Can Transformative Mediation Work In Commercial Litigation? A Conversation With Joseph P. Folger And Robert A. Baruch Bush

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First published in the
February, 2005 issue of the Southern California Mediation Association
Newsletter.

The transformative mediation model was first articulated by Robert A. Baruch Bush and Joseph P. Folger in their classic work, The Promise of Mediation: The Transformative Approach to Conflict (Jossey-Bass 1994, Revised Second Edition 2005). Because transformative mediation focuses primarily on the personal interaction between the disputing parties, it seems well-placed in family, partnership and other disputes where the parties must continue to interact with one another. Whether or not this model is useful in the resolution of arms-length commercial transactions was the subject of a recent conversation between author Victoria Pynchon, a Los Angeles commercial mediator and litigator, and the two originators of the transformative model.

VP: “Transformative mediation” sounds a little “touchy-feely” for my corporate clients. JF: You shouldn’t let the word “transformative” get in your way. The U.S. Postal Service has adopted the transformative model in its nationwide employment dispute resolution program, REDRESS. So have many other governmental agencies and mediation programs.

VP: What do transformative mediators do?

JF: Let me first tell you what they don’t do. They don’t provide a neutral case evaluation. Nor do they become a third-party negotiator, pushing one party’s agenda on the other. Nor does the transformative mediator carry messages back and forth between the parties, deliver the “bad news” that an attorney can’t bring herself to convey to her client, or “bang heads together.” Transformative mediators don’t build cases or “depress client expectations.” I’d guess these are the techniques with which you’re most familiar.

VP: Yes, but I’ve seen these methods creatively resolve seemingly intractable disputes. I’ll admit that the most creative solutions tend to come from the clients, not the attorneys or the mediators. However, I find that most lawyers simply want a neutral case evaluation followed by a couple of hours of third party negotiation.

JF: And how does that work for you?

VP: Most of the cases I’ve litigated have settled within a range I thought to be “reasonable.” Sometimes I think one side is getting the better of the bargain. But I’ve yet to see anyone get taken to the cleaners. Can a transformative mediator do better?

JF: We think so. But let me ask you one more question. Do the clients generally seem pleased with the result?

VP: You know the old saw – a truly good settlement is one that leaves everyone unhappy.

JF: That’s why transformative mediation was developed – to create a process that neither litigation nor the adversarial mind-set can deliver. Transformative mediation creates outcomes that are genuinely satisfactory to the clients. Frankly, we believe clients often accept mediated settlements only because their attorneys have told them they can’t do any better. We believe they can.

BB: We view conflict as a crisis in interaction. In the midst of that crisis, all parties, including their attorneys, experience confusion, fear, disorganization, vulnerability, uncertainty and indecisiveness. They also experience defensiveness and suspicion. This is not surprising for either the parties or their counsel. Everyone, the attorneys most especially, wage wars of nerves, as well as battles of wit and intelligence with and against one another every day. The results — the decisions of trial and appellate judges, and certainly jury verdicts — are extremely unpredictable. One’s adversary is being paid to “trip you up,” disclose as little information as possible and scheme to defeat your every attempt to move the case toward the victory you’re seeking.

VP: I’m still not certain I know why it might be better to involve a “transformative” rather than an evaluative or facilitative mediator, though.

BB: We’re getting there, but a few more basics first. We’ve agreed, I think, that the adversarial system, while perfectly well suited to try a case to a jury, is not particularly good at supporting party participation in developing mutually satisfying and creative mediated resolutions. To be successful a mediator has to encourage the type of cognitive and emotional states that are conducive to changing the quality of the communication and negotiation. Trial lawyers may well wish to play on people’s fears as a way of manipulating their opinions. To be a true alternative to adversarial negotiation and litigation, however, mediation should free people to play by their own rules for the purpose of achieving their own ends – and to do so with clarity and confidence rather than fear and bluff.

VP: How does a transformative mediator begin to achieve that?

JF: By listening very carefully to what the parties are saying to each other and seizing every opportunity to help them move from states of powerlessness to clarity and strength, and from self-absorption to recognition. Remember that conflict creates fear, vulnerability and powerlessless – emotions that create anxiety and impede problem solving. Anxiety is reduced, and often replaced with a sense of competence and self-esteem, when the parties are given the ability to structure for themselves the means of resolving their dispute. And because the means of resolution shapes the outcomes, the result is more likely to be satisfactory to both parties. As the parties begin to regain some degree of control over the conflict, their interaction shifts toward increased clarity, confidence, personal strength, organization and decisiveness. This is movement from powerlessness to strength and clarity.

VP: How about the self-absorption to recognition part?

JF: Remember what we said about states of self-protection, defensiveness and suspicion? We call that “self-absorption.” Once again, it’s a perfectly normal and appropriate stance in an adversarial setting. It’s counter-productive, however, in mediation. The transformative mediator stays alert to shifts in the parties’ discussion that show increasing attentiveness to the other, greater degrees of responsiveness to the other’s position and a greater appreciation for the other’s situation. This can only happen when the mediator allows the parties to express all of their concerns and the full range of their emotions without hindrance.

VP: So are you saying that transformative mediators want the parties to talk about the case without monitoring by their attorneys?

JF: It’s up to the parties. Clients, like children, grow up and want to speak for themselves no matter what others tell them to do.

VP: How does putting the clients “in control” of the mediation change anything?

BB: Well, first of all, transformative mediators don’t put anyone in control – most of all, not themselves. Unlike the evaluative or even the facilitative mediator, the transformative mediator creates an environment in which the parties or their lawyers are given the greatest amount of freedom possible to collectively direct the process of the mediation itself. The parties are in charge of establishing the ground rules, making the agenda, discussing the issues, and, determining what is “in bounds” and what, if anything, is out of bounds.

VP: If the parties (or even the lawyers) express their true thoughts and feelings without interference by the mediator, don’t the sessions turn into free-for-alls, with heated accusations, even shouting? BB: They could. But remember, the parties establish their own ground rules and “no shouting” might well be one of them. We do not, however, discourage strong disagreements. In fact, transformative mediators support the expression of the strongest negative feelings and opinions and never strive to suppress or deflect the discussion to “safer” ground. Surfacing and clarifying sharp differences actually helps parties clarify what they want to do by allowing all sides to come face to face with the real issues separating them. Standing at the edge of the cliff, most people decide they don’t want to jump. Those who do have made the choice freely. But if you hold people back from the cliff, they will keep trying to get there.

VP: But wasn’t it the parties’ inability to solve their own dispute that brought them into litigation in the first place?

BB: Of course. But we believe that “alternative” dispute resolution means what it says. That there is another way to resolve disputes. Something radically different from the adversarial process where the client is effectively side-lined or slotted into the narrative recommended by the attorneys or jury consultants. That process is all about manipulation. Mediation should be about clarity and choice.

VP: What I’ve heard so far is somewhat vague. Can you put some meat on the bones of the process?

JF: Sure. One of the most important principles is focusing on the parties’ negotiation at a micro-level. That means following the discussion among the parties closely enough to help the parties — including the lawyers — to genuinely communicate, not simply posture. Communication and decision-making processes involved in negotiation, even for expert negotiators, are riddled with pitfalls that undermine their quality. This is well documented in the research on negotiations. When unchecked, these pitfalls can block clear decision-making and create “settlements” that leave untapped value on the table and a bitter taste in everyone’s mouth.

Transformative mediators support the communication and decision-making processes on all sides and therefore help to avoid and overcome these pitfalls as the negotiations unfold. In essence, they make the negotiation process less “painful” and more productive, and they do so without insisting that the mediator decide the case.

VP: But my clients are mostly interested in victory. They don’t want to “care” about the other side.

JF: We’d question that assumption. It is true that clients do not want to be “taken to the cleaners.” But that doesn’t mean they want the most adversarial process adopted to achieve their goals. You have to take into account the role that lawyers themselves sometimes play in creating client expectations about the path the negotiations can take.

BB: We know from research that clients value certain key aspects of the negotiation process as much as they value the outcome of settlement per se. Specifically, they value the voice and choice that the process affords them – the opportunity to say their piece fully and to control the decisions that are eventually made. This often matters significantly to them, especially if they are willing in the first place to try to settle out of court. These same “process dimensions” are what make mediation attractive. Mediation can deliver voice and choice — but it often isn’t doing so today.

VP: Why do you believe “process dimensions” matter to clients?

BB: Imagine being asked to sit through a very punishing deposition of a former associate who you know is suffering from a fatal disease. Your lawyer wants to shake him badly enough so that he makes a mistake in giving testimony. Your presence is supposed to help the lawyer do that. That kind of “process dimension” matters a lot to people. Adversarial legal experiences like this – whether in court or in legal negotiations – is deeply distasteful, even painful, to so many parties. And we would add, to many lawyers themselves. The “recovering lawyer” syndrome is no joke in our culture.

VP: So how can transformative mediators achieve better, quicker and more satisfying settlements than evaluative or facilitative mediators?

JF: Let’s take each of your adjectives one at a time. Transformative mediators help to achieve a better settlement by refraining from advice-giving and pressure. This avoids boiler-plate settlement terms that are predictable and uncreative.

We find that litigators are becoming increasingly dissatisfied with evaluative mediation because the mediator simply becomes another layer of the adversarial process. We were training in New Zealand recently and a lawyer/mediator who had dealt with huge commercial disputes there for ten years said that the use of mediation was falling off dramatically. It was now widely believed among lawyers, she said, that “all mediators do is split the difference.” This type of mediation is strategic and manipulative just like the adversarial process. We think mediation can do much better.

VP: You also said transformative mediation is “quicker?”

JF: Yes, it can be. Evaluative mediators get in the way of where the clients and lawyers want to go in their negotiations. They not only direct outcomes, they heavily influence the process to “get things to go” where they want them to go. This shuts discussions down. And, when you stop people from saying or going where they want to go, they will keep trying to get there in different ways. So the attempted mediator control can simply prolong the negotiation process.

VP: Can a transformative mediator help the parties resolve the dispute earlier in the litigation process – even before what might seem like necessary discovery has been done, and it might seem foolhardy to accept a mediated resolution?

BB: Certainly. Most evaluative mediators are brought into the process quite late, after the parties’ positions are deeply entrenched. At that point, suspicion and distrust is the rule, and animosity is running high not only between the parties, but among the litigators as well.

We find that a case develops quite differently when a transformative mediator is brought in very early. At this stage, the parties don’t have firm opinions or expectations of the mediator’s role and the parties’ narratives have not become entrenched and edited by argument-building. It just takes less time to move toward a settlement built from the bottom-up, when the adversarial train is not already running at 120 miles per hour.

VP: And satisfaction?

JF: Satisfaction is key to the transformative mediation experience. It is more satisfying to clients if they are participants in the process. Not to belabor the point – but voice and choice are what clients are missing and they are precisely what transformative mediation provides. The clients are allowed to put on the table whatever they want to – to talk about what matters to them – and to make decisions without interference from attorneys or mediators who try to control them.

This is often a sticking point for counsel, many of whom appear to have “client control” on the top of their lists of conditions necessary for a successful litigation. It would not be uncommon to find a transformative mediator holding a caucus with a lawyer and his/her client to help them get clear about what they both want to put on the negotiating table when they step back into the mediation room. But when client participation is shut down completely, the experience is not satisfying to a client who has come to the mediation as a way of extricating himself from the highly controlled — but inherently unpredictable and dangerous — court setting.

We know a CEO of a large food distribution company who recently participated in a mediation — with his lawyer — over a contractual dispute with a vendor. He told us that the way the mediator treated him in the session was so demeaning he would never encourage his lawyer to use mediation again. There were important issues that the CEO wanted to raise and important topics he wanted to discuss with the vendor but the mediator would not allow him to speak. What was worse, the mediator made him feel foolish for being concerned about the issues that were most important to the CEO. Remember, your clients are sophisticated business people with decades of experience and are very savvy in their own business. Many of them feel infantilized by both the litigation and the mediation process. They don’t feel the need for the “over- protection” their attorneys provide. They believe they have important things they want to say – no matter where it leads.

VP: So what was the CEO’s final verdict on mediation?

JF: He said “I would have been shut down just like this in court. It certainly wasn’t what I expected or wanted from the mediation process.” He was not only unhappy with the mediator, but with his attorneys as well. The “client control” issue is one we believe requires much more attention by the commercial litigation bar.

VP: And litigators? Is transformative mediation more satisfying to them as well?

BB: Based upon our experience, litigators who have experienced true transformative mediation are happier all around. It is a refreshing and welcome option. You well know how tired litigators are of the endlessly repetitive adversarial, case-building and case-busting process.

VP: Yes. I’ve heard lawyers say they litigated a single half-billion dollar case for ten or fifteen years, at a cost of tens of millions of dollars, only to have the trial judge decide a pre-trial motion on grounds none of the attorneys could possibly have predicted and the appellate court to thereafter rule on some tangential point that had nothing to do with the meat of the dispute. Still, my clients usually want predictions of some sort, some assurance that they aren’t “being taken to the cleaners.” At least evaluative mediators provide some assurance on that score.

BB: Perhaps. Assuming everyone thinks the mediator is “on the mark.” Which in our experience is not all that common with evaluative mediators. Evaluative mediation places an enormous burden on the mediator. They try to obtain a clear understanding and assessment of a case without any power to compel production of evidence, and in the face of many well-known negotiation tactics that obfuscate and manipulate information. Based on this, they must assess what will happen in court and then “sell” their evaluation to the lawyers — and perhaps their clients.

Lawyers know all about unpredictability and unless they’ve lost all sense of proportion, have reasonably evaluated the chance of potential success or failure for their clients. Sure, it can never hurt to have an outside opinion, but that’s using only one-tenth of one percent of the potential value of mediation.

VP: So you don’t think evaluation adds all that much?

BB: In evaluative mediation, the lawyer is, in a sense, simply getting a free “mini-trial” to get a preview of how a disinterested observer might respond to the facts and law as presented. It remains the lawyers’ rhetorical burden to convince the clients that this is where the case is likely to end up. In the end, a mediator’s evaluation does not replace the lawyers’ judgment – judgment about the strength of the mediator’s assessment, judgment about whether it is worth going on to court when the mediator’s call seems wrong, and judgment about whether continued negotiations at the post-mediation point are potentially workable. In many cases, mediator evaluation probably adds little to lawyers’ predictive certainty, and therefore does little to lessen their burden of advising the client on whether or how to settle a case.

VP: And you believe a transformative mediator can do better?

BB: Certainly. Transformative mediation is much more likely to create greater certainty about the value of the settlement because that certainty stems from the richer, more textured information that is exchanged in the full and free mediated discussions. The lawyers can more clearly assess what that information means for their clients’ interests and the likely outcome of their case if it does not settle. Lawyers have greater confidence that the variables they are using to predict outcome in court are based on accurate information; and they have greater assurance that the possible settlement scenarios that have emerged in mediation are, genuinely, the farthest the parties are willing to go. Comparisons of settlement options and likely court outcomes therefore have a more solid basis. In short, transformative mediation can often clarify the full picture needed to make settlement decisions in a way that an evaluative process frequently cannot.

VP: If you had to sell transformative mediation to corporate clients as a superior product over evaluative mediation, what would be your top five sales points?

JF: First, it supports the process of negotiation by removing barriers to settlement that restrict information and cloud decision-making. Second, it avoids mediator-imposed, cookie-cutter settlements and instead supports the emergence of settlements built and valued by the parties themselves. Third, it allows for a humanizing rather than demonizing negotiation process so it makes dispute resolution less stressful and personally repugnant for both clients and lawyers. Fourth, it contributes to greater client satisfaction with their lawyers and increases lawyers’ professional satisfaction with the nature and quality of their work. And fifth, it avoids potential mediator abuses, especially the exercise of excessive pressure, as well as ethical pitfalls such as dual representation and unauthorized practice of law.