This guest post has been contributed by network member Robert Angyal SC. Robert is a barrister, mediator and arbitrator. Mediation has been a substantial part of his practice since 1991. His publications include Chapter 13 in M. Legg (ed.) Resolving Civil Disputes (LexisNexis Butterworths 2016), “Advocacy at Mediation: An Oxymoron or an Essential Skill for the Modern Lawyer?” This post is partly drawn from an earlier post on LinkedIn.
- Outline of post
This post presents some new ideas about the mediator’s role with respect to the power of parties in mediation, which it is hoped merit further research. It provides a taxonomy of types of power possessed by parties in mediation and reflects on the relevance of these powers. It questions whether a mediator can in fact know where power lies in any particular mediation and points out that, even if this can be known, power is not static, but dynamic; it can move around over time. Some commentators contend that, where there is a significant imbalance in party power, mediators have a duty to level up the parties’ power; others assert that they have a duty not to do this. The post explains that this debate is entirely academic because, in practice, power-levelling is either impossible or prohibited. Nevertheless, and reassuringly, the post concludes by explaining that mediators can perform a very constructive role with respect to the parties’ power. If they do, parties’ self-determination will be augmented.
- A taxonomy of party powers in mediation
Power of parties in mediation comes in a variety of types. The following taxonomy almost certainly is not exhaustive.
Financial power: Big Bank v. Freddie Farmer: huge financial resources v. not very much at all.
Forensic power: Senior Counsel, junior barrister, law firm partner and employed solicitor v. suburban practitioner or no lawyer at all.
Substantive power: Party A’s case seems strong to overwhelming on the facts and the law. Party B’s case seems weak to hopeless.
Negotiating power: Party A is a sophisticated and experienced negotiator. Party B is an first-time participant in mediation. Party A has invested significant resources in preparing for the mediation. Party B has skimped on preparation in the hope of an early settlement. Party A is realistic about its prospects. Party B is wildly optimistic about its prospects. Party A does all the talking. Party B is interrupted/cut short.
Moral power: Party A’s position is in the public interest/promotes sobriety/will slow global warming. Party B’s position cheats widows and orphans/promotes tax evasion/threatens old-growth forests.
Gender power: Women may not ask for as much as men. Women “are more concerned with care issues whilst men are preoccupied by notions of justice” (Rachel Field, Mediation and the Art of Power (Im)Balancing, 12 QUTLJ 264 at 267 n. 21 referring to Carol Gilligan, “In a Different Voice: Psychological Theory and Women’s Development” Harvard Univ. Press, Cambridge 1982).
For a very different taxonomy, with eight categories of power, see Omer Shapiro, ”Exploring the Concept of Power in Mediation: Mediators’ Sources of Power and Influence Tactics” (2009) 24 Ohio State Journal on Dispute Resolution 3.
- The relevance of power in mediation
Power is relative. If two Big Banks face off against each other, there probably will not be much disparity in power. If both parties to the dispute are female, there is no disparity in gender power.
Further, because there are different sources of power, a party’s power from one source may be either augmented or diminished by power from another source. For example, Big Bank may possess enormous financial power but, in a particular mediation, it may have little substantive power (i.e., its substantive case is weak) and, because it is poorly represented, it may lack forensic power. How in this situation one quantifies the overall power of Big Bank is beyond the scope of this post.
Power in mediation can be seen as the ability to get what you want from the other party. In the context of mediation, this probably means getting the other party to sign the settlement agreement that you want.
A party always has the right to end a mediation without agreeing to anything. Given a large disparity of power between the parties, however, this may not be a realistic alternative for the weaker party. If it is not realistic, the greater power of the other party remains relevant.
- Can the mediator know where power lies in mediation?
All theories requiring a mediator to take action with respect to unequal power of the parties are based on an implicit but unarticulated assumption: That, in a particular mediation, the mediator can identify where power lies.
In practice, several factors constrain the mediator’s ability to do this.The factors include:
- The mediator has limited knowledge of the facts, knowing only what the parties have chosen to tell her/him.
- The mediator has limited knowledge of the relevant law.
- The mediator has limited knowledge of the parties’ interests and needs, again knowing only what the parties have chosen to tell him/her.
- Financial power: Big Bank has to make a profit. Throwing good money after bad makes no more sense for Big Bank than for Freddie Farmer. Having financial power thus does not necessarily mean that it will be exercised.
- Forensic power: There are good silks and not-so-good silks. There are some brilliant suburban practitioners. And, in any event, the forum is a mediation, not an adjudication.
- Substantive power: How can the mediator, often with very limited information, understand the respective strengths of the parties’ positions?
- Negotiating power: This is partly within the mediator’s control.
- Moral power: Opinions on moral issues differ.
- As noted in the previous section, power from one source may be increased or decreased by the party’s power (or lack of it) from another source.
- Power is not static; it can and does move around during the mediation
Even if a mediator is able to identify where power lies in a particular mediation, it may not remain there. Consider a farm debt mediation where the farm has been mortgaged to Big Bank and the mortgage payments are substantially in arrears.
As long as the value of the farm exceeds the amount borrowed plus accrued interest and costs, Big Bank can be uncompromising and will probably negotiate only about how much time the farmer has to pay the mortgage debt – failing which it will padlock the farm gate and put a “Mortgagee Sale” sign on it. There seems no doubt where power lies.
If, however, it transpires that the value of the farm is less than the amount secured over it, the power relationship is quite different. The bank’s legal powers are the same, but exercising them will result in the bank’s recovering only part of what it is owed. The farmer’s personal covenant on the mortgage probably is worthless. A large amount may thus have to be written off. Heads may roll in the Rural Lending Department of Big Bank.
In the second scenario, the bank may become interested in all sorts of settlements that:
- Require the willing participation of the farmer;
- Require the bank (at least for now) to forego recovery;
- Require the bank to lend more money; and
- In effect, require a joint venture between Big Bank and the farmer.
- Subdivision of the farm for sale as hobby farms;
- Novel crops with high value like blueberries; and
- Investing in irrigation, pasture improvement, new barns, new dams and new fencing to improve the productivity and value of the farm.
In the second scenario, paradoxically, the farmer’s weakness has become a source of power.
Consider a simpler example: the mediation of a personal injury claim. The plaintiff, supported by cogent and thorough medical reports, claims to have an incapacitating and permanent back injury sustained at work. Liability is not in dispute. The plaintiff is in an obviously powerful position.
Then the defendant insurer produces a recent surveillance video, showing the plaintiff lifting weights at a gym. Power instantly shifts to the defendant.
The plaintiff then establishes that the video shows not him, but his twin brother, a triathlete. Power instantly shifts back to the plaintiff.
- Competing theories about power in mediation
There are two principal theoretical approaches to mediators’ duties in working with power imbalances.
Theory One: The mediator has a duty to balance the parties’ power
- One party to a mediation may be significantly more powerful than the other.
- A significant power difference between the parties may lead to one party dominating the process.
- A significant power difference between the parties may lead to a settlement that largely favours the more powerful party’s needs and interests.
- This is unfair. At the extreme, the result is coerced.
- One of the functions of mediation is to redress unequal bargaining power.
- The mediator therefore has a duty to the process and/or to the parties to try to balance the parties’ power in the mediation.
See, for example: Ali Khaled Qtaishat, Power Imbalances in Mediation (2018) 14 Asian Social Science No. 2 75 at 79; Rachel Field, supra, at 269-270; James South, Heather Allen and Sean McTernan, Balancing Power in Mediation (CEDR – The Second European Mediation Congress) at 3, 4, 6, 9, 14; Amrita Narine “Power Imbalances in Mediation” Student Note, Harvard Negotiation Law Review 2017 at 9ff.
Theory Two: The mediator has a duty not to balance the parties’ power
- Mediation theory and most mediation agreements require the mediator to be neutral and impartial towards the parties.
- “Neutrality” means that the mediator is disinterested in the outcome of the dispute.
- “Impartial” means that the mediator treats the parties in an equal and even-handed way.
- Disparities in bargaining power are a fact of life inside and outside the mediation.
- If the mediator were to take steps to lessen the power of the more powerful party or to increase the power of the less powerful party (or both), in order to affect the outcome of the mediation, she or he would not be acting in a neutral or an impartial way.
- The mediator therefore has a duty to the process and/or to the parties not to try to balance the parties’ power in the mediation.
See, for example, Rick Voyles, “Managing an Imbalance of Power” (2004); and Susan Douglas, “Neutrality, Self-Determination, Fairness and Differing Models of Mediation” (2012) 19 James Cook University Law Review 19.
- In practice, power-balancing is either impossible or prohibited
The debate between the two theories of power-balancing is fascinating but, it transpires, entirely academic. This is because a practical and a legal problem prevent putting power-balancing into practice.
The practical problem:
If a mediator disclosed in their mediation agreement or at the preliminary conference that they intended to engage in attempts at levelling up the power of the parties, it is almost certain that they would not be hired as the mediator. Why would a party spend lots of money preparing for the mediation, on conferences with solicitors and counsel and on preparation of position papers, and then commit to spend yet more money on a mediator whose stated aim was to dissipate the very advantages that had arisen from their careful preparation?
This practical problem is fatal to any theory of power-balancing because – no matter how compelling the theory in favour of power-balancing may be – a mediator who honestly discloses their intended role almost certainly will never have an opportunity to perform it.
The legal problem:
The legal problem is even worse. Assume that the mediator did not disclose in the mediation agreement that they intended to take such steps as in their discretion seemed appropriate to increase the power of the less powerful party, at the expense of the more powerful party, and instead held herself out as neutral and impartial. Attempting power-balancing in this situation not only would breach the mediation agreement but would also render entry into it misleading and deceptive conduct in trade and commerce, in breach of s. 18 of the Australian Consumer Law, which applies to mediators. [note 1]
Even if the mediator said nothing on the issue in the mediation agreement, that silence itself probably would constitute misleading and deceptive conduct, for the reason that the role of mediator gives rise to an expectation in the parties and their lawyers that the mediator will be neutral and impartial, whereas the mediator always intended to act contrary to the expectation but failed to disclose their intention. [note 2]
Thus a mediator who discloses that they intend to engage in power-balancing is very unlikely to be hired as a mediator. On the other hand, a mediator who intends to engage in power-balancing but does not disclose their intention to the parties will probably breach the mediation agreement and almost certainly will breach the Australian Consumer Law. It follows that, unless mediators are prepared to engage in prohibited conduct that may render them liable in damages, they will not in practice have an opportunity to balance parties’ power.
note 1: The definition of “trade and commerce” in s. 2(1) of the Law states that it includes “any business or professional activity (whether or not carried on for profit”. The definition of “services” in s. 2 of the Law includes “benefits … under… a contract for or in relation to the performance of work (including work of a professional nature).” The confidential and “without prejudice” regime imposed by most mediation agreements cannot exclude the Lawbecause s. 96 provides that the Law “has effect despite any stipulation in any contract or agreement to the contrary.”
note 2: See, e.g., Demagogue Pty Ltd v Ramensky(1992) 39 FCR 31 at 32; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd(2010) 241 CLR 357;  HCA 31 at -; and Porges v Adcock Private Equity Pty Ltd NSWCA 79 at -.
- Does a mediator have any role with respect to power imbalances?
- For the reasons in section 7, the mediator probably has no realistic alternative to taking the parties as she or he finds them.
- That does not mean the mediator has to leave the parties in the position in which she or he finds them. Although mediators cannot engage in power-balancing, they nevertheless can play a very useful role with respect to parties’ powers.
- Reality testing by the mediator in private of the parties’ positions may significantly affect their approach. Likewise, reality testing about the durability or enforceability of proposed settlement agreements may affect their approach.
- Is there a contradiction between taking the parties as you find them and attempting to shift the parties’ positions towards each other so they can settle their dispute?
- There is no contradiction: It is a hallmark of legitimate reality testing that mediator does not upset existing power imbalances.
- It is the hallmark of illegitimate reality testing that it does upset existing power imbalances by (for example) providing a party with legal knowledge that it has not invested in unearthing (“There’s a recent High Court decision on limitations that is right on point and which means that the other party is out of time.”). This is illegitimate behaviour because it is not neutral or impartial. Acting other than in a neutral and impartial way creates a risk for the mediator of losing credibility/losing influence/being fired.
- Instead, the mediator should accept existing power imbalances and assist each party – given the imbalances – to analyse the strengths and weaknesses of its position and of the other side’s position. This analysis can also help a party determine whether offers received or contemplated are better or worse than the party’s BATNA.
- Women tend to value relationships more than men and thus, for fear of damaging a relationship, a woman may be inclined to ask the other party for less (or offer to pay them more) than a man who has the same BATNA (Babcock & Laschever, “Women Don’t Ask: Negotiation and the Gender Divide”, Princeton University Press 2003). Where appropriate, the mediator can help a party to understand that this is what she is doing. The mediator thereby helps her understand the nature and effect of gender power. By doing this, the mediator enables the female party to decide consciously whether she values the relationship more than the best possible outcome of the dispute, rather than unconsciously making this decision.
- The mediator can assist a party to make realistic concessions or to capitalise on a strength itpossesses. This is not balancing power; it is recognising realities about power.
- Viewed this way, the mediator’s tasks with respect to party power can be seen as (i) helping each party to understand what power they have and how and when they should use that power and (ii) helping them understand what power the other party has and how and when it might use it.
- These tasks not only are consistent with being neutral and impartial but also they help the parties to participate effectively in the mediation and thus augment their self-determination.
- A comforting conclusion
Reality testing is a core activity for a mediator. The mediator can employ it to help parties themselves to identify issues around power and to exercise their own decision-making about how they deal with it. This enhances party self-determination.
Viewing the mediator’s role with respect to party power this way means that the patient, careful, earnest mediation of disputes remains a useful and important task. Practising mediators like me will be comforted by this recognition of the value of what they do for a living.