We're now ready to look at the second key building block for ADR. Which is called mediation. And I'd like to start with a couple of very short clips that will give you a taste of what mediation is like and then we'll look at a longer clip that will allow us to analyze a business type mediation. So here is the first short clip. >> I want you to cut down your horrible trees. [NOISE] I can't suntan anymore. [NOISE] I just can't communicate with him. >> Allow me. I speak argue. [MUSIC] >> Excuse me? >> And here is the second short clip illustrating another mediation situation. >> [NOISE] Hi. I'm your mediator. [MUSIC] >> I'm really glad we can be adults about this. [MUSIC] >> Now, we're going to turn in a minute to a longer mediation, again involving a contract dispute. And as you watch this mediation, I'd like you to consider these questions. First of all, how does mediation differ from negotiation? Second, what type of mediation is involved in this film clip, is it evaluative, facilitative or transformative? And finally how would you rate the mediator on a scale of one to ten, did she do a good job or not and why. Before we start the clip just a few words of background on, on the types of mediation. Traditionally, mediation was considered a problem solving process and there were two fundamental types of mediation, facilitative and evaluative. With facilitative, the goal of the mediator was to facilitate conversation, discussion, and negotiation between the two sides to reach a settlement. With evaluative mediation, the mediator would do the same thing except also would be asked to give an evaluation of the mediation to provide certain expertise. What has happened in more recent years is the addition of another type of mediation called transformative. And the goal of transformative is not necessarily to solve a specific problem, although that might be one of the results. But it's also to transform the relationship between the parties to give especially one party who might lack power, or who might lack a voice, more of a chance to express his or her feelings. Here's an example of the use of transformative mediation. Huge organization. The US Postal Service at this time had 800,000 employees and in 1997 they had 14,000 formal complaints with the Equal Employment Opportunity Commission. So in 1998 they started to use transformative mediation for these complaints. And these are the results over the first roughly two years. And they resolved over 17,000 informal disputes. They had a 30% drop in formal complaints. They saved millions of dollars in legal costs and improved productivity, and the disputants to a large extent 90% were satisfied with the process. Now, one of the problems with these studies is that it, it never gives you real life stories about how this process might work. So, I set an email to one of the leading researchers on transformative mediation in the country and I asked her to give me some flesh and blood examples of transformative mediation. This is one of the examples she sent me. This is one of the postal cases. Got a female employee, small, she's a letter carrier, files a sexual harassment complaint against her supervisor claiming that he addresses her by her route number instead of by her name. When they get involved in transformative mediation and she's allowed to express her feelings, the parties realize that he addresses every letter carrier by route number. He had no clue that people found this dehumanizing or offensive. He had no idea until mediation that this was the reason for the sexual harassment complaint. He started greeting people personally, apologized for the past conduct, and the employee withdrew the complaint. So, now we're ready to look at the video and let me give you a little bit of background information about the video. This is a dispute between a company called Compuplast and PM Limited. Basically Compuplast has agreed to provide Robotics Software to PM Limited. However, it looks like the delivery date will be delayed. And PM Limited is very upset, because PM Limited produces door handles for the auto industry. And if they don't get this Robotic Software, they're going to lose a lot of business. So they cancel their contract with Compuplast and both sides have threatened to sue. It's a very emotional, hostile environment for the mediation. One challenge that you have in watching this mediation for those of you from the United States, is that the mediation is in a foreign language. It's in English. So try to do what you can to understand this British mediation. So again these are the questions. How does the mediation process differ from negotiation? What type of mediation is this evaluative, facilitative and transformative? And how do you rate the mediator and why? And with regard to that last question, remember that many of you will be serving as mediators and resolving disputes on the job or perhaps even in your family. So watch the techniques used by the mediator. I, I think there's some great learning watching her in action. So, this is our mediation video. >> And what about this headache. Let me introduce you to a robot. It's job is to make plastic door handles for cars. It's just one snag. The latest computer software to make the robot work hasn't arrived to the factory PM limited. The software designers and suppliers, Compuplast, have failed to meet a deadline. And their failure is leading to enormous financial difficulties both for PM Limited and for the car company which needs the door handles. Indeed, Compuplast themselves have a lot to lose. Once again, it looks like a dispute heading for court. Thousands, perhaps hundreds of thousands of pounds in litigations costs. And the breakdown of the hitherto friendly and profitable business relationship. But does it have to be like this? Even as the lawyers are treading their expensive path up the courtroom steps, they know that there's a chance that the matter will be settled out of court. But in the meantime, costs to their clients have risen, sometimes frighteningly so. And that is no good to anyone. A financially undermined client is never a happy one. If your a lawyer, then you might think well my client has contractual rights that need to be upheld, if that means going to court so be it. After all costs might be recoverable down the line, but increasingly that attitude has not being accepted by clients. They want to know if there are other ways of ensuring that they don't lose out, and if there's a way of keeping a business relationship going, rather than finding relationships so soured by the litigation experience that a previously happy business partner now finds himself permanently at daggers drawn. This, ladies and gentlemen, is where ADR comes in. [SOUND] Let's consider the dispute involving a robot, a plastic manufacturer, PM Limited, a computer software firm, Compuplast, and car company. Because of the delayed arrival of software, this robot isn't able to produce enough car door handles to satisfy the contractual arrangements entered in to by PM Limited. They promised to supply the handles within a week. Because of Compuplast's failure, PM has canceled a half million pounds order for more software from Compuplast. A move which could mean the end of the company. >> I'd like to thank you all for coming this morning, to help to try to resolve this dispute. My name is [CROSSTALK]. >> Compuplast disaster mediator Elizabeth Rivers, to see if there's an alternative solution to this dispute. One that won't lead to enormous litigation costs, and one which will help all parties reach a satisfactory solution. While that decision has led to round table talks between PM and Compuplast, both of whom had brought along their lawyers. By watching this mediation process, you'll see exactly how ADR works. Elizabeth, a London lawyer, is a trained mediator. Her brief is simply to try to enable the two sides to reach a solution. The two sets of lawyers have been asked long to ensure that neither PM nor CompuPlus make a legal fool of themselves. Let's follow the action. >> Now, I understand that your lawyers have sent the seated signed mediation agreement. I'd like just to clarify what my role is here today. Firstly, I want to stress that I'm not here to impose any sort of solution upon you and I have no authority to make any sort of binding ruling. This is your dispute. I'm simply here to help you to try arrive at your own solution, and to facilitate communication between you. The process is entirely voluntary, you can leave at any time if you're not happy, and it's non-binding unless and until an agreement is reached. I'd like to explain a little bit about the procedure which we'll adopt this morning. Firstly, each party will have the opportunity to make a statement of their, their position. And they're permitted to do that without any interruption from the other side. And I'd like to ask you two to hear one another out and, and not interrupt while the opening statements are being made. At the end of those statements I will then attempt to summarize what you've said to me. After that we'll break up into private meetings where I'll see you each individually with your legal representatives. On both meeting were an opportunity for you to speak to me as frankly as possible and in confidence about your concerns about this dispute. >> Shortly the two sides will speak separately to the mediator in so called caucus meetings which are entirely confidential. But first, the opening statements. As Compuplast have called me in as mediator, I suggest that Miss Carter make the first opening presentation. >> Okay. Okay. All right. Well Compuplast is a small computer company. We produce computer software in the, in the plastic molding industry. Last year, we were approached by PM, Mr. James, and asked to design a program of software to enable him and his company to speed up the robot control plastic molding system. And at considerable expense to us, we did design a range of software that could do this and it seemed set to revolutionize the industry. On the strength of this success, PM had come back to us and asked us to design more new computer software. But they also came back and asked us to modify the original software, which we agreed to do. They set us a deadline, which unfortunately, due to unforeseen business circumstances, we can't reach. Now PM have threatened to withdraw their orders for the software. Should they do that, we've got no option but to sue. Our investment was based on their orders. We think we'll succeed in an action against PM. We know that we can provide the modified software that they want, but we need more time. Because PM asked for those modifications, it's their fault there's a delay, and not ours. We think that it's all PM's fault. >> Mr James, would you like to make your presentation now? >> Yes, certainly. We're a plastic molding company, producing parts for the automotive industry. Quite recently, we won a very large contract to supply a major car producer with our flat door handle. We got a contract to Compuplast design the software for this system. They totally failed to meet the deadline. This means we cannot supply parts to our customer. Result of all of this, is the fact that first all, we'll certainly lose the current contract. If Gap were ever get a contract again from our customer. And thirdly, the worst case, they will probably take us to court and sue us. This is a result totally of Compuplast incompetence, and inability to make the deadline. Our position is quite clear. We've canceled orders of software from Compuplast. There's no guarantee they're going to meet future deadlines. Furthermore, we'll take Compuplast to court on the basis they're in clear breach of contract. They must know this position they're in, it's quite serious, and their abject failures places us in an intolerable position. >> Thank you for those presentations. I'd now like to have a caucus with Compuplast. So perhaps Mr. James and your lawyer, Mr. Barra, could step outside and wait in the adjoining room. >> The mediator has heard Compuplast's public position. She understands that posture, but how privately do they assess their position. >> In your opening presentation, you said that you would be able to provide the software, but simply that you couldn't provide it within the deadline set. >> Right. >> Realistically how quickly do you think you can provide this software? >> Well, probably within ten days of the deadline, I would think. >> Right. >> We could probably produce it within the deadline if we had some more help, if we could employ more staff. And I also must account to you that really we have to be cautious about time deadlines until we are quite sure of the work involved. >> You know, we feel that we've, we've gone out of our way to help them, and if they want us to meet this new deadline they've issued us with, then they've got to help us. >> Yes, I think we hadn't actually reached that deadline yet, and really, and Miss Carts has been very good by advising them of the problems before they actually take place. And we'd hope that we might get a better hearing and a little bit more tolerance. >> Yeah. >> I thought Mr. James was very emotive you know, in, in his approach. And that was a little bit distressing. >> Yes, I certainly, we didn't expect them to automatically threaten to sue us. It was very, I, I think they went completely over the top. >> Yes, I mean, we, we thought that he would actually help us help him. >> Right, well, I'm, I'm pleased to hear that you think you can meet the deadline. You mentioned that you would need assistance from PM. Can you be more specific about precisely what you would need? >> Well I talked to you about this, Nick. Really our problem is, and I would prefer that you wouldn't disclose this to them, is that we actually need money to employ someone. We just haven't got sufficient money to hand. To be, to be able to employ the sort of person that we need at such short notice We just haven't got it. So if we're going to be able to meet this deadline, then we need some help, financially to employ the quality of staff needed to produce this software. Might even need two people. So we're talking at least 25,000 I would think. >> Right. I see. So to summarize, without any extra assistance, you think you could provide the software. That it would be ten days after the deadline which has currently been set. >> Mm-hm. >> However, if you were able to employ additional staff, you think you could still meet the deadline. >> Mm. >> But you don't have the funds, if I'm correct in saying you don't actually have the funds at the moment to employ. >> No. >> An additional staff. So you would need some sort of injection of cash to do that. And you've been looking in the region of 25,000 pounds. >> Yeah. Right, right. >> Is there anyway the PM could help you with your cash flow? For example, by making some sort of accelerated payment? >> Well I think I, yes. They sent me, could if they could give us 25,000 now then, then we'd be, we'd be happy with that. And then the, the remaining payment at the end of the year. At, at the deadline. >> All right, all right. Can I confirm with you that I'm authorized to disclose that to PM? >> Yes, I don't think that would prejudice our position. >> Thank you. I'd now like to talk to PM privately. >> The mediator's probings have identified the potential for a settlement. But Lou must match PM's aspirations. >> Well the way I've been on the mend is, they created this problem, and I'm prepared to go all the way to the courts to sort it out. >> Right. >> I don't feel like compromising at all. >> I see, and I have no doubt that you've discussed with Mr. Barry, your solicitor, what the likely outcome would be if you went to litigation. >> The mediator has a difficult job on her hands. At this point PM and their legal advisors discuss the reality of a complex court case. >> You said in your opening presentation that if you don't meet the deadline for your car supplier that you will lose that contract. Future orders can possibly also be sued by the car manufacturers. >> Yes. >> Now, realistically, do you think there is any flexibility with that deadline? >> I don't think there is any flexibility with the deadline at all, Mary. >> Right, so it is crucial that- >> Absolutely. >> Deadline is met. All right, I see. What Compuplast has said to me is that they could meet the deadline but that they need extra staff to do that. That seems to me that it's probably in your interests, whatever the rights and the wrongs legally in this case is, to try and work together with Compuplast to meet the deadline if possible. >> Well I think if they need more stock, that's really their problem. They committed to a deadline, it's their problem how they achieve that deadline, and not PMs. >> Certainly I can see that it's a matter of, of contract law, that's the case, but I think given the knockon effect of their inability it seems to me with their plan at the moment. Effectively it becomes your problem as well. So I think the, the spirit really of mediation is that everybody tries to work together to arrive at a solution to this problem. >> I share your concerns as well. I mean here we have a company in fact that contracted to, to deliver a product at a particular time and then, then time of the essence was, was made plain in that particular contract. >> Okay, what, what sort of figure are they talking about? >> Well what they said to me is that in order to meet the deadline, they need to take on some additional staff. And they're looking at a figure in the region, say of 25,000 Pounds. >> What concerned me actually is if we've already contracted for them to, to deliver a product and they haven't been able to meet the deadline. >> Mm. >> And yet they want another 25,000 Pounds from my client. >> I can see obviously that you do feel very strongly about this. And I can see that this has caused you very serious problem for your business. >> Certainly has. >> And the loss of goodwill with the the car company is obviously very serious so I do see that. >> Okay, we'll give it some consideration then. >> Right. So you will check the contract and see what payments are outstanding. >> Yes. >> What >> Several hours have gone by the mediator has established that PM owes Compuplast 18,000 pounds. That could be released immediately. A range of other possibilities are also discussed. What was a legal argument has become a commercial negotiation. Through shuffle diplomacy and direct bargaining an imaginative solution is reached, one which avoids the court. >> I've called you all back together because I think we've now been able to reach an agreement. I like to summarize the terms which have been agreed. Firstly, PM will make an immediate payment to Compuplast of 18000 pounds in respect of its unpaid invoices. Secondly, there will be meeting, one week's time, between PM and Compuplast to monitor the progress of the development of the software. If PM is satisfied that the deadline will be met, then they will release a further 7000 pounds. In addition, PM's software license from Compuplast is to be extended a further two years at no extra cost. And finally, if PM places any further orders with Compuplast, they will have a 10% discount. Does everybody agree that I accurately summarized the terms of the agreement? >> Yes. >> Yeah. >> Well, I'll write those terms out and I'll ask you all to sign it, signifying your agreement. >> Okay. Can we agree to meet him now? >> Certainly yes, if you want to fix a date now, yes that's fine. >> So that's the way the system works. Now as- >> In the next segment we'll look at the questions I described earlier as well as some other matters relating to a mediation.