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Mediator As Arbitrager

by Robert Creo
November 2004 Robert Creo
No, that is not a typo or other error. I know how to spell arbitrator correctly because I am one. I am also an arbitrager. I do the arbitraging while mediating. I do not act as an arbitrager when I serve as an arbitrator.

Arbitraging involves the process of a person taking advantage of a difference in market prices to broker an immediate deal. The arbitrager takes advantage of asymmetrical information to serve as an honest broker to complete a transaction. Blacks Law Dictionary (5th Edition) defines arbitrage as:

The simultaneous purchase in one market and sale in another of a security or commodity in hope of making a profit on price differences in the different markets.

My thesis is that a skilled mediator is a kin folk of a skilled arbitrager. Arbitrators conduct symmetrical processes based upon the same information being known to everyone and conveyed in a transparent manner. Mediators do not, and should not, be confused with adjudicators.

Asymmetry Inherent in Mediation

Mediation is usually an asymmetrical process based upon multiple factors. Asymmetrical dynamics or paradigms may include, among other elements, in no particular order:

1) One party, usually defendants, are often repeat players in the legal system or manage a book of business risks or disputes.

2) The dispute for plaintiffs, especially tort and employment claimants, is usually 100% of their court docket and/or experience with the legal system.

3) Repeat players, including counsel, bench-mark against other cases; consistency, predictability and uniformity are often core values of repeat players.

4) Participants may have different perspectives and expectations of the processing of legal claims via the courts.

5)Defendants proposals involve real dollars; demands involve abstract sums, goals or “aspires” and not relief in present, real time. Traditional negotiation frames recognize this by nomenclature of “demand” and “offer.”

6) One of the parties, usually claimants, may have suffered “personal trauma” which forms the basis of the claim; this may involve a personal injury, business or economic disruption or a perceived grievance involving their personal self-esteem or public reputation. The other participants’ key interests may be “impersonal” and involve primarily economic impact. In short, one party may be making a personal decision with profound consequences while others are involved in a business transaction.

7) There may be a real or perceived power imbalance among participants.

8) Participants have different risk tolerances and view risk in a unique, individualistic manner. Risk tolerance is fluid, contextual and situational. 9) Participant preparation for the mediation, or experience, expectations and attitudes about the process, differs.

10) Participants process information and make decisions with different cognitive preferences and bias. (e.g., Meyers-Briggs theory, see, e.g., R. Lisle Baker, Harvard Negotiation Law Review, Vol. 9, Spring 2004, Pages 115 to 186).

11) The number of participants, stakeholders and constitutions, on each side are uneven.

12) One or more parties may represent public interests while others act as purely private persons. People may make decisions in a holistic manner. Participants have different levels of authority and power to bring closure.

13) The law may provide additional protections or restrictions on some of the parties based upon their age, competency or other factors.

14) Confidentiality and privacy interests vary among the participants.

15) Counsel/advocates for different parties are compensated pursuant to different methods such as contingent, flat fee, salaried, hourly, per diem, incentives.

16) There is almost always diversity of culture, age, income and other demographics among the participants. This almost always extends to the mediators who may share some, but never all of the demographics with some of the participants.

17) Participants each have their own relationship to time and pacing, especially the mediator.

18) The mediator has different experience with different participants, meeting some for the first time while others are repeat players.

19) The participants have asymmetrical experiences with negotiation and mediation.

20) The mediator may have misaligned or asymmetrical goals with one or more of the participants.

21) Participants submit pre-mediation information and prepare in an asymmetrical manner. 22) Participants communicate at the mediation asymmetrically. 21) Mediators also communicate in an asymmetrical manner.

22) Mediators utilize different tools with different participants at different times in the process.

23) Participants have different interests.

24) There is a difference between Retributive and Restorative interests and goals of participants, mediators and process. Mediators tend to pressure participants towards choosing Restorative interests and goals over Retribution.

25) Mediators are not neutral in the sense of an intervener who stands outside the process without permanent impact on the dispute or disputants. Mediators have their own point of view and interests. Even in a bilateral dispute, mediation is a trilateral process.

Thesis and/or Rationales

A. Mediation is an asymmetrical process intended to function as alternative and flexible dispute resolution. B. Mediation as a complex, non-linear system is reactive and adaptive. This is sometimes framed as “complexity theory” and/or “chaos” theory. Akin to the Heisenberg principle (the act of observation itself changes the system), the mere act of intervention itself transforms the nature of the conflict and its dynamics regardless of the outcome.

C. Attempts to build a consensus definition of mediation or portray it by grids, schemes or other integrated methods is not helpful and is counter-productive when it empowers an orthodoxy of mediation practice.

D. Attempting to create a balanced and predictable process based by grafting due process and other procedural notions from an adjudicatory system onto mediation distorts the inherent asymmetrical nature of the process.

E. Mediation does, or should, fit a classical definition of “argumentation” such as:

Argumentation is an interaction in which participants maintain what they think are mutually exclusive positions and that they seek to resolve their disagreement. (Northwestern Professor David Zarefsky).

What Does this Mean to You as a Mediator? Inherent asymmetries should reduce attention to concepts of neutrality and process balance in order to be effective in providing choice points and/or transforming the participants’ views of each other or the dispute. This differs from adjudication and adversary at-law processes which focus upon symmetrical function, approach and goals. Adjudicatory paradigms and/or legal values should not be grafted onto an argumentation process which relies heavily upon arbitraging differences between the participants. Effective mediators are creative and are able to think outside the box because they think and act asymmetrically, so the box does not even exist. Mediators need not submit to the Borg of Star Trek, The Next Generation. As Captain Picard proved, resistance need not be futile.

Biography


Robert A. Creo received his B.A. in 1974 from Brandeis University and received his J.D. in 1977 from Washington University School of Law. Mr. Creo is a mediator, arbitrator and educator. He has been an Adjunct Professor at Duquesne University School of Law since 1991.

Mr. Creo has arbitrated or mediated over 2,000 cases since 1979, including numerous serious injury/death claims, complex business transactions and cases involving multimillion dollar settlements. Mr. Creo has been retained to serve as settlement counsel by law firms to negotiate complex and/or large claims on their behalf. For many years, he had served as a neutral for professional football, baseball and the United States Senate.

Mr. Creo has published extensively and is active as an educator on ADR, including providing advanced mediator training throughout North America and Europe. He belongs to numerous professional organizations including having served as the first President of the International Academy of Mediators (IAM).



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Website: www.rcreo.com

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