I'd like to talk to you about mediation and arbitration. Many people think the two of them are similar, and the story I'm gonna share with you shows how different they are, not just in actions, but in philosophy. The story is based on a true mediation told to me by Ken Feinberg. Ken is now famous. He's the person who did and allocated the 9/11 fund, the Agent Orange fund, the Boston Marathon fund, so he is probably the world's premiere mediator. But when I saw him in class, he was just still a young Ken Feinberg. And this was a mediation he had done between a country and a bank, and for the purposes of this story I'll call the bank Gringotts and the country Agriba. And what had happened here is that Agriba had nationalized Gringotts Bank, but they weren't willing to offer any compensation, and Gringotts had said that they needed $20 million. And the two of them butted heads, weren't able to reach an agreement, and absent an agreement, it wasn't clear how Gringotts could continue doing business in Agriba. And so the two parties recognized they had a problem and proposed mediation, and Ken was hired. So he goes and works with them for a week. They go back and forth. Each side makes it arguments, and by the end of the week Gringotts is down from 20 million to 19. Okay, we got some progress and Agriba is up from nothing to 1 million. The problem is they we're still 18 million apart, and it was pretty clear that they weren't making enough progress. It didn't look like they were gonna be able to reach an agreement. And so, was Ken gonna go home? What were they gonna do? Well the two parties proposed to Ken the following idea. They would engage in something called final offer arbitration. And the way that works, kind of like baseball, is that each side goes and makes an offer. And Ken would look at the two offers and have to pick which of the two he thought was more reasonable. Now, Ken is not keen on doing final offer arbitration. It means he has to pick one side and say the other is wrong, and it's not the way he likes to do business. But he realized that what he was doing wasn't working, and so he needed to try something else. He says, okay, I'll do it, but under one condition. Which is, I can adjust either offer up or down by a million. And the two parties said, all right, we're good with that. And so they do it, the numbers come in. Agriba raises its number from 1 million to 7, and Gringotts lowers its demand from 19 down to 10. So you've got the numbers 10 and 7. And the question is, what should Ken do? Well first, the facts are important here. And so, the facts from Ken's perspective, entirely favored Gringotts Bank. That is, his view is they are in the right. So what should he do? Well one view is he can adjust the 10 all the way up to 11. And so if you're thinking about what's fair, what's just, that would be a reasonable proposal. And by the way, it isn't clear that when he does that he has to reveal that he's done that. He can just say that the number I've chosen is 11. Another view is he could just pick 10, right? Well, there's no need to kick sand in Agriba's eye. We could just give Gringotts the number they asked for. They'll be plenty happy with it, wasn't even adjusted down. From their perspective, it'll already be a victory, so they'll win and they'll get the number they asked for. If they'd asked for more, they might have gotten it, but they don't know that. A third option is that you could still pick Gringotts, but cut their number from 10 to 9. And the idea here is they're gonna be happy to win, they'll be happy to get paid, and when they asked for 10, they understood they might only get 9, and so that won't be a problem. I think you can even make the argument that Ken could pick Agriba and take their 7 and move it up to 8. And the idea here is that this way both parties are winning a bit. Agriba is winning because they were picked, but Gringotts is winning because they're getting paid $8 million, and so this is unlikely to happen again. Turns out, Ken didn't pick any of these options. What he did is he went and said to the two parties, gentlemen, you're only a million dollars apart, and so my strong recommendation to you is that you agree to meet in the middle. You don't want me to go and say, one of you is right and one of you is wrong. Because if I do that, then one of you is gonna lord that over the other forever. And the other is gonna feel embarrassed and not want to do business with you. The reason why you hired me is because you wanted to reach an agreement on your own without my imposing it on you. That's what mediators do, and now you have a chance to do it. So the worst case for you is gonna cost you an extra half million, but it might cost you nothing. And that half million is small potatoes compared to the value of your relationship going forward. And of course, that's what the parties did. They're happy and Gringotts is continuing to do business in Agriba today. Now these two different options, if you like the 11 million versus the 8.5, illustrate what Carol Gilligan talks about In a Different Voice, two different ideas of justice. The $11 million solution is the male view of justice. It is, who's right, who's wrong, let's look backwards in time, and correct past misdeeds. The female view of justice is, how is it that we can reach an agreement that allow us to work together going forward? So if what you want is backward-looking justice, then you should hire an arbitrator. And here, all the facts of the case matter, but it may destroy your relationship going forward. If it turns out what really matters is your future relationship, then you should work with a mediator, and that will maximize your chance of coming to an agreement on your own. But the agreement you come up with may not really reflect so much what's happened in the past, as the opportunities you have going forward.
