Addressing Intangibles for Proper Mediation Outcomes

Addressing Intangibles for Proper Mediation Outcomes

By Benjamin VanderWindt

On Thursday, May 12, the Winkler Institute for Dispute Resolution, in partnership with Osgoode Professional Development and the International Academy of Mediators (IAM), hosted its annual Conference on Mediation. The day's topic was Navigating Risk in Mediation: Risk Analysis & Decision Making.

The day was comprised of a host of insightful and experienced speakers along with an experiential case study. The day's emphasis was on engaging with the intangible complexities of mediation cases while mitigating risks to the mediation. Mediators must take risks in their practice, but proper preparation can allow for a broad range of content, like a client's emotions, without derailing the process.

Historically, many mediators have solely emphasized to clients the liabilities of the case and the WATNA (or the potential outcome of losing the case). These two roles of a mediator are essential but alone miss out on some of the most significant potential advantages of mediation. As the Honorable Warren Winkler put it during the conferences closing session:

We should never, in the appropriate case, fail to deal with the indirect or intangible risks … Because of the devastating, irreparable, sometimes catastrophic harm that can occur if you fail to do so.[1]

It can be challenging to deal with mediation's emotional or intangible components. But, the actual cost of not dealing with these aspects is often higher, even if not immediately apparent. Mediations are rarely predictable, but some tools help clients consider all relevant factors. The speakers outlined several practical tools to help understand, express, and navigate the intangibles.

Accurately calculating the BATNA

Professor Michaela Keet and Professor Heather Heavin shared a few methods of accurately determining litigation risk. Beyond the obvious monetary costs of litigation, there are typically intangible costs that are frequently forgotten in preparing a client. These intangible costs could be litigation stress, ongoing disruption to life, loss of opportunities, harm to reputation, amidst other personalized costs. When evaluating the BATNA, it is necessary to discuss these with your client and include them into the calculation. For example, the delayed purchasing of a house, return to work, or other investment opportunities likely holds certain monetary value to a client. What would they pay for this to be settled?[2] An accurate calculation of a litigation BATNA should include the value of these intangible factors taken off the likely litigation BATNA when deciding whether to settle. A broad-viewed formula looks like (Liability projection x Damage projection = Risk Adjusted Prediction of Trial Outcome).[3] This straightforward valuation of intangible costs helped me see the value of prioritizing a broader conversation in the preparation stage.

Emotional Risk Preferences

Professor Hutcherson presented the psychology of risk in mediation. It is difficult to fully predict the optimal outcome in a mediation because of unknown factors and limited resources to get information. A helpful tool, Bounded Rationality, involves acknowledging constraints and making a decision that is efficient and satisfactory. We typically do this by calculating the perceived value of an outcome compared to its probability.[4] Perhaps surprisingly, one of the best mechanisms for deciding the most satisfactory outcomes is emotional responses. Emotions are highly adept at calculating risks and making action plans to mitigate the danger. But, occasionally, emotions are not accurate. They can fail to respond proportionally to the likelihood of a risk and make mistakes in quick, under-informed, time-pressured situations. Emotions can be beneficial in making decisions, but we often shy away from them because we do not know how to guide them properly. A prepared mediator can help guide clients in utilizing their emotional intelligence. For example, helping frame the problem with the hidden costs (identify hidden costs/losses in all outcomes) can help clients overcome biases while also utilizing their emotional ability to assess effects compared to their values. Mediators must help their client navigate their emotions, not ignore them.

Mediator as Being on the High-Wire

The keynote speaker of the day, Michel Kallipetis, shared a few high-level mediation stories to give insight into navigating the “high wire” of a mediator's risk.[5] These personal anecdotes perfectly built upon the theoretical insights described above. Navigating risk as a mediator requires acknowledging and utilizing the intangible and emotional components of a case. It is impossible to fully resolve an issue without putting all relevant factors onto your mental table. Some elements of a client's case cannot be openly shared but can still be shared with the mediator. This knowledge helps the mediator offer proper guidance. The mediator should confidentially gather this information from both parties through the right questions, privately exposing weaknesses, and getting proper BATNAs.  Through proper preparation, mediators can navigate clients to accurate BATNAs, as Todd McCarthy emphasized in one of the conference panels.[6] Mediators cannot make the decisions for clients but can help them make informed decisions that address all relevant - including emotional and other intangible - factors.

In reflection on the conference, I greatly appreciate the broad scope of content that can be dealt with in mediation. Having finished my second year as a student at Osgoode Hall, I have been drawn to mediation because of the potential for reforming relationships. Mediations can address the tangible and intangible ingredients of a case. I believe that encouraging the full range of inputs into mediations is crucial to the growth of the mediation field. Navigating a client's emotions can be difficult. But the mediation process is built to deal with these complexities. Although intangible factors include risk, they are also necessary to have fair, satisfactory, and relationally restorative outcomes.

[1]Honourable Warren Winkler, (Closing Remarks delivered at the Navigating Risk in Mediation: Risk Analysis & Decision Making Conference, Osgoode Hall, 13 May 2022) [unpublished] at 6:30:30.

[2] Michaela Keet & Heather Heavin, “Evaluating Litigation Risk: A Crucial Variable in Negotiated and Mediated Settlements” (Presentation delivered at the Navigating Risk in Mediation: Risk Analysis & Decision Making Conference, Osgoode Hall, 13 May 2022) [unpublished] at 13:00 -55:00.

[3] Ibid. at 45:12. Reference video for a more detailed explanation and examples of in-depth formulas for properly calculating litigation risk.

[4] Centri Hutcherson, “The Psychology of Risk Preferences and Applications to the Mediation Process” (Presentation delivered at the Navigating Risk in Mediation: Risk Analysis & Decision Making Conference, Osgoode Hall, 13 May 2022) [unpublished] at 2:24:00.

[5] Michel Kallipetis,In the Footsteps of Nik Wallenda without a Lifeline: Navigating through Risk at Mediation” (Presentation delivered at the Navigating Risk in Mediation: Risk Analysis & Decision Making Conference, Osgoode Hall, 13 May 2022) [unpublished] at 4:00:00 – 4:43:00.

[6] Todd McCarthy, “Risk, Conduct and Outcome: Effects on Mediation” (Panel Presentation delivered at the Navigating Risk in Mediation: Risk Analysis & Decision Making Conference, Osgoode Hall, 13 May 2022) [unpublished & not recorded].