If the deal is good, but no deal is struck, what’s going on?

In mediation, it’s not uncommon for an all-around good deal to be rejected. The mediator sees the value of the deal; the lawyers see it too. But the parties can’t seem to agree on a final resolution. If the proposed deal is good, but no deal is struck, what’s going on?

We are people. People are emotional creatures. And it turns out that emotions heavily influence our decisions. Most of us like to think that our reason takes the primary position in our decision-making process, and that emotions play a distant secondary role. If you believe the work done by behavioral economics pioneers, Danny Kahneman and Amos Tversky, our automatic reactions (emotional, instinctive, etc.) drive most of our decisions. We then use our slower, more deliberative thought process to rationalize our emotional decisions, rather than to correct them.

Emotions manifest during mediation in multiple ways: Ego, sense of justice, anger, frustration, and so on. These emotions, unless fully vetted and addressed, often doom settlement discussions.

The common reaction for dealing with emotions offered by mediators and their counsel, is to simply ignore them. Parties are told to put their emotions aside, see the deal objectively, and are promised that they’ll eventually be able to live with the outcome. But the problem is that disputes often arise because of the emotional reaction to them. If there was no emotional response to a problem, there is often no dispute. Failing to resolve the emotional responses to disputes, even if the deal is eventually struck, leaves parties dissatisfied with the deal that they were forced to enter, and may redirect the parties’ frustration toward the mediator and counsel. Even worse, if the deal includes terms in which the parties will work together going forward, failing to address emotions can be catastrophic to the success of deal implementation.

In mediation, emotions should not be ignored or set aside. They should be dealt with directly, fully understood, and worked into the settlement process. Effectively dealing with emotions will help to clear the path to a settlement that will leave the parties more satisfied when the deal is inked. Our mediation process is designed to account for the parties’ automatic reactions to the dispute and to proposals made during mediation itself.

To learn more, or to get a conversation started, please contact Marc Menkveld at marc@menkveldlaw.com.