Mediating Commercial Relationships

Alec was recently selected as a Southern California SuperLawyer in the field of Alternative Dispute Resolution.

In mediating commercial disputes, once all of the frills are striped away, the dispute is very typically about money. The money can evince itself in a number of ways: one side paying the other cash; one side paying the other in specific performance; one side paying the other by refraining from competing, and so foregoing potential income, and so on. But, when the dust clears, the outcome is generally that money either does or doesn’t change hands.

A second characteristic of such mediations is that they’re almost always distributive in nature. In many cases, the lawsuit is about one party trying to collect from another that is no longer in business. And in the others, by the time that the parties have hired lawyers, filed suit and enjoyed the pleasures of litigation, each has probably come to loathe the other in such a personal way that they’d rather do business with the devil than with each other. That’s not surprising, when each side perceives the other to have broken faith, lied, cheated, and other wise proven to be completely untrustworthy. Welcome to a commercial mediation on a very typical morning

Not long ago, I walked into just such a room. The facts, while not so typical, were not too complex, either. The Plaintiff owned a wholesale warehouse, from which he sold electrical components to retailers, including the Defendants. Plaintiff told me that his cousin, who had worked for him for many years, had apparently been “back dooring” (ie. stealing) merchandise worth $300,000, and then selling it secretly to customers, including the in pro per Defendants. When the fact of the missing merchandise was discovered, Plaintiff said, the cousin confessed all, pointed to the Defendants and was fired after agreeing to make restitution. Naturally, Defendants denied all, telling me that the cousin, now an admitted felon, was giving Plaintiff this “story” to make it easier on himself.

Now a lot of questions were never addressed and/or answered, such as why the police were not brought in, but my overarching understanding is that Plaintiff wanted his money back and wanted reimbursement from his cousin, rather than his cousin in jail and the family complications that would follow.

For a few hours, we engaged in classic back and forth negotiation, but, because each side had invested in a very different reality, very little progress was made. Because Plaintiff insisted that he was dealing with thieves, he expressed an unwillingness to substantially reduce his demands, since this was a case of good vs. evil. The Defendants, on the other hand, lived in a world in which they’d been unfairly smeared and vilified, were now involved in a totally unwarranted lawsuit.

Did I accept either reality? Well, first of all, that’s not my job. My usual approach might be to get each side to understand the reality of the other side, while not necessarily modifying their own reality. Here, that seemed doomed to failure, since each reality overtly required the other party to be lying. I skirted around this several, times, but was starting to run out of ideas. Then, as is often the case, a little nugget was dropped into my lap.

One of the things I always do in caucus is chat up the parties. Among the reasons I do this is because the key to settlement can often inadvertently come from the parties themselves. In this case, one of the Defendants remarked how he was especially infuriated because the Plaintiff, his brother, himself and their families had had so many fun times in the past. In other words, he felt betrayed. I had my lever!

I caucused with the Plaintiff, and after a few minutes of the usual housecleaning discussion, I casually said to him, “I understand that you had a lot of good times with the Defendants. Sitting hear today, that seems hard to believe. Is that true?” The Plaintiff sighed, and said: “Yeah. We used to go to Vegas a lot, we’d spend the holidays with one another’s families. We had a lot of laughs over the years.” I went on: “It’s a shame those times are over, huh?” The Plaintiff agreed, but went on to say that he could never do business with the Defendants after what they’d done to him. I asked him, for the umpteenth time, whether his cousin could have been making it up, and he again said that that was impossible, but with a bit of regret in his voice.

Then I asked him the key question. I asked whether he would be willing to do business with the Defendants if, in the long run, they could repay the value of the goods and he could continue to make a profit along the way. He thought it over, consulted with counsel and then said that he would.

I caucused with Defendants, and, after a lot of wrangling, got them to agree that they’d resume business with Plaintiff and make payments toward the loss, but said that the payments were entirely dependent upon the profit they would make on their end from the product Plaintiff would provide. Several caucuses ensued, and, bottom line, both sides agreed to do $3 million worth of business as soon as reasonable, Plaintiff would bill at his lowest price, and Defendants would pay a surcharge of 10%.

At the end of the mediation, all parties were sitting together, reminiscing and laughing. It’s not something I get to see very often, but I don’t think you’ll ever see that in a courtroom.

The Joys of Giving

Alec was recently selected as a Southern California SuperLawyer in the field of Alternative Dispute Resolution.

At this time of year, everybody, myself included writes paeans to the gratitude we’re supposed to feel during this holiday season, and opines that gratitude should not be a seasonal thing. All true, of course. But I want to remind all of us in the business of resolving conflict to be joyous in all that we give — and not just during the holidays.

For me, mediation acts as a conduit for my spiritual self. I harness a higher power that I do not regularly have, but that I am able to use for the benefit of others. It’s a power that works best when turned outward, rather than for my own, personal benefit. Many times, in the course of opening an initial mediation session, I point out that I’m basically one of the tools available to the parties that they can use to help resolve their disagreements, if that’s what they choose to do. And when I say that, I mean it from the bottom of my heart. What goes on within the mediation rooms may include very evaluative input from me, but if I’m on my game, that input is provided for the benefit of the party to whom it is given, rather than for my own personal gratification. I try to be sure that I don’t dispense evaluative information with an ulterior purpose, such as self-aggrandizement, manipulation of the outcome, and the like. I can’t swear that I always succeed in drawing this line, but I can guarantee that it’s always on my front burner and is something that I take very seriously before any of the words leave my mouth.

No matter what my mood has been, something amazing happens when I enter the mediation room. Some days, I’ve found myself in a tired, grumpy, stressed or otherwise negative mood while driving to a mediation. I remember so many times when I thought to myself, “why did I schedule this for today? Why on a day when I’m just not emotionally up to dealing with someone else’s problems? Why couldn’t I have just called in sick and spent the day in bed licking my own wounds?” To be honest, that thought has crossed my mind a whole lot of times. But never have I taken that action. It never occurred to me to abandon a client, whether pay or pro bono, who was relying on me for help. And then, without exception, once I’ve shaken hands and gone through any formalities, the details of the case come to the fore of my thinking and I start studying each person, and . . . voila . . . the mystique is back! Whatever you want to call it, mystique, focus, mindfulness, I find myself in a tight little world where nothing is happening but the mediation. My personal issues have vanished. The outside world may as well be another planet. Every sinew of my being is completely focused on the single process of mediating the matter before me. What I’ve done is immersed myself into a total act of giving with no expectation of anything at all in return.

Lest the cynics among you point out that I’m being paid for my services, I have two responses. First, I find no distinction in the feelings I have in pro bono versus pay mediations. Second, financial matters are among the externalities that reside on another planet while I’m in my mediation “zone.”
So, my friends and colleagues, while I certainly join in the overall sense of gratitude for all the wonderful people and things in my life that I’ve been privileged to enjoy, I am far more grateful for the unconditional love that I receive from several very special people in my life. And in the same way, I am most grateful for my own ability to return that unconditional love to these special people as well. And, to me, mediation is an extension of that. I am grateful for the opportunity to give of myself unconditionally to people who are asking for help.

To me, that’s not a job. It’s a calling.