As negotiators we all know that there are many different ways to reach an agreement with the other side of the table. We’d all like to be able to use our negotiation styles and negotiating techniques come to a negotiated agreement with them. However, failing that we always have a court case that we can fall back on. However, that is an expensive and messy way to accomplish things. What we’d all like to do is to find a better way to get to where we want to get to.
What Is Alternative Dispute Resolution?
When you find yourself in a negotiation and you’ve run into an impasse, you will often be trying to avoid the hassle and expense of a court case. Perhaps you’ve heard about alternative dispute resolution but you are not sure what it entails. So, what is alternative dispute resolution? It turns out that alternative dispute resolution, or ADR, is a process in which a neutral third party, perhaps a mediator or arbitrator, helps parties who are embroiled in a dispute come to an agreement. Mediation and arbitration are types of alternative dispute resolution because they offer an alternative to going to court. It turns out that there are two basic types of alternative dispute resolution that may be beneficial in resolving certain disputes.
What Happens When Mediation Is Introduced Into A Negotiation?
When a negotiator decides to use mediation, a neutral third party tries to help both sides come to a consensus on their own. Rather than imposing a solution, a professional mediator seeks to assist both sides in exploring the interests underlying their positions. Working with parties together and sometimes separately, mediators try to help them hammer out a resolution that is voluntary, sustainable, and non-binding.
Mediators can help disputants break an impasse in the following ways:
- Finding additional information that either party was unwilling to share with each other Overcoming parties’ resistance to communicating and reaching an agreement by presenting an offer to both sides
- Contributing their impartial, specialized expertise
- Brainstorming options to try to find a resolution that satisfies both parties.
In a negotiation, mediators can be largely facilitative, engaging primarily in shuttle diplomacy and keeping their own views hidden. Other times mediators will be more evaluative, offering their own knowledge and opinions to guide parties toward agreement. The most skilled mediators are able to blend the two techniques according to the nature of the problem and the stage of the mediation.
What Happens When Arbitration Is Introduced Into A Negotiation?
Alternatively when the other primary form of alternative dispute resolution, arbitration, is used a neutral third party serves as a judge who is responsible for resolving the dispute. The arbitrator listens as each side argues its case and presents relevant evidence, then the arbitrator renders a binding decision.
Both sides can negotiate virtually any aspect of the arbitration guidelines, including whether lawyers will be present and which standards of evidence to use. Arbitrators are the ones who hand down decisions that are usually confidential, that is binding, and that cannot be appealed. Negotiators need to understand that arbitration tends to be more expensive than mediation but less expensive than litigation.
Both sides can give the arbitrator the authority to determine who will win the case and what the award, if any, will be. The following are three specifics types of arbitration that are available to disputants:
- Hi-lo arbitration: In hi-lo arbitration, both parties attempt to reduce the risk of making extreme decisions by agreeing ahead of time on the upper and lower limits of any monetary award that the arbitrator will grant. This strategy limits the risk to both parties who are worried about giving total control over the outcome to an arbitrator.
- Final-offer arbitration: In final-offer arbitration, which is often referred to as baseball arbitration because of its use in Major League Baseball contract disputes, both parties present what they believe to be a last, best offer to the arbitrator, who must choose one of the two offers. Because final-offer arbitration typically seems risky to both sides, it often gives the parties incentives to negotiate a reasonable resolution. As a consequence, it increases both sides’ participation in a negotiation while still ensuring a decision will be reached if they are unable to agree.
- Tripartite arbitration: In tripartite arbitration, there will be three arbitrators, one named by each party and one chosen by both of them. Tripartite arbitration is useful in highly complex cases where the parties want advice from three different individuals with differing expertise (such as a businessperson, a lawyer, and a scientist). It is also used in cases in which the parties lack full confidence in a given neutral arbitrator and prefer an arbitrator who will forcefully represent their interests.
Both mediation and arbitration offer compelling alternatives to litigation the next time you are embroiled in a conflict that seems impossible to resolve on your own.
What All Of This Means For You
As negotiators we understand that the goal of any principled negotiation that we find ourselves engaged in is to reach an agreement with the other side. There will be situations where we discover that we are not going to be able to do this. In a situation like this, we still have alternatives that we can consider. One of these is alternative dispute resolution (ADR). Using this approach, we may be able to avoid having to go to court with the other side.
ADR is a process in which a neutral third party helps both parties come to an agreement. There are two different ways to employ ADR. When mediation is used, a neutral third party tries to help both sides come to a consensus on their own. When arbitration, is used, a neutral third party serves as a judge who is responsible for resolving the dispute. The arbitrator listens as each side argues its case and presents relevant evidence, then the arbitrator renders a binding decision. Both of these approaches can allow a negotiator to avoid having to go to court.
When the goal of a negotiation is to reach an agreement with the other side, we don’t want to get bogged down and end up having to go to court. ADR provides us with two different approaches to resolve our impasse. Using a 3rd party to help both sides reach a deal can be what we both need in order to finally reach a deal that we can live with. The next time that you are in a negotiation that gets stuck, think about using ADR instead of heading off to court.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: Should you ever let the other side select the mediator that you will use as a part of an ADR?
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What We’ll Be Talking About Next Time
Most negotiators know that when we are negotiating pricing with the other side, it is always in our best interest to be the first one to make a price offer. This serves to anchor the price and the negotiations can take off from there. However, there is a variation on this practice that a lot of us may not be aware of. It turns out that with a simple modification we can create an even more attractive offer for the other side.