Microsoft and Yahoo: Where Were the Mediators? (5/12/08)
Colin Rule

David Hoffman in the 5/12 Christian Science Monitor: "When Microsoft CEO Steve Ballmer met with Yahoo CEO Jerry Yang earlier this month, what kept them from making a deal? With Microsoft offering $33 per share for Yahoo's stock, and Yahoo willing to take $37, was there truly an unbridgeable gulf? The $4 gap seems trivial in comparison to the potential value of the deal. So did Microsoft and Yahoo walk away from a deal that would have made both sides better off? This type of bargaining failure is hardly rare – businesspeople frequently report deals that have come within inches of closing, only to slip away at the last moment, costing their companies plenty.
 
In the world of litigation, settlement gaps are routinely bridged with the help of mediators. In the world of foreign policy, mediation – sometimes called "shuttle diplomacy" – is used extensively to resolve conflict. Why, then, are business transactions rarely mediated?
 
One theory is that the functions that mediators perform are already handled by transactional lawyers and investment bankers who work hard – and are handsomely rewarded – to close deals. The problem with this theory is that the lawyers and investment bankers often approach the negotiation from a partisan perspective in order to prove their loyalty to their respective clients.
 
A more promising explanation is that when conflicts arise – as in a potential hostile takeover situation such as the Microsoft-Yahoo negotiations – the parties reject compromise because they see the world through a distorted lens. Conflict can cause "reactive devaluation" (a negative assessment of a proposal because it comes from an opponent). Neuroscientists tell us that conflict triggers some of our most primitive reactions – a fight-or-flight response – as opposed to the collaborative impulse required for dealmaking.
 
It's not surprising, then, that people – especially in business settings, where egos, competition, and high stakes collide – are unlikely to opt for mediation unless they are forced, or strongly urged, to do so. In the world of diplomacy, it is often the superpowers that intervene when smaller nations quarrel, and court cases are often mediated because a judge insists on it. Indeed, Microsoft mediated its antitrust dispute with the Justice Department only when the court ordered it. In the setting of mergers and acquisitions, however, the key difference is that there is no outside power that can insist on mediation. Accordingly, it is often up to boards of directors or shareholders to push management to mediation..."
 
The ways that people negotiate are very tied to their cultures, and unfortunately in our culture the use of a third party to assist in a negotiation is frequently cast as a sign of weakness. The notion that Steve Ballmer would have assented to the involvement of a mediator in the negotiation is quite a stretch. But David makes some very strong arguments in this piece.
 
I'd love to see the conflict resolution field put more energy into promoting dealmaking mediation. I think in some contexts it could prove invaluable, and word could get around.

Mediation Requirement Streamlined for Florida Homeowners Associations (3/18/08)
Keith Seat

Statutory changes in Florida have streamlined the mediation process required prior to litigation of certain disputes between homeowners and members. The aggrieved party now can contact the other party directly with a written offer to mediate as set forth in the statute and propose a choice of five certified mediators. Seeking mediation in this way tolls the statute of limitations. If the dispute goes on to litigation or arbitration, attorneys’ fees incurred in the mediation may be recovered by the prevailing party. But those who do not participate in the entire mediation process may not recover any attorneys’ fees or costs.

The News-Press (February 28, 2008); Fla. Stat. § 720.311

IP Mediator Michael Young's "Girls Gone Wild" Commentary Catches Court's Attention (3/17/08)
Victoria Pynchon
From ALTERNATIVES TO THE HIGH COST OF LITIGATION, INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION VOL. 26 NO. 3 MARCH 2008

UPDATE: DESPITE MEDIATION RELATED INCARCERATION, GIRLS GONE WILD FOUNDER IS HEADED FOR MORE ADR

A federal judge has rejected a recusal motion from the maker of the Girls Gone Wild videos, who challenged the judge’s impartiality for first ordering mediation, and then sending the producer to jail for contempt based on his ADR conduct. That means the civil case against still incarcerated Joseph Francis will proceed. And, surprisingly, the case will go back to mediation.

In an order accompanying the . . . . opinion . . . U.S. District Court Judge Richard Smoak . . . told the parties to try mediation again. Smoak ordered . . . . mediation by June 27, with a “mediation report” deadline six days later.

In his 22-page opinion, Smoak strongly defends his record as a mediation supporter, and rejects claims that he tried to force Francis to settle before sending Francis to jail for contempt.  The defense charges stem from a suit brought by Francis’ video subjects.  . . . .  

The support for the defense motion included Los Angeles attorney Michael Young’s 2007 Alternatives article, “Mediation Gone Wild: How Three Minutes Put an ADR Party Behind Bars,” 25 Alternatives 97 (June 2007) (available at WileyInterscience. com). Young wrote that Smoak’s moves intruded into the mediation process and hurt ADR.

Court's opinion below:

 

Court Opinion re Girls Gone Wild Producer Joe Francis - Get more free documents

Capitalizing On Mediation: The Power Of Promoting Awareness For Business Efficiency (2/11/08)
Alessandra Sgubini
In today’s business market, successful and efficient businesses recognize the numerous benefits of mediation and possess the willingness to engage in cooperative negotiations with the help of an impartial third party. This article addresses the importance of promoting the awareness of mediation as an effective conflict resolution tool for businesses in all fields based on proven evidence that it saves immeasurable time and capital especially for businesses across the board.

Courageous Carriers, Meaningful Mediations (2/11/08)
Jeff Kichaven
Pity the poor plaintiff at the mediation of a third-party claim being defended under a reservation of rights. This lonely soul has been "mediated-upon" and finally lowered her settlement demand to a reasonable number. Still, no deal. The mediator spends hours with the policyholder-defendant and its insurer, but to no avail. The mediation ends, and the plaintiff is frustrated. Why was she forced to waste a day? Embittered, she and her counsel return to the litigation trenches less willing to collaborate on settlement initiatives, discovery, scheduling, or anything else. Clearly, this is a bad result.

Businesses Encouraged to Use Dispute Resolution Clauses (2/06/08)
Keith Seat

Companies are encouraged to include mediation or arbitration clauses in agreements covering their business dealings, including employment contracts, in order to avoid litigation. The widespread use of alternative dispute resolution clauses in most consumer contracts for health plans, car leases and insurance demonstrates that all businesses need to make sure their forms are updated with appropriate protections.

Business Times (January 11, 2008)

Hotel Association Urges Mediation Rather than Arbitration in Franchise Agreements (2/06/08)
Keith Seat

In its updated standards for fair franchising, the Asian American Hotel Owners Association includes dispute resolution provisions which focus on mediation if informal direct negotiations are unsuccessful. The standards avoid binding arbitration unless mediation has not been successful and there is express agreement on the details of the arbitration process, including the identity of the arbitrator and location of the arbitration.

Hotelinteractive.com (January 14, 2008)

Survey Concludes that Mediation Saves U.K. Businesses a Billion Pounds a Year (1/23/08)
Keith Seat

A survey by the Centre for Effective Dispute Resolution (CEDR) calculates that mediation in the U.K. saves businesses over £1 billion in legal fees, damaged relationships and lost productivity, at a cost of only £8 million in mediation fees. The survey concluded that there were about 3,700 mediations in the last year, which is up a full one-third since CEDR’s 2005 survey. Over half of these mediations were conducted by only 35 individual mediators, with top mediators charging over £3,000 per case and earning over £280,000 a year. The survey also covered the experience and backgrounds of mediators, performance in mediation, ethical issues and perspectives on standards and regulation.

Sourcewire (November 12, 2007); CEDR Survey (November 8, 2007)

Colm Brannigan and Michael Erdle on Mediating Canadian I.T. Disputes (1/14/08)
Victoria Pynchon

Ontario-based mediator Colm Brannigan * has passed along a valuable article on the mediation of Information Technology disputes from a June '07 Ontario Bar Journal publication.  The article, Resolving I.T. Disputes through ADR -- Part I Mediation was written by Colm with his co-author Michael Erdle. **

Link above with a tempting excerpt below:

[A] common obstacle to settlement in technology cases is differing interpretations of technical terms in a contract or specification. This may prevent the parties from addressing more substantial issues. One possible solution is to mediate a common standard against which the more substantial issue will be measured. A mediator can work with the parties to bring about agreement on a common technical expert whose opinion will be acceptable to everyone.

Another common cause of IT disputes is a misunderstanding between the parties of their respective obligations on a large project. This is especially true where there are multiple parties. The work inevitably takes longer and costs more and each of the parties, often all in good faith, blames the others for the problem. This is a situation that is very difficult to resolve through a series of one-on-one negotiations and can almost always benefit from mediation.

The mediator can facilitate a session that brings all of the parties together, to explain their own understanding of their roles and responsibilities. This assists all parties to understand the gaps that have arisen and helps them to find ways to bridge those gaps in ways that can benefit everyone. These kinds of results are simply impossible to achieve through arbitration or litigation.

In many situations, the parties will have devoted resources to developing a technology or an application upon which they become mutually dependent. Often, other parties, who are not directly involved in the conflict, also rely on these technologies. In a traditional litigation approach, an injunction is often viewed as the remedy of choice.

But the extremely disruptive results of this action on business partners and third parties must be taken into consideration. While the legal rights may support an injunction, the consequences will likely disrupt the business relationships to such a degree that no subsequent effort to restore them would be successful.

Most business people agree that a major part of a company’s cost in delivering services is the expense incurred to develop and maintain customer relationships. The investment in this area is put at risk by traditional litigation methods. By using mediation the parties can meet and with the assistance of the mediator develop creative ways to preserve their investment and/or rights while they work to resolve the substantive issues in their dispute. This can avoid disruptions to a third party that could have the unintended result of additional legal proceedings by the third parties against the disputants.

No dispute is completely binary (win-lose) and business people usually do not think in such simplistic terms. Why should their advisors? Mediation tries to achieve a positive sum result – “I win, you win”. While not always possible, mediated results tend to be creative and sustainable, simply because they are mutually-beneficial. In an industry where entrepreneurship, speedy decision-making and action are highly valued, the management “distraction factor” is an even greater litigation cost than in traditional industries. This cost is significantly reduced by the use of mediation as an affirmative business strategy.

For the full article, click here.

_________________

* Colm Brannigan, LL.B., LL.M. (ADR), C. Med. is a full-time mediator and arbitrator. He can be contacted by e-mail at colm@mediate.ca or (905) 840-9882.

** Michael Erdle is Managing Partner of Deeth Williams Wall LLP. He is a mediator and arbitrator and has advised technology clients in alternative dispute resolution. He can be reached at merdle@dww.com or (416) 941-9201.

Mediation Successful in Providing Consumer Restitution (1/09/08)
Keith Seat

Missouri’s attorney general recovered $9.2 million for consumers through mediation in 2007, which greatly exceeded the previous record amount of $5.2 million in 2006. The attorney general’s office handled about 100,000 contacts from consumers during 2007, including 36,000 formal complaints.

US State News (December 31, 2007) (Subscription Required)

Mediated Settlement Increases Company’s Market Value 70% (1/09/08)
Keith Seat

A $130 million jury verdict in December motivated American Dental Partners Inc. to settle the breach of contract litigation through mediation, resulting in a 72% surge in the price of the company’s stock after the settlement was announced. American Dental provides business services to dental practices, including PDG, P.A. which alleged that, among other things, American Dental refused to give dentists access to their own funds, paid itself unreasonable service fees, and withheld funds for new equipment. The settlement agreement includes American Dental transferring leases and assets for 25 of 31 facilities, payment by PDG of $19 million in future management fees, forgiveness by American Dental of a few million in accounts receivable due from PDG, among other details. The settlement is subject to the approval of secured lenders and requires the parties to enter into definitive agreements by a specified date.

CNNMoney.com (December 27, 2007); Boston Globe (December 27, 2007)

Second in a Series about the Real Estate Downturn and Mediation (12/31/07)
David W. Dresnick
Since the last article in this series was published in the December 2007 edition there has been more bad press not only about the deepening housing market problem, but also for commercial real estate.

Australian Agency Uses Mediation to Assist Small Businesses (12/20/07)
Keith Seat

The Victorian Small Business Commission uses its broad investigative powers and mediation to end unfair market practices and bullying of small businesses by larger companies. The Australian agency has increasingly focused on franchising relationships, along with retail tenancy disputes and other contract issues. The Commission encourages mediation as a way to resolve conflicts without necessarily ruining relationships. The Commission has dealt with 4,000 complaints since the office opened in 2003 and resolved about 80% before or at mediation. The Commission also encourages companies to avoid conflict by utilizing specified practices to sustain good working relationships.

My Small Business (December 17, 2007)

Iowa, Ohio Turn to Mediation in Home Loan Crisis (12/12/07)
Keith Seat

Seeking pragmatic solutions to address subprime mortgage foreclosures, Iowa Attorney General Tom Miller hired the Iowa Mediation Service in September to establish a toll-free phone line and work with Iowa homeowners. The mediation service has received 4,100 calls and is working to settle over 500 mortgage cases. This is a familiar path for Attorney General Miller, who helped enact a state law in the 1980s requiring lenders to mediate troubled farm loans prior to foreclosure. The Iowa Mediation Service began in 1985 and resolved 21,000 cases during the farm crisis. In Ohio, the state Supreme Court is planning to implement pilot projects in three counties using mediation to resolve foreclosure disputes, while a lower court in a fourth county is pulling together bankers, attorneys, government officials, real estate agents and others to develop a mediation program to reduce foreclosures.

New York Times (December 9, 2007) (Subscription Required); Mansfield News Journal (Ohio) (December 4, 2007)

Take This Idea: Commerical Mediators Wheel & Deal with Entrepreneurs (12/11/07)
Dina Beach Lynch
Finding the right niche is critical to your success as a mediator. While most folks can identify a broad niche, say family or workplace, it's those who dig a bit deeper that find the gold.

Reading NY Report while in bed this morning I saw a great article on Buy/Sell Agreements. Entrepreneurship is fraught with conflicts, and one of the stickiest is when owners want or need to sell. Great, I thought- this article will make excellent content for Mediation Mensch.

Imagine my surprise and delight when I noticed that the author's name- Richard Lutringer- a member of ADRPracticebuilder.com! Richard Lutringer is counsel at the New York City office of Chicago-based Schiff Hardin LLP, a full-service law firm. His primary areas of concentration are corporate transactions and mediation.

Here's what Richard has to say about this opportunity:

Alternative Ways to Resolve a Buy-Sell Dispute

Litigation and, recently, arbitration, the traditional means of dispute settlement, are expensive, time-consuming and unpredictable. More and more businesses and their attorneys are choosing to use a third-party mediator to assist them in resolving contentious issues in one or two days, leaving good relationships and bank accounts intact. Mediators, usually paid on an hourly or daily basis, are trained in negotiation and dispute-settlement skills and have no stake in the outcome. Lists of experienced commercial mediators are available through many state and federal courts as well as such organizations as JAMS (jamsadr.com) and the American Arbitration Association (www.adr.org).

What does this mean to you?

For all those workplace and commercial mediators who are chasing corporate clients, this means you may want to look at the small business market instead. Serving newly formed and established partnerships can be a very lucrative business for mediators.

The variety of disputes that can arise within a partnership are almost unlimited. A mediator could specialize in partnership formation or charters, and assist the entrepreneurs to define and standardize their relationship, responsibilities and decision-making abilities. Once, I worked with partners in a three person law firm who had formed on a handshake and then got stymied when one partner decided not to practice law any longer. If they'd taken the time at the beginning, the end of their partnership would've been much smoother and less costly.

You could specialize in buy/sell agreements as Richard suggests. Valuation is a very emotional issue. It would be important to have a third party to help process hard feelings and make a space for good judgment to prevail.

How do you find clients?

The old fashioned way: research. Happily there are some new technology tools to make this process easier. Turn to Hoovers.com or OneSource.com to get a big picture of what companies meet your target market criteria, then use business social networking sites like LinkedIn to make connections.

Then do a Google alert for your small group to understand what the company is doing or needs now. It won't guarantee that you'll get the business but you'll be much better position with a warm introduction and a sense of the company's current needs.

Many thanks to Richard Lutringer for leading the way...

Try. Fail. Learn . Grow! Dina

PS The Workplace Learning Circle, which will discuss these types of opportunities, launches on Monday, Dec. 10th. Visit my website for more details.

The Real Estate Downturn Spawns an Increasing Need for Mediators and Arbitrators (12/03/07)
David W. Dresnick
The growing poor economic cycle for real estate, and growing consensus projections that the reduction in housing prices may last to the beginning of 2009, has resulted in a ever expediential increase for the need for Mediators and Arbitrators.

Litigation Survey Reveals Extensive Use of Mediation (11/28/07)
Keith Seat

An annual survey of hundreds of senior corporate counsel on litigation trends states that half of the companies settled all or the majority of their cases prior to trial or arbitration hearing. Mediation was used in settled matters about half the time or more by 50% of U.S. companies and by 75% of U.K. companies. In the U.S., use of mediation is notably higher in the Midwest and New England than in other parts of the country. Among industries, mediation appears to be used much more frequently in Retail/Wholesale, Financial Services and Education, and less frequently in Real Estate, Tech/Communications and Manufacturing. Overall, the number of lawsuits filed was down from the previous year, although the number of cases involving $20 million or more is increasing.

Fourth Annual Litigation Trends Survey Findings (Registration Required); Survey Data

World Bank Publication Urges Mediation of Corporate Governance Conflicts (11/28/07)
Keith Seat

The Global Corporate Governance Forum of the World Bank Group’s International Finance Corporation recently released a 60-page analysis strongly encouraging the use of mediation by corporations in resolving both internal and external corporate disputes. The paper discusses mediation approaches and obstacles, giving examples throughout. Among other things, the publication recommends that senior management and directors be trained in mediation techniques, that professional mediators increase their knowledge of corporate governance issues, that corporate professional organizations offer mediation services and training, and that codes of best practices recommend use of mediation.

Webwire (November 9, 2007); Mediating Corporate Governance Conflicts and Disputes

Construction and Other Commercial Mediation Increasing in Scotland (11/14/07)
Keith Seat

Mediation is an increasingly preferred mode of resolution of commercial cases pending in Scotland’s courts. In particular, mediation is playing a much bigger role in resolution of construction disputes, where regaining control appeals to the parties. Even disputes that are not immediately resolved in mediation often settle before final judgment because of the mediation effort.

Scotsman (General) (November 7, 2007) (Subscription Required); Scotsman (Construction) (November 7, 2007) (Subscription Required)

Mediation Resolves Land Dispute for Minnesota Twins Ballpark (10/31/07)
Keith Seat

Two weeks of intense mediation between Hennepin County, Minnesota and land owners finally resolved the price for ten acres of land needed for a new Minnesota Twins stadium. The settlement avoids a November jury trial on the landowner’s appeal of the $23.8 million set in condemnation proceedings.

AP Alert Minnesota (October 13, 2007) (Subscription Required)

Non-Lawyers May Represent Parties in FINRA (NASD) Mediations (10/17/07)
Keith Seat

The Securities and Exchange Commission has approved a proposal to permit non-attorneys to represent parties in mediations and arbitrations before the Financial Industry Regulatory Authority (FINRA, the name NASD adopted in July 2007 after merging with NYSE). In addition, attorneys may practice outside states in which they are licensed, subject to state law. However, persons who are suspended or barred from the securities industry or attorneys who are suspended from practicing law or disbarred may not represent parties in FINRA mediations or arbitrations.

RegAlert (October 3, 2007) (Subscription Required)

Mediating the sub prime mortgage crisis (10/16/07)
Geoff Sharp

When America sneezes, the rest of us catch a cold.

So, I guess many mediators around the globe are working out how to get involved in the unfolding drama of the mortgage melt down.

In my neighbourhood we have had 9 financial institutions go to the wall in the last 6 weeks. There will be more.

In the UK there has been a run on Northern Rock Bank - the first run on a bank there since 1866.

As UK's ADR Group says "The threat of insolvency is now a reality facing many businesses that simply cannot cope or do not have business strategies in place to deal with this type of situation. Aggressive or opportunistic creditors are waiting in the wings to strike"

But our UK colleagues are hard at work looking at how mediation may assist in the UK's debt bubble and resolve commercial disputes for distressed businesses.

So too are the Americans - busy looking for ways that mediation can assist the defaulting homeowner.

Mediation Increasingly Used in Brokerage Disputes (10/03/07)
Keith Seat

In the brokerage industry, where the norm of mandatory arbitration is under scrutiny, more parties are turning to mediation, according to the Financial Industry Regulatory Authority (FINRA), with substantial growth in private mediation rather than FINRA’s in-house program. Mediation is seen as a safer alternative to arbitration, since the parties retain control both in choosing the mediator and whether to settle at all. In addition, parties and attorneys agree that mediation can be used to test their cases and, in some instances, bring investor expectations back to earth. According to FINRA, about 80% of brokerage mediations do result in settlements, with mediations taking about four months compared to over 13 months for arbitration. To promote mediation, FINRA is offering discounted fees during October, which is Mediation Settlement Month.

AP DateStream (September 28, 2007) (Subscription Required)

IFC Providing Mediation Assistance to Macedonian Chamber of Commerce (10/03/07)
Keith Seat

In order to provide better resolution of member disputes and improve the business environment through the use of mediation, the Macedonian Chamber of Commerce signed a memorandum of cooperation with the Alternative Dispute Resolution Program of the World Bank’s International Finance Corporation. The agreement is part of an effort by Macedonia and neighboring countries to use mediation in the business sphere, with the greatest success thus far in Serbia, Bosnia and Herzegovina, where about 2,200 disputes involving 45 million euros have been resolved.

World News Connection (September 21, 2007) (Subscription Required); IFC’s ADR Program

Asian Mediation Association Forming to Address Commercial Disputes (9/19/07)
Keith Seat

Mediation centers in Singapore, Hong Kong, Indonesia, Malaysia and the Philippines are joining together to form the Asian Mediation Association (AMA) in response to increasing trade and cross border activity among countries and businesses in the region. The AMA will pool resources and provide a regional infrastructure for conflict management and resolution. An AMA secretariat will be located at the Singapore Mediation Centre, where a memorandum of understanding forming the AMA was signed on August 17 at the 10th anniversary celebration of the Singapore Centre. The AMA hopes to expand to include China and India, as well as other Asian members.

Channel NewsAsia (August 17, 2007); Business Times (Singapore) (August 18, 2007) (Subscription Required)