CROATIAN BAR ASSOCIATION (Zagreb, June 1 st 2009)

1. CROATIAN BAR ASSOCIATION (Zagreb, June 1st 2009) NEGOTIATION AND MEDIATION - A THREAT OR A BUSINESS NICHE FOR LAWYERS? Adapt or perish! The importance of ADR for the future of the legal profession Jeremy LACK Zürich Seestrasse 39 CH - 8700 Küsnacht Tel. +41 44 914 88 88 mail@altenburger.ch Genève Rue Rodolphe-Toepffer 11bis CH - 1206 Genève Tel. +41 22 789 50 20 mail@altenburger.ch

2. The “Old World” Paradigm 2

3. The “New World” Paradigm See: The World is Flat Thomas Friedman e.g., The Internet: Asia Pacific - RedEurope/Middle East/Central Asia/Africa - GreenNorth America - BlueLatin American and Caribbean - YellowRFC1918 IP Addresses - CyanUnknown - White Source: http://www.opte.org/maps/

4. The growing influence of corporations • In 2000: 51 of the 100 largest economies were corporations • In 2009: 56 of the 100 largest economies are corporations • By 2038: 78 of the 100 largest economies may be corporations. • Hypothesis: • Corporations may have their own laws (lexsocietatis?) • In-house counsel will have greater influence • This will translate into more use of mediation Sources: Interbrand (2007), Institute for Policy Studies (December 2000) M. Leathes, based on Richard Susskind’s “The End of Lawyers?” (2008)

5. The commercial perspective of dispute resolution WHY MEDIATE? “Turn your dispute from a business threat into a business opportunity” Cees J.A. van Lede, Chairman of the Board of Management Akzo Nobel NV Source: http://www.mediation-bedrijfsleven.nl/english.shtml#quote4

6. What are the possible implications for Lawyers? “The Legal Profession is on the brink of fundamental change” Prof Richard Susskind timesonline.com - October 19, 2007 Source: Michael Leathes

8. Crisis is good Danger+ Opportunity Source: Michael Leathes

9. The legal profession will have to adapt The 20th Century Lawyer • Expresses desires • Threatens • Stamps feet • Tough shell • Legal expert • Claims Positions • Well-trodden path • Process orientated • Single-minded • <50% successful • Eye-wateringly costly • The 21st Century Lawyer? • Satisfies needs • Warns • Choreographer • Tough core • Legal entrepreneur • Satisfies Interests • Beats new trails • Obsessed by outcomes • Kaleidoscopic • >80% value generation • Worth every cent Source: Michael Leathes, based on Richard Susskind’s “The End of Lawyers?” (2008)

10. The 21st Century Lawyer Source: Michael Leathes Source: Michael Leathes

11. The new EU Mediation Directive 2008/52 • “Article 3 • Definitions • For the purposes of this Directive the following definitions shall apply: • ‘Mediation’ means a structured process, however named or referred to, whereby two or more parties to a dispute attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a mediator. This process may be initiated by the parties or suggested or ordered by a court or prescribed by the law of a Member State. It includes mediation conducted by a judgewho is not responsible for any judicial proceedings concerning the dispute in question. It excludes attempts made by the court or the judge seized to settle a dispute in the course of judicial proceedings concerning the dispute in question. • ‘Mediator’ means any third person who is asked to conduct a mediation in an effective, impartial and competent way, regardless of the denomination or profession of that third person in the Member State concerned and of the way in which the third person has been appointed or requested to conduct the mediation.”

12. The Choices: Appropriate Dispute Resolution (ADR) Least Evaluative Least Structured Least Formal Consensual Parties in control NEGOTIATION MEDIATION INDEPENDENT EXPERT APPRAISAL CONCILIATION NEUTRAL EVALUATION ARBITRATION ADJUDICATION Source: J. Kalowski, JOK Consulting Most Evaluative Most Structured Most Formal Adversarial Third party in control

13. Arbitration Resolution Source: Joanna Kalowski A P1 P2

14. … Conciliation … Source: Joanna Kalowski Resolution Zone of possible agreement C Precedent Justice Statute P1 P2 OBJECTIVE JUSTICE

15. M …Mediation Source: Joanna Kalowski Resolution P1 P2 SUBJECTIVE JUSTICE

16. The invisible side of all conflicts Although the “objective” aspects of the dispute may be apparent… The Facts The Law(s) The Positions A dispute is never about what it is about… Misunderstandings Perceptions Emotions Interests Concerns Feelings Beliefs Values Needs Fears …the “subjective” aspects remain to be discovered.

17. THE LEGAL SYLLOGISM (an algorithm): Facts (past & present) + Applicable law(s) = Outcomes (« conclusions ») “We have to rely only on objective facts”. “Arbitrators have a ‘sacred duty’ to establish the truth.” Arbitration & Conciliation = rights-based approaches The Facts The Law(s) The Positions Misunderstandings Perceptions Emotions Interests Concerns Feelings Beliefs Values Needs Fears

18. The Right Brain vs Left Brain test ... do you see the dancer turning clockwise or anti-clockwise? If clockwise, then you use more of the right side of the brain and vice versa. Most of us would see the dancer turning anti-clockwise though you can try to focus and change the direction; see if you can do it. But “Facts” depend on unconscious biases & perceptions RIGHT BRAIN FUNCTIONSuses feeling"big picture" orientedimagination rulessymbols and imagespresent and futurephilosophy & religioncan "get it" (i.e. meaning)believesappreciatesspatial perceptionknows object functionfantasy basedpresents possibilitiesimpetuousrisk taking LEFT BRAIN FUNCTIONSuses logicdetail orientedfacts rulewords and languagepresent and pastmath and sciencecan comprehendknowingacknowledgesorder/pattern perceptionknows object namereality basedforms strategiespracticalsafe http://www.news.com.au/dailytelegraph/story/0,22049,22535838-5012895,00.html

19. All our senses are processed by our emotions & biases Perception is 100% emotional (whatever we would like to believe) Source: http://cti.itc.virginia.edu/~psyc220/kalat/JK379.fig12.13.amygdala_con.jpg The Amygdala act as a rapid relevance detector: They act as a switch between the reptilian and neocortical brains

20. A new approach to conflict resolution is needed Source: J. Kalowski POWER RIGHTS INTERESTS

21. “We can’t solve the problems by using the same kind of thinking we used when we created them” Albert Einstein

22. Mediation + Arbitration = more choice & better outcomes? Arbitration or litigation The Facts The Law(s) The Positions Current thinking: Med or Arb or Med-Arb or …? + Misunderstandings Perceptions Emotions Interests Concerns Feelings Beliefs Values Needs Fears Mediation = The “big picture”: a more complete dispute resolution process?

23. Why try mediation? Three specific considerations Pre-mediation: Preliminary Conference PAST Opening Parties’ opening statements UNDERSTANDING & EXPLORATION Summarising and Agenda setting Exploration of issues and interests Private Sessions Source: Joanna Kalowski Option Generation (v.Alternatives) PROBLEM SOLVING RESOLUTON Negotiation(s) (joint & private sessions) Agreement/ Closure Post-mediation: Enforcement of agreement FUTURE

24. Why not aim for “Holistic Dispute Resolution”? Is one integrated “hybrid” process possible? Can one neutral do it all? Should we use two neutrals? Can the neutrals work as one team? The Facts The Law(s) The Positions • The drivers: • Costs • Time • Outcomes Misunderstandings Perceptions Emotions Interests Concerns Feelings Beliefs Values Needs Fears

25. “We have to start by defining the process as part of the problem” David Plant

26. What type of process will the parties want? Directive (process) Directive Evaluative Directive Non-Evaluative Arbitration/ Conciliation Mediation Non-Evaluative (subject matter) Evaluative (subject matter) Source: Based on L. Riskin “The New Old & New New Grids” Facilitative Non-Evaluative Facilitative Evaluative Conciliation Mediation Facilitative (process)

27. The Holistic Approach Fundamentals VALUES NEEDS Constraints Strategies Focus Money Time OUTCOMES ISSUES Laws

28. First Step = Diagnosis Target zone for conflict resolution 1 Disagreement The Problem Debate+polemic The people 2 3 Actions, not words Escalation 4 Images and coalitions WIN-WIN 5 Deliberate loss of face Management of threat 6 WIN-LOSE Limited destr- uctive blows 7 8 Fragmentation of the enemy De-escalation Together into the abyss 9 LOSE-LOSE Inspired by: Tina Monberg Source: F. Glasl’s “Confronting Conflict”

29. When to try mediation? WHEN? “Early Dispute Resolution – the earlier ADR processes are implemented in the conflict cycle, the less risk there is of the dispute escalating out of control.” Hans Peter Frick, Group General Counsel, Nestlé SA Source: http://www.mediation-bedrijfsleven.nl/english.shtml#quote4

30. Process Design: More Freedom of Choice & Autonomy • Factors • Parties • Certainty of outcome • Costs • Time & deadlines • Applicable law(s) • Languages • Skill sets • Venue & distances • Institutional rules • Nationalities/cultures • Counsel • Neutrals (roles & no.) • Availabilities • Advisors & Experts • Confidentiality • Discovery • Implementation • Enforcement • Sequential • Med-Arb • Arb-Med • Arb-Med-Con-Med-Arb • Consent awards • Parallel • Med//Arb • Carve-outs • Windows • Shadow mediation • Partnering • Hybrid • MEDALOA • Dispute Board • Co-“medarbiters” • ???

31. The ethical obligation to try to settle first Us et Coutumes de l’Ordre des Avocats (OdA) genevois Art. 7 - L’avocat doit autant que possible favoriser les solutions transactionnelles. Il n’engagera pas de procès sans s’être rendu compte qu’un arrangement n’est pas possible. Il informe le client des risques, des difficultés, du coût prévisible et de l’évolution de l’affaire dont il ne doit garantir l’issue. Code suisse de déontologie de la Fédération suisse des avocats (FSA) Art. 9 - Règlement amiable des litiges - L’avocat s’efforce de régler à l’amiable les litiges, dans la mesure où l’intérêt du client ne s’y oppose pas. Il tient compte, comme représentant d’une partie en justice ou conseiller, d’une médiation en cours ou du souhait de l’une des parties d’en instaurer une. International Bar Association (IBA) International Code of Ethics (Ed. 1988) Art. 11 Lawyersshall, when in the client’sinterest, endeavour to reach a solution by settlement out of court ratherthanstartlegalproceedings. Lawyersshouldneverstir up litigation. Is it malpractice not to advise clients about mediation? Will clients be justified in refusing to pay their litigation invoices?

32. The statistics are compelling (Source: ACB, NL 2006) http://www.mediation-bedrijfsleven.nl/english.shtml

33. The role of the lawyer in mediation HIGH “JOINT PROBLEM SOLVER” COUNSEL RELATIONSHIP ADVISOR LITIGATOR TASK ORIENTATION HIGH LOW

34. When NOT to mediate or rely only on mediation GOOD REASONS • A precedent is needed • There is an abusive imbalance in power • One of the parties is dishonest/cannot be trusted • The neutral is dangerously unqualified • Certainty of outcome is needed by a specific date BAD REASONS • “Mediation is a sign of weakness” • “It is too soon to mediate” • “We tried to negotiate, so a mediator won’t add anything” • “You cannot negotiate with people who are in bad faith” Mediation is not a magic drug, but should be used much more!

35. How satisfactory is national court litigation? How easily are court decisions enforced abroad? How satisfactory is arbitration in resolving IP disputes? Is it responsible to avoid a cheaper process with a 70-80% track record? You can tailor something faster cheaper better! Can you afford NOT to try mediation?

36. In conclusion “In the new economy, those who live by the sword will be SHOTby those who don’t “ Gary Hamel “The world’s leading expert on business strategy” Fortune Magazine Source: Michael Leathes