Video Simulation Highlights the Need for a New Deal Point: The Prevention Neutral

By Amy Foust

A March 4 New York Law School Alternative Dispute Resolution Program presentation focused on the work of CPR’s Dispute Prevention Committee, centering on recognizing the inevitability of disagreements in complex business relationships, and the value of working to prevent problems from festering into conflict and formal disputes.

The program, “No Need to Resolve if You Can Prevent,” opened with moderator Noah Hanft, of New York consulting firm AcumenADR, noting that mediation was rare just a few decades ago, but is now common or even required in many jurisdictions.  He expressed confidence that dispute prevention, although unusual today, will be a part of ADR’s future.

Hanft, who was CPR’s president and CEO from 2014-2019, co-chairs the CPR Dispute Prevention Committee with Gregory S. Gallopoulos of General Dynamics Corp., in Falls Church, Va. The committee has worked with CPR to develop a dispute prevention panel of professionals to assist companies in developing techniques and processes to head off conflicts, and Model Dispute Prevention and Resolution Provisions. 

The model provisions assist with the appointment of a standing neutral for significant transactions, such as joint ventures where the parties envision a long-term relationship; a standby neutral, who is ready to step in but is not necessarily involved in regular meetings; or an agreement, without the appointment of a neutral, to work to recognize and resolve friction before it evolves into conflict.

CPR also offers a new Dispute Prevention Pledge for Business Relationships (it can be viewed and signed here) to recognize the importance of addressing conflict. The Pledge allows for contracting parties to incorporate dispute prevention mechanisms into business arrangements, such as the prompt identification of escalating conflicts or the appointment of a third-party neutral who will be engaged before disputes emerge.

Noting that the failure rate for joint ventures might be as high as 60%, the panel used portions of  a video from a January dispute prevention simulation at the CPR Annual Meeting to discuss how dispute prevention might work in a complex business scenario, with several of the #CPRAM21 presenters returning for analysis at the NYLS program. 

The video follows a hypothetical joint venture of two auto companies seeking to build a network of electric car charging stations. The scenario envisions perfunctory quarterly meetings, with increasing departures from projected results.  In one version of the scenario, there is no early intervention.  The failures lead to finger pointing and blaming.  Mediation fails, and the case goes to arbitration.

In a second scenario, a neutral attends meetings, and calls attention to the pattern of falling revenues before the parties have expressly addressed them.  Recognizing this as a likely source of future conflict, the neutral facilitates a conversation about the significance and causes of the departure from plan—a “constructive framework” for review. The parties work on a joint plan to revise the course of the deal or terminate the joint venture before a dispute emerges. 

The video segments also addressed overcoming objections to adding a dispute prevention clause to an agreement, distinguishing dispute prevention from a routine dispute resolution clause.  One mock negotiator dismissively described the appointment of a standing neutral as “like marriage counseling.” 

But panelist Deborah Hylton, a neutral who heads her own Durham, N.C., firm and who also played the role of the standing neutral in the CPR video, described the neutral’s role as more “guiding and facilitative,” akin to “an honest broker.”  She said the neutral can call out “the 500-pound. gorilla” neither side felt that it could address “for fear of signaling a weakness.” She described the value of the neutral’s ability to raise difficult issues.

Panelist Kimberly Maney, assistant general counsel at pharmaceutical manufacturer GlaxoSmithKline, based in Durham, N.C., spoke to the familiarity of the hypothetical scenario.  These relationships start in a great place, she said, but then “something goes not quite right,” and the relationship “moves to a scorched-earth posture.” 

Her business partners, Maney offered, would be happy to have a better option for managing conflict than burning the relationship to the ground.  Dispute prevention is helpful in allowing the parties to have a disagreement but still maintain a relationship, she noted.

Panelist Steven Bierman, a New York-based partner in Sidley Austin, noted that outside counsel and litigators are ultimately problem-solvers.  One way to help clients, he said, is to litigate or arbitrate a case, but another is to help clients anticipate problems and avoid litigation.  There will always be disputes to be litigated, Bierman said–if not this one, the next one.

In responding to audience questions, the panel encouraged counsel to engage the business executives involved in a large transaction in crafting a dispute resolution clause appropriate to the relationship the parties seek to establish. 

This is too important, Moderator Noah Hanft said, to be left to the lawyers.  Using ADR provisions as boilerplate copied from one agreement to the next is likely inadequate.  ADR clauses typically address how to resolve disputes, not how to manage the relationship to prevent disputes.

Furthermore, because the dispute prevention and resolution clauses govern the relationship, what worked in a prior relationship might not be in the best interests of a new relationship.  The best time to address these issues is at the outset, when everyone is on good terms. 

The program, hosted by NYLS ADR Skills Program Director F. Peter Phillips, is available at the program’s link above.  The CPR Institute has a web page devoted to the program, too, and it includes the video, here. Panelist Deborah Hylton also posted an article that expands on the Annual Meeting and NYLS programs that can be found here.

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Author Amy Foust is an LLM candidate studying dispute resolution at the Straus Institute, Caruso School of Law at Malibu, Calif.’s Pepperdine University, and an intern with the CPR Institute through Spring 2021.

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CEDR’s Eileen Carroll: Her Mediation Story

By Antranik Chekemian

F. Peter Phillips, director of New York Law School’s Alternative Dispute Resolution Skills Program, welcomed an online audience earlier this month as part of the program’s long-running lunchtime speaker series for a session with veteran U.K. mediator Eileen Carroll.

Carroll is founder of London-based Centre for Effective Dispute Resolution, better known as CEDR, “by far the most influential and prescient dispute resolution organization not only in the U.K., but really . . .  in Europe,” said Phillips in the introduction to the Feb. 10 session, which had about 40 attendees.

Phillips invited Carroll to share her professional background and how her journey into the ADR world started.  Carroll opened describing, among other things, a long history with the publisher of this CPR Speaks blog, the International Institute for Conflict Prevention and Resolution, and recounted some of those interactions over these years.  [Phillips is a former CPR senior vice president.]

She said she was a senior litigation partner at a London law firm in the 1980s, with “good contacts” in the U.S., and she took a six-month secondment to San Francisco.  “I was one of the senior litigation partners and they asked me whether I would go and work with a firm on the west coast,” she said, “and I took myself off to San Francisco.”

She said that she decided her focus would be alternative dispute resolution. “I learned a bit about mediation from some of the research I had done, and I thought that would be my project,” she said. She noted that she was impressed by how the mediation process “extracted people from the drama of litigation.” Carroll explained:

I then was given a book called The Manager’s Guide to Resolving Legal Disputes by Henry and Lieberman.  . . . Jim Henry, based in New York, who had started . . .  CPR. He became a very dear friend, and I was going to write a book, but someone gave me his book . . . and I decided when I read that I was really fired up to do something.

James F. Henry is founder of CPR, and Jethro Lieberman is a former CPR vice president and a retired New York Law School professor.

Carroll showed the audience an article she wrote stemming from her U.S. work, “Are We Ready for ADR in Europe?” International Financial Law Review 8 Part 12, 11 (1989).

The article’s title, she said, “was a question no one had asked, and I was determined that we were going to be ready for ADR in Europe. But I knew […] that I needed to do something to get a support behind me, so I set about founding a nonprofit organization.” She added, “I did get inspiration from Jim [Henry].”

She added, “By the time we launched CEDR, I had managed to get with the help of others–80 big companies to support the idea–[and] the major law firms in London didn’t want to be left out, so they thought they better support the idea.”

Philips jumped in and mentioned that CEDR’s story was similar to the CPR Institute’s origin in the U.S. “It wasn’t as if the idea was ‘Let’s take mediation and convince people of it’ so much as it was ‘Let’s take a core of leading owners of disputes–leading corporations, people who spend a lot of money litigating–and convene them so that they become the torchbearers,” said Phillips, adding, “They became the people who are convincing their peers.”

Carroll said that the ties to North America in her work continues, citing current work with the International Academy of Mediators. [CPR and CEDR continue to collaborate on seminars and trainings. Information on the next scheduled joint training–a four-day advanced mediation skills training seminar that begins April 19, in which the organizations will be joined by the Silicon Valley Arbitration & Mediation Center, is available on CPR’s website here.]

Philips asked Carroll about the role of emotion in commercial mediation, noting “the challenge to determine the extent to which . . . the expression of emotion in a commercial context is helpful.”

Carroll said, “In every conflict, there is emotion–people are upset in some way or other. Whether it’s because they have been avoiding it, whether it’s anger, whether it’s anxiety, all of those emotions I find present, and they display themselves in different ways, because we all have different kinds of personalities.”

She stressed the importance of “creating an environment where people can tell whatever their story is.” She stated that a mediator’s job is not to patronize but to notice the parties’ emotions and feelings, and explore them at the right moment with the right questions.

Carroll further emphasized that there is not a uniform approach in mediation. “There may be several working sessions with different people,” she said, “so to deal with these emotions, you have to go at it carefully without too many assumptions and create the space to get to know the people that you’re going to work with.”

Phillips then asked Carroll about the challenges women encounter in ADR. “When you were a practicing lawyer, you were very frequently the only woman in the room,” he said, “In the early days of ADR, you were very frequently one of the very few women who was making a go of it,” he said.

She emphasized that because law firms usually advise their clients during the mediator selection process, “they often follow the same kind of pattern of three names.” She expanded:

When l look back to the beginning of the field when we first started, . . . there was just a sense that we need people with status, people with experience, so at that point people were kind of looking to, ‘Who were those senior people?’ And the legal profession, even in the early 90s, a lot of those people were men. It is changing. But . . . those who were early entrants to the field obviously got . . . a reputation. [If they] were good mediators and good arbitrators who were around in the mid-90s, some of those people still have incredibly effective practices today.

Phillips then asked Carroll about a recent CEDR report that discussed “how female mediators view their strengths as opposed to how male mediators view their strengths.” [CEDR’s current research can be found here.]

“[W]omen recognized that they were good at relationships and empathy,” said Carroll, recalling the research, “and a lot of guys obviously have that experience, but . . . a lot of the men saw themselves as more as getting the deal done, much more transactional.”

Carroll then referred attendees to a Simon Baron-Cohen’s 2012 book, “The Essential Difference: Men, Women and the Extreme Male Brain, which discusses these issues.

“Women do have some very natural abilities in relation to communication skills and they have done work with babies, boys, and girls . . . and the way they react.  . . . So, women have a lot of natural skill in the area of mediation which I think sometimes they underplay because if you look at in life, women often have the role of having to make . . . all the relationships work within a family, sometimes in an office,” said Carroll.

Emphasizing the need for diversity, she concluded, “Women absolutely have the capability to do any tough mediation, because they have got the intellectual skill, they understand the background of the problem. There is no reason why there could not be as many successful commercial women mediators as men. I think it’s something about the filter of the selection process, which I think is changing.”

“All the business people I have worked with through the years in mediation, I have never had a problem,” said Carroll.  “Over time,” she continued, “I have never . . . felt any concern in dealing with business people about the role of the woman mediator. Never. I would not say that was always the case in relation to certain members of the bar.  . . . I have always managed to walk around it. It hasn’t been a problem.”

She concluded her presentation discussing instilling “patience and persistence” into mediation to make it successful.

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Eileen Carroll’s presentation is archived at the NYLS ADR Program link above and directly on YouTube here.

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The author, a second-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern.

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