{"id":486,"date":"2010-03-01T17:56:08","date_gmt":"2010-03-01T21:56:08","guid":{"rendered":"http:\/\/businessconflictmanagement.com\/blog\/?p=486"},"modified":"2010-03-01T17:56:08","modified_gmt":"2010-03-01T21:56:08","slug":"can-you-recognize-when-youre-being-reality-tested","status":"publish","type":"post","link":"http:\/\/www.businessconflictmanagement.com\/blog\/2010\/03\/can-you-recognize-when-youre-being-reality-tested\/","title":{"rendered":"Can You Recognize When You're Being "Reality Tested"?"},"content":{"rendered":"

NOTE:\u00a0 The following text will appear as a chapter in a mediator skills volume to be published soon by the International Bar Association, edited by mediator <\/em>Patricia Barclay <\/em><\/a>of <\/em>Bonaccord Ecosse Limited<\/em><\/a>, in\u00a0Edinburgh, Scotland.<\/em>\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Reality testing is the technique of inviting a party to adjust his perceptions of the claim.\u00a0 A party may overestimate the likelihood of success on the merits, or the other side\u2019s ability or willingness to pay.\u00a0 He may have an unrealistic assessment of his alternatives to settlement.\u00a0 The transaction costs of continuing the dispute in court may not have been accurately addressed.\u00a0 He may not have confronted business, competitive, or psychological obstacles to a successfully negotiated conclusion of the dispute.\u00a0 The purpose of reality testing is to help to eliminate those obstacles.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Reality testing is a necessary part of mediation.\u00a0 Intelligent and rational parties, advised by competent counsel, may have labored long and hard to place a value on a claim or defense, and discussed the weaknesses and strengths of their position.\u00a0 Good counsel will have put probabilities of success at various junctures of the litigation process, and together they will have lived with the matter for months, sometimes years.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Now along comes a mediator, who has just learned about the matter for a few hours, seeking to cast doubts on all this good work.\u00a0 Why would a mediator put herself in such an unwelcome and vulnerable posture?<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 By reality testing, the mediator is testing the positions of the parties, inviting re-assessment and forcing an articulation of certain hitherto tacit assumptions.\u00a0 In the process of reality testing, counsel and client may discover that they have not always been starting from the same place, or using the same logical analysis of the situation.\u00a0 They also may not have accurately or thoroughly assessed the situation from the perspective of the other side.\u00a0 The more specific the mediator\u2019s probing, and the more determined the mediator is in following-up each area of reality testing, the more useful the exercise is to the parties.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 There are many ways to start off this type of inquiry.\u00a0 Note the distinctions among these questions:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What do you see as the main weaknesses of your claim?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What do you see as the main strengths of their defense?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What do you think they perceive as the biggest weakness in your claim?\u00a0 Do they have a logical basis for that?\u00a0 In other words, do they have a point (however misguided it may be)?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If you were in their position, how would you attack the logic (or the facts or the conclusions) that underlie your demand?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 So do you think that, from their perspective, they are behaving rationally when they offer XXXX?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The intent of this series of questions is to encourage a realistic \u2013 dare one say objective \u2013 view of the status of the negotiation process.\u00a0 The discussion undermines the \u201cdemonization\u201d of the opponent that is an inevitable product of longstanding conflicts, and assists each party in assessing the bid\/ask gap in a more productive way.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Another series of questions tests the solidity and sophistication of a party\u2019s BATNA:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If we don\u2019t get an agreement today, what\u2019s your best-case scenario?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What\u2019s the worst thing that might happen to you if we don\u2019t get this done today?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 How much does your counsel project it will cost to take this matter to the end of discovery?\u00a0 Through a motion for summary judgment prior to trial?\u00a0 To the eve of trial?\u00a0 To the end of trial?\u00a0 To appeal, in the event that the trial doesn\u2019t go as you expect it will?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 How much of your own time is being spent on this case and away from your business?\u00a0 Do you expect that will decrease or increase if we fail to end it today?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Do your other customers and competitors and vendors know that you have this lawsuit going?\u00a0 What impact do you think it will have on your good will and your business reputation if this has to go to trial?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Does your boss have a view on this?\u00a0 Does your wife?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 There are risks in posing reality-testing questions.\u00a0 One risk is that the mediator may be perceived as being rhetorical.\u00a0 If one is going to ask these questions, one must be prepared to listen to the answers, and to pursue what is unclear.\u00a0 Why do you say that?\u00a0 What do you base that on?<\/em>\u00a0 And one should take care in each case to say, I think I understand how you\u2019re going about this, and I follow you<\/em>.\u00a0 Even in reality testing, everyone needs to be validated.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Another risk is that a party may feel she is being coerced.\u00a0 Too often, mediators who think they are being clever are in fact brow-beating the parties they are trying to help.\u00a0 It is too easy for a tone of voice or an arch of a brow to give the suggestion that there is a right and a wrong answer to a question, when the mediator honestly intended to provoke discussion, not bear down with implied shame or humiliation.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A third risk is that the mediator may be viewed as offering an indirect or implied evaluation of a claim or defense.\u00a0 Great care must be taken to avoid that perception (unless it is intended) by prefacing one\u2019s questions with such disclaimers as \u201cWell, you know your business better than I do, so let me just ask you\u2026\u201d<\/em> or \u201cYour counsel has given you a far more reliable piece of advice on this than I could, so let me just ask what your sense is of\u2026.\u201d<\/em>\u00a0 The goal of reality testing is, after all, to provoke a change of the party\u2019s assessments and assumptions, not to give the party the fruits of your own wisdom. \u00a0They have legal counsel already \u2013 what they need now is an invitation to make a fresh assessment.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Reality testing is particularly helpful when it focuses on business, rather than legal, questions.\u00a0 Why do you think that your co-venturer breached the agreement?\u00a0 How does she think she might profit by making that move?\u00a0 What have you heard on the street about the possibility of a bankruptcy filing?\u00a0 Would the other side consider it attractive to lower the unit price but extend the term of the agreement?\u00a0 Why?\u00a0 Why not?\u00a0 How did you come to that conclusion? What if the other side thinks differently, rightly or wrongly \u2013 what would the consequences be for you?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Reality testing can take many forms.\u00a0 It is not a discrete set of tools to be used at a discrete stage of the mediation process.\u00a0 It often arises spontaneously and its form reflects the nature of the claim itself.\u00a0 And sometimes it just doesn\u2019t work.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0I once got an employer to agree to accommodate a physically disabled employee in every way she sought \u2013 including a change in supervisor.\u00a0 When I relayed this success to the claimant, she unexpectedly made an additional demand of $100,000.\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Why do you need $100,000?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Because they hurt my feelings and caused me months of grief.<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Why $100,000?\u00a0 Why not $50,000 or $200,000?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Okay, $200,000.<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Why would they pay you that?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 They better if they want me to go away.<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 But they don\u2019t want you to go away; they want you to continue to work for them.\u00a0 They might think that\u2019s a lot of money, especially since your annual salary is $35,000.\u00a0 Have you heard of any other employee who was paid $100,000 to settle a case?\u00a0 Have you read in the paper about anyone getting $100,000 to settle a case?\u00a0 Did any lawyer even give you the opinion that you could get $100,000 to settle this case?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 No, no, no.<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 So if we don\u2019t settle this today, you figure you will tell the judge (in four years or so, when your case comes up) that they treated you badly because of your disability, and they will say that they fixed every one of the problems by arranging everything you asked for, and you will say you also want $100,000, and the judge will say sure, makes sense, pay her?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Yup.\u00a0 Or I at least want to have a try.<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What do you think they will say when I walk into the other room and say that you want $100,000?<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 They can say what they want.\u00a0 But you tell them.<\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Even persistent reality testing will not have an effect on an irrational or obstinate party.\u00a0 But most business parties are commercially rational, in the end.\u00a0 And failing to press the matter would mean failing to engage in one of the unique values that a mediator adds to the negotiation process.\u00a0 In the real world, attorneys cost something.\u00a0 Juries are uncertain.\u00a0 Arbitrators sometimes err.\u00a0 Laws change.\u00a0 All claims and defenses must be discounted for mere uncertainty.\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Moreover, reality testing, properly conducted, will often dispel a major obstacle to settlement: concerns of the other party\u2019s bad faith.\u00a0\u00a0The mere fact that one\u2019s opponent has a different assessment of the claim does not mean they are lying, treacherous\u00a0or stupid.\u00a0 It may mean that they are viewing the same set of facts and the same body of law from a different but equally valid perspective, and basing their assessments on different but equally valid assumptions.\u00a0\u00a0Look at a wedge from above and you’ll see a triangle; from behind you’ll see a square; and from the side a rectangle.\u00a0 Testing a party\u2019s view of the other side\u2019s assessments and assumptions can be enormously helpful.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The great American jurist Louis D. Brandeis once wrote that \u201cThe logic of words should yield to the logic of realities.\u201d\u00a0 Di Santo v. Pennsylvania<\/em>, 273 U.S. 34, 43 (1927).\u00a0 In business disputes, the logic of the law should yield to the reality of commercial markets.\u00a0 Reality testing, if done with empathy, sensitivity and genuine curiosity, can be an enormously effective tool to achieve this end.<\/p>\n","protected":false},"excerpt":{"rendered":"

“Reality Testing” is a critical phase of business mediation. Both lawyers and parties should recognize it when it starts, to get the most value from it.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[15],"class_list":["post-486","post","type-post","status-publish","format-standard","hentry","category-mediation","tag-mediation"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/486","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=486"}],"version-history":[{"count":0,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/486\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=486"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}