March 2001 

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Mediation and arbitration have become increasingly popular methods of alternative dispute resolution. Parties to a dispute typically resort to mediation when they are unwilling or unable to resolve the matter on their own. The end result of the mediation process is not binding, and the parties can continue their dispute if they are unhappy with the result or still just do not want to settle.

Arbitration, on the other hand, is a binding resolution process similar to a trial, but with fewer technical rules than a traditional courtroom trial. The parties pick one to three private arbitrators to judge the matter, or an arbitration organization selects them and the parties retain veto rights over some potential arbitrators.

Many lawyers are more comfortable with arbitration than with mediation as a trial substitute. The greater acceptance of arbitration may be based on its perceived similarities with courtroom procedure. Some attorneys reason that they can better judge the likely outcome of a more familiar process. And some have the feeling that there is just less control over the mediation process.

But more important than either of these perceptions is the reality of the mediator's or arbitrator's philosophy. The philosophy of the mediator or arbitrator can be outcome-determinative. Accordingly, this article is designed to help the practitioner to answer two questions in advising and counseling clients about alternative dispute resolution: 1) Whether to avoid mediation or arbitration because the philosophy of the mediator or arbitrator may hinder the matter or produce a less favorable outcome than some other proceeding; and 2) Whether a particular mediator or arbitrator has an acceptable philosophy.

Mediators differ markedly in the philosophies that they bring to mediation. Although it is not possible to catalogue every difference, the variations can be grouped into three categories:

• Differences in goals
• Attitudes about process
• Attitudes about protocol

Mediator Goals
The different goals tend to fall into three general categories:

Mediator Goal 1: The primary concern is to resolve the dispute quickly, in any way possible, but without being unprofessional or hostile. This type of mediator often will use verbal scare tactics to pressure the parties into reaching an agreement. The mediator may misrepresent each party's real position if it appears that concessions can then be achieved through the mediator's efforts;

Mediator Goal 2: The primary concern is to resolve the dispute in a manner that permits the parties to have a good, workable, continuing relationship in the future, whether it be business, social, political, or personal; and

Mediator Goal 3: The primary concern is to resolve the dispute so that both parties feel the outcome was fair and the mediator believes that the resolution is within the outcome range of fair results which would be expected in a full arbitration or trial.

Mark K. Schoenfield is a member of the firm of Schoenberg, Fisher, Newman & Rosenberg in Chicago. This article first appeared in the October 2000 issue of The Practical Lawyer and is reprinted here by permission.

"it may be important to have a mediator who will listen to concerns about particular psychological issues affecting the other party and its negotiator, as well as how to handle those issues."

Shared and Differing Goals
All three types of mediator goals may be appropriate for different situations. A good mediator will assess the situation and apply the most applicable goal for the circumstances. However, a problem arises when a mediator imposes the same goal on every mediation, regardless of whether it fits the parties' needs.

The use of an inappropriate goal may cause a dramatically different outcome. For example, if a mediator uses the first type of goal in a dispute between parties with disparate power, the weaker party may ultimately be in a worse position than if it had continued with litigation. A mediator wedded to the first type of goal may force the weaker party to make more concessions than the stronger party, merely because such concessions are easier to secure.

Similarly, a party who has no interest in continuing a good working relationship with the other party may actually be frustrated by a mediator who relies on the second type of goal. Of course, if the party should be concerned about having at least a reasonable future relationship with the other party, a mediator can perform a real service by educating that party about needs, interests, values, concerns, and priorities.

A mediator with the third type of goal can be a special problem if the mediator ignores possibilities for an outcome which the parties would accept, but which the mediator finds offensive or inappropriate. In addition, you may not want a mediator with this philosophy if you have more power or sophistication, so that you may be able to convince the other party to agree in a way that is highly favorable to you.

Attitudes About Process
Another type of philosophical difference distinguishing mediators relates to the mediation process itself. The two approaches can be categorized as facilitative and evaluative:

In facilitative mediation the mediator acts as a go-between, shuttling messages between parties, while seeking to promote clarity about each party's needs. If possible, the mediator also will propose new or creative approaches for a resolution. The process may include clarifying issues and each party's determination of strengths, weaknesses, risks, benefits and detriments, but does not include the mediator's own views.

In evaluative mediation, the mediator also seeks to add his or her views of the parties' strengths, weaknesses, risks, benefits and detriments. Since the mediator is seeking to convince each party to make concessions, there often is an overemphasis on factors favoring settlement and the making of concessions, and little focus on those factors disfavoring settlement. One extreme (although not necessarily inappropriate) variation of the process is when the mediator states what he or she believes to be the most likely outcome at trial and then seeks to impose it as the settlement.

Like the philosophical difference in mediation goals, either mediation process philosophy may be appropriate -- depending on the needs of the parties. However, a problem can arise when the mediator follows only one particular philosophy regardless of the parties' needs and desires. For example, the mediator may have specific values that skew his or her evaluation of the matter, or may have insufficient experience to evaluate trial issues accurately but believes in evaluative mediation.

Attitudes About Protocol
A third type of philosophical difference among mediators concerns the mediation protocol, beyond whether the process should be facilitative or evaluative. The issue is whether the mediator has a rigid view of the process and is unwilling to discuss how to handle the other party or its negotiator, or if the mediator is willing to let the parties participate in setting or adjusting the ground rules. A cooperative mediator can greatly advance the matter by being willing to respond to the lawyers' needs for assistance and help to educate the clients, if necessary. Similarly, it may be important to have a mediator who will listen to concerns about particular psychological issues affecting the other party and its negotiator, as well as how to handle those issues. Like the effect of the other mediation philosophies, mediation outcome may be affected by the mediator's protocol philosophy.

There are a number of other areas in which the mediator's protocol philosophy should be considered:

• If the other lawyer has unfairly filtered information, made unrealistic predictions or raised his client's expectations to unrealistically high levels, will the mediator try to rectify the problem when dealing with the other party?
• Will you be able to reveal your true position to the mediator and still be able to make incremental concessions through the mediator? Or will you have to reveal your concessions to the mediator only when you are ready to disclose them to the other party, so the mediator can tell the other side that it was a difficult concession to obtain?
• If the mediator presents an acceptable offer, can you discuss the option of waiting before telling the other side that you have accepted, so that they do not think that you agreed easily and feel emboldened to make further demands?
• If it appears useful, will the mediator be open to meeting with the negotiators without clients present, or the clients without negotiators present?
• Will you benefit from a mediator who will caucus with you about the other side's positions and interests (and tell you how determined, angry, or difficult the other side may be), but who will not provide any real insight into the psychology of the other party? Or do you need a mediator who can provide that psychological insight and is willing to share it in caucus?

Like the other mediator philosophical issues, the question becomes whether you want a mediator who always acts one way, or one who will assess the situation and be more flexible. If the mediator has a set philosophy (for either this matter in particular or generally) that differs from your own, it may be impossible for the mediation to proceed favorably for you. Nearly all of mediation occurs in a shuttle-diplomacy style. Once the shuttle process begins, you have no control over the process unless the mediator cooperates.

We often try to pick mediators based on how we expect them to relate to us, our client, the other party, and the other negotiator. We also consider their ability to be credible and persuasive based on recommendations and background information, such as employment history, age, mediation experience, and their fees. However, it can be far more important to learn the mediator's philosophies, since those will directly affect the process.

"it may be advantageous to have an arbitrator who will, at some appropriate time at least before final argument, inform the parties of issues and questions which need to be addressed."

"an arbitration process can be established which allows counsel for the parties to address issues and questions by the arbitrator(s) without creating any greater opportunity for anyone to appeal than exists in an ordinary arbitration proceeding."

Like mediators, arbitrators can have philosophical differences which create traps for the unwary.

One Size Fits All
The first area concerns the arbitration process. Does the arbitrator have a set philosophy of how every arbitration should proceed, or will the arbitrator allow the parties to have significant input to shape the process to fit their needs? The arbitrator's process philosophy differences may affect:

• Fact discovery, including the number and length of depositions;
• Whether experts will be identified and provide reports;
• Summary judgments motions; and
• Simultaneous briefs as opposed to briefs submitted so that one side has the last reply brief.

Defining the Issues
Another area concerns the type of arbitration process followed or allowed by the arbitrator as a matter of professional philosophy. For example, will the arbitrator simply take all of the information in as it is presented? Or will the arbitrator also define questions and issues (at least those in his or her own mind so counsel knows them) at some point before deciding the matter, thus giving each party a fair chance to address the questions and issues as the arbitrator sees them? There is nothing more frustrating than receiving an award, being displeased, and discovering that you cannot understand how the result happened, or that the arbitrator did not understand a point or was looking -- correctly or incorrectly -- for some information that neither side provided. Therefore, it may be advantageous to have an arbitrator who will, at some appropriate time at least before final argument, inform the parties of issues and questions which need to be addressed.

As an example of this, I was recently the lead arbitrator of a three-arbitrator panel, in which counsel for both parties had agreed that the entire matter should proceed entirely on cross-motions for summary judgment with simultaneous briefs and no oral argument. In setting the initial briefing schedule, counsel and the arbitrators agreed to hold a conference call as soon as the parties' lawyers reviewed the briefs. The purpose of the call was to permit the arbitrators to indicate the questions and issues they wanted counsel to address in the reply briefs. After hearing those questions and issues, counsel for the parties conferred and decided that oral argument would be preferable to reply briefs. They reasoned that oral argument would give everyone an opportunity to talk through the issues and questions, so that the award at least could be based on the best arguments counsel could make in view of the arbitrators' real concerns and views.

Note that an arbitration process can be established which allows counsel for the parties to address issues and questions by the arbitrator(s) without creating any greater opportunity for anyone to appeal than exists in an ordinary arbitration proceeding. This is especially true when there is no written opinion, or at least when any written opinion is fairly abbreviated to avoid indications of plain error.

"Split the Difference"
A dangerous arbitrator philosophy (unless there is an easy and clear-cut way to resolve the matter and you particularly want it for your situation) is the "split the difference" mentality. Arbitrators who think this way often fear or do not like to make tough choices. Such arbitrators may want the parties and lawyers to like them, because of a desire for future work, because of personality, or some combination of the two. This type of arbitrator thinks that both sides will be happier if the award splits the difference in the parties' positions, even when there is no logical or legally proper way to do so. The problem with such an award can be that there still may not be grounds for a successful appeal, so that each side is stuck with the split of their differences. Of course, if before the arbitration starts, you would have wanted the arbitrator to split the differences, rather than decide difficult issues of fact or credibility, then you should choose an arbitrator with this decision-making philosophy.

A Legal or Business Orientation
Another philosophical difference among arbitrators is their basic thinking in coming to a decision. Do they view the problem strictly in legal terms? Do they like to decide on the basis of business fairness? Do they rely on what they consider the norm in a particular business or profession? This also can involve differences between attorneys and nonattorneys, and between other different types of professionals, as well as between business or insurance attorneys as opposed to trial lawyers, and so on.

Black and White Thinking
An additional type of philosophical difference may be more a personality trait than a matter of conscious philosophy. Some people see everything in the world as right or wrong: everything is either X or Y. They make up their minds quickly -- even without thinking about whether there is any middle ground in a situation, so that one party quickly is seen as entirely right or wrong. This view then controls or at least colors all subsequent issues to be decided.

The Three-Arbitrator Panel
One of the ways to minimize the impact of any one arbitrator's philosophy is to use a three-arbitrator panel. This often creates a small group dynamic like a jury, bringing out the best in everyone with regard to how they handle the analytical and decision-making processes. Of course, it only cuts the impact of any particular individual's philosophy if that person is not considerably more domineering than the others, or at least one other panel member does not share that member's philosophy. Moreover, the potential decision-making advantages of a three-arbitrator panel must be weighed against potential disadvantages, such as costs and scheduling difficulties.

These issues are especially critical in view of the very limited grounds for appeal from an arbitration award. Errors may not be grounds for such appeal even if they would be if committed in a bench or jury trial.

These philosophical issues should be factors in deciding whether to choose mediation and arbitration as opposed to court process, especially regarding whether you can control the choice of mediator and arbitrator(s) sufficiently to get the philosophies which you want or at least avoid the ones that you do not want. If you then do choose mediation or arbitration, try to learn about the philosophies of the potential mediators or arbitrators before you choose a particular person. In addition, once in the mediation or arbitration, be alert for clues about that person's operational philosophy, so you can try to use the operational philosophy to your advantage.

For businesses, trade associations, or other organizations that can structure a relationship with a mediation-arbitration service provider or establish their own system for those services, decisions should be made about the desired and acceptable mediation-arbitration philosophies. Then these decisions must be clearly implemented to have processes that work in a beneficial manner as desired.