TOOLS FOR EFFECTIVELY REACHING SETTLEMENT / Perspectives on Dispute Resolution

PERSPECTIVES on Dispute Resolution—

SPRING 2013

Tools for Effectively Reaching Settlement

FOCUS

4

Is My Case Ripe for Settlement?

by Mark Grossman & Scott Van Soye

Mediating with Insurance Companies Ten Ways to be Successful

by David C. Peterson 8

What Matters Most at Impasse

by Joe Markowitz 10

Understanding & Working with Blame The Fundamental Attribution Error

by Zachary Ulrich 12

Overcoming Communication Breakdown

by Finding Common Ground

by Jim W. Hildreth 16

DISCOVER

ON THE EDGE

Public Policy & the Arbitrability of Intellectual Property Disputes

by Greg Wood 26

COMMENTARY 32

24

Ten Strategies for Managing Stress

by Arezou Kohan

22

The Invisible Woman - Our ADR Problem

by Victoria Pynchon

The Courtroom Vs. The Boxing Ring

by Mikita Weaver

FEATURED CONTRIBUTORS ALSO IN THIS ISSUE Message from the Editor 3 Upcoming Events 3 Mark Grossman

Greg Wood

Joe Markowitz

Zachary Ulrich

Jim W. Hildreth

Victoria Pynchon

A Page From the Mediator’s Notebook31 If a deal isn’t ‘fair’ it won’t happen

MESSAGE FROM THE EDITOR The focus of this issue is “Tools for Effectively Reaching Settlement.” In this edition, mediators share their insights on how to reach settlement by employing various communication strategies, techniques, and tools to bring parties to resolution in negotiations and mediation. Mediators, Mark Grossman and Scott Van Soye, have coauthored a piece on how parties and attorneys should prepare for mediation in order to give settlement its best chance. The article discusses the importance of evaluating the case prior to going to mediation or entering into settlement negotiations. David C. Peterson shares insights into how to work with insurance companies to create an atmosphere of resolution during the mediation process. Joe Markowitz talks about impasse and the most important tool a mediator can use in overcoming impasse, while Jim W. Hildreth shares insights into how to overcome communication breakdown by helping the parties find common ground.

At ADR Times we welcome constructive comments and insightful opinion pieces. This edition includes an article from Victoria Pynchon, successful attorney-mediator, and arbitrator. As an active writer in the Alternative Dispute Resolution Community (including her Forbes.com “She Negotiates” Blog), Victoria Pynchon talks about the problem in the ADR community of the invisible woman, and calls upon women to become more active in the community, to raise their profile, and to become more vocal and visible.

You’ll also hear from Arezou Kohan, a litigator-turned-mediator and lifecoach, on how to manage stress and maintain balance in an otherwise stressful profession. And arbitrator and mediator, Greg Wood provides an in-depth discussion of public policy and the arbitrability of intellectual property disputes.

We thank you for your continued interest as we build a community for sharing Alternative Dispute Resolution insights and resources. z For more information or to submit an article please contact: Mikita Weaver / Editor-in-Chief editor@adrtimes.com For more information on advertising opportunities, please email ads@adrtimes.com www.ADRTimes.com (800) 616.1202

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Mikita Weaver, Esq. Editor-in-Chief

Publisher Mark Fotohabadi & W. Timothy Pownall Design / Production www.vueladesign.com

The content of this publication is subject to Copyright by ADR Times, Inc. 2011-13.

Scott Van Soye, Esq., LL.M. Managing Editor

ADR Times explores mediation, arbitration, negotiation, diplomacy & peace.

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FOCUS

IS MY CASE RIPE FOR SETTLEMENT?

by Mark Grossman & Scott Van Soye

Mark Grossman

Mark Grossman is a full time mediator with the Agency for Dispute Resolution, devoted to putting things together, not tearing them apart. As a licensed attorney since 1981, Grossman focused his practice on personal injury, business-to-business, insurance, products liability, and family law disputes. Grossman has also been instrumental in the development of a family business manufacturing dental devices, which included starting a new company, managing between 300 – 400 people in the United States and Mexico, ensuring compliance with FDA and International Regulatory standards, and handling legal issues and sales worldwide. During these years, Mark gained a unique cross-cultural perspective that only years of managing people and negotiating can bring.

Read articles by Mark Grossman at: www.adrtimes.com/articles/author/markgrossman

A cake recipe says to add all of the required ingredients, and then place it in the oven for 45 minutes at 350 degrees. The chef, who is in a rush, takes a shortcut and leaves out an important cooling process and places the cakes in the oven at 400 degrees for 35 minutes, hoping for a good result. Instead, the chef has unhappy customers when the resulting product is not satisfactory in taste and texture.

The attorney has what she and her client believe to be a strong case.

She allows the other side to do all the work in discovery but does not do her own and fails to lock down evidence of how her client has been damaged or for the defense of the claims against her client. She and the client “have a number in mind” that the other side will have to meet.

However, they can’t or won’t explain how they arrived at this number or provide proof of the damages.

In a distributive bargaining situation, mediators often see counsel that come to the mediation looking for the mediator to, “Get me the money” or “Convince them their claim has little to no value.” When beginning to manage expectations during a mediation, mediators often wonder why parties would choose to waste everyone’s time coming to the mediation unprepared. To a mediator, this shows either that the unprepared party doesn’t know what mediation is, or doesn’t mind wasting a real opportunity to settle her case.

Mediation is not an opportunity to settle the case without groundwork or expense. The process requires that the parties know what they want, and why the case is worth what they expect to get. It also ideally includes some idea of the other party’s strengths and weaknesses – which usually means prior investigation or discovery. Notably, a good mediator can help the parties decide what it is they want, or discuss the outcome of similar cases in terms of settlement value or the outcome at trial. Preparing adequately for mediation requires a significant commitment of time and resources, which could be better devoted to talking directly about settlement.

A mediator is better equipped to push the parties toward settlement if the parties provide some data or information about the value of their

Scott Van Soye

case. If a plaintiff says his case is worth X, the mediator will be in a good position to push that number down if there are hard facts casting doubt on liability, even if there is contrary evidence. For example, in an auto accident case where serious injury is claimed, a plaintiff should share with the neutral evidence undermining defendant’s arguments about the slow speed of the vehicles at the time of impact (ideally information or testimony under oath). Again, preparation and discovery are essential, because the mediator starts out with no knowledge of the case – that’s one of the reasons we believe her to be neutral.

Why all this emphasis on developing evidence? Why can’t we just sit down and pick a number together? We could if both sides were perfectly rational, both sides had perfect information, and both sides wanted only money. But we aren’t and we don’t. For example, humans tend to irrationally distrust information that comes from an opponent. Such “reactive devaluation” assumes that what is good for you must be bad for me. Humans (also irrationally) assume without support that our position is correct, that the information, as known to us, supports our case, and that a jury will think as we do. These are phenomena called “naïve realism” and the “false consensus effect.”

Litigants lack perfect information and distrust what is given to them.

This makes it harder to settle. Preparing for mediation by doing discovery mitigates this problem. Information developed in verified responses is trusted more because we know that the penalties for lying under penalty of perjury are severe and we expect our opponents to avoid that risk.

Another reason that failing to prepare for mediation can hurt the chances for settlement is that it violates our opponents’ expectations and sends the wrong signal about a case. The litigation process – including mediation or negotiation, to some degree – is seen as rational and competitive. Parties are expected to develop evidence, come up with demands or offers based on that evidence, and make the strongest case possible at the mediation table.

Scott Van Soye is the managing editor of ADR Times. He is also a full-time mediator and arbitrator working with the Agency for Dispute Resolution with offices in Irvine, Beverly Hills and nationwide. He is a member of the California Bar, and practiced real estate, civil rights, and employment law for over twenty years. He holds an LL.M. in Dispute Resolution from Pepperdine University, where he is an adjunct professor of law. He welcomes your inquiries, and can be reached at scott.vansoye@agencydr.com or (800) 616-1202, Ext. 721.

Website: www.scottvansoye.agencydr.com Read articles by Scott Van Soye at: www.adrtimes.com/articles/author/scottvansoye

« IS MY CASE RIPE FOR SETTLEMENT?

WHY CASES THAT HAVE GOOD

potential outcome DON’T REACH A GOOD

Like the baker, some attorneys do not carry their burden in the mediation process. They underestimate the value of preparing for the mediation. Many come to the mediation knowing very little about the file or have not prepared their bargaining positions, hoping that something will develop to enhance their position at the table. Others think they can bluff their way to a settlement on terms more favorable than they could get with a frank and open conversation about the value of their case based upon what they can show at trial.

A mediator can assist in eliciting the known or provable facts necessary to keep the parties at the table, highlighting both the potential risks and rewards. However, mediators don’t carry the mandate to figure out the case for one side or the other. A mediator’s neutrality and role as an honest broker can be subverted by coming up with theories or unexpressed positions for one side or another.

When counsel make a demand for money without adequate support, they signal that they either have a weak case or are unprepared or both. Why would they not present strong evidence? The assumption is that they either can’t do so or that they are grasping at straws.

In either case, they send a message that not settling is a low risk proposition. Their counterparts smell blood in the water and either close their coffers or jack up their evaluation and demands. The perceived weakness leads to a hardening of positions, not based on the real strength of their case but on the holes in the other side’s case that are left after the opening statements.

Unpreparedness also leads to poor results in mediation because it robs the litigants of reasons to compromise. Culturally, humans

6 | ADR Times Perspectives

tend to enter a distributive bargaining situation having built “room to move” up or down into different positions. But (especially when clients are present) attorneys want to be given some reason to move – to feel that they are being logical in compromising their position while still being strong advocates.

Sometimes this reason is a significant position-change by another party, but often, it is tied to some evidence presented, or to a risk evaluation by the mediator, also based on the evidence. Movement for its own sake feels like weakness even if a party may have expected to settle for far lower than it originally started. The result: a party doesn’t move or feels uncomfortable about it.

In cases that aren’t “ripe” for mediation, one or both sides are often dissatisfied with the resulting negotiations and blame the other side for not negotiating in good faith. Worse yet, the attorneys blame the mediator or the process used, finding either one or both “unfair.”

Even if the case settles, one or both of the parties may feel unhappy with the terms or may feel taken advantage of. Many times, the mediation is terminated or it is continued until the party or parties have done their homework. In the case of judicially-ordered mediations, the parties have now wasted their least expensive opportunity to have their case settled and must either book a paid mediation or go to trial.

Consider the case where a very nice man slipped in one of the garden centers at a big box retailer. The man claimed that he slipped and fell on a small puddle of water in the section of fresh house plants and vegetables. He claimed that he couldn’t remember seeing a “Piso Mojado / Wet Floor” warning sign.

The slip caused knee damage and required surgery to repair his MCL. He had successful surgery and according to his doctors had made a good recovery.

This gentleman made a good appearance and seemed very honest in his presentation of the facts surrounding the accident. The man was a stay at home dad. He had not worked for a very long time and could not present a lost wages claim or future lost earning capacity.

His chief issues aside from the surgery and recovery period were that he felt pain / discomfort while doing housework for prolonged periods and he couldn’t wear certain favorite shoes any longer as they made his knee uncomfortable.

While that store didn’t argue that the medical expenses were unnecessary or unreasonable, they felt that given all the circumstances there was a responsibility on the part of the man to be aware of his surroundings, especially in the live plants department, where there is often water on the floor. They also said that they believed there was a warning sign in place.

One party had avoided doing any discovery, and it became clear that the negotiation process was also a discovery exercise. After only a few rounds of offer and counteroffer, it was clear that neither side could satisfy the other based on the evidence presented. Critical pieces of information were missing. Both sides needed this information to realistically evaluate their positions. The negotiations stopped dead. One side had reached their number and couldn’t be moved – because without evidence there was no persuasive force to the arguments made.

This was a case that could have settled. But there were unmet needs on both sides. One side wanted more evidence before going above a certain offer while the other side refused to reduce a certain demand it thought it could reach at trial relying on facts yet to be fully developed.

Not doing the work to “ripen” a case can delay or even doom settlement and may lead to the uncertainties and expense of trial. In addition, failure to prepare adequately may make an attorney appear incompetent, weak, or just plain rude for wasting others’ time and may adversely impact counsel’s reputation in the community. Ultimately, attorneys and parties must take the time to set the table for settlement – you’ll be glad you did. z

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Mediating with insurance companies TEN WAYS TO BE SUCCESSFUL

by David C. Peterson

It’s no secret that insurance carriers have altered their practices in the past several years. Authority and independent judgment they previously possessed has been removed from adjusters, managers, and supervisors as executives in the companies strive for uniformity in claims handling and ironclad control over settlement decisions. Rarely at mediation is there a person present from an insurance carrier with genuine ability to be flexible and exercise individual judgment beyond parameters established in advance.

with a letter or brief. The easier the connection can be made between the documents and damages, the more likely the carrier representative will grasp what is being communicated and prepare accordingly.

This reality renders it is more important than ever that plaintiff attorneys create the circumstances that will produce optimum results. Those employed by insurance carriers to participate in establishing the reserves on claims as required by law and who set settlement parameters must be motivated to set them in a range that will settle the case.

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This has frustrated plaintiff lawyers along with judges and mediators in many instances where clearly a case should and would settle if the right person with authority and flexibility were present. Pressure on the companies in this respect continues from various sources but the practice of restricted authority and flexibility persists in many instances.

The best plaintiff lawyers understand this. The changes in claims practices have not prevented plaintiff attorneys from settling their clients’ cases for reasonable amounts. The statistics are still quite high for settlements in mediations where experienced professionals are involved in each of the roles, especially plaintiff’s counsel. The reason is that experienced professionals find ways to work within the existing parameters. Rather than spinning wheels in unproductive behavior, demanding that which cannot occur, they do what will bring success in the environment in which they find themselves.

Carriers are paying hundreds of thousands and millions of dollars in settlements at mediations. They pay based upon their perception of risk. Plaintiff attorneys who have the best success for their clients at mediation, even under the present conditions, do the following:

1 ► Prepare the other side for the mediation. It is necessary to do

that which will have the other side prepared to negotiate within a range that will settle the case. The most important task is to make sure the claim representative’s file is documented. This means providing actual, reliable, tangible evidence supporting the client’s injuries, liability, and damages, past and future. These must be in the hands of the representative in plenty of time prior to evaluations taking place so that nothing is left to conjecture, if at all possible. Evaluations take place weeks and sometimes months prior to the mediation. The basic rule for carriers is that, if it is not documented it does not exist or is not true. Claims examination takes place with a critical eye. It is a cumbersome process many times to change evaluations when documentation is submitted too late. Obviously, the mediation session is too late. But so too is just a few days or even a week prior in many instances. What happens in claims processing must be kept in mind. Even if records are obtained by the carrier through subpoena, it’s best to organize what is important for the carrier to see and contemplate. Walk the adjuster through the records

8 | ADR Times Perspectives

2 ► Communicate directly with the assigned insurance adjuster.

Don’t rely upon defense counsel painting an accurate picture of plaintiff’s case as you would. Instead, by organizing and putting together the documents supporting liability and damages, work directly with the adjuster in addition to opposing counsel. With the changes taking place over time in the dynamics between the claims department and defense attorneys, direct communication with the adjuster is usually acceptable if not encouraged. This also minimizes the chance the carrier will come unprepared to the mediation with insufficient settlement authority.

Do thorough discovery. Requests for admission and special interrogatories are powerful tools yet too many plaintiff lawyers do not use them or do so ineffectively. Depositions are important as well. Unless doing so may hurt your client’s case or where an early settlement can be reached without the added expense, the time and money should always be spent to do discovery in a careful, expert fashion. It is another means to demonstrate to the insurance carrier that you are and will be on top of your case. It is the best and most clear way of showing the risk faced by the carrier. Depositions need to be well thought out so that when taken the result will be a transcript that can be used to make critical points obvious to the carrier representative. Thorough discovery does not mean overkill discovery – it should be carefully tailored to have the effect intended. Overkill can be counterproductive as it can invite the same in return as well as drive an unnecessary wedge between counsel and the carrier representative rendering negotiations more difficult.

Maintain a professional demeanor in all communications with insurance company representatives and defense counsel. It is rare that outward aggressiveness is productive. Insurance company representatives and defense attorneys rarely cower in fear and pay more money in response to rude and uncivil behavior. Those who are unsophisticated use crude methods in an effort to intimidate.

Those who are really effective go about it intelligently. They reveal the power in their case through demonstration by their work product not by empty-headed blustering. Also avoid pettiness and arguments in working with the other side. Dysfunction occurs when it “gets personal” between opposing attorneys and with a claims representative.

While cooperativeness is not always necessary to reach agreement, the lack of it can lead to unnecessary costs and delays. When you want something from someone, even your foe, treating them badly is normally counterproductive.

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5 ► Maintain a close relationship with their client and keep careful

track of their medical condition and treatment. Many attorneys fail to follow what their client is doing with respect to treatment and other matters important to the case. It is only when it is too late that the

attorney discovers, for example, that their client has received treatment with a chiropractor for too long or is wrapped up with some odd holistic guru, running up specials far beyond that which is reasonable. Or, clients may fail to seek the help they need because they don’t know enough. By failing to stay in close contact, counsel may learn too late, for example, that their client has been experiencing symptoms that called for a specialist intervention but did not know what to do about it.

the manner in which the settlement funds will be divided so that they understand how the net sum to them will be determined. Prepare the client for the mediation to look and act in a manner that will cause the opposing side to respect them. This is overlooked too many times by plaintiff lawyers who suffer the consequences when the adjuster and defense attorney spend time during the mediation talking about how a jury will dislike their client.

6 ► Demonstrate you are prepared to go to trial. In this era of 9 ► Prepare for mediation. Prepare as if there will be a trial, not attempted uniform claims processing, attorneys can have a tendency to rely on the ability to settle without doing much preparation or spending the money and time needed to develop and document their case. While it is true that carrier practices are such that documenting the injuries, treatment, and expenses are heavily weighted (unless liability is genuinely contested) it remains important in many cases if not most that clear signals be given that you are prepared for trial if no settlement is reached. Insurance company defense attorneys are required to provide reports to claims adjusters which are reviewed by others including supervisors and managers. In some cases, these go to home office. The reports will include statements regarding the plaintiff attorney and expectation of effectiveness at trial. Those who have prepared their case for trial are more compelling in terms of generating favorable settlement offers than those where the attorney has been lax in their discovery, witness statements, retaining experts, assembling demonstrative evidence, and so on. It becomes less significant whether you have tried 5 or 100 cases, if you demonstrate you are prepared for trial in the instant case being mediated.

7 ► Avoid

attempts at trickery. If you are primarily a plaintiff personal injury lawyer you will develop a reputation with insurance carrier representatives, defense attorneys, mediators, and judges. You do not want to be known as tricky, underhanded, or dishonest. It makes those on the other side not trust even that which is legitimate when it comes from you. It causes those representing carriers to discount you and your client’s claims. It is one of the worst things a plaintiff lawyer can do. You become just another sleazy plaintiff lawyer. You will not do as well for your client as you should in mediation or settlement conferences. The attorneys who consistently do well are those with the best reputations for ethical conduct and honesty.

8 ► Prepare your client for mediation. There have been instances

where the attorney meets their client for the first time at the mediation.

The client needs to be prepared so that they have a realistic view of settlement ranges and value. It becomes problematic when a client has nestled into a belief their home will be paid off or they can retire or pay college loans with their net recovery when this sort of settlement value is simply not there. It’s also important to review with a client in advance

David C. Peterson

as comprehensively but in terms of organization. Have the documents and items to be used at mediation organized. Make copies in advance of documents to be shared, including medical records, reports, itemizations of specials, and anything else that will be useful during the mediation. Highlight in advance statements in records and reports that are of particular importance. If there is a video be sure the mediator is prepared to view and show it. Prepare a list of specials. Have the medical billing itemized with the “Howell” reductions determined.

It does no good to try to hide this ball. Do a timeline especially including the history of treatment and other relevant events. Where future costs or losses are claimed, have these documented as effectively as possible both as to amount and the manner in which these will come about and show why it is not speculative. It’s best to put all of this in a binder for ease of use, providing a copy to the mediator and other side, including the claims representative directly and in advance. Jury verdicts can be helpful at times but they need to be relevant as to geographical area and similarity to the instant case. Local verdicts are more persuasive.

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Prepare to negotiate and work with the mediator intelligently. Negotiation approaches differ widely from mediation to mediation. The most experienced mediators are prepared to employ that means of approach or style which best fits the circumstances and parties. They have to be flexible in this respect and comfortable whether the negotiation will be highly competitive and the atmosphere tense or whether the circumstances call for a more cooperative approach.

It is best that a plaintiff attorney come with an open mind relative to the manner in which the mediation will occur in this respect. If one approaches the mediation with a cooperate style in mind but the other side is determined and bent on engaging in a battle, then the style of the mediator will adjust and so should that of the plaintiff’s attorney. A good mediator will also know and assist in negotiation strategies that will be best under the circumstances to achieve an optimum settlement. It is wise for a plaintiff lawyer, when comfortable with the mediator, to work with them in determining effective strategies in the negotiation. z

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David C. Peterson is a full-time mediator on the Central Coast beginning in 1995 and mediating over 1,800 cases. After a 20+ year litigation career, he obtained a Master’s degree and then LLM degree in Mediation from Pepperdine University School of Law, Straus Institute for Dispute resolution (rated #1 by U.S. News & World Report) where he has taught Mediation Theory and Practice. He is head of the ADR Sections in Santa Barbara and San Luis Obispo (now co-chair). For comments or information Mr. Peterson can be reached at davidcpeterson@charter.net or (805) 441-5884.

Read articles by David C. Peterson at: www.adrtimes.com/articles/author/davidpeterson

Spring 2013 | 9

WHAT MATTERS MOST AT IMPASSE

by Joe Markowitz

I remember reading a piece by a newspaper columnist who described the process by which someone in that field can finally claim to have mastered the trade. The aspiring newspaper columnist starts with a head full of ideas. He might even have rough drafts or outlines for many weeks’ worth of columns in a bottom desk drawer. But after about a year of doing the column, all of those ideas are going to be exhausted, and the columnist will have

nothing left in the storehouse to draw from.

Around that time, the columnist is going to be facing a looming deadline with no idea what to say. And that is when any newspaper columnist worth his salt begins to prove that he knows what he is doing. The columnist still has to file the column no matter what.

I can relate to this analogy partly because I have been publishing a blog on mediation for

about four years now, which I try to update weekly. I live in fear that I will run out of new ideas. I’m also facing a deadline right now—to finish this very article. However, this feeling or position—that of a writer on deadline with no idea what to put on paper— resembles the position of a mediator in the midst of a broken down negotiation who has run out of suggestions.

Getting beyond impasse is a popular subject for mediation training, and most mediators have listened to seminars or lectures filled with tips and tricks for keeping the mediation going when the parties have just about given up and are heading for the door. Many of these techniques can be effective.

Every mediation trainer will tell you:

IT’S GOOD TO HAVE AS MANY TOOLS IN YOUR TOOLBOX AS YOU CAN because you never know for sure what might be effective.

I recently participated in a seminar with Ken Cloke, one of Southern California’s great thinkers and writers on the subject of conflict resolution. Ken didn’t teach this group of mediators very many new techniques for breaking impasse. He just got us comfortable with the idea of impasse as a natural state, with exploring the sources of conflict rather than simply trying to squelch it, with getting beneath the surface concerns of parties to reveal deeper truths.

He reminded us that the most important tool a mediator can bring to the mediation is “your authentic self.” He urged mediators to remain present and remain interested because the parties eventually run out of patience with games. Whereas if a mediator has demonstrated that he or she has listened to and understands the parties’ concerns and genuinely cares, the parties will eventually trust the mediator to take them beyond impasse to resolution.

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Or as George Burns put it, “Sincerity is everything. Once you can fake that, you’ve got it made.” But seriously, faking it is dangerous.

Parties tend to figure out if the “authentic mediator” is not in fact sincere. A mediator must have a genuine desire to continue working with the problem, even after everyone—including the mediator—has run out of suggestions and ideas. The mediator’s genuine desire to reach settlement may be the only tool in the mediator’s toolbox that counts in the end. z

And they are right. But what happens when the mediator has run through the grab bag of tricks, or when all the participants can smell another trick coming a mile away?

At that point, the mediator can send everyone home. But if the mediator refuses to give up, the only tool in the “mediator’s toolbox” is whatever remains of the mediator’s initial will to persevere and hope for resolution.

A mediator must look within oneself and keep going, no matter what.

Joe Markowitz has practiced commercial litigation for more than 30 years, both in New York City and Los Angeles, and has served as a mediator for more than fifteen years. He is a member of the Mediation Panels in both the District Court and Bankruptcy Court in the Central District of California. He is currently the president-elect of the Southern California Mediation Association. www.mediate-la.com Joe Markowitz

Read more articles by Joe Markowitz at: www.adrtimes.com/articles/author/joemarkowitz

Spring 2013 | 11

Understanding&Working with Blame The Fundamental Attribution Error

in

Mediation

by Zachary Ulrich Have you ever had someone blame you for something over which you had absolutely no control?

If you’ve ever been late to a meeting, been framed by a sibling growing up, or otherwise haven’t lived under a rock your entire life, you know what I’m talking about. Why do people do this? Situations like these are due to a powerful psychological phenomenon called the Fundamental Attribution Error (FAE), and it pops up all the time in everyday life. While the FAE entails many things, the salient point here is that it describes human beings’ tendency to assume that someone’s behaviour – especially when we disagree with or are negatively affected by that behaviour – is due to that person’s personality or disposition, and not due to external factors or situations beyond their control. For example, say you’re late for a first date and the other person assumes that your tardiness is because you just don’t care enough, or because you lack punctuality. Further imagine that, in reality, you got stuck behind a huge accident on the freeway – you had absolutely no control over the situation – and your cell phone died unexpectedly so you couldn’t call.

By the time you arrive to the restaurant, your date has made a judgment – indeed, they may have committed a FAE without knowing it. Your date has assumed you had control over the situation when you did not.

It is important to note here that when someone assumes that you can control events they tend to become more offended, because they usually also assume that you didn’t personally care about or respect them.

This scenario also exemplifies why first impressions are so psychologically important: When people have little information about others, they assume things based on initial words and actions. If your initial actions do not accurately reflect your personality or character, they will likely commit a FAE in assessing you.

The FAE has huge implications for not only our everyday lives, but

12 | ADR Times Perspectives

also for many sources of conflict between mediating parties. Are you consistently late for dates? Do you normally go out of your way to ensure that your spouse knows how much you appreciate and care about them? When someone “commits” a FAE, they only have the context of the situation (i.e., your past behaviour) by which to reevaluate their assessment (and thus, their potential “offense” from what you’ve done).

Unfortunately, as humans we tend to only consider the “context” of actions when those actions are our own. We give ourselves the benefit of the doubt, but it’s a different story when judging others. And the story is no different in mediation: By the time a case crosses your desk as a mediator, more likely than not at least one of the parties (often, at minimum, the plaintiff) is wholly convinced that the dispute only exists because the other party did or did not do something to cause it. And they may be right! But as many experienced mediators know all too well, often the truth of a situation is secondarily important to how parties perceive it. Many times, parties will make up stories for themselves regarding the “fault” of a situation, and use their judgment of fault in order to legitimize their not reaching out to the other side, their unwillingness to compromise, and thus their determination to perpetuate the conflict. There are a lot of reasons why parties do this, and one very potent enabler of this process is the FAE parties apply when thinking about other parties’ actions.

I believe that it is incumbent upon conflict resolution professionals to be aware of and able to react to FAE thinking when we see it, and to understand that this kind of thinking produces assumptions and blame that can keep parties from ever considering settlement in the first place.

For instance, perhaps a subcontractor did not meet a deadline but could not do so because the subcontractor’s main supplier delivered needed goods too late. If the contractor does not take the time to ask why the

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contract terms were not met, and no communication occurs, they are likely going to assume that the subcontractor had full control over the situation and thus that it was their fault. Sometimes, parties assume the other party “harmed” them and could have prevented it, even when they could not. As mediators we know too well that facts are often muddled, convoluted, incredibly complex, and laced with emotional biases – and therein lies the conundrum: When parties can possibly blame other parties for a negative experience or outcome, they tend to do so because the FAE leads us to assume that someone was always in control of events. All too often, blame lies somewhere in the middle of the dispute, and in mediations where parties might otherwise have an opportunity to openly communicate with one another and come to an understanding, all dialogue is instead focused on “blame” (i.e., liability) and thus what money must exchange hands for the dispute to end.

This is especially true when parties do not have a previous personal or professional relationship: As with our hypothetical dispute between

Zachary Ulrich

spouses, if parties do not have a previous context by which to judge the validity of their FAE, they are more likely to commit a FAE and assume the other side is to blame – regardless of the reality.

So as mediators, what can we do? Of course, one of our most fundamental responsibilities is to remain neutral, but there are instances where it is nonetheless beneficial for parties to be guided in fully examining the potential FAE’s they may have committed. It’s always better for a client to examine their stance in mediation than to enter trial and find out the hard way that there are perspectives they haven’t considered.

Even more than saving my clients the time and money of trial, often full resolution is only possible by helping clients examine their thinking, re-assess their situation, and communicate with the other side as part of the process. In order to better remember how to break down my approach to potential FAE-related “roadblocks” in a dispute, I like to keep it simple and use the same acronym as the problem itself: “FAE.”

Zachary P. Ulrich is currently a researcher for Pepperdine School of Law’s Straus Institute for Dispute Resolution. He holds a JD, Masters in Dispute Resolution, and Masters in Psychology (Clinical). Zach is an alumnus of General Electric’s highly-esteemed Financial Management Program, where he held several financial analysis positions of increasing responsibility and completed a graduate-level education in business management and operations. He has published over twenty-five articles and commentaries on organizational conflict resolution and mediation psychology.

Read articles by Zachary Ulrich at: www.adrtimes.com/articles/author/zacharyulrich

Spring 2013 | 13

Facts

Address

Empathize

The ‘F’ in FAE

The ‘A’ in FAE

The ‘E’ in FAE

First, understand the Facts of the case from both sides, as best you can. Inexperienced neutrals might think this seems elementary, but experienced practitioners know full well that gaining a complete understanding of a case is almost always trickier than it seems.

Even though we are neutrals, we certainly have the opportunity to help our clients assess their conflict in ways they may not have previously. But this is only possible if we carefully gain a sense for the case from all sides’ perspectives, and if we are consciously aware that the perspectives parties share with us are inherently their version of what has occurred. Because our clients are human, they naturally will tend to perceive conflict through the lenses of various cognitive biases – including the FAE. Therefore, it is often the missing and contradictory pieces of information that can help us identify points where the parties may have made incorrect assumptions about one another’s behaviour.

Put another way, if our mediation cases were a jigsaw puzzle, it is only by carefully placing each piece in order to see the gaps or overlapping pieces that we can figure out what questions we may need to ask to help our clients gain clarity or re-evaluate their assumptions about other parties’ intentions.

Which brings me to the second step of the process. If you do choose to Address a potential FAE, make sure that (1) it is relevant to the dispute-at-hand (e.g., not something that neither party considers important and that thus will likely not cause stalemate later) and that (2) addressing the assumption is worth the delicate balance of indirectly calling attention to a potential “mistake” or “bias” a party may have. There are often many interpersonal and emotional issues we as mediators might address with clients, but we are not therapists: There is sometimes an unclear line between our task as conflict resolvers and that of a mental health professional helping clients process their emotions and improve their relationships.

My general rule is to ask my clients directly whether or not they think addressing particular misunderstandings or issues would help them in the conflict. Alternatively, when I think my client may be experiencing a FAE (or any other cognitive bias, misinterpretation, or misunderstanding) that they do not see as important to address, I will ask them for permission before giving my thoughts as to how the FAE might be driving their conflict.

For a party’s FAE to be important enough to address, it does not necessarily have to be about something that would lead to “stalemate,” but instead might simply be about an issue that is nonetheless important to the case or that might determine the outcome of even one significant aspect of the settlement.

Precisely because this process can be so sensitive, it is always important to Empathize with our clients when questioning their assumptions. Simply put, there is no “right” or seamless way to help a party think through their assumptions, only methods you can use to ensure that parties know you are seeking to help both sides find resolution from a neutral stance. Questions causing reconsideration of our clients’ and other parties’ actions can be important for clients to hear, but are all potentially interpreted as a threat to their established viewpoint. I cannot stress enough how important – and powerful – it is to consistently communicate empathy as a mediator, especially when helping clients re-evaluate FAE’s and other assumptions that may serve to undergird their sense of identity, legitimacy, or power in a conflict. Communicate that you are “seeking to ensure that we have thought through all possible alternatives,” and iterate your role as a neutral both on “no one’s side,” but also on “everyone’s side,” if you are comfortable taking that stance.

I always have my “feelers” out for potentially relevant, alternative “interpretations” of the dispute by either side. I try to understand what motivations my clients might have for perceiving the conflict in particular ways.

Do they gain any emotional strength or legitimization of their actions from their perception? Are there any facts from either party that suggest liability may not lie where one (or both) of the parties assumes it might?

Further, do I think one or both of the parties may be committing a FAE? Of course, the whole point of many cases is that one or both sides feel they have an adequate factual basis from which to feel justified in their positions – right or wrong, but this doesn’t preclude the possibility that they have committed one or several FAE’s you may consider addressing.

14 | ADR Times Perspectives

The best way to address a FAE, I’ve found, is to help a party think through any assumptions they may have made regarding others’ actions.

I ask questions from the standpoint that I am seeking clarification on the potentially ambiguous issues involved. For instance: Is it possible there is another explanation for what the other party did?

Can you help me understand what might have motivated the other party to act in this way?

How might the other party explain their actions?

Questions such as these help parties to think through their assumptions, consider alternative explanations, and thus begin to reframe the conflict stories they have built in their minds.

These lines of questioning can be important elements of a mediator’s work, but they also present a delicate process of calling into question assumptions that might bolster stories very emotionally important to our clients.

All-in-all, addressing potential FAE’s within mediation is a delicate balance, and is not a process to be undertaken lightly. It should be done when there is potential for a party’s assumptions to prevent them from considering viewpoints or options that may affect their positions on key issues, or that may affect their long-term commitment to settlement. Finally, realize that often it may not matter to a party how or why a perceived slight or harm was committed – they may only value being recompensed (and legally, it may be the other side’s fault). Regardless, one of our roles as mediator is to understand and interact with our clients’ potential biases and motivations as we help them navigate their conflict. The fundamental attribution error is one of the most prevalent cognitive biases in human thinking, and as such it is essential that as mediators we both understand and effectively work with this and other potential mental “roadblocks” as they arise. z

Spring 2013 | 15

OVERCOMING COMMUNICATION BREAKDOWN

by Finding Common Ground

by Jim W. Hildreth

Communication breakdown often leads to the doorway of anger, resentment, hostility, and the filing of a lawsuit. Often this doorway leads a prospective client to a member of the local bar. They sit down and together they discuss the merits of a potential lawsuit.

Today’s top law schools such as UC Berkeley, Stanford, and Pepperdine (to name a few) are training law students to act not only as advocates but are going a new step further to train students to “problem solve” versus litigation. Law schools are now embracing negotiation via Alternative Dispute Resolution (ADR). Seasoned members of the bar are also finding benefits in utilizing ADR as to reestablishing communications and resolving conflicts earlier instead of waiting to settle on the courthouse steps.

The legal system is known for long delays, causing backlogs and crowded courtrooms. In 2013, there have been multiple announcements

16 | ADR Times Perspectives

of budget restraints which include closing of courts across California.

Los Angeles alone has had to close more than thirty courtrooms and the Civil Division of ADR is no longer available. In addition to the changes in the legal system, the retention of counsel is expensive. As a result, pro pers are flooding California courtrooms in “Small Claims” and Family Law Issues in record numbers. This shift is due perhaps in part to the new great recession that started in 2005.

As a California-based mediator I witness first-hand the breakdown of communications in each and every dispute. Mediators are trained to facilitate open communications. That job description involves conflict, which can often be painful and full of anger and resentment.

A case in point: two neighbors in Northern California were involved in the mauling death of one of their dogs. The lawsuit involved high emo-

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tions, expensive medical bills, and a complete breakdown in neighborto-neighbor communications.

At first, the conflict was smooth with one neighbor offering to pay installments towards the veterinary bills as “Good Faith.” As the recession grew deeper in the rural community of Sonora, California, priorities shifted as neither neighbor had the ability to pay the medical bills.

Threats of foreclosure of their home became top priority.

At this point, the dispute turned into denial and blame. The one time friendly neighbors became “Plaintiff” and “Defendant.” The court wisely suggested Alternate Dispute Resolution. Both neighbors reluctantly entered mediation, hostile and uncooperative. Hours were spent with the goal of opening communication lines and in the end the mediation failed; however, the mediator neutral made a suggestion that the parties and the

court consider a “cooling off” period before trying mediation again.

A month and half transition occurred, with the cooperation of the veterinarian who agreed to delay the monthly invoices. The parties returned to the second mediation. Almost immediately, there was what seemed to be a complete breakdown of communications with only expressions of anger and resentment. It seemed impossible to reach any solution.

Slowly, inch by inch, the mediator was able to negotiate with the parties. The opening of communications via Mediation was the objective.

The breakdown in neighbor-to-neighbor communications was the cold reality. The opportunity was finding the solution. The mediator pulled from the mediator’s toolbox various techniques to help the parties find common ground. Hours later the neighbors approved an agreement that was accepted and approved by the court. (Continued on p.20)

Spring 2013 | 17

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A mediator can employ simple techniques to help parties find common ground:

1. Separate the Positions from the People by Learning About Each Other. Create an environment that is open to allowing communications. This technique can be as simple as introductions in the beginning of a mediation session: What is your background? What are your hobbies?

How long have you been friends?

Can you share with me a picture of your grandchild? These conversations help humanize the adversary, and allow both parties at the mediation table to see one another as humans with dreams and goals.

A WISE SUPERIOR COURT JUDGE ONCE SHARED EXCELLENT ADVICE FOR HOW TO REACH SETTLEMENT:

90% IS USING PEOPLE SKILLS AND 10% IS THE LAW.

2. Focus on Common Ground. In one mediation, I turned to the angry disputants and posed a question, if you could be anywhere today, besides this court room, where would you be? The answer was sitting in his cabin next to the fireplace on a cool winter morning. Almost all litigants can agree that they would rather be doing something—or anything—else instead of litigating their dispute in Court.

3. Utilize Humor. Another technique that has been effective for me is using humor in a mediation. I once said with a smile to a defendant, “Bob you did that?” and Bob returned with a smile and said “yeah.”

Tension was removed from the room and progress was made in finding a solution.

A wise Superior Court Judge once shared excellent advice for how to reach settlement: 90% is using people skills and 10% is the law.

Court rooms by nature have lots of rules and regulations, but as a mediator, one can reduce stress by being open, friendly, caring, and using active listening skills.

From experience, mediation is the proper venue for exploring opportunities for problem solving and creating an environment that can lead to peace and resolve.

As a mediator, I focus heavily on disputes involving real estate (e.g. landlord-tenant, buyer-seller, agent). In approaching all mediations, my goal is to open the channels of communication which led to the communication breakdown in the first place. The mediator must create a venue for parties to air their anger, hostility, resentment and frustration that compelled them to file a lawsuit in the first place.

When both parties are truly communicating and listening to one another, they can better hear the other’s perspective: “The fight is over” “We can be neighbors again” “It was not about the money, I just need to be heard” “I want Respect.”

Finding the common ground in human conflicts is an essential tool in my mediation tool box. By utilizing humor, making emotional connections, learning about one another, and finding common ground, a mediator can open channels of communication. By employing this effective tool, the parties are one step closer to settlement. z

4. Make an Emotional Connection. Another powerful tool is the power of touch. At an appropriate time in certain situations, a hug or a touch to one’s hand or shoulder can be effective. For me, it has melted hearts, and has led to healing.

5. Share a Meal. A simple tool to help parties find common ground is the simple sharing of food or drink such as coffee, tea, ice water, or a light snack. The mediator can insist that parties sit down together at lunch time. Even small talk at a meal is enough to help the parties connect with one another at some level.

Jim W. Hildreth is a mediator, arbitrator, and referee. Jim is both a private and court appointed mediator with offices in Oakland & Sonora, CA. www.RealEstateMediation.org Jim W. Hildreth

Read articles by Jim Hildreth at: www.adrtimes.com/articles/author/jimhildreth

20 | ADR Times Perspectives

DISCOVER

The Invisible Woman Our ADR Problem

by Victoria Pynchon

It’s self-evidence that women have a commercial dispute ADR problem.

If women mediators are successful, we are either the Sally Rides of mediation practice (doing it weightless, backwards, and in heels) or we are segregated in “pink collar” specialties—family, elder and employment law—all of which focus on people rather than on commerce or finance.

When I ask AmLaw200 attorneys whether they’ve ever hired a woman mediator, they pause for a very long time, eyes canted upward as if searching that part of the brain storing lost socks, keys, and sunglasses. Sometimes they are silent for so long that I have to answer the question for them.

“The answer is no,” I say. “You’ve never hired a woman mediator and that’s OK because I never did either.” My former colleagues and opponents are always baffled and a little embarrassed at this recognition, which is why I always add the permissive part of my commentary. The part about it being “OK.” But it’s very much not “OK.” It’s not “OK” for the women in the ADR community or for the profession itself. A woman’s brain is a terrible thing to waste.

I became so tired of having this discussion about professional bias, I eventually left the ADR field entirely. Before I did, however, I collected the many reasons both men and women gave me for not hiring women mediators.

• I don’t know any women mediators (Really? While I’m standing before you?)

• I’d hire a woman mediator, but I don’t think my client would feel comfortable with one (Does your client live on man-planet?)

• I’d hire a woman if the case called for compassion (Is this a trait you find in excess among bet-the-company women litigators turned mediators?)

• Most women can’t close a deal (The last time you had the last word in any argument with any woman anytime anywhere was when?)

22 | ADR Times Perspectives

• I hire women when one of the parties is a woman or one of the attorneys is a woman (Why are women absent from top leadership positions across all sectors particularly commercial work?)

What To Do?

I don’t know what percentage of this magazine’s readers are women but I’m hoping that we account for more than 20%, because I want women to hear this too.

I personally know the [female] editor of this fine journal and nearly every time I receive a link to its online version, I check out the gender of the contributors. Then I write to ask “why so few women?”

This month, that editor called my bluff, asking me to submit an article and inviting me to ask my professional women colleagues to submit material too.

Which I did.

With little effect.

Not a Pipeline Problem

I wasn’t in the first wave of women who enrolled in law school in the early 70’s, but I was in the wave that raised the percentage of women law graduates somewhere between a third and 50%. My own graduating class of 1980 (U.C. Davis, King Hall School of Law) was 50% female.

That was nearly 35 years ago, time enough to fill up the pipeline of ADR professionals with women. Why, then, do we remain so invisible that our commercial litigator friends feel free to look straight at us and say “I don’t know any women who mediate”?

There are a lot of reasons women aren’t more active in the ADR community, including implicit (unconscious) bias. We can spend the next couple of decades banging our heads on that problem, with little likely effect on actually moving the numbers. But, what we can do is to make ourselves more visible.

Women Doing It For Themselves

The Op-Ed Project (www.theopedproject.org) was founded in 2008, to “increase the number of women thought leaders in key commentary forums to a tipping point.” The Project works with top universities, foundations, think tanks, and the like to scout and train underrepresented experts to take thought leadership positions in their fields; connect them with its national network of high-level media mentors; and channel the best new experts directly to media gatekeepers.

When the Op-Ed Project was founded, only 15% of all mainstream media OpEd pieces were written by women. But here’s the rub. Only 15% of all Op-Ed pieces in the mainstream media were submitted by women.

In the past five years, the Op-Ed Project and other organizations such as the Women’s Media Center SheSource (www.shesource.org) have raised the percentage of women’s Op-Ed pieces to 22% at The New York Times, 19% at the Washington Post, 17% at the Wall Street Journal, 24% at the L.A. Times, 27% at Salon, and 36% at the [woman-founded] Huffington Post.

My own writing, which began with a free blogger blog in 2006, brought me my own company’s branded negotiation column at Forbes.com by the end of 2011. By that time, so many women had asked me to speak to, consult with, and train them to negotiate better deals, I was on the verge of leaving the ADR field forever.

The Forbes Blog – She Negotiates - brought me to the attention of NPR’s All Things Considered, The New York Times, The Wall Street Journal and CNN among dozens of lesser media outlets. All sitting at a keyboard in my office sharing my thoughts first about negotiation and later about the ten-year leadership plateau women have reached in business and the professions.

Everything you need to know to be a Successful Mediator

by Victoria

Pynchon

Joe Kraynak, Contributor

Available at Amazon.com “A MUST READ!” “The best book on conflict resolution.”

If women in commercial ADR are invisible it is at least partly our own doing – or our own “not doing.” We alone can break through both negative and the benevolent stereotypes that keep us from landing mediation work in the fields we know so well as former litigators and business attorneys.

We do that, as so many of us did 30 and 40 years ago, by standing up and standing out.

By saying “I won’t be marginalized in a ‘woman’s’ profession.” By saying “I don’t want to be a nurse, a teacher, a waitress, or solely a housewife. “ We can be more visible by saying “I want to be a lawyer, a doctor, a welder, a fire fighter, a coal miner, or a commercial mediator or arbitrator.”

We cannot control who is willing to hire us or who is willing to “One of those Dummies Books publish us. But we can control that are not really for dummies!” how often we submit articles in our own professional journals and the about.me/vpynchon | @vickiepynchon magazines, blogs, and journals our That means raising up our voices and market readers. We can control how plastering our photographs all over often and how well we speak about commercial litigators’ walls, reading what our profession to business and professional groups likely to refer our market reads, attending the events or market attends and speaking clients to us or give us business directly. We can control how we to businesses where our market resides. deploy our energy, skill, and vision to advance to leadership positions In the age of the internet, we are told that “content” (not credentials) is in the Bar and in commerce.

“King.” Let’s make ADR content Queen as well. z

Victoria Pynchon is an attorney-mediator and arbitrator. She is also a principal in the She Negotiates Consulting and Training firm for which her blog “She Negotiates” is named. In addition to writing for the Forbes.com legal blog “On the Docket,” Pynchon also authored the book “A is for A**hole, the Grownups’ ABCs of Conflict Resolution.”

Victoria Pynchon

Read articles by Victoria Pynchon at: www.adrtimes.com/articles/author/victoriapynchon

ON THE EDGE

Ten Strategies for Managing Stress

by Arezou Kohan

I am now an author, holistic mediator, and life-coach, but when I was practicing law, I had more than one case that drove me to the edge.

My body is now recovering from the impact of the stress of my legal practice. The law is a profession that is hard on the adrenals. Even in my mediation practice, stress is inevitable. Notably, every feeling carries a message and stress is not always a bad thing. In fact, stress can be excitement lost in translation.

The question is: how do we cope with stress in a healthy manner?

Here is what I am learning: There is More To Us Than Our Head

First things first, I am learning to stay present in my body. This means checking in, periodically during the day, to ask it how it’s doing. What does it need right now? What would be nurturing for it right now? It’s so easy to get overwhelmed and over-stimulated and to continually push our body well-beyond its natural limits.

Sooner or later, however, it catches up with us. We might be smart but our body is smarter! Eventually, it will rebel and get sick in order to force us to listen. (It also knows how to heal itself when we are ready, willing, and able to listen.) Our body also holds a lot of intuition (i.e. gut feelings, etc.), so listen to your body.

Our Body Is Our Infant/Child

Consider that taking care of your body is like taking care of an infant. How responsive of a caretaker are you? Would you force your child to work as hard as you do? Probably not. Let’s look at an infant’s basic needs: sleep, rest, food, water and play. I would also add safety and comfort. How well are you giving yourself these things? When an infant is distressed, a parent might soothe the child by holding the child, rocking the child, or giving the child a bottle of milk. When your body is distressed, what can you do to keep it safe and comfortable?

10 Quick Strategies for Managing Stress

► 1.

Get out of the situation. Take a break, go for a walk or a drive, go out to lunch, or go to the restroom. Sometimes a change in geography is enough to change a situation.

► 6.

► 2.

Close your eyes. 80% of what we perceive is visual stimulation. So, close your eyes for a few minutes to shut out some of the stimulation.

► 7.

► 3.

► 8.

Breathe. Calm your thoughts by calming your breath. Try inhaling into your stomach and exhaling out like you are blowing out a candle.

► 4.

Think “Water.” Drink a glass of water, splash water on your face, drink herbal tea, take a shower or a bath, or go for a swim.

Walk by, listen to, or look at water to cool off. You can even set your screen-saver to a picture of the ocean, lake, or a river.

► 5.

Take a walk. The rhythm of walking is like rocking a child; it’s soothing. I love to walk in nature. Plus, I tend to think better when I am walking.

24 | ADR Times Perspectives

Listen to music. I find that classical music is really relaxing and it is really easy to listen to on the computer with various online radio stations.

Shake it out. Shake the stress out of your body by doing some jumping jacks, dancing, or just jumping up and down a few times.

Eat something warm. Warm foods, like soups, are comforting for the body.

► 9.

Stretch. A forward-fold can be very calming for the nervous system.

► 10.

Get a hug. If all else fails, get a hug.

I am learning not to take my body for granted. Reaching for comfort-foods, caffeine, alcohol, or other substances might be somewhat instinctual, but that’s not nurturing; it’s numbing ourselves. This is the sort of stuff they don’t teach you at law firms and law schools – yet. z

Have an article, story, comment, or topic suggestion you would like to share with ADR Times?

Email editor@adrtimes.com or contribute online at: www.adrtimes.com/connect

Arezou Kohan, Esq. is a mediator, life-coach and the author of ‘Healing Conflict – How to Manage Disputes and Resolve Legal Conflict through Higher Consciousness.’

Spring 2013 | 25

Public Policy & the Arbitrability of Intellectual Property Disputes

by Greg Wood

Arbitration offers many advantages in addressing and resolving disputes, specifically intellectual property disputes.

Among these advantages are:

- party control (the parties retain control of the process and issues to be decided to a greater degree than if the matter was submitted to the courts),1

- certainty of forum (the risks of inconsistent results can be avoided where intellectual property disputes implicate the laws and procedures of multiple countries), 2 - speed (arbitration can be faster since it is not hostage to court dockets and calendars),3 - control of arbitrator selection (the parties can select arbitrators with particular expertise),4 - flexibility (in process and substance), 5

- privacy and confidentiality (there is greater likelihood that a business relationship can be preserved or restored),6 - enforceability (awards in New York Convention7 signatory nations are enforceable in all other signatory nations),8 - lower costs,9

- and a greater likelihood of finality (arbitration decisions are rarely appealable),10 to name just a few.11

26 | ADR Times Perspectives

There is nevertheless a perceived reluctance to choose arbitration for intellectual property disputes. Reasons for this that are often cited include: (1) the desire to retain the possibility of invoking legal strategies and appeals in “bet the company” intellectual property disputes; (2) a need to keep the availability of publicity as a means of effecting investor perceptions; (3) a preference to retain flexibility in modifying and adapting claims as the case proceeds; (4) the desire to keep disputes in familiar forums where procedures and relationships are known; and (5) concerns that intellectual property disputes might not be arbitrable or that intellectual property arbitration awards would not be enforced such as on public policy grounds.12 The concern related to arbitrability and public policy in intellectual property disputes merit a closer analysis. Patent, trademarks, and copyrights, and to a lesser extent trade secrets, are specially vested with a public interest because the rights are creations of the state given to individuals for the broader common or public goods.

Arguably then, the state which defined the nature and scope of intellectual property rights granted to an individual should retain control over enforcement to ensure that the public interest is protected. Obviously, this raises issues of the enforceability of the agreement to arbitrate and the enforcement of an arbitration award.13

ARBITRABILITY OF INTELLECTUAL PROPERTY DISPUTES

The question of arbitrability begins with whether the parties have agreed to arbitrate their intellectual property dispute. Such an agreement can be reached after a dispute arises but more often arises from an arbitration clause in a pre-dispute license or commercial agreement.14 However, the agreement to arbitrate does not necessarily render a dispute arbitrable or an award enforceable. Section 2 of the Federal Arbitration Act, provides that an agreement to arbitrate is enforceable “…save upon such grounds as exist at law or in equity for the revocation of any contract”15 and Section 12 (4)16 provides that an award may be vacated “[w]here the arbitrators exceeded their powers…” Accordingly, an agreement to arbitrate an intellectual property dispute that is procured by fraud, is unconscionable, or where arbitration is precluded by a specific statute, could be challenged.

Nevertheless, public policy embodied in the Federal Arbitration Act strongly favors arbitration.17 This policy favoring arbitration was extended to patents in 1982 with the amendment to the patent statute that explicitly approved arbitration of patent disputes18 and has been recognized as a means of resolving trademark and copyright disputes19 notwithstanding that arbitration is a private resolution affecting intellectual property rights granted to individuals for the broader public interest. This seeming surrender of control over enforcement of

EDGE intellectual property rights to individuals in arbitration is rationalized on the grounds that such arbitration awards bind only the parties involved and only minimally impact the public at large.20 Consequently, the arbitrability of intellectual property disputes has become a historical and academic exercise rather than a present impediment to arbitration at least in the United States.

As such, intellectual property issues such as validity, enforceability, ownership, infringement, and claim interpretation are issues subject to resolution in arbitration.

That does not mean that the arbitrator might not find that a patent was invalid for failing to meet statutory requirements or that a license was invalid because it violated statutory prohibitions or was contrary to public policy such as extending the requirement to pay a royalty beyond the statutory expiration of the patent, but the dispute itself would nevertheless be arbitrable.21

By contrast, intellectual property disputes may not be arbitrable in the international arena.

The New York Convention22 provides that:

V. (2) Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or b) The recognition or enforcement of the award would be contrary to the public policy of that country.23

Accordingly, in a country where the validity of a patent issued by that country is required to be determined by its courts, patent validity would not be arbitrable. One illustration of this is South Africa whose laws give exclusive jurisdiction to hear and decide patent infringement and validity issues to the “commissioner.”24 This is presumably based on the notion that disputes that might affect the public should be decided by the patent commissioner and not by a private arbitrator.25 However, suppose that the arbitration venue was the U.S. not South Africa and the same issues of infringement and validity of the South African patent were raised in arbitration? Section V (2) (a) of the New York Convention only permits the “competent authority” of the country where recognition or enforcement is sought or to deny arbitrability.

Consequently, if the parties had set the arbitration venue to be the United States and the issue to be arbitrated was infringement of a South African patent, the arbitrator in the US would be bound

by U.S. law not the law of South Africa and therefore should decide the infringement issue as between the parties to the

Greg Wood, Esq. Drawing on an engineering background, thirty five years as an advocate in commercial, intellectual property and e-discovery disputes, twenty years serving as an arbitrator, 200+ mediations and 400+ hours for formal ADR training, Greg is “all in” in assisting parties in the speedy and economic resolution of disputes whether as a negotiation or settlement counselor, a mediator or an arbitrator. While Greg is available for mediation and arbitration of various disputes, his focus remains on complex commercial and intellectual property matters including e-discovery disputes.

Spring 2013 | 27

arbitration under Section 2 of the F.A.A. Suppose that the award of the U.S. arbitrator was then presented to a South African court for enforcement. A denial of enforcement of the award in South Africa would be permitted under either Section V (2) (a) or (b) of the New York Convention. If the award was presented for enforcement in another convention country, that country would be compelled under Article III of the New York Convention to enforce the award notwithstanding South Africa’s prohibitions.

Finally, suppose that South African law or public policy prohibited enforcement an arbitration infringement award even as to foreign patents, then a court in South Africa could deny enforcement of an award rendered in a U.S. arbitration related to a U.S. patent. These examples demonstrate that it is the laws and courts in the country where recognition or enforcement is to take place that will control subject to the impact of a choice of law clause in the arbitration agreement.

Therefore, on the issue of arbitrability, intellectual property disputes can raise statutory or public policy issues that could preclude an arbitrator from deciding a particular intellectual property issue in the first instance. However, such arbitrability issues will primarily arise in international arbitration under the New York Convention rather than in domestic arbitrations pursuant to state and federal arbitration laws. If there is an arbitrability issue, it should be raised at the outset of the arbitration and

However, arbitrability is only part of the issue. Another challenge, briefly alluded to above, is enforceability of an award. Again, non-enforceability can arise from a number of grounds. However, the one to be discuss hereafter is the challenge that an award is unenforceable because it violates the public policy of the enforcing state under Section V (2) (b) of the New York Convention.

PUBLIC POLICY’S CHALLENGE TO ENFORCEABILITY OF ARBITRATION AWARDS.

Article III of the New York Convention requires that each contracting state “shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon.”27 When a state becomes a contacting party to the New York Convention, it effectively adopts this recognition and enforcement obligation as its “public policy.”28 Nevertheless, Article V (2) (b) of the New York Convention sets out an exception to this strong public policy of recognition and enforcement: That such recognition or enforcement would be “contrary to the public policy of that country.” This exception is in the first instance somewhat anomalous.

By becoming a signatory to the Convention, the contracting country in effect adopts as its public policy the recognition and enforcement of arbitration awards. Therefore, not

... courts in New York Convention countries have reached different conclusions as to whether the public policy exception to recognition and enforcement should be broad or narrow ... would be decided by the court26 in a separate proceeding unless the parties had agreed otherwise.

The arbitrability challenge can therefore be said to arise either from the limitation in the arbitration agreement itself where one of the parties denies an agreement to arbitrate in the first instance or from the laws of the jurisdiction where the arbitration takes place that prohibit use of arbitration to resolve the dispute at hand. Accordingly, care should be taken in crafting an arbitration agreement to select an arbitration forum where arbitration of intellectual property disputes is permitted and that the risks of other challenges to arbitrability are minimized.

28 | ADR Times Perspectives

enforcing such an award on public policy grounds would seem to be a violation of the very public policy of recognition and enforcement that the contracting country adopted by becoming a member of the Convention.

Consequently, Article V (2) (b) would seem to refer to a more significant “public policy” that would trump the recognition and enforcement public policy of the contracting state.

A second observation regarding the public policy exception is that it is the authority

in the country where enforcement is sought that makes the determination. Thus, if recognition and enforcement of an arbitration award rendered in Country A was sought in Country B, Country B would decide whether recognition and enforcement was to be denied on public policy grounds.

A third observation is that it is the public policy of the recognizing and enforcing country that controls the determination.

Thus, in the example given above, Country B would not only decide whether to recognize and enforce the award but it would do so based on its own public policy not the public policy of Country A or any other country.29 A final observation relates to the discretionary nature of Article V. Thus, the contracting state in which recognition and enforcement of an award is sought is not compelled to refuse recognition and enforcement even when it could do so based on public policy grounds under Article V(2)(b).

Thus, the enforcing courts retain discretion to enforce an award even if one of the parties or the courts finds that Article V (2) (b) would justify an exception to enforcement.30 Other implicit limitations on the application of the public policy exception have also been suggested including that the exception is confined to public policies that are applicable at the time of the enforcement proceedings; confined to the enforcement of a state’s public policies applicable to transactions involving foreign elements; and confined to enforcement of a state’s fundamental public policies.31

However, rather than identifying the source of the public policy, the adjudicating authority, or the scope of discretion of the adjudicating authority, these implicit limitations seem to refer to the definition of the public policy itself.

So the question is raised: What is “Public Policy” under the New York Convention?

In order to understand the meaning of “public policy” referred to in the exception to enforcement and recognition in Article V (2) (b), it is important to distinguish between “public policy,” “international public policy” and “transnational public policy.”32 One author defines “public policy” as those “moral,

social or economic considerations which are applied by courts as grounds for refusing enforcement of an arbitral award”33 and the “principle of law which holds that no subject can lawfully do that which has a tendency to be injurious to the public, or against public good.”34 By contrast, “international public policy” has been described as “that public policy which is applied by State courts to foreign awards rather than domestic awards.”35 In other words, “international public policy” is the public policy that the enforcing country would deem applicable to international awards. Finally, “transnational public policy” has been defined as consisting of those principles representing an “international consensus as to universal standards and accepted norms of conduct that must always apply.”36 Thus, “transnational public policy” would encompass the principles of universal justice and morality accepted by civilized nations.37 Stated more simply, “public policy” pertains to the public policy of one nation regarding its internal affairs, “international public policy” pertains to those policies perceived be one state as being consistent with the policies of a group of nations and “transnational policy” pertains to the policy shared by the international community as a whole.38 Public policy can also be categorized as substantive and procedural. Substantive public policy refers to the substance of the arbitrable award including the factual and legal bases for the award. Thus, taking an extreme example, an arbitration award for breach of a contract related to human slave trade would be denied enforceability because slave trade would be against substantive public policy. Similarly, an award might be denied enforceability if a party against whom the award was granted was not give notice or an opportunity to defend because the award was in violation of public policy that accords procedural due process.

So which of these definitions applies to the New York Convention public policy exception? Reference to the Drafting Committee of the New York Convention, the 1927 Geneva Convention, the 1975 Panama Convention, the 1983 Riyadh Convention, and the 1987 Amman Convention yield different understanding and application of the public policy exception ranging from broad to narrow.

However, the preference is for the public policy exception to be narrowly applied.39 Thus, enforcement of an arbitration award should be

denied on public policy grounds “only where enforcement would violate the forum state’s most basic notions of morality and justice.”40

Applying this perception of public policy, a court in the U.S. should enforce an arbitration award under the New York Convention even though a similar claim would have been precluded had it arisen in a U.S. domestic transaction.41 While much has been written on the topic of the public policy exception and courts in New York Convention countries have reached different conclusions as to whether the public policy exception to recognition and enforcement should be broad or narrow, several conclusions seem warranted. First, the recognition and enforcement of arbitration awards should only be denied on public policy grounds in the most exceptional of cases. Second, the public policy defense should not be “a parochial devise protective of national political interests…”42 The internal public policy applied by a state to govern its own internal affairs should not be a basis for denying enforcement of an award considering the policy accepted by all contracting states to accept and enforce arbitration awards from other New York Convention states. Third, the enforcing state should only reassess underlying facts upon which an award was based only when there is a strong prima facie case that international public policy has been violated.43 PUBLIC POLICY AND THE ENFORCEMENT OF AWARDS RELATED TO INTELLECTUAL PROPERTY MATTER.

Having seen that disputes related to intellectual property rights are arbitrable and that an award may be denied enforceability if contrary to the forum state’s public policy – its most basic notions of generally accepted morality and justice, we next examine examples of public policies that defined the parameters of intellectual patent rights in the United States.

A first example arises from the Supreme Court case of Lear v. Adkins. In that case, the doctrine of licensee estoppel was considered and abrogated on public policy grounds.

The specific issue was whether a clause in a patent license precluding a licensee from challenging the validity of the licensed patent was a violation of public policy. On the one hand was the interest of states in enforcing contracts and on the other was the

“strong federal policy favoring free competition in ideas which do not merit patent protection.”44 After a lengthy exposition of the issues, the court concluded that the right of two contracting parties “…do not weigh very heavily when they are balanced against the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain.

Licensees may often be the only individuals with enough economic incentive to challenge the patentability of an inventor’s discovery. If they are muzzled, the public may continually be required to pay tribute to would be monopolist without need or justification. We think it plain that the technical requirements of contract doctrine must give way before the demand of public interest …”45

EDGE

Therefore, in the U.S. the strong public policy precludes a licensor from requiring a licensee to forego the right to challenge the validity of the patent as a condition of receiving the license.46 But is this public policy a “parochial devise protective of national political interests” or is it in the nature of “international public policy” that while national in focus nonetheless is recognized as embodying a broader internationally recognized policy? In Lasercomb America, Inc. v. Reynolds, the court answers this question by setting out not only the origins but the rationale of patent and copyright laws from the sixteenth century in England. This same rationale was the motivation for inclusion of the power to grant patents embedded in the U.S. Constitution.47 Consequently, the policy of permitting licensee’s to challenge the validity of licensed patents and copyrights notwithstanding a contract prohibition from doing so is more than just a “parochial devise” but addresses a core value shared by other nations – protecting competition by precluding parties by contract from extracting that which should belong to the public.

Before touching on other public policies that infuse intellectual property interest, examining an illustration of how this particular public policy might impact the recognition and enforcement of arbitration awards. Suppose two parties enter a technology license for an invention covered by patents issued

Spring 2013 | 29

by five different countries, one being the U.S. The license prohibits the licensee from challenging the validity of any of the patents and requires that the licensee continue to pay royalties for five years after the last of the five patents expire. The license agreement also includes an arbitration clause requiring any arbitration to take place in Country A pursuant to the laws of Country A. Arbitration is thereafter initiated in Country A. The arbitrator, following the terms of the agreement, declines to hear any challenge to the validity of the U.S. patent and enforces the contractual obligation to pay royalties after the expiration of the five patents including the U.S. patent. The licensor seeks to have a court in the U.S. enforce the arbitration award relying on Article III of the New York Convention and Section 2 of the Federal Arbitration Act. The licensee seeks to have the award vacated or otherwise not enforced asserting that the award is contrary to U.S. public policy both because challenges to validity by a licensee must be permitted and because requiring payment of royalties after a patent expires expands the scope of a patent beyond that granted by the US patent office.48 Would the U.S. court decline to enforce an award under Article V (2) (b)? In the first instance, the public policy in issue is that of the United States. Second, as above noted, this U.S. public policy permitting challenges to patent validity and allowing challenges based on misuse (which actually arises out of

David D. Caron, The World of Intellectual Property and the Decision to Arbitrate, Arbitration International, Vol. 19, No. 4 at 441 (2003).

2 Philip J. McConnaughay, ADR of Intellectual Property Disputes, at 2, http://euro.ecom.cmu.edu/program/ law/08-732/Courts/ADRPMcCon.pdf 3 Id. at 3.

4 Id. at 4.

5 Id. at 5.

6 Id. at 4.

7 See, 9 U.S.C. Sections 201-208 (1996) and 9 U.S.C. Sections 1-16 (1996) 8 McConnaughay, supra note 2, at 6.

9 Alejandro Garcia, Sophie Lamb, Arbitration of Intellectual Property Disputes, The European & Middle Eastern Arbitration Review 2008, Section 3.

10 Id. 11 David Allgeyer, In Search of Lower Cost Resolution: Using Arbitration to Resolve Patent Disputes, Conflict Management, Fall 2007, Volume 12, Issue 1.

12 Caron, supra note 1, at 442, 445-448.

13 David W. Plant, Resolving International Intellectual Property Disputes, 30-31 (1999) 1

30 | ADR Times Perspectives

14

15 16 17 18 19 20 21

22

23

24

25 26 27

28

antitrust principles) is not simply a parochial device but is in the nature of a national public policy arising out of values and mores held by other countries as well. Accordingly, a court in the U.S. would have the authority to refuse to recognize or enforce the award at least as to the U.S. patent.

Modifying the illustration somewhat, suppose that enforcement of the award in Country B (not the U.S.) was sought. None of the patents were issued by Country B and Country B has no public policy that it must recognize the patents or public policy of another country.

However, Country B is bound to follow its recognition and enforcement obligations under Article III of the New York Convention.

In this case, since Country B has no public policy of its own that could be invoked to preclude enforcement and is bound by Article III, it should enforce the award and allow assets of the licensee in Country B to be seized to pay that award. Obviously, the arbitration agreement itself and the selection of the arbitration and enforcement forums become critical strategy concerns.

This particular public policy related to intellectual property is not alone. Other intellectual property related public policies include (1) the prohibition against using a patent or copyright to secure exclusive rights not granted by the patent or copyright office;49 (2) conditioning the grant of a license on the requirement to use or decline to use an unpatented device;50 (3) the prohibition against

Daniel Schimmel and Ila Kapoor, Resolving International Intellectual Property Disputes in Arbitrarion, Intellectual Property & Techology Law Journal, February 2009.

9 U.S.C. § 2.

9 U.S.C. § 10(4).

9 U.S.C. § 2.

35 U.S.C.A. § 294.

See 1 Domke on Com. Arb. § 16.12.

See 35 U.S.C. § 294.

See Mitsubishi v. Soler ChryslerPlymouth, 473 U.S. 614, 628-629 (1985).

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.A. No. 6997, 330 U.N.T.S. 38.

The New York Convention is enforceable in the United States under 9 U.S.C. §201 et seq.

China, Singapore and Romania also limit arbitrability of patent disputes.

Schimmel, supra note 14, at 3.

Garcia, supra note 9, at 3.

9 U.S.C. § 4.

New York Convention Article III. See also 9 U.S.C. § 2.

Winnie (Jo-Mei) Ma, Public Policy in

removing the inventions from the public after prolonged public use by the inventor;51 (4) the policy of prompt and widespread disclosure of new inventions to the public;52 (5) the policy of preventing an inventor from commercially exploiting his invention beyond the term of the patent;53 and (6) the policy of allowing an inventor a reasonable time following sales activity to prove the value of the invention before being required to seek patent protection.54 These public policies may well also provide a basis for a U.S. Court to refuse enforcement of a foreign arbitration award.

Conclusion

Whether the violation of one of these policies will be a basis for a court to decline to recognize or enforce an arbitration award in the U.S. will be subject to the facts and the discretion of the Court. In other countries, similar public policies circumscribing the enforcement of patents may provide the violation of “public policy” under Article V (2) (b) that could render an award unenforceable in one or more countries.

The need to examine the laws of each country in which an award is to be sought to ensure that the dispute is arbitrable and to further examine the laws of the country in which an award is to be enforced at the time the arbitration clause is drafted and at the time arbitration is being initiated is obviously of critical importance. z

the Judicial Enforcement of Arbitral Awards: Lessons For and From Australia, Bond University Degree of Doctor of Legal Science (SJD) Thesis 109 (2005), citing David Branson, ‘USA’ in Global Legal Group, International Comparative Legal Guide to International Arbitration 2004 (2004) 241, 245.

29 Id. at 59-60.

30 Id. at 144.

31 Id. 32 Audley Sheppard, Public Policy and the Enforcement of Arbitral Awards: Should there be a Global Standard?, Transnational Dispute Management, Vol. I, Issue 01 (February 2004).

33 Id. 34 Egerton v. Brownlow, 4 HLC 1 (1853).

35 Sheppard, supra note 32, at 2.

36 Id. 37 Id. 38 Id. 39 Id. 40 Parsons & Whittemore Overseas Co., Inc. v. Societe Generale de I’Industrie du Papier RAKTA and Bank of America, 508 F.2d 969 (2nd Cir. 1974).

41 Sheppard, supra note 32, at 6 citing

Scherk v. Alberto Culver Co., 417 U.S. 506 (1974).

42 Ma, supra note 28, at 65.

43 Sheppard, supra note 32, at 6; Ma, supra note 28, at 63-68.

44 Lear, Inc. v. Adkins, 395 U.S. 653, 656, 89 S.Ct. 1902, 1904 (1969).

45 Id. at 670.

46 This policy against licensee estoppel yields to the strong public policy of upholding judgment and settlement agreements so that a settlement agreement that includes a covenant not to challenge validity of a patent in the future will be upheld since the defendant has been given the opportunity to challenge the patent and has given up that right. See Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362, 1369 (Fed.Cir. 2001).

47 Lasercomb America, Inc. v. Reynolds, 911 F.2d 970, 974-975 (4th Cir. 1990).

48 Id. at 975-977 49 Id. at 977.

50 Id. at 978.

51 General Electric Co. v. United States et al., 654 F.2d 55, 61 (Ct.Cl. 1981).

52 Id. 53 Id. 54 Id.

A PAGE FROM THE MEDIATOR’S NOTEBOOK

If the deal isn’t ‘fair’ it won’t happen

I was a ‘lawyer-negotiator’ for over twenty years. For litigators, trial is rare. Negotiation under the threat of trial was and is the norm. Professor Marc Galanter calls this “liti-gotiation” – using litigation’s obvious risks and downsides to gain leverage in the nearly inevitable settlement.

I noticed something when I negotiated: I couldn’t just “beat down” my opponents.. Showing that I was “reasonable,” or “in the ballpark” was critical. If a proposal was somehow unfair, it didn’t get done.

There’s more than one reason for this. First, people treated unfairly get angry. Anger makes us overconfident, competitive, risk-loving and focused on revenge – why settle when we might teach a lesson to the unfair so and so?

Second, people will reject a benefit rather than feel mistreated. In the “ultimatum game,” subject A is given $100 and told to share with B. B may accept or reject his share. If B accepts, both keep their share. If he vetoes it neither gets anything. Subjects prefer vetoing the deal to accepting less than about $30 – better not to settle than to do so unfairly.

A third reason is reactive devaluation – the tendency to distrust a proposal because it came from an ‘enemy.’ The less of an enemy we seem, the more likely our proposal is to be accepted.

You will be more likely to settle if you focus partly on fairness. Lay out your damages. Be realistic about opponents’ ability to pay. Use objective means to determine demands. Talk about clients’ real needs. Avoid hyperbole Listen.

Maybe a payment schedule won’t work, but if you listen, you seem like less of an enemy for reactive devaluation purposes. This doesn’t mean your client should recover less. It means they might recover more if they settle fairly. z —Scott Van Soye

www.scottvansoye.agencydr.com

Spring 2013 | 31

COMMENTARY

The Courtroom -VS-

The Boxing Ring

by Mikita Weaver

32 | ADR Times Perspectives

A

bout a year ago, I started boxing at a local gym. I like being active but walking on a treadmill or running on an elliptical seems so pointless—I mean you are literally running nowhere. I also practice yoga regularly but I value hot yoga/Vinyasa Flow more for its relaxation benefit and ability to calm mentally. I needed a challenge. Boxing became just that.

On the surface, boxing looks like it is all about injuring the opponent. Andy Lane, Professor of Sports Psychology and former amateur boxer, explains the unique mindset of a boxer: “Boxing is a unique sport. At face value, the aim is to inflict blows on your opponent and avoid injury yourself by landing more punches than you receive. A common perception therefore is that boxers need to psyche themselves up into a frenzied state, fuelled by anger with the intention of causing injury.

However, for those who have worked in boxing, this perception could not be further from the truth.”

Instead, boxing is a type of physical chess: “a battle that is as much psychological and tactical as it is physical.” To be successful in the ring, a boxer must develop mental and physical strength.

This requires psychological intervention in many instances. Legendary trainer Cus D’Amato, who helped bring world heavyweight titles to Mike Tyson and Floyd Patterson, recognized that “fights are won and lost in the head.” Sports psychologists or life coaches are common in the industry. A quick Google search even reveals that there is a debate on whether psychologists are violating ethical duties by participating in boxing given the intent to injure/injuries in the sport. Debate or no debate, psychological training is often part of boxing. And as with most professional athletes—or professionals for that matter— counseling or therapy is often necessary.

Two key points: First, to be successful, a boxer must first become desensitized to the effects of inflicting injury on others. Secondly, the boxer must accept personal risk with every fight.

As a litigation attorney and a writer, the boxing world is full of parallels to my profession. Many key psychological aspects of boxing are very similar to that of litigation.

UNDERSTAND THE EFFECTS OF INFLICTING INJURY ON OTHERS

A boxer and a litigant must understand that at some point they will have to inflict injuries on others. In boxing this seems obvious but it still requires a particular mindset and an approach in order to be at peace mentally outside the boxing ring. Litigants on the other hand may not initially consider the negative impact that their choice to litigate may have on others. Although some litigants may file a lawsuit against their adversary for the sole purpose of hurting and destroying their opponent, more often than not a litigant will file a lawsuit to vindicate their own rights. A litigant may file suit for breach of contract to simply recover what is owed to them or enforce a property right.

Even though the intent of litigation may not have been to harm, there will inevitably be negative effects. In order to be successful, the other side must lose. This is a key consideration, particularly if a plaintiff is suing their neighbor, a business associate, or a family member. Where relationships are at stake, a good lawyer or mediator should play on these themes to push clients toward settlement. Any settlement agreement should be crafted to keep future relationships in tact. Settlement must prevent the family from being destroyed. Settlement must encourage the two warring businesses to find a way to work out their differences so they can both continue working together so as not to hurt their bottom line. Settlement must encourage the neighbors to resolve their disputes in such a way as to prevent ongoing conflict in the future. Just like a boxer must understand that injury is inevitable, a litigant must consider the psychological aspect to this truth. Litigants must recognize that a refusal to settle or find a way to resolve their differences will hurt the adversary financially, mentally, and emotionally. Relatives may be estranged in a family estate dispute if issue can’t be resolved. A business may go under if saddled with a large judgment. Neighbors may become a source of constant turmoil - disturbing the quality of one’s life and ability to be at peace. While it may be tempting to take some joy in the pain or suffering of others as part of “winning,” these feelings are only temporary. Litigants must recognize that their decision to litigate and refusal to settle will inevitably cause harm to others.

Spring 2013 | 33

ACCEPT PERSONAL RISK

To be successful, the boxer and the litigant must learn to grapple with the idea of personal risk. A boxer’s risk is mostly physical although there is a psychological component in terms of the shame or embarrassment of losing to a particular adversary. On the other hand, a litigants’ risk may vary. A litigant will exhaust time, energy, and money litigating a dispute. In the process, the litigant will sacrifice mental, spiritual, and often physical health.

It’s important for the boxer and the litigant to accept personal risk while also recognizing his or her inevitable fate. In boxing, there may be a winner but no one walks away from the fight without bumps and bruises (or injuries far worse like a broken nose or ribs). Likewise, in litigation, everyone loses something. With a jury award or court judgment, there may be a clear winner (maybe), but everyone walks out of the court house broken. In one way or another, litigation leaves a litigant with at least one wound.

The cost of litigation: Think about the litigant who owes their attorney a significant sum of money even though they “won” their property-line dispute in their neighbor-to-neighbor conflict. The money inevitably spent in litigation could fund so many other more exciting things, e.g. an adventure across the globe, a home remodel, a kid’s college education.

The emotional and mental toll of litigation: What about the litigant who may have achieved their litigation goal but whose marriage is now broken beyond repair after years of neglect and hostility due to the ongoing litigation dispute. Litigation is distracting. A part of a litigant’s brain will always be wrapped up in the stressful world of litigation until the dispute is resolved.

The time spent in litigation: Perhaps a litigant had to miss seeing her child’s first steps. Instead of watching his kid’s piano recital, a litigant is forced to participate in seemingly endless depositions. Instead of reading a bedtime story to their child, parents are required to spend late nights making sure the lawyers have everything they need. Whether it is taking time off from work or spending late nights, litigation robs litigants of important memories they would otherwise have.

UNDERSTANDING THE RISKS AND MOVING FORWARD

A coach must help a boxer understand the personal risks at stake. Likewise, a good attorney will periodically talk to their clients about the risks in moving forward with litigation versus the other options—be it negotiations or mediation, in an attempt to reach a possible settlement.

In mediation, it is the mediator’s job to emphasize the risks inherent in moving forward with the litigation strategy. The mediator must be the voice of reality and voice of reason.

I’ve seen scare tactics used by mediators with some level of success. One mediator opened the mediation with a joint session. She drew a huge piggy bank of money. She then went on to describe how the significant chunk of change diminishes phase by phase - from the initial fact investigation to discovery to trial preparation to trial. At the end, the piggy bank is empty and only one party has anything to show for it depending on the outcome of litigation. While scare tactics may work, the goal is to highlight what is at stake. In litigation the stakes are high and there is huge risk.

Just like a boxer must understand exactly the risks when he or she walks into the ring, the litigant must be fully aware of all the personal risks at stake. Joe Frazier noted, “Boxing is the only sport you can get your brain shook, your money took and your name in the undertaker book.” There are great risks associated with both boxing and with litigation. Like coaches in the boxing arena, lawyers and mediators must help litigants understand the true breadth of what is at stake. z

Mikita Weaver is the Editor-in-Chief of ADR Times, a premier online dispute resolution community. As an associate at Northrup Schlueter APLC, she focuses predominantly on litigation and arbitration in the field of construction insurance defense. She received her Juris Doctorate at Pepperdine University School of Law and received a Masters in Dispute Resolution from the Straus Institute. Mikita has been published on the Pepperdine Dispute Resolution Law Journal and worked at the Centre for Effective Dispute Resolution in London. As an avid traveler, she continues to explore various dispute resolution issues and how they vary from region to region. She graduated magna cum laude from Berea College with a philosophy degree and her favorite things include yoga, cooking, photography, and singing with the Legal Voices of Los Angeles and Lawyer’s Philharmonic.

Meet Mikita— www.adrtimes.com/editor-in-chief

34 | ADR Times Perspectives

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