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In-house Division

Mediation: Cutting the cost of conflict

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Andrew Hildebrand explains how to use mediation to cut the cost of conflict and show the board you’re a profit centre

Managing your organisation’s legal issues in an ever-increasing regulatory environment is one thing, but how do you do so while keeping external legal costs down? What should you be doing to prevent disputes escalating, or to provide more effective support to the company partner? Here are some tips to consider.

1. When you get into a conflict, consider mediating first

Mediation is very effective. Ninety per cent of UK commercial mediations settle. It’s quicker, less expensive and less risky than most alternatives, and invaluable when a relationship or reputation might be at stake. And it’s confidential too.

2. Don’t wait until things have deteriorated. Think of it as marriage guidance, but for business problems

If you know how to intervene early enough, it can be much easier to resolve things and get a relationship back on track. So think about hiring a mediator when a dispute is flaring up, or when colleagues start experiencing difficulties with business partners.

3. You can use it in various different ways

Don’t think of ‘mediation’ in the formal sense, either. Maybe you just need someone who can knock heads together and keep everyone on track until a binding agreement has been reached, or to clear the air and stop people arguing about who’s right and what the damage is – in other words, someone who can identify ‘how we got here’, and move everyone on towards establishing ‘where we go from here’.

I also chair tricky board meetings or away-days, and multi-party stakeholder discussions, especially where people have different interests, or are about to have to deal with change.

4. It is especially useful when…

  • the law won’t give you what you want
  • you don’t have a cast-iron legal case
  • you don’t want to risk collateral damage or incur disproportionate management time or expense
  • you don’t want issues becoming public or disruptive
  • you want a quick fix, for example, to avoid cashflow issues
  • people may take things personally, or where communication has been poor
  • dealing with sensitive issues inside the company.

5 Why couldn’t I do it myself?

Because you can’t referee your own dispute if someone else won’t let you, regardless of how good your negotiation skills are. If ‘they’ see the organisation as being part of the problem, they won’t let you scratch under the surface either. But they will listen to someone who is independent and has no skin in the game.

As lawyers, we tend to analyse business issues though a legal prism. When it comes to settling disputes, however, there’s usually something else going on, which is the real obstacle to settlement. The problem is – and I review mediation bundles every week – you won’t find it in the inter-party correspondence or the pleadings.

That’s what an experienced mediator is trained to uncover and defuse, as they manage the process and keep people focused on what they want to achieve – and away from what is separating them.

6 Put mediation into your dispute escalation clauses

Make it your default position. That way, when negotiations start coming unstuck, you can automatically invoke it. Put mediation clauses in key deals, standard contracts and contracts with foreign partners (to avoid the added protraction of having to litigate abroad). Long-term or multi-party projects can also be insulated from inter-party fall-out by appointing a dedicated ‘go to’ point person in the contract.

7 Use mediation to improve how your department is perceived within the organisation

Like it or not, in-house lawyers sometimes get bad internal press, especially when we don’t appear to be delivering quick commercial results. Mediate a case quickly and successfully though, and that perception can soon change. Mediating also provides a great opportunity to spend time with key decision-makers and colleagues involved in the dispute, and show them at first hand how you add value when the company is in a tight spot.

8 Use mediation to show you are a profit centre. Use it to bump up the bottom line

With year-ends looming, take stock of outstanding disputes. Liaise with your finance director. Could any provisions be released or reduced? What about any anticipated legal expenses? Have any potentially recoverable amounts been written off? What would raise EBITDA? Could a litigation be taken off the books?

9 Try it

Mediation is tailor-made for businesses, and you can use it to get whatever result you want, irrespective of whether you would normally be legally entitled to it. I started using mediation as a GC and found it invaluable. So much so that, 10 years ago, I switched careers and became a full-time mediator instead. But don’t take my word for it – try it.

Andrew is running his ‘Mediation for In-House Lawyers’ seminar on Wednesday 15 March in London.

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About the In-house Division

Your In-house Division is dedicated to meeting the needs of in-house lawyers working in the corporate and public sectors, not-for-profit organisations and charities.

See our 2016/17 Engagement Programme.