Mediating Commercial Relationships

In mediating commercial disputes, once all of the frills are striped away, the dispute is very typically about money. The money can evince itself in a number of ways: one side paying the other cash; one side paying the other in specific performance; one side paying the other by refraining from competing, and so foregoing potential income, and so on. But, when the dust clears, the outcome is generally that money either does or doesn't change hands.

A second characteristic of such mediations is that they're almost always distributive in nature. In many cases, the lawsuit is about one party trying to collect from another that is no longer in business. And in the others, by the time that the parties have hired lawyers, filed suit and enjoyed the pleasures of litigation, each has probably come to loathe the other in such a personal way that they'd rather do business with the devil than with each other. That's not surprising, when each side perceives the other to have broken faith, lied, cheated, and other wise proven to be completely untrustworthy. Welcome to a commercial mediation on a very typical morning

Not long ago, I walked into just such a room. The facts, while not so typical, were not too complex, either. The Plaintiff owned a wholesale warehouse, from which he sold electrical components to retailers, including the Defendants. Plaintiff told me that his cousin, who had worked for him for many years, had apparently been "back dooring" (i.e., stealing) merchandise worth $300,000, and then selling it secretly to customers, including the

in pro per Defendants. When the fact of the missing merchandise was discovered, Plaintiff said, the cousin confessed all, pointed to the Defendants and was fired after agreeing to make restitution. Naturally, Defendants denied all, telling me that the cousin, now an admitted felon, was giving Plaintiff this "story" to make it easier on himself.

Now a lot of questions were never addressed and/or answered, such as why the police were not brought in, but my overarching understanding is that Plaintiff wanted his money back and wanted reimbursement from his cousin, rather than his cousin in jail and the family complications that would follow.

For a few hours, we engaged in classic back and forth negotiation, but, because each side had invested in a

very different reality, very little progress was made. Because Plaintiff insisted that he was dealing with thieves, he expressed an unwillingness to substantially reduce his demands, since this was a case of good vs. evil. The Defendants, on the other hand, lived in a world in which they'd been unfairly smeared and vilified, were now involved in a totally unwarranted lawsuit.

Did I accept either reality? Well, first of all, that's not my job. My usual approach might be to get each side to understand the reality of the other side, while not necessarily modifying their own reality. Here, that seemed doomed to failure, since each reality overtly required the other party to be lying. I skirted around this several, times, but was starting to run out of ideas. Then, as is often the case, a little nugget was dropped into my lap.

One of the things I always do in caucus is chat up the parties. Among the reasons I do this is because the key to settlement can often inadvertently come from the parties themselves. In this case, one of the Defendants remarked how he was especially infuriated because the Plaintiff, his brother, himself and their families had had so many fun times in the past. In other words, he felt betrayed. I had my lever!

I caucused with the Plaintiff, and after a few minutes of the usual housecleaning discussion, I casually said to him, "I understand that you had a lot of good times with the Defendants. Sitting here today, that seems hard to believe. Is that true?" The Plaintiff sighed, and said: "Yeah. We used to go to Vegas a lot, we'd spend the holidays with one another's families. We had a lot of laughs over the years." I went on: "It's a shame those times are over, huh?" The Plaintiff agreed, but went
on to say that he could never do business with the Defendants after what they'd done to him. I asked him, for the umpteenth time, whether his cousin could have been making it up, and he again said that that was impossible, but with a bit of regret in his voice.

Then I asked him the key question. I asked whether he would be willing to do business with the Defendants if, in the long run, they could repay the value of the goods and he could continue to make a profit along the way. He thought it over, consulted with counsel and then said that he would.

I caucused with Defendants, and, after a lot of wrangling, got them to agree that they'd resume business with Plaintiff and make payments toward the loss, but said that the payments were entirely dependent upon the profit they would make on their end from the product Plaintiff would provide. Several caucuses ensued, and, bottom line, both sides agreed to do $3 million worth of business as soon as reasonable, Plaintiff would bill at his lowest price, and Defendants would pay a
surcharge of 10%.

At the end of the mediation, all parties were sitting together, reminiscing and laughing. It's not something I get to see very often, but I don't think you'll ever see that in a courtroom.

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