Why Deal Mediation?


Why Deal Mediation?

Over the past two decades, mediation has become a frequent process choice across a wide range of practice areas — family, personal injury, estates, commercial, and more. Yet, despite a breadth of experience with the potential value added by mediators, the process is typically invoked only once a dispute has arisen. Is there also a role for mediation or facilitated negotiation (referred to here as “deal mediation”) at the inception of a legal or other relationship — not in anticipation of a particular dispute, but with a view to facilitating negotiations so that they proceed more efficiently, avoid breakdown and preserve ongoing commercial and other relationships?

While as yet uncommon, deal mediation has been pointed to as a process with potential to improve commercial transactions and relationships since at least 2000. Numerous articles and conference presentations have noted that deal mediation seems to have a natural place in the negotiation of commercial relationships (whether a simpler commercial contract or a more complex business merger, acquisition, or sale) and other arrangements having significant financial implications (such as a pre-nuptial agreement in family law or an application for regulatory approval in construction).

A conventional deal negotiation typically follows the same paradigm: each party engages their own lawyers, and the lawyers each work in the interests of their own clients to help “get the best deal possible.” While most lawyers endeavour to be at least courteous (generally, counsel know how to be civil, at least as long as the other side behaves!), the structure of the engagement still requires that each counsel “pick a side” — that of their client. While it is certainly not inevitable, experience shows that in many negotiations this “client-side” orientation leads to positional bargaining, which can supplant mutually beneficial outcomes. Even where a mutually beneficial outcome eventually results, the process may be painful and expensive, and ongoing relationships among the parties may be difficult.

How can a mediator help avoid these pains? The introduction of a deal mediator may bring a number of advantages.

  • The deal mediator can bring structure, timelines, and process management to a negotiation, which can assist in maintaining momentum and avoiding inadvertent frustrations impacting trust. Given how closely flexibility and creativity can rely on trust, there may be a knock-on effect of greater idea generation.
  • A process professional can help both sides to the matter recognize that they are not necessarily engaged in a zero-sum game. Improved tone can be more readily achieved where a neutral buffer helps avoid and break impasses.
  • A mediator can create structural pauses between direct communications — allowing sober second thought with respect to the tone of a communication that the other side might perceive as aggressive or inappropriate.
  • Sometimes, the professional neutral can even give each of the parties somebody to blame other than the other party.
  • The deal mediator may enable a less contentious negotiation. By engendering or preserving positive relationships, necessary post-signing cooperation among the parties may be facilitated. There are many steps between signing the deal and actual completion: interim operations by vendor between signing and closing; satisfying pre-closing covenants; determination of post-closing adjustments; post-closing cooperation (e.g., filing of tax returns, post-closing audits); and survival of warranties (potentially lasting for years after closing). Even where parties think that “the deal is done” and they can go their separate ways after signing, that is rarely actually the case.
  • Ongoing relationships extrinsic to the deal itself may be preserved (whether those relationships are commercial, familial, or simply as members of a common community).

So, why deal mediation? Deal mediators can help the deal get done, and help parties and their counsel also survive and thrive to negotiate another day.