areas in 2008.  Technology is making true transparency possible, and therefore vital.

These global climatic forces, plus other market developments such as the increasing acceptance of non-litigious forms of dispute resolution and the emergence of more, and more credible, mediators, will force lawyers to change their attitude and perspective.  New York Times columnist and author, Thomas Friedman, sees this as the market becoming more adaptable to market needs.  In his bestseller The World is Flat he talked of triple convergence.

For those who read the signals, change their mindsets and prepare well, this is not Armageddon.  There will always be a certain place for court action, but dictionaries will be re-written to cite litigation, not mediation, as the definition of Alternative Dispute Resolution.

Change always accelerates at times of economic stress.  Almost everyone now views risk with increasing alarm.  Interests consciously predominate over positions.  The cast iron case never existed, but now pragmatism, reality and risk factors are weighing more heavily, emphasizing prevention, avoidance and the earliest possible resolution of disputes.  Back-to-basics instincts render brash bravado outdated and unacceptable to stakeholders.  This will endure long after the world emerges from economic hardship.  Such 20th Century business people are a dying breed.  Replacing them is a new entrepreneurial mindset exuding glasnost, humility, reality, resolve, delivery and simplicity.

Attorneys will have longer careers if they are artistic engineers with a highly adaptable toolbox of process and substantive approaches to every predicament, using those tools without being told.  Aggression, force, rigidity and a win-lose mindset will no longer address client needs. Gary Hamel, a leading business strategy guru, put it unforgettably: “Those who live by the sword will be shot by those who don’t”.

“Resolvers” will replace “litigators”.  What some still call “ADR”, the field once likened to homeopathy and ridiculed as Alarming Drop in Revenue, will become mainstream. The need now is to re-focus courtroom skills and put them to better use as creative resolvers, adept at making and saving deals, resolving disputes and preserving relationships.

Unlike litigation, mediation and other forms of private dispute resolution offer versatility.  They will be used by businesses not just to resolve disputes, but to make deals.  Settlement counsel and collaborative law will flourish.  Neutrals will be co-funded by the parties to act as “Counsel to the Deal” and as “Dispute Boards”.  Early Neutral Evaluation, Non-Binding Arbitration, Mini-Trial, Evaluative, Transformative, Facilitative Mediation, and hybrids like Arb-Med will grow as parties tailor process to their precise requirements.  For CLDs, selecting the right horse for the course is the name of the game – in terms of the choice of professional and choice of process.

And here comes the rub.  How do corporate counsel select the right horse for the course without the right information about the available riders?  It’s difficult.  Transparency comes into play.  That is why the Perfect Storm heralds change for mediators and provider bodies, accustomed to operating behind a privacy screen.  Only the parties, their representatives and provider entities involved in a mediation can really tell how “good” the mediator is, but most never make public that they even took part in a particular mediation.  All very secretive and whispered.  So too is typically-available information about mediators’ performances. 

What worked for a few mediators and providers in the past in terms of vague and general reputation will not sustain them for the future.  In the past, the parties’ choice of mediator was based on perception – word of mouth, anecdotal impressions, whether someone they knew thought they were “good”.  Hearsay.  The world has changed.  Uncertain and   imprecise forms of endorsement will no longer be adequate for discerning General Counsel and their staffs.

Corporate counsel’s growing appetite for transparency and authenticity will drive demand for access to prior user feedback before making a choice of an individual mediator or a provider institution.  Those wishing to maintain the status quo, who are unwilling or unable to offer credible independent feedback from prior users up front, risk being selected less often, however well-known or experienced they may be.  Transparency, authenticity and trust are three of the eight choreographers of the New Economy. 

Mediators and their provider institutions cannot deny or escape these changes.  Their task now is to lead their colleagues by example and validate their profession.  This requires stepping out from behind the privacy screen into daylight, meeting the new market expectations head on and turning them to advantage by showing the world’s users how very good they are via the credible, transparent endorsement of prior user feedback.  Becoming IMI Certified (www.IMImediation.org) with a Profile and a Feedback Digest, fits the bill.  That’s how to enhance credibility, gain recognition, get selected and generate growth.

All of this is obvious to users of mediation services; the proverbial no-brainer.
Do not allow yesterday’s success to lull you into today’s complacency.
Act now to take advantage of The Perfect Storm.

February, 2009


 

Co-Authors

1  Jan Eijsbouts, General Counsel and Director of Legal Affairs (Ret), Akzo Nobel NV
2  Hans Peter Frick, Senior Vice President and Group General Counsel, Nestlé SA
3  Bengt Gustafson, Senior Vice President & Chief Legal Counsel, Securitas AB
4   Marina Kaldina, Counsel to the Chairman of the Supervisory Board, Basic Element Company
5   Wolf von Kumberg, Assistant General Counsel of Northrop Grumman Corp
6   Michael Leathes, former Legal Director of Pfizer International, IDV and Head of IP, BAT.
Executive Director of the International Mediation Institute
7  Deborah Masucci, Vice President, Office of Dispute Resolution, AIG Commercial Insurance
8  Erik B. Pfeiffer, Chief Executive Officer, Paranova Group A/S
9  Philip Ray, Senior Counsel, Energy Sector/Legal, Siemens AG
10  Roland Schroeder, Senior Counsel – Litigation and Legal Policy, General Electric Company
11  Steve Weatherly, former Head of Internal Audit and Head of Legal, Scottish & Newcastle plc
12  R. Bruce Whitney, Chief Litigation Counsel (Rtd) of Air Products & Chemicals Inc

The views expressed in this article are those of the individual co-authors and not necessarily of the organizations they represent.

 

Biography


Michael Leathes is a co-founder and formerly a director of the International Mediation Institute (IMI). He spent much of his career as an in-house counsel for a number of international corporations in a variety of roles, including General Counsel of Pfizer International (1984-87), General Counsel of International Distillers & Vintners Limited (1992-97) and Head of Intellectual Property of BAT (1997-2006). He has spent much of that in-house career managing disputes around the world. Michael is the author of a book on negotiation, to be published by Wolters Kluwer in January 2017.



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