I have been resolving disputes for many years. I started as a commercial litigation solicitor, fighting to get the best deal for my client. More recently, I have been sitting in the middle as an arbitrator or mediator.
People are often confused by the difference. An arbitrator is a sort of private sector judge. They decide who is right and makes an award – typically that Party A must pay Party B something. The award has legal status and will be enforced by the courts. A mediator doesn’t make a decision, but encourages the parties to settle the dispute on terms that both can live with.
Most of my work, as a solicitor, arbitrator or mediator, concerns a business deal that has gone wrong. The construction industry is a rich source of work. Any large construction project is a complex web of contractual relationships with a client, the contractor, subcontractors, architects, engineers and material suppliers. If any party does not perform as planned, many other parties suffer extra cost and disruption – and the claims fly in.
Everyone concentrates on the “gone wrong” aspect and the arguments go back and forth about who failed to do what they said they would, when they said they would do it and what it has all cost.
A common theme
As a solicitor, my aim is to try to put the blame on another party so I can recover the losses for my client. As an arbitrator, I have to decide who is responsible and how much must be reimbursed as a result. In either role, my concern hasn’t been about whether the deal was a sensible one in the first place. If someone agrees to do something by a specific time and fails to do it, it really doesn’t matter how difficult the task was.
However, as my experience of these disputes grew, I saw a common theme. People were agreeing to do things that were not really practicable. To get the deal, the “doers” would promise to complete the job in an unrealistically short time. The people who wanted things done were putting unreasonable pressure on the doers to agree. Prices were being agreed that were too low, tempting the doer to look for ways to charge extra wherever possible. Clearly, if a more realistic price and time for the job had been agreed at the start, many disputes would never have happened. The huge legal bills and wasted management time would have been avoided.
When acting as mediator, I start with two parties that appear to have irreconcilable objectives. I have to persuade each to moderate their position. More important, I have to encourage each to think from the other’s point of view. What does the other party need to achieve in order to settle? Is time more important than money? Does a continuing relationship have a value? Is there a reputation to be gained or lost? By listening to the (often angry) comments I start to understand how to move towards a settlement, which may be achieved at a monetary figure that neither would have contemplated paying or accepting at the start.
An offer they can’t refuse?
Drawn from my experience of sorting out these problems, I have two tips for those involved in putting together business deals at the start.
First, don’t drive too hard a bargain. It’s exciting to drive the price down and down, but the lower it goes the more chance of litigation later. The legal costs and wasted management time may mean that you spend much more than you save.
Second, try to get into the mind of the other side. If you know what they really want, you may be able to make them an offer that they can’t refuse.
? John Redmond is a solicitor and chartered arbitrator, formerly head of construction at Osborne Clarke. He now works independently as an arbitrator and mediator on a wide range of commercial disputes