Deal-Dispute Mediating

April 18, 2019 | JAMES C. FREUND

Most of the business disputes we mediators handle are what I call “one-shot dollar disputes,” involving parties with no continuing relations squabbling over money. This often becomes a zero sum game, with few variables that can prove useful in crafting a creative resolution. And since things usually end up in court if the parties are unable to reach a negotiated agreement, the litigation alternative forms the measure against which the parties evaluate any proposed mediation resolution.

There is, however, another kind of situation ripe for mediation that presents a blend of “dispute” and “deal” factors – what I call “deal-dispute mediating. Here, although specific items are in dispute (or even the subject of active litigation), other vital issues separating the parties aren’t litigable at all. Rather, they’re business matters, not involving claims of legal wrongdoing, that need to be resolved for final agreement to be reached. While the litigable disputes involve prior issues, these other matters deal with current and future issues relating to assets, liabilities, transactions and conduct.

This is prime territory for mediation. It’s not easy for judges or arbitrators to resolve disputed issues of business judgment, and they can’t impose the kind of resourceful business solutions the parties should be able to fashion with the mediator’s assistance.

The need for deal-dispute mediating can arise in a number of different contexts – for example, a corporate joint venture that has soured, or a financially troubled company (with too many mouths to feed) that is attempting a turnaround to avoid bankruptcy. I’ve always seen this as a logical direction for the practice of mediation to take – away from narrowly-defined litigable disputes and toward a more comprehensive approach to resolving conflict in fractious business controversies.

There are both similarities and contrasts between what works for the mediator in the one-shot dollar dispute and what’s needed in a deal-dispute mediation. There is one constant, however, that I believe pervades all forms of mediated proceedings – the mediator has to be a good negotiator. If anything, this skill is even more vital in the deal-dispute area. The mediator’s ability to persuade, willingness to bargain, mentality to conciliate, and knack of devising creative solutions to problems – these remain the keys to resolving impasse.

If you’re interested in learning more about deal-dispute mediating, please see Part III of my book, Anatomy of a Mediation – A Dealmaker’s Distinctive Approach to Resolving Dollar Disputes and Other Commercial Conflicts (PLI, 2012). It contains a comprehensive treatment of a business breakup between partners – colleagues who have lately become adversarial but can’t reach an accord on their own – in which the mediator needs to act in a creative fashion to bring about a negotiated resolution.

–Jim Freund