Third-Party Intervention

When people cannot resolve or manage their own conflicts, they often resort to third-party intervention, also known as Alternative Dispute Resolution [ADR]. Third-party intervention varies in invasiveness depending on method.

Neutrals can suggest contingency agreements when disputants cannot agree on future facts (the tactic also works in direct negotiations). These usually convert fixed payments into percentages, a simple case being the author’s royalty rate of, say, 10% per book sold instead of $100,000 that would leave the publisher unhappy if sales were low and the author unhappy if they were spectacular. Neutrals can prepare a draft agreement, submit it in separately to the disputants for suggestions, revise it, and resubmit it. This process can continue until the disputants are satisfied and the draft becomes the final agreement. It is a variation on the “Delphi Procedure” that negotiators call the “one text procedure.”

A neutral can help each side to estimate optimistic, realistic and deadlock agreements, the likelihood of achieving each, and the opportunity costs of delay. Helping each side to consider this information in the context of their aspirations, beliefs, constraints, needs, perceptions, and values provides both sides with more rational assessments that can narrow the gap between the parties.

Arbitration is a quasi-judicial process in which a neutral decides how to resolve a dispute based on evidence presented by the disputants.

Mediation⁴ is a non-judicial, often voluntary, process in which a third party neutral helps disputants who retain the power of decision to reach an accord. Mediation frequently has resulted in innovative resolutions with higher satisfaction and compliance than compulsory methods. It works best in relatively small-scale conflicts where there have been close relationships between two more-or-less equal disputants. It is potentially more confidential than arbitration (although in some cases mediators can be compelled to testify if the dispute ends in court). Most mediators are impartial, avoiding any case in which they have an interest or in which even the appearance of favoritism might cost them the confidence of one party. However, some mediators believe they should help the weaker party, particularly when the disparity is great. Still other mediators employ “transformative mediation” in which they try to improve relationships in addition to helping reach agreement.

Contract embellishers interview all disputants confidentially after a tentative agreement is reached then write a single proposal to discuss privately with each side. If both sides think it an improvement, it replaces the tentative one without change. The goal is to reach an optimal agreement. The idea is similar to the way the US House of Representatives and Senate reconcile their versions of a bill based on a committee report that both Houses vote up or down without amendment.

Consider a buyer and seller trying to reach agreement on a sale involving issues of quality, quantity, and delivery time. Assume to illustrate the essentials of the process that there are only three possible discrete positions for each issue. During the confidential interviews, the embellisher has the seller and buyer divide 100 points to indicate the relative importance they attach to the possible resolutions of each issue (Figure 17.3). Cells A1 through C27 represent all possible combinations for the Seller; cells G1 through I27 are the values to the Buyer of the same combinations. Columns D and F represent the total value of the possible solutions to the Seller and Buyer, which are simply added together to get the Joint Value of each solution shown in Column E.

Inspection (or the sort function for a spreadsheet) quickly identifies the best solutions for each party and for both parties. Row 3 gives the Buyer 100 points but the Seller only 56 points, a joint total of 156. Row 25 gives the Seller 100 points, but the Buyer 25 points for a joint total of only 125. The solutions represented by Rows 8, 9, and 18 create Joint Values of 163, 166, and 161 points. Row 8 is the most nearly equal, Row 18 is best for the Seller (86 points), and Row 9 is best for the Buyer (85 points) and produces the highest Joint value. The embellisher could propose either Row 8 or Row 9 depending on whether equality or maximizing joint gain seemed best in the particular situation. Giving the disputants themselves a choice risks stalemate.

Astute negotiators could find these solutions without a third party or knowing the opponent’s values using linkage. One negotiator can offer a combination that improves the deal for himself and ask if it improves things for the other. Regardless of the answer, he can work through each possibility, always asking if the new one improves on the best found so far. In this tedious fashion, negotiators can find the optimal deal without anyone revealing anything important.