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Negotiation Skills for Mediators

Negotiation Skills for Mediators

Has your mediation ever ended up in a horse-trading or salami-slicing exchange between the parties or you’re wondering what on earth to do with a ‘derisory offer’? What about when one party bravely announces to you that their bottom line is X whilst the other side are digging their heels in. The negotiation phase of any mediation can get very difficult, in this interview John Clark reveals how you can avoid ending up in these dilemmas (he should know he’s got a PhD in Game Theory). This interview is packed full of great tools and strategies that every mediator should carry around with them.

 

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Transcript

Full Transcript

Aled: Hi everyone. I’m Aled Davies, founder of MediatorAcademy.com, home of the passionate and ambitious mediator and a place where mediators, new and experienced, come to listen and learn from experienced mediators.

Experienced mediators come here to tell their story about how they’ve built their mediation business and also how they’ve handled particular challenges or situations in mediation, the kind that we all find ourselves experiencing at some time in our career but aren’t ever prepared for. They share their stories about how they’ve handled those situations. They also share specific expertise that they’ve got.

I love listening to these interviews. I listen to them because I get so much from them. I learn so much. It improves the way I mediate myself. I hope that you also get a lot of tools, strategies and tactics from these interviews so you can go out there into the big world of mediation and carve your path, create your success story and, hopefully, come back here and share that with my audience.

We’ve all been in this situation. We’re in the middle of a mediation and we’re entering the negotiation phase of the mediation. It’s that mysterious part of the mediation, the one that we expect will just naturally unfold in front of our very eyes. It never quite works out that way. Well, not for me anyway. More often than not, I’ve found myself in the situation where I’m horse trading, salami slicing, doing all the things that as mediators we’re not supposed to be doing, but that’s what we like to believe. Well, not my guest.

My guest today is going to set me straight on how to be a more effective negotiator. Ultimately, commercial mediation is a facilitated negotiation. As mediators, we should be experienced and have expertise to be able to do this.

Let me say a little bit more about my guest. He’s well qualified in this area. He’s an experienced negotiator and mediator. He divides his time between mediating and advising on commercial and intergovernmental negotiations. He teaches negotiation and mediation skills. His career started as a management consultant with McKinsey and Co. Since then, he’s advised the boards of many blue chip companies and the most senior levels of government on issues of strategy, economics and international relations.

As well as an MBA, he holds a Ph.D. in game theory, that branch of economics which examines interactive decision problems. He’s taught aspects of negotiation analysis at London Business School and Oxford University. He’s a CEDR registered mediator and is currently chair of Oxford Mediation. John Clark, welcome.

John: Thanks, Aled.

Aled: I’m delighted to have you here today. Thanks for investing your time. I really appreciate it. Tell me. How did it all start for you? Did you just wake up one day and decide, “Mediation’s for me”? Did it kind of emerge from your experience as a negotiator? Why mediation?

John: Why mediation? This is going to sound strange, but I’ll take your there anyway. I was sitting one day having a chat with my wife, who was in the bath at the time. She’s talking about a case because she’s a barrister. She’s talking about a case she’s involved in. They’re negotiating at this point and it was at what sort of level the settlement should fall at. I said to her, “Why don’t you use a decision tree to do that?” She said, “What do you mean?” I explained to her what a decision tree was. I did that a few times with her. Then some other people asked me about it so I did that a few times more.

Then it became apparent in mediation that, and this is many years ago, that might be quite a useful thing to do. I thought, “I’ll mediate [inaudible 4:40]. That sounds interesting.” I went off and did a course which was with CEDR. I’m sure things have changed a lot now, but at that time the course was mainly about the process. For example, the introductory phase, you go through presenting your different statements. You might have separate meetings with the parties and then it’s pretty free form. You might have joint meetings, separate meetings, all that good stuff. How that all works. There was very little in there about how people negotiate, the dynamics of negotiation, and the theory of science of negotiation.

Ever since then, I’ve been very interested in that. Obviously, with a Ph.D. in game theory, I’ve had a bit of a leg up in the first place in all of that stuff. That’s how I got in to mediation really, through thinking about the science side of stuff and then being attracted into “maybe I could do something interesting and slightly different here.”

Aled: You currently divide your time between mediation and negotiation. How do people decide that they need someone to advise them on negotiation?

John: Obviously you have to do a bit of marketing. Sometimes it’s about contacts that you’ve already established and they know your background. For example, I’ve been brought in to negotiations with sports companies over various bits and pieces through prior contacts. Sometimes it’s through law firms. I do training with them as well as doing mediation with those guys. From time to time, they ask me to come in and actually advise them on specific negotiations they might be doing.

Unfortunately, I’ve got a bit of a tag. I said I started out with this decision tree thing and people recognize me at Mr. Decision Tree Guy. There’s an awful lot of other stuff out there as well. Decision trees are often the tool I deploy. There are a whole load of other things you can do to help people in terms of negotiation preparation usually.

For example, if it’s a big enough case and it justifies it, and you can imagine how the international ones would meet that criterion, you might rehearse. You set up a team of people that are meant to be the other side, you have a team of people who are your side, and you can rehearse how the negotiation might go. You get inside the other side’s head, to an extent, by using your own people to pretend that they are the other side in a negotiation. If it’s a big enough commercial one, that might be appropriate too.

Aled: It’s almost you act a bit like their coach and put them in a situation.

John: Yeah. I guess. You can put whatever tag you want on it. It’s helping people to prepare for negotiation. There’s a whole load of work, as we all know, you can do to position yourself better before negotiation starts, by thinking through the dynamics, what’s likely to happen, who the people involved are, what linkages there might be with other negotiations, what options you’ve got, are there any timing issues, all that good stuff. If you’ve worked out what all those things are then you’ve got a better sense of what the negotiation’s like to go through. Then the specifics within a mediation or a negotiation, in terms of tactics and so on, will become much clearer. You have a much more limited set that is appropriate.

To give you an example, if you’re in a negotiation with somebody who has been a long-term business partner and you might want to continue that business arrangement, then obviously you are going to negotiate a whole lot differently than if this is a one off single negotiation issue where it’s about price and you’re never going to see these people ever again. Not that I would advocate it, but the likelihood of hardball tactics in that situation are much, much greater than in other situations. Knowing the situation and the structure of the negotiation before you go in to it are obviously critical.

Aled: You used the term linkages earlier. I want to pick up on some of these terms as we go through the interview. Linkages, as I understand it, is if you’ve got another interest with the parties. You tell me.

John: I’ll tell you what it is. I’ve written various bits and pieces. You can find them on my website. One thing, for example, is a piece on how structure affects dynamics. There is a cheesy little acronym I use, which is PILOT. The key things you have to think about before you get in to negotiation that are going to affect the way a negotiation’s going to go are the people or parties, the issues, linkages, option and timing. PILOT. Parties, Issues, Linkages, Options, Timing.

If I take each of those in turn, parties, one really simple factor is how many are we talking about. By far, the most common [inaudible 10:04]. If there are more than that, then there are certain things you need to think about immediately as a mediator or indeed as a negotiator. If it’s more than one party that are in the negotiation or mediation you need to think about coalition formation. You can’t get a final settlement unless you’ve got two groups who are going to do it.

The classic example might be construction where this often happens, where you have an architect, contractor, a client or another supply. You have three or four different sets of people. The building has not gone right. A classic situation. The building has not gone right. It’s not what we wanted. Legal stuff has started or is about to start. Let’s have a mediation or let’s try to negotiate a solution to this particular problem.

In those circumstances, you’re not going to get any solution if everyone is just fighting a bilateral fight. The architect and the client may decide that they are going to be on one side and the other guys are maybe on the
Some kind of coalition formation. Then, in terms of preparation, as an individual party, you need to work out what are the best sets of coalitions that need to be created to favor the outcome you’d like to see most. Therefore, can you stop certain coalitions from being formed and enhance the creation of other coalitions? That’s what happens if you’ve got multiple parties.

If it’s just two parties, a different type of negotiation’s going to take place. With more than two parties, the very simple thing is that negotiation is going to take longer because you’ve got the whole coalition stuff that happens first and then the mediation and negotiation are where you’re exploring. Those things are happening in tandem. There’s grey overlapping areas as in all of these things. There’s something you have to think about. That’s just on the P side of things. That’s one issue under the parties. There are a couple of others but that’s probably a good flavor to show you how the dynamics will change according to the number of parties that are involved.

Issues are similar. A simple way of looking at it, number of issues. If it’s just one issue, if it’s just the price of a car or the price of a building, if it’s just one issue then that’s going to suggest it’s going to be quite a tough negotiation. That will be purely bargaining about that issue. Whatever I give away, they are getting. Whatever they give away, I am getting. It’s win-lose. If it’s multiple issues, then you have scope for trade between those issues.

Let’s go back to the construction example. Say you’ve got a building and the completion of the building, the amount it’s going to cost, the timing of it. You’ve got a number of different issues. Then you might have issues around terms of payment, how often it’s going to be paid, how long you can stretch these things out. If you have multiple issues, you can start to trade between those issues. People will have different preferences. It may be that the contractor wants to get their money as soon as possible. You can see how you can trade between those different things. If there is no scope for trade, again, that’s going to give you less scope for creating the glorious win-win, which people use rather loosely in their language about how negations go.

Linkages. Is this the only negotiation that you are currently having or are there other things related to this negotiation that will affect how you will behave or how the other party will behave in this? Classic example would be in Middle East negotiations, is it just about Iran stopping its nuclear program or are there some issues associated with how Russia is behaving over its gas pipe lines that may affect this negotiation? You can see in an international environment those things happen all the time. You’ve got to be carefully thinking about what any knock-on effects might be between this negotiation and other negotiations.

Aled: Going back to linkages for a moment and continuing with the construction example, a linkage might be they are working on another contract or they’ve got another tenant?

John: Yes. They are building another building for them. Until we get this one sorted out, so on and so forth.

Options is all the decision tree stuff. The classic example is if we don’t settle today and we go to court, what’s the likely outcome? You should never, and people often do, go in to a negotiation not knowing, “If I walk away from this negotiation with no settlement, what’s the impact on me?” That will give you a sense of how much you should be prepared to take or give in the negotiation that you’re at in the moment. If you don’t know the likely value of what the outcome is if you go to court, then you’re negotiating with your hands tied because you don’t know where you stand. You need to know what your options are.

Aled: Isn’t your job as a mediator to help the party do that? I’ve been in meditations where parties have loosely considered the future state of affairs if they don’t settle, but they haven’t really thought it through. They haven’t really thought through the impact in a systemic way.

John: Of course you can do that as a mediator and you should have the tools and the equipment to do that. Decision trees being the one in this particular instance. Vastly preferable is if you’ve got them to do the work beforehand. You get a bit more sophisticated when you start to think, “What options does the other guy or the other side have? Have they done a decision tree working out what will happen to them if they go to court? What does that look like for them? How are they going to react if we don’t settle today?” That will give you some inclination as to what their likely bottom line is. As we all know, understanding what the other side’s bottom line is, is a very, very important aspect to how well or otherwise you can negotiate.

Aled: Is there a tactic that can help you anticipate what the other side’s bottom line is?

John: It’s the usual stuff, the cliched stuff. Put yourself in their shoes. Sit down and work out what you think they will think their chance is. It’s almost always going to be the opposite of what you think. If you think your chances of winning are 20-80, meaning you think your chances of losing is 20% and chances of winning is 80%, it’s almost certain they’re going to be
Well, maybe they think it’s 50-50. I don’t know. You’ll judge that from what they’ve said to you and what their legal people have said to you and all that kind of stuff. You may have a sense of how positive they think their case is. You can then start attaching numbers around what will happen if you win, what will happen if you lose. This is the most simple case. These things can get quite complicated. This is a very simple case.

You can therefore work out what the expected value, i.e. the value looking from today, although you can’t be sure, of going to court is for them. That is their bottom line. If you knew with absolute certainty that if you went to court, you would get a million quid, no way would you settle for less than that in the negotiation that you’re currently involved in, right? You need to know what happens if you go to court.

Aled: Sounds like, then, decision trees are a really important tool a mediator can use to help the parties.

John: Yes. It depends on the party. It depends on the nature of [inaudible 18:37]. They’re not great talking about unquantifiable things. If you’re talking about a family dispute, you’re talking about how much time you can spend with the kids. Obviously you can’t do that in this instance. Any kind of commercial dispute, it usually will come down to numbers and you should be able to work out the numbers. Even things like if we increase the timing of payments, there are things that you can do, like discounted cash analysis to work out what the impact of that is on the bottom line.

Aled: I want to come back to decision trees a bit later.

John: Okay. We’ll put a flag there. Decision trees you want to talk about later. Although it’s just reinforcing that John Clark is decision tree man but never mind.

Aled: We all need a specialty, John.

John: Please. It’s such a nerdy specialty.

T is timing. Timing almost can be subsumed into issues. Are there some things going on out there that will affect behavior directly as a result of timing. For example, the Olympic construction stuff. You can bet your bottom dollar that there will be some last minute haggling and negotiation over completion of various bits and pieces and increases in prices as a result of that because there is a deadline the government, or London Olympic Outfit, whatever they call themselves, have to meet to deliver the games on time. That gives massive power, in terms of timing, to the construction folk. That’s an example in construction.

An example going back to the international arena, say Iran or North Korea or one of those guys are negotiating over nuclear disarming or the possibility thereof. If you think very simply about what the key thing that affects the likelihood of them getting their hands on nuclear arms is, either the nuclear material or the delivery system, so on and so forth, it’s time. If they’ve got more time, they have more time to achieve all those bits and pieces. Therefore, you can expect them to be obfuscating, delaying, which, until very recently at least, is exactly what we’ve seen. Delays, storming out of meetings, all that kind of stuff gives them more time to achieve what they want to achieve. Thinking about timing, that’s an international scene.

There’s some weird, wonderful stuff that happens in commercial negotiations where you’ve got stuff like “we’ve got to get this within this quarterly result.” There will be pressure on the people who are making the decision to get it in this quarterly result so they can either say that this large negotiation has been settled and that’s the amount of money they are getting or giving. It’s within this quarterly result. It’s not something hanging over them. It’s done and dusted. Those things are important considerations to have. That’s T.

Aled: Brilliant. We’ve got into this thread and you talked about helping parties prepare in terms of how you support client and do role plays in terms of their strategy and structure for their negotiation. One of the things I think I don’t do very well is prepare specifically around what you’ve just talked about. I hadn’t thought through before going in to a mediation nor have I helped the parties think through any more than what’s your best case scenario, what’s your worst case scenario. A very crude preparation. Do you remember you very first solo mediation?

John: Of course, it was probably in the London County Court. It would not have been very large. I can’t remember exactly. I don’t know if they still run the scheme there. You used to get next to nothing for going down there, waiting for hours and hours before the people turned up. The people who turned up, half of them didn’t really want to be there. It was always, “What is this mediation stuff? I’m not interested in it.” It was pretty brutal. It’s a cliche amongst mediators, at least I think it is, but it’s absolutely true. The tiniest little, low value mediation is just as difficult, just as hard, just as complicated as the massive great, big multi-million whatever one. Some of them may be a little more complex to get your head around but ultimately in terms of resolving it, they’re all the same. They’ve all got the little bits of interesting stuff, the little pathways you need to go along to help people get it sorted in the end. It would be one of those I should think.

Aled: Did it settle?

John: Did it settle?

Aled: You’re going to say probably, right?

John: No. I can’t remember. Almost certainly, I’d say. Ninety five percent of the time it did. I can’t remember. I’m sure we’ve bored on about this subject before in terms of did it settle. I find that most of the meditations that I do, do settle. Probably a little over half of them settle on the day but a lot of them settle a bit later. I have absolutely no problem with that. I do have a problem with the idea that mediators will be pushing people to settle there and then on the day to get the notch on the bedpost. It’s not appropriate. People need the time to settle. They’ve got to be comfortable with it, they are settling, it’s the right thing.

I think you and I have had this conversation before about the conflict between mediators wanting to big up their professional expertise by increasing their “settlement rate” versus what’s best for the client. I think you and I would say what’s best for the client is what’s best for the client. If that means not settling today and settling later or if it means not settling at all and actually going to court, then that’s the best thing. If one side of the other is so intransigent or hasn’t got it or for whatever reason, then go to court. Get it sorted out if that’s the best place to do it. I’ve no problem with that.

I know there are some mediators out there that claim they are massively successful because they have a very, very high settlement rate. I’ve got a high settlement rate but I’m not sure that’s the best indicator of success.

Aled: Those that settle after, so the following day…

John: It could be coming weeks later.

Aled: Do you stay in touch? Do you have any input? Do you continue to help the dialogue come along?

John: It depends. Sometimes you do, sometimes you don’t. There’s one that went on for about a year. It was quite a small thing, but these people were battling back and forth and coming back to me as the kind of trusted adviser as to how they should go. Oh my word. It went on for far too long. I was far too nice. I should have just said, “No. I’ve had my money. I’m done. I’m out of here.”

Aled: Excellent.

John: That kind of thing is the exception. Generally, parties will sort it out themselves. The mediation is there to help them see what is what. If there is a little more work they have to do afterwards to get it sorted then they can sort it out themselves normally. Sometimes they come back to you but more often than not they get it sorted themselves.

Aled: That was your first mediation. Tell me about a mediation that you found particularly challenging. Something happened in the mediation that you didn’t see coming, really left of field and you found yourself with a real dilemma and either handled it badly or you looked back and you think I wish I had done something different. Do you have an example?

John: Yes. I have to try and get my language right so I don’t reveal any confidentialities. There was one where there was basically a little guy, in fact there were a number of little guys, but there was one little guy and a big guy. The big guy said that the little guy owed him so much money. The little guy pretty almost certainly didn’t owe them that much money. The big guy behaved in a pretty bad way and I think if it would have gone to court and the big guy would have got absolutely slapped. It was a mediation. The mediation ended with no settlement.

It was clear that there was going to be some costs attached to the little guy if he went to court but those would probably be mitigated by payments subsequently from the other side. I said, “We can’t get to an agreement here today,” the usual spiel at the end of a negotiation that doesn’t work. I left.

Then after I’d gone, we all agreed it was done and dusted, the big guy and the little guy got together and the little guy agreed to pay the big guy quite a large sum of money. In the lawyer’s offices after I’d gone, that happened. Clearly he felt that was the right thing for him. Clearly the big guy felt that was the right thing for him. Yet, after that, I thought, “That was really not the right thing to happen.” This is where you stray to dodge your territory because you begin to become a bit judgmental about outcomes.

They carried on negotiations. They did a deal. The deal they did, to my mind, given the knowledge I had on the basis of the mediation and the papers that I read, severely was against the little guy. He would have been much better off going to court if he couldn’t get the big guy to agree to anything. As I said, you’re not supposed to be judgmental and I don’t know what else I could have done differently but I just felt that was a bit unpleasant. I didn’t like that.

As we all know, at the end of most negotiations and meditations, both parties will go away feeling a little bit like they haven’t gotten exactly what they wanted but vaguely satisfied that at least this thing is done and dusted now rather than, “Yes, this is a brilliant deal.” Both parties go away and say, “Brilliant deal.” That just doesn’t have often. Very, very rarely. In this case, I don’t know what was in the guy’s mind. I guess he was really, really fearful of the possibility of a large legal bill, which was very unlikely but still affected the way he did. I guess that was the way his preferences were and that is what happened.

Aled: I guess there was nothing stopping them from continuing that conversation either in the same building or on the phone the next day, in terms of what you could have done differently. I guess it kind of illustrates something that you said a moment ago. You never quite know what people’s motivations are for settling. It may be that they don’t reveal all to you. They still withhold something which might lead them to settle for something as a mediator you think, “Why are you accepting that because on face value that doesn’t seem at all fair.” You just never know.

John: I’m sure you do what we all do. We say at the outset that you’re going to have to trust me. I need to know as soon as possible where you are coming from. I don’t expect you to give me your bottom line precisely but I really would like to know some close indication of that. There’s all that stuff you start out with. People don’t usually reveal it until they’ve gotten to know you a bit better. Once they know you a little bit better, and that can take as long as it can take. Sometimes it may never happen at all. Once they get to know you and understand that you’re competent, you can be trusted, and you’re not going to pass inappropriate information to the other side, once they’ve got that then if they can open up, obviously you’re going to get a much better, speedier resolution.

Aled: A couple of things I still want to get from this interview. One is I want to blow open this myth about the negotiation phase of mediation. What’s the reality of that? I also want to dig in to a little bit more detail about decision trees.

John: The negotiation phase. I prefer to call it bargaining. I think the whole thing is a negotiation so I think it gets a bit confusing if you call it that. I call it the bargaining phase. I think the problem started way on back with the “Getting to Yes” book, which is a very good book. If you haven’t read it, you should read it. It’s a very good book. There was a general sort of sense that the bargaining is unpleasant and bad and it means that somebody’s going to lose and somebody’s going to win. This will happen. This will always happen. Show me a negotiation or a mediation that you’ve been in where some of this hasn’t happened at some point. You did say at the beginning hour that you felt uncomfortable because it was all becoming salami sliced. That stuff’s going to happen. Don’t feel uncomfortable. This is the way these things work.

Obviously what you need to do is ensure that you’ve created as big a pie as possible in the first instance. You have made sure that all of the issues have been explored. All the possibilities to tradings I was describing before between those issues has taken place. You’ve understood your options. You’ve understood the position and all that stuff. Then, inevitably, you will be doing that kind of horse trading stuff. That will happen. You shouldn’t feel bad about that but you should understand the dynamics of how that stuff works. Make sure that it’s going appropriately.

A kind of flip of the situation I was just describing to you before. A long time ago, in a mediation with a car company and a software company, the software company is a little company and the car company is a big company. There was this totally bizarre bargaining phase. They talked about all the bits and pieces.

The software company was owed some money effectively. The car company initially said they were going to pay 20,000 pounds, which was quite a long way off of what the software company was asking for. Then the car company said they were going to pay 50,000 pounds. Then they said 100,000 pounds. Then they said 200,000 pounds. As you can see, this is not how you negotiate.

One of the core rules in this bargaining phase is that you should be going in steps of ever decreasing amounts, signaling where you are likely to end up at. Those amounts should take decreasing steps not increasing steps. God knows what these guys were doing. Anyway, they ended up getting hammered because they didn’t know how to negotiate properly.

That’s one of the rules. You need to go in ever decreasing steps towards a point. Of course, that signals very clearly where you are coming from and where you’d like to end up. The only thing that’s going to change any of that is new information. If you’re in this stage of a negotiation, the only thing that will change that progress is if all of the sudden a new piece of paper is revealed that says actually the situation is completely different. That will change that. Otherwise, effectively the speed at which you go from your starting point to the end point will be indicating where your bottom line is and so on and so forth. You need to think about that very carefully in the way that you move. How many moves are you going to make? Is it just going to be two or three?

The classic error is the man of integrity who says, “I’m not going to do any of this bargaining. Bargaining’s not for me. It’s for the souk and the marketplace. I don’t stoop to that kind of stuff. I will make one offer and I will not move from that position.” Well, that’s a great speech but unfortunately life isn’t like that. Life is about reciprocity. If you don’t give yourself room to maneuver, if you don’t give yourself an ability to change your position then the other side is going to think, “They’re an intransigent so and so. I’m not going to deal with them because they’re not moving at all.” You need to start at a place from which you can move, at least a little bit.

Aled: That leads me in to a question then around the role of a mediator as a coach for the parties in terms of how they negotiate. I’ve been in a similar situation where the party says, “I’m not going to get into any of this horse trading business. I’ve got a number that I’m not prepared to go above. I don’t want to experience this negotiation strategy. I don’t want to take part in it. I just want to have an honest conversation.” As you said, it’s a nice speech. I can see the benefit and the value of sitting down with a party and saying, “Life is about reciprocity. You need to give yourself room to maneuver because if you don’t the other party is just going to interpret that as you being intransigent.” I think that’s a really effective tactic to have up your sleeve.

John: Exactly. I do have a standard preamble beforehand which talks about that kind of stuff. It talks about the stuff that I’m sure everybody else uses in mediation, that there will be ups and downs. It talks about the fact it’s very easy to demonize the other side and misinterpret every move that they make as being a negative thing as opposed to everything that you do is a positive thing. All that stuff. Make sure that people understand the process.

As a mediator, you’ve has so much more experience than most of them. Of course, there are going to be loads of people that have more experience with negotiations than you because they do it on a daily basis doing different sorts of negotiation. Often, there will be people that don’t quite get this process and are not familiar with it and it’s your job to help them understand the likely stuff.

If you do this all beforehand, before you actually get involved in the negotiating, before you start explaining the issues and all the rest of it, then you can’t be accused of bias or bringing out just to try [inaudible 40:31] or something like that. It’s important you do it all before anything starts to happen.

Aled: Sounds like part of your preparation is both helping the parties think through what the scenarios could be, what their options might be, but also part of your preparation is sitting down with the parties and managing their expectations about how this mediation could play out.

John: Yes. Absolutely. It’s critical. If you do that as well, when those things happen, because they will happen, when the things that you say are going to happen, happen, you can go, “Okay. You see? I told you that was going to happen.” That increases their levels of trust in you which then enables you to do your job.

Aled: You talked about trust at the very beginning and parties not willing to be open and disclosing what’s on their mind until they have sufficient trust in you. I think part of that trust is generated from you saying, “This is how it’s likely to play out,” and it plays out that way. They say, “Okay, this guy knows what he’s talking about. This person knows what they’re talking about. They’ve been here before. I’m going to trust them in terms of how much information I’m going to disclose to them.”

John: All that stuff. Exactly. We’ve been talking quite a lot about the analytical side of things but my big thing is that a mediator has to be a rational empathizer or an analytic empathizer. A good mediator or negotiator will be able to analyze the situation, do all the stuff we’ve talked about in terms of preparation, thinking through the strategy, thinking through the tactics, understanding the number, all that good stuff. Equally, they will be able to empathize and try and understand where both sides are coming from on an emotional level too. That all feeds back in to how people are going to behave, what’s going to happen, so on and so forth. You need to have all that stuff too, which is softer, harder to get your head around, and all that good stuff.

Aled: We’ve got 10 minutes left.

John: You wanted to come back to decision trees, I think you said, didn’t you?

Aled: Yeah. I want to come back to decision trees. Obviously I want a little bit of time to wrap up at the end. Let’s get into decision trees now.

John: Have you got a thing about decision trees, Aled? First of all, I want to know about your obsession with decision trees. What is your obsession with decision trees, Aled? You love them clearly.

Aled: I love them. I was assisting someone in a mediation and she used a decision tree. I thought, “This is such an effective tool to help the parties.” It helped the mediator think through but to help the parties look at their situation through a different lens. It really changed the dynamic of the mediation. Ever since then, I’ve been curious about them. Whenever we speak, I tease you a little bit about your obsession with decision trees.

John: No, I think it’s yours.

Aled: I think in psychology they call it projection, don’t they?

John: Oh, really?

Aled: Decision trees. What’s a decision tree, John?

John: There are three elements to a decision tree. One, you need to understand the structure of the decision being taken. Two, you need to understand the probabilities associated with any uncertain points in that structure. Three, you need to understand what the likely payoffs are at any part of the structure.

For example, you have a very simple decision tree. You have a decision to make. Do I accept this offer or not? If I accept this offer of, say, a million pounds, there’s the payoff of a million pounds at the end of the accept offer branch of a decision tree. If I don’t accept this offer, I’m going to go to court. If I go to court, I could win or lose. Let’s say if I win, I get two million pounds and my chances of winning are 80%. If I lose, I have to pay 200,000 pounds and my chances of losing are, therefore, 20%.

You then need to do a little bit of a calculation on what happens if you go to court. If you go to court, you’re going to win 2,000,000 pounds, chance 80%. That’s equivalent to 1.6 million pounds. If you lose, you pay 200,000. Chance of 20%. That is equivalent to 40,000. Let’s call it 1.5 million for the sake of easiness. It’s 1.5 versus the 1 million that’s on the table, therefore, you are better off going to court. You can use those things to work out what the values of different options are in front of you.

If you’ve got a settlement offer of a million pounds versus you go to court and if you go to court you’ll get so much money with such and such probability, you can work out using those numbers what the likely value of you going to court. You have to factor in how much it’s going to cost you if you lose, how much you are going to get if you win, so on and so forth. You can chuck some numbers around and play with it.

The problem, of course, with decision trees is have you got the numbers right. That’s one issue. Another problem is it tends to lock people… Once they’ve done a decision tree, it’s something there on a piece of paper with these numbers. They tend to get locked into and anchored onto the particular values that are on the decision tree.

On the other hand, I agree with all those things, and you have to be careful about those things, but my counter to that is what else are you going to do? How else are you going to think about this? What are the alternatives? This is by far the best tool to do that. You need to do that. As we discussed earlier on, a really good thing to do is to do a decision tree for the other side to work out where they are coming from and play with that too as a useful way of understanding their bargaining strategy or their likely strategy.

Aled: You’d sit down with the parties, do a decision tree for them or help them do a decision tree. Walk them through that process for their situation but also putting them in the party’s shoes. You might also then do it with the other party. Vice versa.

John: Yes. The mediation depends on the sophistication of the people that you’re dealing with. Often, if it’s a finance director or so on, then some of them will be able to do that before the mediation. I’ll say, “Show me the decision tree that you’ve thought through about how this is going to pan out.” They will do that, no problem.

Sometimes I use it with individuals, if you’re in a smaller scale mediation. I use it in a very limited way, just literally the kind of win versus lose thing. You can get very sophisticated and much more complicated decision trees that have got multiple stages and all that kind of stuff. I use it in a very limited way to explain to them how they should be thinking about the going to court side of things, if it’s appropriate. I don’t always use them. It depends how it’s going.

As you said, you saw it being used as an effective tool but presumably you’ve been in a lot of meditations where it’s not used at all. Those things still work as well. It’s something I think you should have in your armory as a mediator.

Aled: I’ve got a feeling that there is so much more that we could cover on this topic that would be helpful for me regardless of who else is watching. I’d love to hear more about it. Maybe we can fix up some time.

John: Exactly.

Aled: Maybe then I can also give you a little bit of advice on how to select international rugby coaches that will deliver the results that you want.

John: Really? Well, I think what you do is you poach the best ones from England. Isn’t that how it works? You just get [Shor 49:56] Williams and then you’re sorted.

Aled: Listen, John. Just before you go, I know we’ve got two minutes, I want to quickly summarize what we’ve covered because I’ve written stacks of notes. There are lots of useful tips that I’m definitely going to take away. Then I just want to make sure that we’ve got your details so anyone watching this can reach out to you if they want to and just say thank you or pick up the phone or contact you somehow.

You talked about preparing being a really important role of a mediator, specifically coaching parties around their negotiation strategies, helping them think through what their outcomes are, and also helping them manage their expectation. Even if you’ve got a party that thinks that horse trading and salami slicing is not for them, you need to help manage their expectations around that. They might have all the best intentions and the highest levels of integrity and their word is their bond, one figure, one number, but the other side might interpret that in a different way. It’s just not helpful for the process. They need to allow sufficient maneuverability.

We talked about PILOT. That stood for Parties, Issues, Linkages, Options and Timing, which is helping you think through how you might negotiate. Parties, how many. If it’s two parties, it’s easier. If there are more than two parties then you need to be thinking about coalition formations. Is there just one issue or are there more issues? If there are more issues then there is greater scope for trading which might help in the negotiation phase. You talked about linkages. Thinking through are there any other negotiations or deals that might rest on the outcome of this today.

You talked about options which is all the decision tree stuff. You’d encourage them to work that out beforehand. Also help the parties understand and put themselves in the shoes of the other party from a negotiation standpoint. You think that this might be their approach, their strategy, but if you were them, what would be going through their mind? What would your decision tree look like if you were them?

Finally, timing. Timing, you used some great examples. Completing the Olympic Stadium. Are there timing issues that might affect that outcome, that might strengthen your bargaining position? Did I get that right?

John: Yes.

Aled: You talked about seeing the negotiation phase, not as this idealistic, magical moment where you wave your magic wand and the parties just come together. The reality of it is it’s a bargaining phase. That’s the reality. The most effective way to enter into that phase is to create as big a pie as possible. Make sure that you’ve got all your shoes out on the table, really explored all their options, gone through the PILOT with them.

Then helping them think through their negotiation strategy. The offers that they make should go in ever decreasing steps toward the point where they are prepared to settle. That acts as a signal to the other side so they can anticipate where you’re likely to settle. It’s a little bit of a game but game theory is what you’ve got a Ph.D. in. It’s how you play the game to maximize a successful outcome for you and trusting that the other party will be doing the same to serve their own needs as well.

There’s a whole host of other things that I’ve probably missed out. One thing I liked that you described, that the mediator has to be an analytical empathizer as well as being able to take someone through the data, the analysis, the factual stuff, and all the numbers. You’ve also got to be able to make a human connection with them, be able to empathize with them. If you can do both of those effectively then you’ll be serving the needs of your clients, the parties in the mediation, to the best of your ability.

John: Yes. Absolutely.

Aled: A lot in there and a lot more to cover. John, I know we’ve gone over time. You’ve been incredibly generous and tolerant with the internet connections and so on. Just before we go, John, if people out there, and I know they’re going to want to get in touch with you and pick your brain, specifically on decision trees because, after all, you’re the decision tree man, how can they get in touch with you? What’s the best way of doing that?

John: The best way to do it is through my website which is www.negotiation-mediation.com. You can find on the website plenty of stuff. I think you’re going to put it up there on the links. There is a downloadable preparation form. There’s a blog with a whole load of discussion pieces on a lot of stuff that we talked about and a lot of other stuff too. There’s plenty of stuff on there, plenty of material and it’s constantly refreshed. If people want to sign on to that, they’ll get plenty of stuff from there.

Aled: Brilliant. I’ll put all that information underneath the interview. I want to be the first to say thank you, John. It’s been a really interesting interview. Loads more to cover so maybe you’ll come back on and do another one at some point.

John: Of course. Cheers, Aled. See you.

Aled: Thanks, John. Take care.

About the mediator

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John Clark is an experienced negotiator and mediator who divides his time between mediating, advising on commercial and inter-governmental negotiations and teaching negotiation and mediation skills. His career began in management consultancy with McKinsey & Co. Since then, he’s advised the boards of many blue chip companies and the most senior levels of government on issues of strategy, economics and international relations. As well a... View Mediator