THE TANGIBLE EFFECTS OF INTANGIBLES

Barristers and mediators often overlook or minimize the effect of “intangibles” in negotiations and mediations. It is also common for clients to find it difficult to identify or express the “intangibles” that drive or are embedded in their stated legal positions.? Sometimes, it is left to the skillful advocate or mediator to uncover and articulate these intangibles and if an intangible is uncovered and recognized, the real challenge is to put a value or weight on it in the process of determining risk.

What is an intangible?? In mediation parlance, it is sometimes described as an “interest” in contrast to the legal right to enforce that interest.? Here are some examples:

a)??????? Reputation

Most professionals and businesspeople highly value their personal or corporate reputations but often overlook the risk that an unexpected court outcome may pose to that reputation. Many clients are surprised to learn that court decisions are public and easily accessible online. ?In a risk-averse approach to settlement (see my earlier articles on the subject), a party should value and weigh the risk of an adverse finding against the chance that the reputation may be vindicated. In the end, the question is whether pursuing or defending a claim is worth the risk of reputational harm.

A corollary is that a party may have included in its risk calculus the harm that a decision may inflict on the opposite party. In other words, the chance that a court will find the other party to be not credible or may have engaged in improper conduct is in fact the driving force that encourages that party to continue the claim.

In any case, the challenge is to value and weigh the risks as part of calculus.

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b)??????? Emotional Investment

Many disputes arise from the breakdown of personal and business relationships, and that often results in deep feelings of betrayal, mistrust, anger, vengeance, and the like.? Indeed, it is not uncommon for litigants to become overly invested in the dispute, and in rare circumstances, this overinvestment may lead to vexatious conduct and mental illness ?(for a medical/legal analysis of vexatious conduct in law and medicine see Gary M. Caplan and Dr. Hy Bloom: “Litigants Behaving Badly: Querulousness in Law and Medicine,” Advocates' Quarterly vol. 44, no. 4 (November 2015): p. 411-459). ?

One school of thought is that mediation can be a transformative process where these emotions can be expressed, recognized, and legitimized.? Another is to downplay emotions and focus the litigants on the legal issues in dispute.

The point here is that emotional investment in a legal dispute is an intangible which if not addressed, may result in the failure of the bargaining process and resolution of the lawsuit.

Mediation briefs delivered by lawyers often fail to address this intangible and it is likely that in preparing the client for the mediation, a lawyer may dismiss or minimize the emotional input. If unprepared, both the lawyer and the mediator may have to “manage” high emotion on an ad hoc basis.

The point here is that this intangible must be “managed” by the lawyer in advance of the mediation.? In my experience, lawyers who are live to this intangible often warn the mediator in advance that the dispute is a highly charged one and suggest that the parties not sit together in a plenary session and proceed immediately to caucus.

c)??????? ?Recovery

Getting to a trial can take years and, in that time, the financial fortunes of parties can unexpectedly change. Unless a claim is insurance-protected, the risk of recoverability is an intangible that should be factored into any risk analysis.? Efficiency may dictate that the payment of a smaller number sooner is better than the chance of a larger payment later.

d)??????? Justice and Efficiency

It is not surprising that in the mediation, most litigants and their lawyers are focused on liability and damages. As I have noted in earlier articles, the use of advocacy skills to advance a predictive model of trial outcome is simply unprincipled and unproductive.? Trapped as they are in their version of the “justice” narrative, litigants and lawyers often fail to consider “process alternative efficiencies” as an intangible: using arbitration to deal with all interlocutory and timetable issues; using arbitration to settle gateway issues; hot tubbing experts and the like.

e)??????? Culture/Gender/Power Imbalances

There is a vast literature that addresses how each of these “intangibles” may impact the bargaining process in mediation. While all parties to a civil dispute are bound by procedural rules that are intended to level the playing field, the mediation process lends itself to the exploration of creative problem-solving that may address these issues.? In theory, at least, mediation is where “rights” can be balanced with “interests”.?? But the key here is awareness of these intangibles and the skill to “mediate” them.

Conclusion

Failing to address intangibles or minimizing their value, can doom the mediation process.? A lawyer must be live to these intangibles and ought to prepare the client to express or hear them.? The skillful mediator will be on the lookout for these intangibles and may raise them in the caucus sessions. Better to be ready than not