Pros and Cons of Caucus Versus Joint Session in Business Dispute Mediation

Caucus versus joint session. Every mediator has a different view on the subject. Some rely heavily on caucus, and some try to avoid it. Some recommend a joint session followed by caucus while others advocate the reverse.

We are writing about this topic because we recently came across a blog post by bankruptcy lawyer and mediator Donald Swanson, which contends that joint sessions are more effective than caucus when mediating business disputes that arise out of a pre-existing relationship between the parties.

Swanson distinguishes between disputes where the parties contemplate an ongoing relationship (such as in the employment or partnership arenas), and tort cases such as auto accidents and slip-and-falls where the relationship between the parties is limited to that momentary interaction when the plaintiff was injured by some act or omission of the defendant.

In the latter type of disputes, in the absence of a meaningful relationship between the parties (with some notable exceptions such as medical malpractice cases), the key decision makers regarding settlement are often insurance company representatives. Swanson maintains that “caucus” works well when mediating such disputes because the dispute is exclusively, or at least primarily about how much the defendant should pay the plaintiff.

In contrast, Swanson observes, business disputes are frequently “colored by the parties’ past relationships and will affect their future dealings.” Swanson believes a mediator is unlikely to develop a clear understanding of the nuances of the parties’ relationship within the short amount of time available during a mediation; only the parties themselves are fully aware of their history. In such contexts, Swanson argues, joint sessions are presumptively the more appropriate format to help the parties “explore their history, and the differences and understandings and misunderstandings” that led to the dispute.

Mediator Laurie Israel advances a similar perspective, distinguishing between contexts like divorce mediation where joint sessions are critical to model dispute resolution techniques for parties that will need to communicate effectively post-mediation, and contexts where the parties will have nothing to do with each other after the mediation.

Israel further suggests that extensive use of caucus might lead one party to believe (rightly or wrongly) that the mediator is partial to the other side, thus damaging the perception of neutrality critical to the success of the mediation. That is certainly a perception to guard against, and a mediator would be well advised to caution parties not to read anything into him or her spending more time with one side than the other.

We hear these points. A dispute that arises out of an existing business or personal relationship will nearly always contain an emotional component that needs to be addressed before the dispute will resolve, and getting the parties talking to each other face-to-face may ultimately be what is required to dispel the misunderstandings and misperceptions that triggered and fueled the dispute.

For example, in addition to losing money due to some act or omission of Party B, Party A may now perceive Party B as dishonest. In which case, rebuilding Party A’s trust in Party B will require exploring whether Party A’s perception of Party B’s motives for acting the way it did was consistent with reality. As per the psychological principle known as Hanlon’s razor, it may be that what Party A perceived as nefarious intent was actually inadvertence.

Enabling Party A to hear Party B’s explanation for its acts or omissions directly from Party B (rather than through the mediator) may better help Party A appreciate how it misjudged the situation. While Party A may still demand some compensation for the harm it suffered, it no longer mistrusts Party B and can envision resuming the relationship once the dispute is resolved.

Alternatively, my colleague David can share examples of mediations where getting the two CEO’s of companies talking to each other did the trick because they had the incentive to foster a long-term relationship that their subordinates lacked.

Nevertheless, at Merge Mediation Group, we are biased towards recommending starting off with caucus where possible for several reasons.

Getting Educated About the Nature of the Dispute

Using caucus to get better educated about the origin of a dispute, and its effect on how the parties currently feel about each other, can help a mediator lay the groundwork for a more productive joint session. To be sure, a mediator can read about the dispute in a mediation statement, but it cannot compare to hearing about it directly from the parties themselves.

For example, might one party make allegations that will enrage the other side? If so, upon becoming aware of those allegations during caucus, the mediator can advise one party on how to communicate its concerns in a less inflammatory manner (such as, for example, avoiding the use of labels) while preparing the other party psychologically to listen to those allegations dispassionately (such as by visualizing a “shield” to “deflect” the allegations; a technique commonly used in marital therapy).

Getting Educated About Each Party’s Negotiating Style

Unless a mediator is familiar with the negotiating styles of the parties, starting off with joint sessions risks unpleasant surprises. For example, one party may believe in “sending a message,” and immediately start things off on the wrong foot with an “insulting offer.” Or a party may impulsively take an extreme position that it will later find difficult to retract without losing face (thus leading to impasse).

Caucusing provides the mediator with an opportunity to experience the negotiating styles of each party and learn about the approach they plan to take at any joint session. In that context, the mediator can explain why certain negotiating tactics are likely to backfire, and encourage consideration of a different approach.

Maximizing Candor

As previously discussed, Professor Robert Mnookin has observed that parties involved in face-to-face negotiations are often reluctant to share information about their interests because they fear the other side will exploit their candor instead of reciprocating. As Mnookin puts it, “without sharing information it is difficult to create value, but when disclosure is one-sided, the disclosing party risks being taken advantage of.”

Applying that insight to mediation, parties are likely to be guarded in joint sessions. This reduces opportunities for the mediator to discover gains from trade because parties won’t fully disclose their underlying needs and interests. In contrast, because a mediator commits to confidentiality, parties will likely be far more candid with the mediator during caucus, thereby providing the mediator with an opportunity to learn information that provides the basis for creative proposals.

Engaging in “Reality Testing”

Caucusing also provides an opportunity for a mediator to engage in frank “reality testing” with a party about the weaknesses of their position that would be wholly inappropriate in a joint session as a breach of neutrality.

Without overgeneralizing, mediators who embrace a more facilitative or transformative approach to mediation will tend to favor joint sessions while mediators who take a more evaluative approach will be more biased towards caucus where evaluation generally occurs. That said, as Lauren Israel acknowledges in the essay cited above, it is ultimately important to maintain flexibility with regard to using caucus versus joint session, and not be too rigidly wed to either approach (because there are times when your favored approach will simply not work, or your disfavored approach is plainly more appropriate).

With that, dear reader, where do you fall on the continuum between caucus and joint session?