The other day, I found a new online magazine in my e-mail box. It was the very first edition, Vol. 1, No. 1 (October 2011) of ADR Times Perspectives on Dispute Resolution.According to the message from the Editor – Ms. Mikita Weaver – this publication started out as an interactive blog, gradually shifting to this very first edition of ADR Times.com covering negotiation, mediation, arbitration, diplomacy and peace.

            Reading the publication, I found that many of the articles covered the fundamentals rather than the arcane. For example, Scott Van Soye discussed “The Negotiation Dance: Five Reasons Not to Sit Out” (at pp. 4-5). I have been in many mediations where counsel wanted to speed up the “dance.” Often, my response is that you can’t; if you do try – you will lose that magical something in the process of “dancing” and the negotiations will fail. Mr. Van Soye puts it more concretely, providing five reasons why the parties must dance!

            The first reason, as identified by Professor Peter Robinson (co-director of the Strauss Institute for Dispute Resolution at Pepperdine Law School) is that most agreements are reached at about the midpoint between the first two reasonable offers. To get to this midpoint, social pressure is placed on each party to share the burden of conceding. “Without a pattern of concessions, sometimes called the “negotiation dance”, this mutual pressure is gone.” (Id. at p. 5).

            The second reason is because it is normal to negotiate; “. . .failing to negotiate leaves your counterpart frustrated, angry that you are being “stubborn” or “unfair” and doubtful that you are really at your bottom line.” (Id. at p. 5). Consequently, without the “dance”, even the best deal may not be acceptable.

            The third reason is that a “take or leave it” approach greatly limits your ability to negotiate as well as  your credibility. If your first proposal is your bottom line, if it is not accepted – you must walk away to maintain credibility. If, instead, you offer something else, your credibility is gone.

            The fourth reason is that the “pattern of the dance significantly impacts the ultimate amount agreed upon.” Studies show that the first move in a negotiation strongly influences the other party’s estimate of value. (Id. at p. 5). By anchoring your first demand at a higher (lower), but reasonable amount, the agreement ultimately agreed upon will be higher (or lower). By being the first to make the proposal, you can set the level (or playing field) of expectation.

            The fifth reason involves “the value of aspirations or optimistic goals.” (Id. at p. 5). “Those with high hopes routinely do better than those with more “realistic” ones. Of course, this assumes that the demands are within the realm of possibility. Ridiculous demands will be ignored. (Id.)

            In sum, if you refuse to “dance”, you will definitely be at a disadvantage in any negotiation. You must “dance” to get the most out of the negotiation: it is that plain and simple.

            . . . Just something to think about!

            Recently, a colleague, Daniel Yamshon, Esq. (Thank you, Dan!) directed me to a very unique story epitomizing alternate dispute resolution at its zenith! It is all about beer.

            As related by the authors of www.abnormaluse.com (more specifically, on page 4: http://abnormaluse.com/page/4 ) in their blog interview of May 3, 2011, it seems that two separate breweries produced a beer called “Salvation.” More specifically, both Adam Avery, President and Brewmaster of the Avery Brewing Company in Boulder, Colorado and Vinnie Cilurzo of the Russian  River Brewing Company in Santa Rosa, CA, each brewed a beer called “Salvation.”

            In 2000 or 2001, Mr. Avery met Mr. Cilurzo, and they “became really good friends.” At some point, Mr. Avery realized that each of them was brewing a beer with the same name; “Salvation.”

            As the years went by, they became “really close” friends, with Mr. Avery visiting Mr. Cilurzo at the latter’s brew pub on several occasions. Eventually, Mr. Avery asked the question: “are we going to have a problem with [the beers with the same name]”? Mr. Cilurzo responded that at some point, both of them needed to figure out what to do about this dilemma.

            At this point in the story, the legal community, no doubt, would urge the filing of a lawsuit: sue for trademark infringement and a host of other claims, and make a big hullaballoo out of this!

            But they eschewed the litigation route. Instead, Messrs. Avery and Cilurzo got together at Mr. Avery’s brewery in 2006 or 2007 and each took a batch of their respective beers and blended them together, getting the right ratio… and boom… a new beer was born called “Collaboration not Litigation.” (It was Mrs. Cilurzo who came up with the name!)

            To Mr. Avery’s surprise, this new beer became quite popular, to the point, that he and Mr. Cilurzo brew a small batch of it each January! As Mr. Avery explains, the public’s reaction

“. . . has been all positive. People really appreciate the fact that we could have sued each other but instead kept this – our single beers both called Salvation and then we decided to do this blend. Vinne and I would both think that the blend itself is a better beer than the other two by themselves. There’s a weird kind of combination that goes on…. These flavors don’t exist in either of the two beers, but somehow when they come together they create the new nuances….”

            So, I guess, at times, the whole is greater than the sum of its parts. And to state the obvious, parties gain more by working together or collaborating than working alone or in opposition to each other.

            Undoubtedly, the implications in this story call for much further discussion… over a beer!

            . . .Just something to think about!

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            This week’s blog has absolutely nothing to do with mediation but in a very indirect way, has everything to do with conflict resolution. It is about a group of women who have taken it upon themselves to ease the conflicts created by bureaucracy; they take one week out of their own lives to build a house from start to finish in New Orleans for Katrina victims under the auspices of Habitat for Humanity.

            Although I know only one or two of them, these ladies are my college sorority sisters who were seniors or then just recent graduates when I first started pledging Sigma Delta Tau Sorority (SDT) at H. Sophie Newcomb Memorial College for  Women at Tulane University in New Orleans in 1969.

            After graduating college, I did not give SDT much thought until last fall when I bumped into a sorority sister at my husband’s fraternity reunion in New Orleans. She told me about these sisters and asked if I would be interested. I said “yes” and got on the e-mail list.

            But I did not fully understand what their mission was all about or their commitment to it until I read the Reader’s Digest  article (June-July 2011) that was just published about their extraordiness. They are truly awesome! (NewOrleans)

            Twelve baby boomers who as college students at a private university were as far removed from the hard knocks of life as one can get, trade their “easy” lives for saws, hammers, drills, tape measures and the other tools of construction to help the victims of Hurricane Katrina obtain one of the most basic needs: shelter. Why? Because it is New Orleans and simply sending a charitable contribution was not enough.

             The first house that they built in 2006  went to Kewanda Baxter, a single parent with three children. These ladies did not simply build the house and walk away. To the contrary, they  wanted to meet Ms. Baxter and have been “there” for Ms. Baxter and her children ever since. They have provided Ms. Baxter and her family with both tangible and intangible support, helping her and her family  put their lives back together after the devastation of Katrina. They are truly incredible! 

            Having lived ten (10) years in New Orleans, I understand their mindset and why my sorority sisters are doing what they are doing. I am proud to call them my sorority sisters and my “construction” hat is off to them! Next November, I plan to join them!

            . . .Just something to think about!

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            One good thing about mediation is that the parties are free to change their minds on any issue as many times as they want during a mediation. . . until they sign a settlement agreement. Once  an agreement is signed, the settlement is extremely difficult, if not impossible, to unwind.

            Earlier this month, the Winklevoss Twins (of Facebook fame) found this out the hard way. In The Facebook, et al. v. Narendra, Case No. 08-16745, the Ninth Circuit Court of Appeals refused to let them back out of a settlement they made with Facebook and Mark Zuckerberg. (Facebook vs Narendra)

            As has been widely publicized, the Winklevoss Twins and Divya Narendara (“Twins”) claim that Mark Zuckerberg stole the idea for Facebook and so sued both Facebook and Zuckerberg in Massachusetts. Zuckerberg and Facebook counter-sued in California adding ConnectU as a defendant and alleging that these defendants stole data and tried to steal users.

            The federal District Court in California eventually dismissed the Twins due to a lack of jurisdiction but then ordered the parties to mediate their dispute.

            Prior to the mediation, the parties signed a Confidentiality Agreement stipulating that

 “. . . all statements made during mediation were privileged, non-discoverable and inadmissible “in any arbitral, judicial or other proceeding.” ” (Slip Opinion at p. 4902).

            After a day of negotiations, the parties signed a handwritten, one and a third page “Term Sheet and Settlement Agreement” (“Term Sheet”). Therein, the Twins agreed to give up ConnectU in exchange for $20 million in cash and $45 million in shares in Facebook (now estimated to be worth about $200 million.)  (See, Los Angeles Times April 21, 2011 article.)

            However, the negotiations fell through during discussions on the final deal documents. Facebook filed a motion to enforce the settlement. ConnectU opposed the motion arguing that the Term Sheet was not enforceable as it lacked material terms and was procured by fraud. The trial court found the Term Sheet to be enforceable and ordered completion of its terms.

            The Ninth Circuit agreed, affirming the trial court’s order. As part of the settlement, Facebook was to acquire all of ConnectU’s shares in exchange for cash and a percentage of Facebook’s common stock. To accomplish this, the attorneys drafted more than 130 pages of documents typically required to finalize an acquisition. 

            On appeal, the Twins argued that if the terms set out in these voluminous acquisition documents were “required” and “typical”, then they should have been included in the Term Sheet; because they were not, it is unenforceable.

            The Ninth Circuit rejected this argument finding that the Term Sheet complied with the requirements of California contract law.

            Next, the Twins argued that Facebook misled them as to the value of its stock. An internal valuation prepared to comply with the federal tax code put the value at $8.88 per share. In contrast, the Twins claimed they were led to believe that the value was four times as much and so were defrauded.

            The Court rejected this argument noting:

       “The Winklevosses are sophisticated parties. . . . They engaged in discovery, which gave them access to a good deal of information about their opponents. They brought half-dozen lawyers to the mediation. Howard Winklevoss – father of Cameron and Tyler, former accounting professor at Wharton School of Business and an expert in valuation – also participated. A party seeking to rescind a settlement agreement by claiming [fraud] under the circumstances faces a steep uphill battle (citations omitted). Id. at p. 4906.

            Finally, the Ninth Circuit addressed the issue of mediation confidentiality, but only superficially. It agreed that the trial court was correct to reject the proffer of certain evidence by the Twins about what was said and not said during the mediation, in light of the Confidentiality Agreement signed by the parties. The Ninth Circuit though did not delve into a discussion of mediation confidentiality, its purpose and importance. It simply concluded:

“. . .The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity. See Geoffrey A. Fowler & Liz Rappaport, Facebook Deal Raises $1 Billion, Wall St. J., Jan. 22, 2011, at B4 (reporting that investors valued Facebook at $50 billion – 3.33 times the value the Winklevosses claim they thought Facebook’s shares were worth at the mediation). For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached.”

            In sum, signing on the dotted line means that the matter is  truly over!

            . . .Just something to think about!

 Postscript:  A couple of weeks ago I wrote a blog entitled “An American Hero” about Kenneth Hughey who had been a POW in Vietnam at the Hanoi “Hilton”. Recently, I received an e-mail from a reader who, as a young boy, wore a bracelet with Ken’s name on it as part of America’s effort to support our Vietnam POW’s. He kept the bracelet all these years and offered to return it to him. Ken wrote him an e-mail, accepting the offer. Wow!… the wonders of the internet!

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            A few weeks ago, my colleague Maria Simpson, PhD., in her weekly Two Minute Training (February 15, 2011), mentioned a story she had heard the previous day on National Public Radio’s Morning Edition about a pre-school that was teaching conflict resolution to four year olds. Contrary to what occurs in most pre-schools, while these pre-schoolers had lots of energy and were very active, they did not fight, yell or whine.

            Intrigued, I hunted down the story on NPR and learned that the school was The Clara Barton Children’s Center in Cabin John, Maryland (http://clarabartoncenter.org/), and passed this information on to my colleague.

            But, I was still curious about this success of conflict resolution among 4 year olds. So was my colleague as she took up this topic again in her next Two Minute Training column on February 22, 2011. It seems that this school employs a “Solution Kit” provided by the Center on the Social and Emotional Foundations for Early Learning (CSEFEL) at Vanderbilt University (http://csefel.vanderbilt.edu./). This “Solution Kit” is simply a poster that, using pictures, shows 10 different ways to end an argument:

1.  “Get a teacher” (i.e., use a mediator or a third party objective neutral.);

2.  “Ask nicely” (i.e., have a calm non-confrontational conversation about the issue; make it a conversation of curious inquiry, not a cross-examination.);

3.  “Ignore” (i.e., don’t react to negative personal attacks ; let them roll off your back, remain focused on the needs and interests of the parties or on the issues; NOT on the person.);

4.  “Play together” (i.e., work co-operatively and together to create options by which each party will gain, thereby developing a “win-win” resolution.);

5.  “Say “Please Stop”” (i.e., have a discussion about the opposing and/or conflicting underlying needs and interests of each party and how best to meet them; again, focus on the interests of each party and create options that will meet each party’ s needs.)

6.   ”Say, “Please”” (i.e. be polite and respectful  to the other party; separate the people from the problem – be soft on the person, but hard on the problem.);

7.  “Share” (i.e., compromise; do not engage in distributive bargaining in which the goal is that one person wins, and the other loses (zero sum game) but rather engage in integrative bargaining by which both parties “win” by compromising.);

8.  “Trade” (i.e., engage in “give and take”. Prioritize your interests and  concede issues that may be of little value to you but important to the other party in exchange for ones that ARE important to you but of little value to the other party so that each party obtains what is important to her.);

9.  “Wait and Take Turns” (i.e., be patient; actively listen – really listen, and don’t interrupt – to what the other party is saying so that you can understand what are the needs and interests of the other party and thus be able to figure out collaboratively how to meet both her needs and interests and yours.); and

10. “Get a Timer” (i.e., use the element of time as a way to resolve the dispute either by setting a time limit on the discussions which will force the parties to focus and concentrate on the issues: or by setting up a timetable by which certain elements of the resolution must be accomplished (e.g. an installment plan).)

(http://csefel.vanderbilt.edu/modules/2006/solutionkit.pdf)

      If four year olds can grasp these basic concepts of conflict resolution, shouldn’t we adults be able to so, as well?

      When I first read about this “Solution Kit”, my initial reaction was to get a hold of one and send it to Congress. I am still half toying with the idea of doing so! In the meanwhile, perhaps there are some other adults amongst us that could benefit from its use, as well.

        . . .Just something to think about! 

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