'Ethics' in Mediation
The ‘Art’ of Mediation ????????????
Mediation is an art not a science. There is no single way to do it ‘right’; but there are some simple things that parties can do in advance, that may improve the chances of obtaining a satisfactory outcome.
My prior posts have all, more or less, been about practicalities. For the start of a new year, I want to pose a question about ‘ethics’ in mediation.
Imagine a negotiating scenario in which (to keep it very simple) A thinks $100 is a very fair outcome to a dispute; and probably as much as it is realistically entitled to. However, during mediation an opportunity arises for A to settle for $500. Maybe B has made a miscalculation in its figures; maybe it considers it is in such a position of weakness it simply must settle. It doesn’t really matter for present purposes.
The question is: should A take the $500?
At first glance the answer seems obvious – of course A should (and of course any lawyer representing A, acting in A’s best interests, should advise A to do so). It’s a steal! But can I suggest that answer is not universally true? To use that time honoured maxim of legal advising; ‘it depends’. And it can depend on a multitude of factors.
For example, to get the $500, A may be asked to accept terms that may be problematic in terms of enforcement. Or A and B may have an ongoing commercial relationship which – if B later realizes they have been taken advantage of – might be damaged with consequences far beyond the $400 ‘gain’ from the settlement. Even without an ongoing relationship, if B thinks they’ve ‘been had’ during negotiations, A’s reputation will likely suffer and this could cause reputational and/or market damage to A. Or B might try to set the agreement aside and, if it is successful, A will probably be worse off than at the start of the mediation.
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We’re all familiar with the expression ‘there’s no such thing as a free lunch’. It applies in the present context in that, if you (or the client you represent) appear to be getting a deal that is significantly better than might realistically be expected, there may actually be a hidden cost.
To mangle a metaphor; you don’t want to look a gift horse in the mouth, but equally, you don’t want it to be a Trojan horse!
It’s prudent practice to take a moment to consider whether the deal is really as good as it seems, or whether there may be unintended consequences. If, having done so, you assess the downside risk as minimal then by all means ‘do the deal’: there is no rule that you can’t make a one-sided (and favourable) bargain. But do make sure you take that moment to reflect.
M: +61 (0) 493 704 366
January 2025
Mediator at Kerry Hogan-Ross Mediations
2 个月Great post Tony and I agree. Interesting if it was in the context of a mediation. If I was the mediator and saw the error, I think I’d have a duty to alert B before the offer was made, probably starting by asking that magic question ‘what am I missing here?’ But what if a mediator detected the error and let the deal go through? Breach of good faith? If there were more 000s involved the outcome could be catastrophic for everyone and possibly lead to litigation.