1. 1© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Zürich Seestrasse 39 CH - 8700 Küsnacht Tel. +41 44 914 88 88 mail@altenburger.ch Genève Rue Rodolphe-Toepffer 11bis CH - 1206 Genève Tel. +41 22 789 50 20 mail@altenburger.ch NEGOTIATION AND MEDIATION - A THREAT OR A BUSINESS NICHE FOR LAWYERS? Adapt or perish! The importance of ADR for the future of the legal profession Jeremy LACK CROATIAN BAR ASSOCIATION (Zagreb, June 1 st 2009)

2. 2© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch 2 The “Old World” Paradigm

3. 3© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch See: The World is Flat Thomas Friedman e.g., The Internet: Asia Pacific - Red Europe/Middle East/Central Asia/Africa - Green North America - Blue Latin American and Caribbean - Yellow RFC1918 IP Addresses - Cyan Unknown - White The “New World” Paradigm Source: http://www.opte.org/maps/

4. 4© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The growing influence of corporations Sources: Interbrand (2007), Institute for Policy Studies (December 2000) M. Leathes, based on Richard Susskind’s “The End of Lawyers?” (2008) In 2000: 51 of the 100 largest economies were corporations In 2009: 56 of the 100 largest economies are corporations By 2038: 78 of the 100 largest economies may be corporations. Hypothesis: Corporations may have their own laws (lex societatis?) In-house counsel will have greater influence This will translate into more use of mediation

5. 5© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch “Turn your dispute from a business threat into a business opportunity” Cees J.A. van Lede, Chairman of the Board of Management Akzo Nobel NV Source: http://www.mediation-bedrijfsleven.nl/english.shtml#quote4 http://www.mediation-bedrijfsleven.nl/english.shtml#quote4 The commercial perspective of dispute resolution WHY MEDIATE?

6. 6© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch “The Legal Profession is on the brink of fundamental change” Prof Richard Susskind timesonline.com - October 19, 2007 What are the possible implications for Lawyers? Source: Michael Leathes

7. 7© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch

8. 8© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Crisis is good Danger + Opportunity Source: Michael Leathes

9. 9© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The legal profession will have to adapt The 20 th Century Lawyer Expresses desires Threatens Stamps feet Tough shell Legal expert Claims Positions Well-trodden path Process orientated Single-minded <50% successful Eye-wateringly costly The 21st Century Lawyer? Satisfies needs Warns Choreographer Tough core Legal entrepreneur Satisfies Interests Beats new trails Obsessed by outcomes Kaleidoscopic >80% value generation Worth every cent Source: Michael Leathes, based on Richard Susskind’s “The End of Lawyers?” (2008)

10. 10© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The 21st Century Lawyer Source: Michael Leathes

11. 11© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The new EU Mediation Directive 2008/52 “Article 3 Definitions For the purposes of this Directive the following definitions shall apply: (a)‘Mediation’ means a structured process, however named or referred to, whereby two or more parties to a dispute attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a mediator. This process may be initiated by the parties or suggested or ordered by a court or prescribed by the law of a Member State. It includes mediation conducted by a judge who is not responsible for any judicial proceedings concerning the dispute in question. It excludes attempts made by the court or the judge seized to settle a dispute in the course of judicial proceedings concerning the dispute in question. (b) ‘Mediator’ means any third person who is asked to conduct a mediation in an effective, impartial and competent way, regardless of the denomination or profession of that third person in the Member State concerned and of the way in which the third person has been appointed or requested to conduct the mediation.”

12. 12© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The Choices: Appropriate Dispute Resolution (ADR) Least Evaluative Least Structured Least Formal Most Evaluative Most Structured Most Formal Consensual Parties in control Adversarial Third party in control NEGOTIATION MEDIATION INDEPENDENT EXPERT APPRAISAL CONCILIATION NEUTRAL EVALUATION ARBITRATION ADJUDICATION Source: J. Kalowski, JOK Consulting

13. 13© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.chA P1 P2 Resolution Arbitration Source: Joanna Kalowski

14. 14© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch … Conciliation … P1 P2 C Precedent Justice OBJECTIVE JUSTICE Statute Resolution Source: Joanna Kalowski Zone of possible agreement

15. 15© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch M P1 P2 Resolution …Mediation SUBJECTIVE JUSTICE Source: Joanna Kalowski

16. 16© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Although the “objective” aspects of the dispute may be apparent… …the “subjective” aspects remain to be discovered. The invisible side of all conflicts The Facts The Law(s) The Positions Misunderstandings Perceptions Emotions Interests Concerns Feelings Beliefs Values Needs Fears A dispute is never about what it is about…

17. 17© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Arbitration & Conciliation = rights-based approaches THE LEGAL SYLLOGISM (an algorithm): Facts (past & present) + Applicable law(s) = Outcomes (« conclusions ») “We have to rely only on objective facts”. “Arbitrators have a ‘sacred duty’ to establish the truth.” The Facts The Law(s) The Positions Misunderstandings Perceptions Emotions Interests Concerns Feelings Beliefs Values Needs Fears

18. 18© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The Right Brain vs Left Brain test... do you see the dancer turning clockwise or anti- clockwise? If clockwise, then you use more of the right side of the brain and vice versa. Most of us would see the dancer turning anti-clockwise though you can try to focus and change the direction; see if you can do it. http://www.news.com.au/dailytelegraph/story/0,22049,22535838-5012895,00.html LEFT BRAIN FUNCTIONS uses logic detail oriented facts rule words and language present and past math and science can comprehend knowing acknowledges order/pattern perception knows object name reality based forms strategies practical safe RIGHT BRAIN FUNCTIONS uses feeling "big picture" oriented imagination rules symbols and images present and future philosophy & religion can "get it" (i.e. meaning) believes appreciates spatial perception knows object function fantasy based presents possibilities impetuous risk taking But “Facts” depend on unconscious biases & perceptions

19. 19© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch All our senses are processed by our emotions & biases Source: http://cti.itc.virginia.edu/~psyc220/kalat/JK379.fig12.13.amygdala_con.jpghttp://cti.itc.virginia.edu/~psyc220/kalat/JK379.fig12.13.amygdala_con.jpg Perception is 100% emotional (whatever we would like to believe) The Amygdala act as a rapid relevance detector: They act as a switch between the reptilian and neocortical brains

20. 20© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Disputes are therefore like a piece of cheese Perceptions = Value = 9/10 of all disputes “It isn’t that they can’t see the solution, it is that they can’t see the problem” Gilbert K. Chesterton Triangle = ½ x r x h Rectangle = r x h Square = h x h

21. 21© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch A new approach to conflict resolution is needed Source: J. Kalowski

22. 22© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch “We can’t solve the problems by using the same kind of thinking we used when we created them” Albert Einstein

23. 23© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Arbitration or litigation Mediation Mediation + Arbitration = more choice & better outcomes? The Facts The Law(s) The Positions Misunderstandings Perceptions Emotions Interests Concerns Feelings Beliefs Values Needs Fears + = The “big picture”: a more complete dispute resolution process? Current thinking: Med or Arb or Med-Arb or …?

24. 24© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Private Sessions FUTURE PAST Opening Parties’ opening statements Summarising and Agenda setting Exploration of issues and interests Option Generation (v.Alternatives) Negotiation(s) (joint & private sessions) Agreement/ Closure UNDERSTANDING & EXPLORATION PROBLEM SOLVING RESOLUTON Post-mediation: Enforcement of agreement Pre-mediation: Preliminary Conference Why try mediation? Three specific considerations Source: Joanna Kalowski

25. 25© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Why not aim for “Holistic Dispute Resolution”? The Facts The Law(s) The Positions Misunderstandings Perceptions Emotions Interests Concerns Feelings Beliefs Values Needs Fears 1.Is one integrated “hybrid” process possible? 2.Can one neutral do it all? 3.Should we use two neutrals? 4.Can the neutrals work as one team? The drivers: Costs Time Outcomes

26. 26© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch “We have to start by defining the process as part of the problem” David Plant

27. 27© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch What type of process will the parties want? Facilitative (process) Directive (process) Non-Evaluative (subject matter) Evaluative (subject matter) Source: Based on L. Riskin “The New Old & New New Grids” Directive Non-Evaluative Directive Evaluative Facilitative Non-Evaluative Facilitative Evaluative Arbitration/ Conciliation Mediation

28. 28© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Fundamentals Time Money Laws VALUESNEEDS Constraints Strategies ISSUES OUTCOMES The Holistic Approach Focus

29. 29© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch First Step = Diagnosis Together into the abyss Limited destr- uctive blows Fragmentation of the enemy Management of threat Images and coalitions Deliberate loss of face Actions, not words Disagreement The Problem Debate+polemic The people 1 2 3 4 5 6 7 8 9 WIN-WIN WIN-LOSE LOSE-LOSE Inspired by: Tina Monberg Source: F. Glasl’s “Confronting Conflict” De-escalation Escalation Target zone for conflict resolution

30. 30© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch “Early Dispute Resolution – the earlier ADR processes are implemented in the conflict cycle, the less risk there is of the dispute escalating out of control.” Hans Peter Frick, Group General Counsel, Nestlé SA Source: http://www.mediation-bedrijfsleven.nl/english.shtml#quote4 http://www.mediation-bedrijfsleven.nl/english.shtml#quote4 When to try mediation? WHEN?

31. 31© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch Factors Parties Certainty of outcome Costs Time & deadlines Applicable law(s) Languages Skill sets Venue & distances Institutional rules Nationalities/cultures Counsel Neutrals (roles & no.) Availabilities Advisors & Experts Confidentiality Discovery Implementation Enforcement Process Design: More Freedom of Choice & Autonomy Sequential Med-Arb Arb-Med Arb-Med-Con-Med-Arb Consent awards Parallel Med//Arb Carve-outs Windows Shadow mediation Partnering Hybrid MEDALOA Dispute Board Co-“medarbiters” ???

32. 32© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The ethical obligation to try to settle first Us et Coutumes de l’Ordre des Avocats (OdA) genevois Art. 7 - L’avocat doit autant que possible favoriser les solutions transactionnelles. Il n’engagera pas de procès sans s’être rendu compte qu’un arrangement n’est pas possible. Il informe le client des risques, des difficultés, du coût prévisible et de l’évolution de l’affaire dont il ne doit garantir l’issue. Code suisse de déontologie de la Fédération suisse des avocats (FSA) Art. 9 - Règlement amiable des litiges - L’avocat s’efforce de régler à l’amiable les litiges, dans la mesure où l’intérêt du client ne s’y oppose pas. Il tient compte, comme représentant d’une partie en justice ou conseiller, d’une médiation en cours ou du souhait de l’une des parties d’en instaurer une. International Bar Association (IBA) International Code of Ethics (Ed. 1988) Art. 11Lawyers shall, when in the client’s interest, endeavour to reach a solution by settlement out of court rather than start legal proceedings. Lawyers should never stir up litigation. Is it malpractice not to advise clients about mediation? Will clients be justified in refusing to pay their litigation invoices?

33. 33© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The statistics are compelling (Source: ACB, NL 2006) Average duration of a mediation4 x ½ day sessions No. of disputes resolved in a single mediation15% Percentage of cases reaching a settlement79% Willingness of the parties to repeat mediation92% Average value of thedisputeEuro 5 million Average costEuro 3,500.00 / party http://www.mediation-bedrijfsleven.nl/english.shtml

34. 34© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch The role of the lawyer in mediation TASK ORIENTATION LOW HIGH ADVISOR COUNSEL LITIGATOR HIGH “JOINT PROBLEM SOLVER” RELATIONSHIP

35. 35© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch When NOT to mediate or rely only on mediation GOOD REASONS A precedent is needed There is an abusive imbalance in power One of the parties is dishonest/cannot be trusted The neutral is dangerously unqualified Certainty of outcome is needed by a specific date BAD REASONS “Mediation is a sign of weakness” “It is too soon to mediate” “We tried to negotiate, so a mediator won’t add anything” “You cannot negotiate with people who are in bad faith” Mediation is not a magic drug, but should be used much more!

36. 36© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch How satisfactory is national court litigation? How easily are court decisions enforced abroad? How satisfactory is arbitration in resolving IP disputes? Is it responsible to avoid a cheaper process with a 70-80% track record? You can tailor something faster cheaper better ! Can you afford NOT to try mediation?

37. 37© B. Sambeth Glasner & J. Lack 2008-9. All rights reserved. www.altenburger.chwww.altenburger.ch “In the new economy, those who live by the sword will be SHOT by those who don’t “ Gary Hamel “The world’s leading expert on business strategy” Fortune Magazine Source: Michael Leathes In conclusion