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Written Diagnostic Reports By Mediators

by John Wade
September 2000

This article has been reproduced with permission of the Bond University Dispute Resolution Newsletter September 1999, Vol 2.
To receive future newsletters. For past Bond newsletters, mediators, courses, publications, see website.

John Wade
Successful organisational mediators and consultants have been accustomed for decades to add a "reporting" step into the classical mediation process. After identifying, interviewing and surveying in writing all the important parties (often an exhausting and expensive process!), these mediators draft a report which sets out, for example:

  • areas of apparent agreement,
  • problem solving and personal questions which need to be addressed,
  • anonymous quotes describing perceived problems,
  • possible future processes.
The diagnostic report does not go as far as recommending a particular substantive outcome. However, if the participants know exactly what service they are buying, a "medene" report - mediation followed by early neutral evaluation - can be a helpful intervention.

Nevertheless even a diagnostic process report may be a bombshell, for it will inevitably reinterpret "blame" and shatter some self-images. The mediator may quickly lose his/her job; or make enemies within the organisation. There are many skills to be learned concerning:

  • How to contract clearly that this controversial diagnosis will take place?
  • Initially to whom should the draft report be summarised orally?
  • To whom should a written draft report be shown for shock-reduction and for possible modification?
  • What confidentiality attaches to the draft report?
  • What language should the report use - direct quotes of disputants or paraphrased concepts?
  • To whom should the final report be released? (no more confidentiality at that point!)
  • Should the report attempt to preserve its legal "mediation" confidential status?
  • How to risk manage for defamation etc?
  • How to assemble post-report meetings to discuss its impact, and whether to continue the mediation process? (see particularly the work of Speed Leas dealing with church conflict)

Apart from organisational conflicts, the writer has often used diagnostic reports as part of his contracted process in other kinds of conflicts with fewer participants. This is particularly so where the disputants reach an impasse and are unwilling for the moment to continue the negotiation/mediation.

Anecdotally, lawyers and disputants have been encouraged by these diagnostic reports which:

  • Clarify chaos,
  • Provide a framework of options for the next step,
  • Can avoid high expenditure and frustration of future inappropriate interventions,
  • Turns a "failed" negotiation session into a perception of (painful) progress,
  • Provide a clear document to reflect upon; rather than conflicting memories of tense spoken words,
  • Provide a powerful re-interpretation of history which divides the cheerleaders and tribes behind the immediate disputants.

Organisational mediators have a great deal to teach us concerning risk management and benefits of this diagnostic reporting stage. The challenge for other mediators (once again) is to add this tool to the tool-box and offer clear written reports for the "right" cases. Set out below is an example of a diagnositc report in a "failed" business dissolution/matrimonial property mediation. (Dates, places and parties have been anonymised)


C/- School of Law
BOND UNIVERSITY Q 4229
Phone: 07 55952004
Fax: 55952036
Email: john_wade@bond.edu.au
5 February 1996

To Joy Johnson and David Johnson
And To Lawyer A and Lawyer B

Dear Sir/Ms
Re: Johnson Mediation - Without Prejudice; Mediation Report

I met with Joy and David Johnson for a hasty mediation on Saturday 1 February in the mediation room at Smith and Bloggs in Brisbane.

This report, based on joint information shared in joint sessions (not on private information in separate sessions), may provide some structure for future negotiations.

The respective lawyers provided me with helpful and extensive documentation and summaries of legal issues. The mediation was triggered by the crisis of a hearing potentially occurring on Friday 7 February.

This haste led to two hurdles in the mediation meeting:
1. Insufficient intake time with Joy and David. Thereby no proper diagnosis of the causes of conflict was possible; nor practice on how negotiations normally develop; nor possible arrangements for supporters at the meeting.
2. Last minute data, namely Joy's valuation of the business emerged on the night before the mediation, thereby creating a sense of "ambush" and absence of a short agreed summary on why two expert valuers were so far apart.

Nevertheless, in the first two hours of the meeting Joy and David communicated well by speaking through the mediator and on occasions directly to each other.

A. Joy and David agreed that:
1. They wanted the best for the business and its employees
- in short term,
- in long term.
2. Some partial agreement about the repetitive conflict between them on the business premises would be desirable if complete agreement was not.
3. They were not healthy for one another.
4. Their entrenched patterns of communication were destructive.
5. The prepared list of assets and liabilities was:
a) complete;
b) meaning of certain terms was clarified;
c) list of reflected agreed approximate valuations except for the

  • share holding, (over $2 million apart)
  • wine and watch collection,
  • trailer.
6. Joy was too tired to buy out and run the business herself.
7. David would readily sell the business to Joy at her valuer's valuation.

B. Joy and David together listed the following risks in joint discussion if settlement is not achieved between them quickly:
1. Undoubtedly the performance of the business will suffer.
2. The best staff will leave in any atmosphere of conflict.
3. Plans to restructure the business will be put on hold.
4. Neither will be able to get on with their lives.
5. Suspicions will be fostered (exist already) that the business was "running dead" to lower values. This must lead to conflict on site, futile interim litigious sorties to "manage the business properly"; and further diminution of value of the business.
6. Health will suffer.
7. The children will vicariously experience tension and sadness.
8. The alleged uniqueness of the case will lead to it being reported and bound in black in vitriolic splendour - not a desirable long-term memory for the family.
9. As the super mum and super worker facts are allegedly unique, it is a lottery what a judge will do.
10. Unique facts, vitriolic evidence, duelling experts and abundant wealth increase the likelihood of appeal - a further 12 months of delay.
11. Legal and valuation costs are only a minor risk in such a large estate.
12. Loss of personal control of decisions to professional experts
13. As the valuers are so far apart, they will become entrenched in their views. One or both MUST be wrong. Yet Joy and David will pay for the debate between them before a bemused judge.
14. A judge cannot split the difference between expert valuations. One must be found to be wrong.
15. A judge could not possible be educated in the complexities of their industry.
16. A predictable result would be that neither will take the business at the other's valuation; therefore a forced sale would be ordered by the court with the result that:
  • Vultures will gather,
  • Price will drop below lowest valuation,
  • Employees will jump ship,
  • Large commissions will be payable to auctioneers and managers,
  • David and Joy will divide the metaphorical ashes.
17. They would write further one-sided affidavits which would inflame the dispute, and damage personal credibility before a judge who "has heard this all before".

C. Whiteboard questions
David and Joy articulated a number of concerns and goals which were translated into the following agenda of questions of the whiteboard. The aim was, in normal negotiation style, to move up and down the list and create a series of packaged offers to one another.
1. Is the current list of assets complete?
2. How to determine an appropriate value for each item on list?
3. What percentage division of the assets - on good day/ bad day?
4. What items or assets on each side of ledger?
5. What timing for division?
6. What periodic payments - if any?
7. What debts exist? How should these be paid?
8. What partial agreements if any are possible in interim?
9. How can the business be preserved and flourish
- in short term?
- in long term?
10. How should
- franking credits
- Joy's mother's estate
Be taken into account?
11. How should any payouts be funded?
12. How far is clean break desirable or achievable?
13. How can continuity of Joy's income be funded?
14. What post-settlement restrictions, if any, on each working in related industries?

D. Duelling Expert Valuers
Joy and David agreed that they had employed two expert valuers who had provided them with a predictable problem, rather than a solution.

They considered and wrote out the following standard strategies for clients to respond to duelling valuers:
1. Sell on a time limited schedule - both free to bid.
2. Require both experts to write a jointly drafted and jointly signed two-page simple explanation of why they are so different.
3. Require both experts to sit and explain and be questioned at a joint meeting to help them understand why such differences.
4. Employ a third valuer to give an opinion.
5. Brief a third valuer to give a decision either on which number is "closer" OR on another number altogether.
6. Leave to a judge to guess on his/her limited expertise and evidence.
7. Flip a coin.
8. Trade - "what if I accepted a number closer to your valuation, would you be prepared to…."
9. Split the difference.

E. Conclusion
At the offer stage of the mediation, while attempting to package offers, it became clear to the mediator that there was too much grief over loss of family, betrayal, potential loss of career and loss of friends for applied communication and normal negotiation to take place. In hindsight, and in my opinion, these deep-seated feelings need to be addressed by time, pain and grief counselling.

Biography


John Wade is an Emeritus Professor of Law at Bond University and a practicing lawyer. John is a nationally and internationally acclaimed expert in dispute resolution, legal education and family law. For the last 40 years he has taught at two Australian, three Canadian, one French and four US law schools. He has led over 250 courses in mediation and negotiation for law firms, government and industry in UK, Hong Kong, NZ, USA, Indonesia and Australia. John was one of the founding editors of the Legal Education Review and pioneered the postgraduate teaching of educational methods and theory to new law teachers. He has published over 100 books and refereed journal articles.

Mediation practice.  Since 1987, John has mediated hundreds of disputes in areas of family property, organisational, succession, insurance, and child disputes. He has developed a specialty in family property conflicts. In 2011, John was named by the International Bar Association as one of the top nine commercial mediators in Australia. In 2013, John moved to Vancouver, Canada with his family, and continues his mediation practice and teaching there.

John now lives in Vancouver, Canada. Contact: jwade@bond.edu.au



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