Sometimes it’s helpful, in understanding our own situation, to look at someone else’s.
Mediation is a common tool for resolving commercial disputes in New Zealand. A 2017 study of mediation in New Zealand reveals how it’s done there: “From Anecdote to Evidence: The New Zealand Commercial Mediation Market [Fn. 1].
Here are some findings from the study:
- Nearly every prominent area of law in New Zealand is governed by a specific statutory regime of mediation: e.g., employment mediation, environmental mediation, family law mediation. However, “commercial mediation”—New Zealand’s largest and most important example of a private mediation market—has no such regime.
- The growth of commercial mediation since the 1990s has led to a small, but identifiable, sub-profession of mediators who dominate the market.
- There is a large group of accredited mediators ready and willing to take on more commercial mediation work, but there is not enough demand to satisfy the supply.
- The standard model is a one-day mediation.
Development of Commercial Mediation
Historically, commercial disputes in New Zealand have been resolved in the first instance through negotiation between parties, often involving legal representatives. If these negotiations fail, litigation begins.
The commercial mediation market emerged in New Zealand during the 1980s. The Dispute Resolution Centre NZ (which opened in 1988), for example, offered commercial mediation as one of its services. Commercial mediation, then, increased during the 1990s and into the new century.
Commercial mediations occurred as a result, primarily, of private parties seeking private solutions. Such solutions came in the form of, (i) clauses in commercial contracts requiring mediation for resolving disputes, which have become increasingly common, and (ii) parties seeking to avoid the cost and delay of court proceedings.
Criticisms of Commercial Mediation
Overt criticism of commercial mediation as arisen. Here are some examples of anti-mediation arguments:
“It is little wonder that insurance company lawyers favour mediation. It provides exactly the right environment for obtaining settlements at levels below that which would otherwise be achievable”;
Mediation undermines the civil justice system by “taking work that should rightly belong in the courts”; and
“It is a profound irony that lawyers, who are trained to value our constitution and our laws, should now spend much of their time on a [mediation] process that generally ignores our constitution and our laws. . . . [Judges] should be getting a diet of stimulating cases in which they develop the law to make it more relevant and helpful for the community.”
In response, the study says:
- Ideally, commercial mediation complements the civil justice system, rather than challenging it.
- Commercial mediation is limited in New Zealand and is in no position to undermine the commercial litigation system.
- The number of commercial mediators may be increasing, but they are struggling to secure work.
Publicly Funded Mediators
There is, apparently, little appetite in New Zealand for using taxpayer dollars to fund mediators. One commentator opined, for example:
“why public money should be used to mediate a well-heeled corporate dispute is beyond me … To accept the need for taxpayer-funded mediation in our civil courts is to forever devalue it and prevent the legitimate development of mediation as a profession.”
The study asked mediators to identify the mediation styles they use in commercial mediations and to “rank them in order of frequency of use.” The study provided four different styles for the mediators to choose from:
(i) facilitative (focus on underlying interests and problem solving with maximum autonomy for parties);
(ii) evaluative (focus on rights and duties and provide parties with information and advice as needed);
(iii) settlement (focus on parties’ positions and settling through compromise and bargaining); and
(iv) transformative (focus on empowerment and parties transforming their understanding of the conflict and relationship).
Here’s what the study found:
“The most common style identified” by mediators in the study “was clearly facilitative, followed by evaluative, which was very closely followed by settlement,” with transformative “a somewhat distant fourth”; and
“Most mediators will approach style in an eclectic way,” but study results “clearly show a preference for facilitative mediation.”
This facilitative-in-first-place result was “a surprise” to the study’s author, because anecdotal evidence “suggests that settlement and evaluative styles dominate commercial mediation in New Zealand.” Explanations for this discrepancy between study findings and anecdotal evidence may include:
- Mediators may be incorrectly defining what they do—e.g., using evaluative and labeling it facilitative;
- Mediators may be using a facilitative approach within a settlement style, that is, identifying underlying interests to achieve settlement but not providing substantive advice to parties;
- The anecdotes could simply be incorrect; and
- Nearly all mediators are specifically trained in the facilitative style and this will have some effect on their practice.
For legally trained mediators, facilitative and evaluative styles were most commonly used; whereas, for those without legal training, facilitative and settlement styles dominated. A leading New Zealand commercial mediator argues:
- For litigated money claims, mediators who could energetically reason with, persuade, cajole, badger, and wear down the parties flourished;
- Mediators who persisted in passive, facilitative, therapeutic, or non-interventionist styles were equally successful in their fields—but their fields were increasingly seen to be at the personal, family, relationship, and community end of the spectrum;
- Many parties in commercial mediation desire an evaluative approach; and
- Evaluative mediation increases as mediators become more specialized in specific content areas.
Here’s a big “thank you” to the study’s author, Grant Morris, for his efforts in performing this study and providing its results to us. The foregoing is an excellent basis for comparing and evaluating our own circumstances—and achieving a better understanding of mediation in general and how it might be improved.
Footnote 1. The study is by Grant Morris, Senior Lecturer, Faculty of Law, Victoria University of Wellington, New Zealand, and is published at 22:1 NZ Business Law Quarterly 10-30, Feb. 28, 2017.
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