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What Role Does "The Law" Play In Mediation?

The role that the law can and should play in mediation is one of the most widely discussed topics in the field of dispute resolution. It comes up in almost all mediations. It takes volumes to fully develop all the ideas, but the introduction we can make in a blog post should be a useful starting point for your own thinking.

By agreeing to mediate, the parties have chosen to try to resolve the dispute to their own mutual liking, rather than ceding to a judge the power to impose a decision about the outcome. In theory, if a judge decides a dispute, he does so by applying "the law", as that judge understands the law to be. We all know that two lawyers often disagree about how "the law" would make their case come out in court. We know that trial-level judges' decisions are often reversed on appeal. Just from recognizing those few facts, perhaps the best we can hope for from the court system is an approximate adjudication of how "the law" applies to the parties' case.

If all we can depend on in litigation is an approximation of what some Platonic ideal of the law would say, then why do we litigate anything? For one thing, it beats fisticuffs. For another, it's in our culture, if not our genes. We all want to think that we're law-abiding citizens. I do what the law says I should, so if I'm in court, I should win. (If I made a mistake and know it, or if I cheated, then by going to court I'm either trying to delay or I'm hoping the courts make a mistake about the law in my case, as they have in so many others.)

There are other reasons why we rely on "the law". By convention and the social compact, we trust that "the law" provides general rules of behavior and defines some aspects or relationships for most run-of-the-mill situations. Even if we don't know the millions of details in statutes, case decisions, ordinances, regulations, etc., we have the sense that they're all there for the public good. We each think we have a general sense of what they say, even without having specific training. We think that they're dependable. We accept that they state the way we're supposed to live, even when we're not consciously thinking about what the law requires or permits. Suppose two parties enter into a contract to buy and sell gizmos. They don't have to say in their contract what happens if the seller fails to ship, or if the buyer fails to pay. They know "the law" will provide an after-the-default answer about their rights and remedies.

Alright, how do those observations about "the law" apply to mediation? We digress for a moment to negotiation and dispute resolution theory. Negotiating parties should always understand what the likely outcomes would be if they can't agree to a resolution. The range of those other likely outcomes makes up a huge part of the reality in which the parties are negotiating or resolving disputes. This concept was popularized by Roger Fisher and William Ury (of the Harvard Negotiation Project) in their ground-breaking book, Getting to Yes. The acronym is BATNA, the best alternative to a negotiated settlement. If both parties come out better with their proposed deal than they would under the best alternative likely outcome, then it makes sense for both of them to agree. That's why knowing "the law" can be important in mediation. It's vital for everyone in the discussion to have of sense of the range of what a judge would probably say the outcome should be. Knowing the BATNA -- including "what the law would say" -- can be crucial in deciding the shape and dimensions of a mediated deal.

But that doesn't mean that the point of mediation is to come to the same result that a judge would arrive at in litigation. The parties of course might choose to do that (and save a great deal of time and expense by doing so.) But a great strength of mediation is that the parties don't have to do what "the law" would do. (The parties shouldn't enter into a deal that's "against the law," but that's a conversation for another day.)

A few examples can make this clearer than a long discussion. Suppose Alice, a patent holder, claims that Barry infringed on his patent because he's been incorporating Alice's invention in some products that Barry sold over the last few years. "The law" might say that if Alice proves the infringement, then Barry would have to pay a zillion dollars in damages whether or not he know of that he was infringing any patents. But Barry, and eventually Alice, know that Barry priced the products he has already sold without building in any license fee for the use of Alice's patents. Therefore, he just doesn't have a zillion dollars lying around to pay her. All "the law" would permit a judge to do is enter a judgment for a zillion dollars -- assuming Alice could prove everything at a very expensive trial and the judgment withstood years of very expensive appeals. That would put Barry out of business and he couldn't pay it all to Alice anyway. But in mediation, there is a whole world of opportunity for resolving this dispute to the advantage of both Alice and Barry. For example, they could agree that for products sold in the future, Barry will pay Alice a license fee of 6% instead of a more reasonable 4%. Then Barry would know how to price his future products to include enough to cover a 6% fee to Alice. Barry could stay in business, making money for himself and extra money for Alice every time he sold a product. A judge couldn't order that, but the parties can certainly agree to it in mediation.

Take an example from another realm I'm familiar with. New York has a statute that sets forth how child support is to be calculated. Generalizing, it says that child support has to be paid by the parent with whom the child spends less time, to the parent with whom the child spends more time. Calvin and Doris are getting divorced. Calvin makes much more money than Doris does, but for their family, it makes sense that their child, Eddy, spend more time with Calvin. A judge would likely not have the power in a divorce case to compel Calvin to pay Doris any child support. But in mediation, Calvin can say, "OK, I understand that the law doesn't require me to pay any child support. But to me, it only makes sense that I help Doris by paying her some child support. I want Eddy to know that his mom can also afford to live in a home where he has his own room, and she has enough money to pay for things that Eddy needs." Doris and Calvin can make that agreement, and even if a judge wouldn't have the power on his own to order child support payments to Doris, he does have the power to approve their agreement to that effect. That judicial approval of the parties' agreement becomes a judgment.

The patent lawyers for Alice and Barry told them what "the law" is. Each could see that the law would probably provide a remedy that did neither of them any good, and harmed Barry. For Alice and Barry, "the law" helped them understand their circumstances, and they elected to resolve their disputes in a completely different way. The divorce lawyers for Calvin and Doris told them about "the law" of child support. Knowing that law, the couple decided to do what made sense to the two of them, and what was best for Eddy, despite what "the law" would have said.

The beauty is that in mediation, the role of the law is important, but not because it dictates an outcome. It's just one more thing the parties can consider and discuss. The parties can decide how much weight to give "the law," how much sense it makes in their situation. The parties, with the help of the mediator, can use "the law" only in the way they want to, only in the way that makes sense to both of them, in resolving their disputes.

Charles Newman has worked diligently as both a lawyer and mediator to resolve conflicts and conclude transactions to the maximum benefit and satisfaction of his clients. For an appointment with a skilled lawyer, mediator and arbitrator, call Charles M. Newman at (212) 332-3321 or contact his office online at http://www.newmanlawmediation.com/contact-us.html


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