Tag Archives: mediation

How to Ensure that your Case does not Settle at Mediation

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On several occasions over the course of my years participating in mediations both as counsel and as mediator, I have come across a number of lawyers who clearly have no interest in settlement. This post is not directed to those lawyers. It is directed to those lawyers who do have an interest in settlement but, perhaps unwittingly, make mistakes that decrease the chances that their case will settle. 

Here is a list of what I consider to be the most significant of these mistakes:

Raising New Issues

In Ontario, most mediations take place after the discovery process is complete. At that point, both sides should have a good idea of the cases they have to meet. However, it is not always so, and it is certainly not likely if the mediation takes place early in the process. This gives rise to the possibility that one side would be able to raise a completely new issue, for the very first time, at the mediation. Inevitably, it results in a good deal of wasted time and perhaps even the need to adjourn the mediation so that the issue can be fleshed out with the mediation resuming at a later date. 

Similarly, a mediation is not a good time to bring forward any type of smoking gun for the first time, for the same reason.

Failing to have a Frank Discussion with the Client Prior to the Mediation

It is a serious mistake not to discuss with the client, in advance, the obstacles that he or she faces in achieving a successful result. It is also a mistake not to temper a client’s expectations by painting a realistic picture of how the case is likely to play out, and by not encouraging the client to recognize both the factual and legal challenges that he or she faces. 

The client will certainly hear about all of this at the mediation. If the client is hearing this for the first time, this may lead to a rather embarrassing loss of confidence in his or her counsel, and with it, a severe reduction in the odds of reaching a settlement. 

Failing to Explain the Process to the Client

The typical client will have only a vague idea of what a mediation is about. The client may even be under the impression that the mediator has some kind of authority to impose a result. Obviously, the client has to be disabused of that notion before the mediation. The client has to understand that there will be a great deal of downtime in the course of the exercise, and that when he or she is actively involved, there may be some unpleasant remarks made for which the client has to be prepared. Above all, the client has to understand that the case is almost certainly not going to settle unless some compromise is made.

Coming in to the Mediation with a Bottom Line Drawn in the Sand

In terms of compromise, a realistic assessment of the case should give the client a good idea of what a likely result would look like. Having said that, it is usually unhelpful to formulate, in advance, a bottom line position. It is more helpful to consider the range of possible results. At the top end, the range would consist of clearly acceptable results and obviously better than risking an adverse result at trial. At the other end, the range would consist of results that are likely unacceptable at the outset, but may have to be considered once the process unfolds. This is especially true if it becomes clear that the client’s assessment of the case was overly optimistic. The middle range, which is where most settlements are achieved, involves balancing an immediate and ascertainable result, as opposed to the uncertainty and expense of a trial.

Other Mistakes

Other mistakes I see all too often include:

Any of these mistakes can easily scuttle a mediation and deprive both sides of what is likely the best opportunity to resolve the dispute that they will ever have. 

Virtual Mediations and Arbitrations: The New Opportunities Presented to Disputants

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The new world of virtual court attendances, arbitrations, and mediations has now been our reality for well over one year. There is no reason to believe that this will not continue, regardless of our progress in reducing the impact of the coronavirus on the population. In fact, users of Ontario’s justice system have already been told that virtual court hearings will be the new normal.

This news is far from all bad. Actually, there are some very positive aspects to virtual litigation. This may be particularly true for parties to disputes seeking to either arbitrate or mediate their disputes.

Common to both arbitration and mediation is the fact that the parties select their own neutral. In the past, as a general rule, parties and their counsel were usually restricted to neutrals residing near locations where the parties lived or did business. This did not ordinarily represent a serious obstacle for parties located in highly populated areas. However, this posed a serious problem for those in smaller centres where there are fewer trained and qualified mediators and arbitrators. The only solution was to pay the additional expense involved in bringing in or going out of town to see the selected neutral.

Furthermore, in disputes involving highly technical fact patterns or complex legal principles, the search for a local qualified neutral is more complicated and far less likely to be fulfilled adequately.

In the virtual world, these restrictions do not exist. Parties are now able to locate and engage neutrals literally anywhere in the world. The restrictions of living or working in small markets no longer apply, as neutrals anywhere can be engaged at no additional cost. Where specific expertise, whether legal, factual, or scientific, is required, the availability of neutrals with such expertise opens up dramatically. For an arbitration matter involving a complex area of knowledge, it is now possible to engage a panel consisting of a trained arbitrator and industry experts, from wherever they happen to be located, and all without the burden of travel costs to bring such individuals together in a room for days, weeks, or more.
In the world of virtual mediation and arbitration, there are almost no limits to the extent that imaginative counsel can accommodate the needs of their clients at far less expense than before.

The experience of the pandemic has been brutally difficult for almost everyone, but here is one example of a silver lining that should be exploited where possible.

Some Thoughts and Observations By a Toronto Mediator – Part 2

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In this post, once again, I thought I would provide some additional observations on an aspect of the mediation process.  This post will comment on the relationship between neuroscience and conflict.

There are a number of studies in the booming area of neuroscience that focus on how the human brain relates to conflict and specifically on how male and female brains differ in that connection.  For example, psychologically, females are usually thought to be superior in inter-personal sensitivity than males.  That is a factor that is highly relevant to the issue of empathy, a critical element in the mediation context.

The entire issue of neuroscience is attractive because it deals with physical phenomena.  It produces pictures of brain activity which may suggest universal behavioural features.  In turn, this might enable mediators, counsel and parties to better understand decision-making processes and predict responses which people of a given gender, for example, may exhibit.

In my view, this type of study is particularly valuable to pick up where a mere economic analysis leaves off.  Economics gives us expected value calculations and litigation risk analysis.  It is based on the theory that decisions are made by rational people, who will act in a rational and logical manner in all circumstances.

Anyone with any life experience at all knows that this is simply not the case.  Firstly, people do not act on a rational basis in every case and every time.  Secondly, even where a party strives for rationality, what is rational behaviour to one person will not be rational to another.  Put another way, many if not most decisions are capable of more than one approach which may appear to be rational to some but not to others.  Variables in this connection likely include both culture and gender.  They will also include neuroscientific considerations.

For example, according to neuroscience, people speak in a universal emotional language.  The entire theory behind parties to a mediation gathering in a room and delivering opening statements is probably based on, or at least supported by, the theory of mirror neurons.  The assumption is that people are hardwired for empathy which, as we now know, probably varies with gender. Taken at face value, this may suggest that as a practical matter, the extent to which mediators should permit parties to engage in face-to-face discussion may be influenced by whether or not one or both is male or female.

Unfortunately, the literature is not at all consistent in this area.  Perhaps this is not surprising given the relative infancy of this area of study.  For example, one author suggests that the ability to interpret facial expressions is unconnected with culture.  On the other hand, there is evidence that suggests that the manner in which people perceive the facial expressions of others will indeed differ across cultures.

There is even controversy in the literature as to what mediators ought to do with this type of information.  There are those who consider face-to-face discussion to be important to any party interested in convincing the opposing party of his or her sincerity.  On the other hand, others consider face-to-face discussion to be highly problematic, at least in instances in which there is a perceived power imbalance between the parties.

While these nuances may be controversial, however, there appears to be solid evidence from neuroscientific studies as to the manner in which the brain reacts to emotionally charged issues such as those typical of conflict and efforts to resolve conflict.

For example, while it is normal and natural for a party to a legal dispute to feel angry, it would appear clear that such feelings represent an obstacle to settlement at least in the sense that angry people are less likely to make decisions in their own best interests.

Feelings of anger generally begin with a triggering event which causes a party to assess the relevance of a given situation to his own aspirations and the likelihood of achieving his own goals.  The party will then focus on who is to blame for the problem and assess whether or not the person will be able to cope with the situation as well as the likelihood that the situation will improve.  In the meantime, however, the party dealing with feelings of anger will be subject to an excessive amount of adrenaline produced in the brain.  This hormone is produced by the adrenal glands when the body is in a state of high anxiety, fear or excitement.  While it enhances alertness, and while neuroscience teaches us that emotion of this nature is an integral part of reason and the decision-making process, anger will affect cognitive processing and interfere with the ability to solve complex problems.  It has even been suggested that regardless of personal levels of intelligence, during anger arousal, people perform generally as if they have a learning disability.  Even subtle forms of anger impair problem-solving and general performance.  In addition to increasing error rates, anger narrows mental focus, obscuring alternative perspectives.

The angry person has one “right way” of doing things, which, if selected in anger, is seldom the best way.

Neuroscience tells us that this limitation to a person’s access to rational cognitive functions will arise whenever a person is under stress or threat or feels shame.  On the other hand, when the body senses safety, the nervous system becomes receptive to new information.  This suggests that there is a need for mediators, counsel and parties to be aware of physical dynamics in order to reduce a party’s perception of threat and thereby increase the chances of a successful resolution.

Some Thoughts and Observations by a Toronto Mediator

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In this post, rather than discussing a recent case, I thought it might be useful to provide observations on an aspect of the mediation process based on my training and recent experience conducting mediations in commercial disputes.  In particular, I would like to address the role of lawyers in managing their clients’ expressions of anger or high emotion.

Anger is almost an inevitable part of conflict.  A party believing his position to be right will likely believe the other side to be wrong and unreasonable in refusing to meet his demands.  As a result, parties in a mediation often blame each other and the resulting anger is one of the most commonly experienced emotions during a conflict.

One of the challenges for a mediator is to recognize the emotional states of the parties to the dispute, assess them in the context of the dispute and make an appropriate decision as to the circumstances under which each party is to be encouraged to express his or her emotions. At the very least, that analysis is critical to the decision as to whether to permit each party to vent or otherwise express emotion in the presence of the opposing party or merely in caucus.

One of the critical elements in the process has to do with the mediator’s own emotional self-awareness or emotional intelligence. Self-awareness will alert a mediator to feelings that might otherwise threaten his or her impartiality. Emotional self-regulation prevents these feelings from being expressed and acted upon in a manner that undermines the mediation.

A point that appears to receive little attention in the literature has to do with the importance of emotional intelligence of self-awareness among lawyers.

In a sense, the task of mastering one’s emotions is even more difficult for the lawyers than it is for mediators. Unlike the third party neutral mediator, each lawyer has been immersed in his client’s case, likely from the outset. The lawyer has been exposed primarily to his own client’s side the of the story, subject only to whatever documentary and oral discovery may have taken place by the time of the mediation. While any lawyer will recognize the importance of providing advice that is as objective as possible, the fact remains that many lawyers will, either deliberately or subconsciously, adopt their client’s cause as their own.  As a result, it may be more likely for the negotiations at mediation to give rise to emotional upset for the lawyer than for the mediator. This is particularly true if the lawyer for the opposing side is able to press the right triggers, for example by challenging the lawyer’s integrity, pride, ego, or skill level.  In that event, the need for lawyers to regulate their own emotions becomes even more important, but more difficult, than for the mediator.

Furthermore, unlike the mediator, a lawyer acting on behalf of an angry client in an emotionally charged dispute may find himself in a different predicament. Angry clients have a rather disturbing tendency to turn their anger upon their own lawyers, sometimes at the drop of a hat.  Whether that is a function of the often irrational behavior that characterizes angry outbursts and attitudes filled with blame and resentment is beyond the scope of this post.  However, most lawyers will have gone through this experience and may well have to confront it once again at or after mediation.  This will particularly be so if the mediation does not go well for the client, either because of hostility created by the opponent’s expressions of anger or for any other reason.

A lawyer confronted by his own angry client with attacks on his own integrity and threats to his own ego will have to manage his own emotions in order to respond appropriately and constructively.  This reality will represent a very real challenge.  A lawyer will approach the negotiation, presumably, with a view to obtaining the best result reasonably available to his client given the strengths and weaknesses of his case, the likely outcome and costs of trial, and the other usual considerations.  It may well be that this objective would be best served by permitting his client to express anger and high emotion, although presumably under controlled circumstances.  On the other hand, permitting a client free rein with his emotions may result in a backlash against the party’s own lawyer if the desired result is not achieved.  Furthermore, there are clients who seem to feel that their lawyer ought to share their anger, particularly if it is based in righteous indignation.  Lawyers who join in with their clients in expressing those sorts of sentiments may ingratiate themselves with their clients but, by doing so, will rarely contribute to the objective of settlement.

There is an additional reason why the need for lawyers to help regulate their clients’ conduct is even more significant than that of the mediator.  The mediator’s involvement in the matter will conclude at the end of the mediation whether the case has settled or not.  If the case has not settled, the action will proceed, the lawyer will continue to be involved, and the lawyer will next face the task of assisting the client to regulate his emotions when the matter reaches the courtroom.  In the courtroom, of course, the consequences of failure are far greater than they are at mediation, the atmosphere is likely to be even more emotionally charged, the need to regulate emotion is even higher, and the difficulty of doing so is even greater.

These observations are not just directed to lawyers.  A party involved in a mediation with a genuine interest in settlement will have to be able to “read” not only the opposing side but also his own lawyer, to be satisfied that the advice and guidance being provided is truly objective and dispassionate.

When Will the Court Refuse to Enforce an Arbitration Clause?

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The recent Ontario Court decision in Hargraft Schofield LP v. Fluke provides some interesting reminders as to problems that can arise when one attempts to enforce an arbitration clause in a contract.

In this case, the plaintiff sued its former employer for an alleged breach of a variety of clauses in the employment agreement that had existed between them.

The parties had entered into an employment agreement in June 2000 with a three-year fixed term. The agreement included an arbitration clause that required that all disputes relating to the agreement would have to be referred to arbitration.

After the first employment agreement expired, the parties entered into a second employment agreement for another fixed term. That document did not include an arbitration clause. It did include a clause providing that it represented the entire agreement between them.

Over the ensuing years, the parties entered into further employment agreements as the terms of each one expired. Eleven years after the first agreement had been entered into, the defendant resigned.

Several months after the defendant’s resignation, the plaintiff sued in Ontario Court. Over the course of the next two years and ten months, the dispute proceeded through the litigation process. The parties exchanged pleadings, negotiated a discovery plan, agreed to a timetable for the balance of the steps in the action, exchanged sworn affidavits of documents, scheduled examinations for discovery, and conducted a mediation (which failed). The defendant then raised the argument that the matter should be proceeding by way of arbitration. The plaintiff refused to change its course of action and the defendant brought a motion for an order staying the action and referring the issues to arbitration.

The first question that the court dealt with had to do with whether or not there even existed an arbitration clause in the agreement between the parties. The initial employment agreement had contained such a clause but the court found that it had been superseded by the second employment agreement which did not include such a clause. Even though one of the subsequent employment agreements specifically indicated that the defendant’s employment would continue on the same terms and conditions as had been contained in all of the previous agreements, so that they were deemed to be incorporated in the most recent agreement, the court determined that as the first agreement had been superseded by the second, and the second included an “entire agreement” clause, there did not exist a valid arbitration clause upon which the defendant could rely.

One of the interesting points in this respect had to do with whether or not the court even had the jurisdiction to make this decision. The Ontario Arbitration Act provides that:

    “An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.”

It was suggested that based on that provision, where there is an issue as to whether or not there even exists a valid arbitration clause, an arbitrator would have to be appointed to make that determination. Fortunately, in this case, the court took a more common sense approach and considered that this provision in the Act was not mandatory and that the court had the jurisdiction to determine whether or not an arbitration clause was in existence.

Secondly, the court went on to consider whether or not, if there did exist an arbitration clause, there was a valid basis for refusing to refer the matter to arbitration. The court pointed out that while the Arbitration Act requires the court to stay a proceeding that has been commenced in the face of a valid arbitration clause, there are exceptions. One of the exceptions arises where a motion for a stay of the proceeding is brought with undue delay.

The court pointed to the fact that almost three years had elapsed since the law suit had started. During that time, there had been a substantial amount of progress made along the litigation path. The court seemed to suggest that the defendant had either forgotten about the arbitration clause, or deliberately refrained from insisting on arbitration until after the mediation had failed. While not stated in the court’s decision, the idea that the defendant was now raising this argument merely to delay may also have been a concern.

In any event, the court dismissed the motion and the matter was ordered to proceed to trial in the usual course.

Among other things, this is an important reminder to parties to a contract with an arbitration clause that if they do not address the arbitration clause promptly but rather proceed by way of a legal action, they may lose the ability to insist on arbitration at a later date.