Conflicts, whether in business or family matters, are often emotionally charged, making clear-headed decision-making difficult. Fortunately, mediation offers a structured approach to resolve disputes. However, a key element often missing is risk analysis.
Risk analysis is a tool for informed decision making, and involves systematically evaluating the potential consequences of different options available in a conflict. This includes both tangible risks (e.g., financial losses from litigation) and intangible risks (e.g., damaged relationships, emotional stress).
In a recent appellate mediation case, I encountered the challenge of a client unprepared for strategic negotiation despite a lost case. Their initial demand (the same as in the original case) was unrealistic given the judgment against them. The appeal had minimal chance of success, and the opposing / prevailing party was seeking attorney fees. While I completely understood the client's emotions, a clear-eyed assessment of the situation was crucial. Minimizing attorney fee awards through negotiation could be a more realistic goal in this situation. This case example highlights why risk analysis is crucial. By entering mediation with unrealistic expectations, valuable time can be wasted. Instead, I guide the parties through a risk analysis helping them understand the strengths and weaknesses of their case, which fosters informed decisions and facilitates successful outcomes.
With a clear understanding of risks, parties can make informed decisions about their best course of action. Risk analysis helps parties develop realistic expectations about potential outcomes, reducing emotional influences. Knowing risks allows for more constructive negotiations. Parties can identify areas for compromise and prioritize their needs strategically. Recognizing the risks of extended litigation can encourage parties to reach a settlement, saving them money on legal fees, and saving attorneys’ time, especially if they will be having a hard time collecting attorney fees.
In my role of the Mediator I guide the parties through risk analysis by:
Facilitating discussions to identify key risks.
Helping parties explore potential consequences of different options.
Providing neutral and objective assessments of the situation (if requested by attorneys).
In some cases, I help attorneys communicate the realities of the situation to their clients.
Successful mediation requires open communication and realistic expectations. Here are some tips:
Attorneys: Conduct a risk analysis before the mediation day and prepare your client for the possible outcomes. Alternatively, ask your mediator to assist you with this important step.
Clients: Be open to understanding the risks involved and work with your attorney to explore different options.
At TK Mediation, we leverage risk analysis to help you understand your options and achieve the best possible outcome in mediation.
