Resolving Disputes with Negotiation, Mediation and Arbitration

Resolving Disputes with Negotiation, Mediation and Arbitration

Professor DANIELLE L. HARGROVE – Hargroveadr@TAMU.edu

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Learning Objectives

• Understand and be able to explain the primary differences among the dispute

resolution processes of negotiation, mediation, arbitration with litigation.

• Be aware of the factors involved in selecting appropriate dispute resolution

procedures.

• • Understand the roles of parties, lawyers, and neutrals within each of these

• Understand the theoretical foundations of these ADR processes, and how they can be useful in achieving agreements and/or resolving certain kinds of disputes;

• Know and understand the basic mechanics/rules/principles/theories related to these ADR processes;

• Improve your ability to effectively engage in these ADR processes, which comes from both “book learning” and “behavior/skill learning” (i.e., from both theory and practice)

 

 

Why are you in this class??

“I work with contracts at work that have dispute resolution clauses.” “I am interested in bias and behavioral economics and human behavior that drive judgment and decision making.”

“I want to obtain knowledge and skills necessary to manage the process at work to move parties toward a fair and balanced solution.” “I’m preparing for upward development at work.”

“I want to learn the common types of disputes in healthcare settings and ways to resolve for health equity and social justice.” “I want to learn the fundamentals of dispute resolution to handle client disputes effectively.”

“Learn the dos and don’ts involving disputes and best way to achieve required outcome.” “I want to learn more about how to deal with ‘difficult’ people.”

 

 

Why are you in this class, cont’d??

“To be able to handle disputes in a positive manner to get the best possible results.” “I want to learn how to apply these strategies professionally and personally.”

“I want to sharpen my decision-making skills, to recognize, evaluate, resolve issues in group crisis context and respond to ethical dilemmas at the workplace.” “To learn emotional control, situational awareness, and emotional intelligence especially in politically intense situations.”

“It is a core course… but dispute resolution techniques are beneficial in the workplace.” “I want to learn how to be more neutral – take out my emotion and personal beliefs to allow people to be transparent.”

“I want to apply skills in my day to day dealings with clients, studios and business vendors .” “To assist me with my investigations at work.”

 

 

Why are you in this class, cont’d??

“To recognize critical factors that complicate resolving disputes that arise at work.” “Develop skills to increase my skill sets in consulting with attorneys.”

“To better handle negotiations and disputes in my personal and professional life.” “To better work with our parent company’s legal group on contracts to shorten the turnaround time for our documents.”

“To learn legal parameters especially related to residential property contracts for new and resale.”

“I hope this class cover techniques to use before the mediation is scheduled to induce a better chance for successful resolution.”

 

 

Is Dispute Resolution an Art or a Science?

 

 

What are some reasons for escalation of conflict in the home or workplace?

• Lack of/ Poor Communication

• Fear of Dealing with Conflict, abandonment, etc

• Lack of Control of information or Outcome

• Opposing positions

• Competitive tensions • Power struggles • Ego/ Pride

• Lack of Emotional Control/Emotions driving decisions

• Jealousy • Performance

discrepancies • Compensation

issues • Personal Issues • Mental Health

Issues • Disrespect • Unconscious Bias • Systemic Problems

within Organization

 

 

Continuum of Dispute Resolution Processes

Dispute Resolution Processes (ADR?)

• • Litigation/jury trial, bench trial

• • Arbitration (binding) • • Private trial • • Private tribunal • • Early neutral evaluation

• • Non-binding arbitration • • Summary jury trial • • Mini-trial

• • Ombuds • • Conciliation • • Mediation • • Negotiation

 

 

 

 

Recent Developments – Online and Early Dispute Resolution • Online Dispute Resolution (ODR) Early Dispute Resolution • Private use Expedited Process – w/in 30 days • eCommerce Speed of interest requires it • eBay, PayPal Influenced by Collaborative Law • Apps Efficient – cost/discovery • ▫ Family Cons:

v Divorce, child custody Legal Profession Inertia v Post-divorce communication Discovery

• Public use Client inertia v Municipalities, agencies Sign of weakness if move first v Tax assessment appeals Can”t accept 30 days

• Courts v Family matters v Debt collection

 

 

Negotiation

 

 

Negotiation Key Considerations • Recognize when a conversation is (or can be) a negotiation • • Know and use your Best Alternative To a Negotiated • Agreement (BATNA) • ▫ Know yours • ▫ Consider how to improve it • ▫ Use it as the basis for your “walk away point” • ▫ Consider the other negotiator’s—and decide whether to influence it • • Challenge zero sum (or “fixed pie”) assumptions – ask • questions, get at underlying interests – and develop new • solutions • • Consider anchors or objective criteria – yours and other • negotiators • • Consider constituencies – yours and other negotiator’s • • Consider emotions – and what you’re communicating about • your respect for the other person • • Define success in negotiation—outcome, relationship, both?

 

 

Negotiation: Getting to Yes – Fisher and Ury

SEPARATE THE PEOPLE FROM THE PROBLEM

FOCUS ON INTERESTS, NOT POSITIONS

GENERATE OPTIONS FOR MUTUAL GAIN BEFORE DECISION

INSIST ON USE OF OBJECTIVE STANDARD

 

 

Negotiation Principles: GETTING TO YES by Roger Fisher and William Ury

 

 

Best Alternative

to Negotiated Agreement

(BATNA)

Know your BATNA – Keeps you from accepting terms that are too unfavorable and rejecting offers too favorable to reject

You are negotiating to get something better than if you had not negotiated.

Ex: When a family is considering the sale price for their home, the correct question is not what they “ought” to get for the house, but what they will do if the house does not sell in “x” time. Of ALL of the considerations, which of THOSE is the best alternative?

 

 

Tips in Negotiation When you’re searching for a yes:

• Consider the obvious positive and negative feelings your counterpart will have

• Prepare 3-5 Labels to defuse those negatives and enhance the positives, if they exist

• Do a Cold Read of the environment you find yourself in before you start speaking

• Use the Cold Read to fine-tune your Labels

• Cold Reads and Accusation Audits • Cold Read is the process of assessing your

environment, the present circumstances, and any history that might impact how your audience receives your message before driving for your yes.

• Accusation Audit is the clearing of the negative emotions that get in the way of deals, as the first move • It probably seems like…

 

 

Tips in Negotiation, cont’d

Labeling shows that we are attempting to gain an understanding of the position they are in, whom they have to influence, and challenges they face. It helps us uncover the factors that drive behavior.

 

 

Exactly What To Say – Phil Jones 1. I’m not sure if it’s for you . . .

• This phrase makes them think: • ‣I’ll be the judge of that! • ‣Let’s them decide if it makes sense for them • ‣Turns them into active listeners • ‣Makes them sell the strategy to you • ‣Allows you to propose this in a non-sales-y way

2.Would you be open to ________________? • These phrases make it difficult for the other person to reject your idea and

makes them feel obligated to explore the possibility • Why? Because everyone *thinks* they are open-minded ‣When

introducing a new idea, start with “How open- minded are you?” • This will naturally attract them toward the very thing that you’d like them

to support – Everybody wants to be open-minded…

 

 

Exactly What To Say – Phil Jones

3. What do you know about _________? • The phrase is a soft questioning of their knowledge base and forces

them to share their reference sources on which their argument is based

• Crucial – Make sure your tone of voice and delivery is inquisitive (Oh… that’s interesting, what do you know about…? Body language: Nod your head and then turn your head sideways).

• casts enough doubt that makes enough consider other/back-up options

4. How would you feel if . . . .? • These phrases get people excited about seeing their future and gives

them a reason to move forward • You need to create a big contrast between where they are today and

where this decision [working with you] would put them/do for them

 

 

Exactly What to Say – Phil Jones 5. Just imagine….

• Every decision anyone makes is made at least twice – the decision is first made in your mind hypothetically before it is ever made in reality

• Creating pictures/visions in the minds of others is done by telling stories • When you hear “Just imagine” the brain pictures the very scenario you are

creating

6. When would be a good time to . . . ? • You prompt the other person to subconsciously assume that there will be a

good time and that ‘no’ is not an option • It is the kind of direct question that prevents people from telling you that they

have not got the time and, as a result, helps you avoid one of the biggest objections people face

7. I’m guessing you haven’t gotten around to… • Making a decision

 

 

Exactly What to Say – Phil Jones • Signing the contract • Getting the paperwork • Calling the bank . . . Compliance…. • This allows the other person to save face, but it also eliminates

the excuse they have already prepared – it’s preemptive • They respond in 1 of 2 ways: either they feel proud that they

have done what they had promised, or they are embarrassed that they haven’t and make a new promise to take the action

• By pushing the negative scenario, you get them to rise to the positive or tell you how they are going to fix things so they are not called out again

8. Simple swaps • Turn an open question into a closed one. • “Do you have any questions?” into “What questions do you

have for me?”

9. As I see it, there are three (good) options.

• People hate to feel manipulated or and nearly always want to feel like they made the final decision

 

 

Exactly What to Say – Phil Jones • When they need help deciding, using these words can

help narrow their gaze, reduce their choices and make it easier for them to pick • This makes a difficult decision, with a lot to think

about, completely effortless • It allows you to to appear impartial • But you can display/frame the options in a way

that guides them to your preferred choice • Leave your preferred choice until the end – it’ll

allow you to easily build the value of the option and load the choices, so your preferred outcome stands out as the winner

10. I bet you’re a bit like me… • A powerful tool to help gather evidence to use in building your

later recommendations • It results in the other person comfortably agreeing with you • It helps avoid many common objections by gaining full

agreement with something they may otherwise have tried to use as a future excuse

 

 

Comparing Arbitration and Mediation

• Third party decides outcome • Third party applies external norms

(reasonable person/ case law/precedent)

• Not conducive to Holistic, creative resolution

• Often treated as Litigation Lite • Formal decorum maintained • Generally, win-lose—but may be

lose-lose • Generally binding decision • Compliance not guaranteed, but

possible with judicial enforcement

• Disputants decide outcome • Disputants’ norms control—but

external norms also relevant • Holistic, creative resolution more

likely • Parties’ “voice” includes initial

presentation and, perhaps, give-and- take

• Collaborative generally, relatively informal tone fostered

• Opportunity for win-win, WINwin, or at least OK-OK • No guaranteed resolution

• If resolution reached, greater compliance with outcome

• Arbitration • Mediation

 

 

Mediation

 

 

Fundamental Aspects of Mediation

Control of the outcome

Confidential Process*

Low transaction costs for the process

Can often maintain or transform relationships

 

 

Mediation: Legal

Perspective

TRANSFORMATIVE

EVALUATIVE

FACILITATIVE

 

 

The Mediator

The Mediator:

• Neutral

• Controls the process, not the outcome • Sets the tone • Establishes ground rules

• Builds rapport with both parties

 

 

The Mediation Process

Mediator Introduction

Joint Session

Opening Statements

Caucus

 

 

And now… • Do you know enough about mediation and arbitration—or the other processes–to educate a colleague or superior about them? • Do you know enough about these processes to help a colleague or superior decide whether and when to use them? • Do you know enough about these processes to help a colleague or superior decide how to structure these processes or choose a neutral?

 

 

Phil Jones – Exactly What to Say • 1. I’m not sure if it’s for you but… • 2. Open-minded (e.g. “Would you be open to….?) • 3. What do you know about. . .? • 4. How would you feel if…? • 5. Just imagine… • 6. When would be a good time? • 7. I’m guessing you haven’t got around to… • 8. Simple swaps (e.g. turning “Do you have any questions?” into “What

questions do you have for me?”) • 9. As I see it, there are three options. • 10.I bet you’re a bit like me. • 12.If you… then… (e.g. “If you decide to give this a try, then I promise you won’t

be disappointed.”) • 13.Don’t worry…

 

 

Why Arbitrate?

• “Efficiency”* in: • Time to hearing • Time to decision • Costs • More control over

process • Discovery • Easier access to fact-

finder for disputes in arbitration

• Resolution (mediation often part of process)

• Mutual Selection of Factfinder

• Confidentiality/Privacy

• Same remedies as trial

 

 

Arbitration History and Arbitration Agreements

 

 

Legal Framework of the FAA • FAA, 9 U.S.C. §§ 1-14 • § 2. Validity, irrevocability, and enforcement • § 4. Failure to arbitrate under agreement • § 5. Appointment of arbitrators or umpire • § 7. Witnesses; fees; subpoenas • § 9. Award • § § 10. – 12. vacating; rehearing; modification or correction • § 13. enforcement • § 16. Appeals

 

 

4 most common types of difficult people • 1. The “Yes, but…” person • The “Yes, but…” person is one who discounts or rejects just about everything you say. They will appear

to be unable to make decisions, making you responsible for the lack of progress in the dialogue. They will acknowledge the validity of the option/decision/action, but there is always a reason why it will not work. • How To Win Them:

• One of the most effective ways to deal with this type is by way of the Label and Calibrated Questions. Respond to the “Yes, but” person with calibrated question driving them to provide the solution such as,

• “You seem to be having some difficulty accepting what I am proposing. How should we resolve this?” • 2. The Always Suspicious • The suspicious person is controlled by fear on some level which makes the establishment of rapport

difficult. • How To Win Them:

• A Paraphrase and Calibrated Questions may be in order. By using these techniques in this fashion, you are identifying the trust issues and refocusing them on the underlying cause of their suspicion.

• “You seem to be having a problem trusting me and my company. What can I do to allay some of your concerns?”

 

 

3. The Hostile The hostile or angry person attempts to control you through intimidation. This is the individual who personalizes angry responses and insults you because it is their default coping mechanism. It is also used as a common an avoidance response.

How To Win Them: Your first response is to control yourself. The only thing you have absolute control over is your response and emotions. If you speak in anger, you will make the best speech you will ever regret. The next step is to use an “I” Message to confront the person without sounding confrontational. “When you ________, I feel ___________ because _________”.

When they challenge you about labeling their hostility, you can respond by saying,

“I didn’t say you were angry. I said you sounded angry. Help me understand how what I am hearing is wrong.”

4. The Challenger The challenging subject attempts to exert power and a sense of superiority over you. He or she will challenge your experience, knowledge, expertise, ability, or authority. Their focus is on you, not the issue. They are the consummate derailer. You will find them to be calm, composed, and appearing to enjoy the “game.”

How To Win Them: Don’t respond directly to the challenge or the insult. Avoid a power or knowledge struggle. Again, your control is paramount. Show no negativity in tone or response. Ask what they would do if they were in your shoes in the form of a calibrated question.

How would you approach this if you were me? What would you do differently if you were in my shoes?

Overall: Be firm and principled. Don’t back down simply because they are being difficult. Use your Black Swan skills to determine the underlying cause of their behavior to change it and gain the edge.

 

 

https://blog.blackswanltd.com/the-edge/how-to-get-buy-in-with-the-3-most- effective-calibrated-questions

 

 

Why Arbitrate?

• “Efficiency”* in: • Time to hearing • Time to decision • Costs • More control over

process • Discovery • Easier access to fact-

finder for disputes in arbitration

• Resolution (mediation often part of process)

• Mutual Selection of Factfinder • Confidentiality/Privacy • Same remedies as trial

 

 

Topics for discussion

Terms of Arbitration Agreement

Ethics

Participants

Arbitrability

Judicial Review of Arbitration Awards

Privacy and Confidentiality

 

 

QUESTIONS FOR CLASS

SHOULD CORPORATE ENTITIES SEEK TO AVOID “RUNAWAY JURIES” BY REQUIRING ARBITRATION IN THEIR CONTRACTS WITH CUSTOMERS AND EMPLOYEES? IS THIS A LEGITIMATE GOAL?

IF YOU WERE TO LIMIT AN ARBITRATOR’S AUTHORITY, WHAT WOULD YOU WANT TO LIMIT AND WHY?

WHAT ARE THE ARGUMENTS FOR AND AGAINST BEING BOUND BY THE ARBITRATOR’S DECISION?

 

 

PRIVACY AND CONFIDENTIALITY

Why the need for Privacy and/or Confidentiality?

• Propriety information or processes • Personnel/ personal matters • Sensitive matters • Trade secrets • HIPAA • Financial Information • Mergers and Acquisitions • Avoidance of Copy Cat claims

• Privileged Information • What can parties do to protect their interests?

• Protective Orders • Confidentiality Agreement in the

arbitration agreement or post filing of arbitration claim with or without liquidated damages clause

• Avoid an award with Findings of Fact and Conclusions of Law

• Public v. Private Sector Case • Enforcement

 

 

Arbitrability – 3

Questions

• Whether the parties entered into an agreement to arbitrate (and who decides);

• Whether a specific issue or dispute is included within the scope of the arbitration agreement (and who decides);

• Whether any conditions that might be necessary to trigger the contractual duty to arbitrate have been satisfied (and who decides).

 

 

Relevant arbitrability cases

• First Options of Chicago, Inc. v Kaplan (SCOTUS 1995) (who decides) • MKI is only party that signed an arbitration provision in the

workout agreement • Kaplans did not sign the MKI workout agreement personally • Panel of arbitrators decided they had the power to rule on claim

Kaplans were liable for MKI debt and ruled against the Kaplans. • Kaplans sought to vacate and appealed to 3rd Circuit and won

with Court finding the dispute was not arbitrable and reversed the trial court

• Holding: A court must defer to an arbitrator’s arbitrability decision when the parties submitted that matter to arbitration. A fair and complete answer to the standard-of-review questions whether the parties have agreed to submit the arbitrability issue to arbitration. It is clear on the record before us, First Options cannot show that the Kaplans clearly agreed to have the arbitrators decide or that the Kaplans agreed to arbitrate arbitrability in this case. Therefore, can’t force them to arbitrate and arbitrators shouldn’t have heard the case.

• Why do you think the Kaplans wanted to avoid arbitration?

 

 

Relevant arbitrability cases, cont’d

• Steelworkers Trilogy • 3 cases decided in 1960 established the presumption of arbitrability in

Labor-management contract disputes • Agreements enforced but must have positive assurance that the

arbitration clause is not susceptible of an interpretation that covers the asserted dispute.

• Howsam v Dean Witter Reynolds, Inc. (SCOTUS 2002)(subject matter arbitrable?)

• Dispute arises out of investment advice Dean Witter gave to Howsam to hold interests in four limited partnerships some time between 1986 and 1994

• Howsam alleges Dean Witter misrepresented the virtues of the partnerships.

• The Dean Witter standard Client Service Agreement’s arbitration clause provides “ all controversies . . . concerning or arising from . . . any account . . . any transaction . . . , or . . . the construction, performance or breach of . . . any . . . agreement between us . . . shall be determined by arbitration before any self-regulatory organization or exchange of which Dean Witter is a member.” The agreement also provides that Howsam can select the arbitration forum. She chose the NASD.

 

 

Relevant arbitrability cases, cont’d

Howsam v Dean Witter , cont’d. • Provision in arbitration clause stated no dispute “shall be

eligible for submission . . . where six (6) years have elapsed from the occurrence or event giving rise to the . . . dispute.”

• Dean Witter filed lawsuit to stay her arbitration claim arguing a limitations defense and sought injunction from arbitrator

Holding: Ct said it was for the arbitrator to decide as a “gateway question”. Also recognized as “procedural questions of arbitrability” where a condition precedent to arbitrability has been fulfilled: • Time limits • Estoppel • Notice • Laches

 

 

Relevant arbitrability cases, cont’d Prima Paint Corp v Floyd & Conklins MFG, Co.

• On October 7, 1964, Flood & Conklin Manufacturing Company, entered into a “Consulting Agreement,” with Prima Paint Corporation. This agreement followed the execution of a contract pursuant to which Prima Paint purchased F & C’s paint business. The consulting agreement provided that for a six-year period F & C was to furnish advice and consultation “in connection with the formulae, manufacturing operations, sales and servicing of Prima Trade Sales accounts.”These services were to be performed personally by F & C’s chairman, Jerome K. Jelin, “except in the event of his death or disability.”

• F & C bound itself for the duration of the contractual period to make no “Trade Sales” of paint or paint products in its existing sales territory or to current customers. To the consulting agreement were appended lists of F & C customers, whose patronage was to be taken over by Prima Paint. In return for these lists, the covenant not to compete, and the services of Mr. Jelin, Prima Paint agreed to pay F & C certain percentages of its receipts from the listed customers and from all others, such payments not to exceed $225,000 over the life of the agreement.

• The agreement took into account the possibility that Prima Paint might encounter financial difficulties, including bankruptcy, but was silent to possible financial problems by F & C. The agreement stated that it “embodies the entire understanding of the parties on the subject matter.”

• The parties agreed to a broad arbitration clause, which read in part: “Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in the City of New York, in accordance with the rules then obtaining of the American Arbitration Association . . .”

• Prima Paint notified attorneys for F & C that in various enumerated respects F&C had broken both the consulting agreement and the earlier purchase agreement claiming it had fraudulently represented that it was solvent and able to perform its contractual obligations, whereas it was in fact insolvent and intended to bankruptcy shortly after execution of the consulting agreement.

• After considerable litigation, the District Court, granted F & C’s motion to stay the action pending arbitration, holding that a charge of fraud in the inducement of a contract containing an arbitration clause as broad as this one was a question for the arbitrators and not for the court.

Holding: The Court only hears claims that go to the making of the arbitration clause itself. If the claim of fraud in the inducement is of the arbitration clause itself, then the Court hears it. The Court will not hear an independent, general claim of fraud in the inducement of the overall contract. That is for the arbitrator, particularly because of broad arbitration clause. Who agrees the case should be affirmed? Reversed?

 

 

You be the Arbitrator • Grievant was a school bus operator for nine years, with a satisfactory work record, and no serious

discipline except a suspension six years prior for talking on a telephone while operating a bus. • She was discharged for misconduct for utilizing a school bus to take her minor children to daycare;

and in doing so, left her scheduled route; left the keys in the ignition (with the bus running) and the bus unattended while she dropped her children off at daycare; using toll roads to return to her route without authorization; arriving at two of her stops more than five minutes late; failing to call dispatch to give the Employer notice of her delay for each late arrival; and generally failing to comply with laws, rules and regulations, policies and operating procedures. In this instance, no one was injured nor were any students late to class. Grievant did not call her supervisor initially because she had recently been counseled about tardiness.

• The Union contends that the Grievant was not terminated for just cause and that she should be returned to employment. The Union argues that the degree of discipline was not reasonably related to (a) the seriousness of the employee’s proven offense, and (b) the Grievant’s record. Specifically, it argues that Grievant’s decision to bring her four minor children (all under the age of 4) to work at 5:00am, designed only to ensure she got to work on time, does not warrant the punitive termination action when administering progressive discipline would have been more appropriate given the circumstances. The Union argues that using a toll road without permission, failing to obtain permission before deviating from her route, and leaving her key in the ignition were minor infractions which were the result of Grievant simply trying to get to work on time.

• The Employer argues the Grievant was terminated for just cause and asks that the claim be denied because the Grievant’s conduct constituted “misconduct in office” and “willful neglect of duty,” in violation of the Employer’s rules of conduct and the parties’ collective bargaining agreement. The Employer further argues that the Grievant violated provisions of the Transportation Handbook which constitute adopted school board rules; and, that each violation on its own, serves as grounds for dismissal.

• You are the Arbitrator, Would you uphold the termination? • To what extent does it matter if Grievant thinks it shouldn’t matter that she broke a few rules

because all of her students got to class on time?

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