Why is mediation such a success story in the Anglo-American dispute resolution scene while the German market still seems to belittle this powerful mechanism in business cases?
Besides the obvious reasons related to specific features of the respective legal systems including their procedural frameworks, one factor may be a softer one: The "how-to".
Mediation rests on elaborate techniques and skill sets that mediators conducting them tend to possess in either system. However, we observe significant discrepancies in mediations when it comes to a very fundamental question – that of the set-up. Yes, mediation takes place with a mediator and the parties involved, usually including their respective counsel. But how do these players interact? Should we aim at togetherness or separation when the mediator works with each of the parties? While an entirely joint session – having everybody involved in one room at all times – can be a powerful set-up in certain occasions, the potential of individual sessions of each party with the mediator, the so-called caucus, seems to be neglected in the German market. Wrongly so, we believe.
Mediation is a popular and successful dispute resolution mechanism in the Anglo-American scene, especially in the business sector. Holding individual sessions between each party and the mediator, the so-called caucus, is a common set-up in this context. In contrast, caucus is still vastly underrepresented in the German mediation market for business cases. In the following, we explore potential reasons for this underrepresentation (I.), why we should consider changing the approach (II.) and conclude with an appeal for modern mediation in Germany – including caucus (III.).
I. Why do we lack caucus in Germany?
Asking the obvious question: Could caucus be the missing key ingredient to make mediation a more successful tool for dispute resolution in Germany? And why could this "standard set-up" be so unpopular or unknown to this country while Anglo-American mediation practitioners and users may not even consider it noteworthy? We believe that the genuine potential of this one-on-one interaction between the mediator and each party has simply not yet been sufficiently explored in the German dispute resolution market.
Status quo: Joint sessions prevail in German mediations
Whether in court-related proceedings or out-of-court mediations, we observe a tendency to rely on joint discussions of matters, i.e., with all parties involved always present.
Specifically, joint set-ups prevail in the German dispute resolution scene when it comes to mediation-prone elements in civil law matters. In the court-related set-up, the German judicial authority has introduced two noteworthy mediation-related elements. First, a conciliation hearing (Güteverhandlung) with the adjudicating judge (cf. section 278 para. 2 German Code of Civil Procedure). This hearing usually takes place right before the oral hearing and aims at an amicable resolution of the dispute – often in a rather brief and unsuccessful manner. Second, rather recently, the legislator introduced the concept of an independent conciliation proceeding, basically being a mediation or other kind of alternative conflict resolution process with a different judge than the adjudicating one (cf. section 278 para. 5 German Code of Civil Procedure). Both conciliation approaches at German courts have one thing in common: They usually take place with all parties involved, all sides being present or at least represented.
Correspondingly, the German Mediation Act appears to indicate the current "German bias" towards joint sessions: Namely, the legislator only authorizes the mediator to "conduct separate discussions with the parties [i.e., caucus] subject to agreement thereto by all the parties" (cf. section 2 para. 3 sentence 3 German Mediation Act), which can be understood as joint sessions being the rule and one-on-one sessions the exception. However, the wording does not suggest anything more than a potential bias: Mediation is a voluntary process. Consequently, the mediator could not and would not force parties into a caucus they do not (all) approve of anyway.
Similarly to the findings in court and legislation, joint sessions seem to prevail in the practice of out-of-court mediation proceedings as well. The preference to have all parties present throughout the mediation process is also reflected in corresponding training and literature (excluding some trailblazers) – and a possibly vicious circle persists.
Potential reasons: Exploring the current "German bias" towards joint sessions
Why does the German mediation scene favor joint sessions?
A very basic suggestion may be a bias towards keeping things as they are – a tendency to stay close to our status quo and what is familiar. Being used to a joint set-up from regular German state court proceedings in civil law cases, a correspondingly trained and experienced judge or a correspondingly socialized legislator may not consider caucus as a viable alternative option; at least not in the same way someone with significantly different socialization or experiences might.
Furthermore, referring to historical evidence, starting off with joint sessions may be the typical line of development in any mediation scene. In the very beginnings of mediation in the Anglo-American sphere, there was a predominance of joint sessions as well. So, is the prevalence of joint set-ups just the natural starting point when establishing mediation as a conflict-resolution tool? Possibly. And if so, Germany's evolution may be in progress, more and more adopting a broader mindset on set-ups, including experimenting with caucus and experiencing its benefits.
Similarly, cultural aspects as well as biases may play a role. For example, the fear of the unknown or a genuine distrust towards the party we are in a dispute with, which is spread onto the mediator as the person who is trying to help us resolve it. Do we want the other party to have exclusive time with that intermediary? If we do not have trust in the mediator and positive experience with the process of mediation, most likely not.
Whatever the reasons for the lack of caucus in the German mediation market in the business sector may ultimately be, we limit ourselves to raising awareness of possible reasons and influencing factors for the present purpose. The undeniably multifaceted background may encourage us to discern and reconsider conscious or unconscious fears or concerns, and to approach new, promising paths.
II. Why should we consider changing our approach and resort more to caucus?
Looking forward in the German landscape of mediation in the business sector: Why can caucus be such a powerful set-up, if used at the right moment? And why might it revolutionize the sector? To be upfront: Caucus is and has been an issue of controversy, and rightly so: It comes along with countless intricacies, but also a huge potential.
Especially, parties may be concerned about information unwantedly leaking to the other party or being misconstrued "in the other room". Furthermore, we may wonder whether the caucusing mediator deviates from the parties' respective views when transmitting messages in a presumably optimized way. And besides, which message does he or she transmit at all, and how would we know whether we like it or not? In particular: Where does the mediator draw the line when it comes to framing a message in a way that still reflects the originating party's view while making the other party possibly respond better to it?
Prerequisite for using caucus successfully: Choose the right mediator
A prerequisite for using caucus successfully is having the right
mediator: Evidently, he or she should be open to resorting to this
set-up where helpful and must also be accordingly trained and
experienced. In addition, the general rule applies: The mediator
should be the right fit for the case.
What does that mean? In particular, does a mediator need to know
all specifics of the relevant case or technical intricacies of a
certain branch, product or business concept? Most likely not.
Indeed, we experience that one of the most crucial factors for
constructive mediations is the professional personality of the
mediator. Building a fruitful relationship with the parties (and
their counsel) tends to matter a lot more than in-depth knowledge
about the issue in dispute. In other words: Are the key players in
the mediation able and willing to trust the mediator and in what he
or she is doing?
In this context, trust should not be misconstrued by reversing responsibilities or the chain of cause-and-effect: Is it the parties' job to take a leap of faith to enable a constructive mediation process? Definitely not, in our view, and quite the opposite. Parties, especially ones that are not familiar with mediation processes, will naturally hesitate to talk openly to a third party just because they happen to be the mediator. It is up to the mediator to create an atmosphere in which the parties are able and willing to trust.
So how will the mediator accomplish this challenging task to gain the parties' trust, respect and willingness to cooperate, in the best case also having their counsel on board? In our view: Equipped with an excellent skill set, experience and a fitting professional personality. This includes an open mind towards each party, patience, genuine interest, and conviction.
Digging deeper into the role of the mediator: While a decision-maker like a judge or arbitrator is usually confined to structuring a process, elaborating the facts and applying the law to them, mediation takes place on a different playing field. The mediator's role is and can be fundamentally different for an obvious reason: He or she will not decide on the case. Instead, they provide a valuable service to the parties – as intermediary, moderator, or sometimes sparring partner or devil's advocate. The mediator is committed to supporting the parties in whatever way brings them closer to their goals efficiently. This can be the common goal of resolving the dispute amicably swiftly as well as realizing whether and how this is achievable at all or not.
What the mediator will do, and in which set-up, depends on the case and the parties at hand. A mediator who is fluent in the relevant techniques and attentive will guide the parties through whatever steps and stops are necessary; ready to react flexibly to developments, progress, supposed impasses or drawbacks. Some mediators even put parties in the wringer, questioning issues, addressing potential flaws; others help with "PR", suggesting how an offer or piece of information might be perceived by an opposing party, and parties ultimately appreciate it! Irrespective of their education or former career, parties would thus want their mediator to be witty and quick to understand: Asking the right questions, understanding the causalities, interplay and context swiftly, and taking on the right role for the very phase of the process.
Admittedly, it may be beneficial if a mediator is not a legal lay person when it comes to legal assessments. In particular, they may be more apt to challenge a party's view, draw attention to risks, flaws and biases that the party (and their counsel) may overlook, ignore or downplay. However, an experienced mediator will know where to draw the line: They are not called in to decide, but to support. Thus, they will make sure that they know and understand everything they need to fulfill their task.
A noteworthy common feature that we have observed in many successful mediations in this regard is the mediator's humility: No assumptions, no assessments, but questions and an open mind. Interest in discovering the parties' common ground and points of disagreement; their concerns, reservations, limits, hopes and any other views; their needs and ways to satisfy them as well as their willingness and capacities to meet other parties' needs vice versa.
Summing up: Parties and their counsel should choose the mediator wisely, looking from different angles that include formal milestones as well as professional personality. Having found the right mediator, parties will feel comfortable in the mediation process, and possibly engage in caucus in a fruitful fashion.
Potential of caucus: What benefits can we gain?
How can – wisely applied – caucus sessions further mediation? In short: Parties can benefit from having an intermediary they can access in a trustful and safe one-on-one session, who can then in turn pursue all parties' interests in a way that no involved party or their counsel could. Caucus-using mediation can open new dimensions of potential resolution. Additionally, parties can benefit from a presumably more pleasant process than going down the litigious avenue. Especially, mediations including well-led caucus sessions can resolve disputes more comprehensively, leaving parties feeling heard, seen and considered. Furthermore, it can enlarge horizons for potential solutions. Highlighting some beneficial aspects:
- Enlarging the playing field: Caucus allows including considerations in the resolution process without having to share them with the respective opponent. In this regard, caucus establishes a useful "black box" that only the mediator can access. Caucus enables parties to withhold information strategically from the other party, while allowing the mediator to make use of it. Specifically, parties can introduce important aspects without having to disclose them to each other. This is particularly helpful where a party should keep certain information secret, for example because it may severely harm them in a potential further litigious process or in their regular conduct of business. Indeed, a mediator can work with such secret information without revealing it. If a mediator is doing a good job in caucus, a party's actual needs can be reflected to a significantly greater degree in a potential settlement than parties or counsel involved could ever explore – thanks to the "black box" generated through caucus that enlarges the playing field. To eliminate an immediate worry: A trained and experienced mediator will know how to introduce information, especially how to present it without exposing confidential elements, discrediting or weakening a party. Also, the mediator will seek party authorization before sharing information and act accordingly. Furthermore, a professional mediator will not allow a party to manipulate or instrumentalize them as a puppet to optimize their goals.
- Being challenged without losing faith or one's face: Once trust is gained and a working relationship established between each party and the mediator, parties often appreciate the mediator being friendly but frank. Each party wins a supporter that has no interest in embellishing the situation. Usually, parties appreciate being listened to, having the chance to present what matters to them most and what they wish to achieve – without being restricted to the legally relevant issues or strategic considerations. This can help to eliminate internal or practical barriers or constraints that hinder exploring settlement options more broadly.
- Allowing for more focus: One-on-one sessions offer great focus and limit distractions. If we imagine how a joint session can go: Everybody is sitting in one room, and a party has to listen to their opponent's version of the story (again). This is not necessarily a joyful experience and can have unwanted effects. For example, a party may internally distance themselves from settlement, be worried that the mediator buys the story as told, get angry, roll eyes or interrupt. So, what does a mediator do if they need to let each party speak in a joint set-up? While working with one party, the mediator will still scan the room and be attentive even to minor reactions and responses of all others and react to it. Admittedly, this can be beneficial, too. For example, the mediator might obtain a very immediate understanding of core issues or resentments that will need to be addressed before a party will even consider settling. Still, a mediator can gain this insight in a one-on-one session, too, when they report on what they have learned from the other party. In this set-up, the mediator will be able to respond more empathetically or effectively to the reaction they receive than they could do in a joint session where everybody listens and where they have to split their attention between all parties. Furthermore, even a trained mediator (or more of them when co-mediating) has limited capacities: As with any multi-tasking, they will not be able to assess everything as profoundly and comprehensively as they would be focusing on only one task at a time. Evidently, this applies to the parties as well: Most likely, a party will be distracted, hindered, less constructive or open if someone else in the room shows their disapproval. Even if the mediator manages the atmosphere, tempers and appeases, even signs of disagreement or disapproval of one party may leave their mark on the other. Additionally, a mediator's interventions will usually be better perceived when they happen in a safe, closed setting – the one-on-one, without the other party watching. Thus, taking all this into account, caucus sessions may contribute to a constructive working atmosphere and increase focus of all persons involved – and by that the productivity of the entire mediation process.
- Re-establishing relationships and trust: The mediator's "diplomatic" work on all sides, combined with excellent communication skills and genuine interest, often leads to re-establishing a personal or business relationship and trust, common understanding and professional empathy. Evidently, this may not only benefit resolving the dispute at hand efficiently but also provide for doing it in a more pleasant way, possibly contributing to further joint business activities or at least less resentment.
- Benefiting from the mediator's framing skills: A mediator that connects with all parties involved gains the insights necessary to transmit messages in the most effective way. Slight nuances can make a significant difference, especially if there is a record of discussion, opposition and disagreement between the parties already. Given their very role, mediators are able and entitled to communicate in the most fruitful way. This can open doors to new options for a way forward.
- Tame the "third party at the table": Last but not least, the mediator has a crucial role when it comes to neutralizing sometimes forgotten "third parties at the table", such as respective counsel. Undeniably, counsel will want to look good in front of their client, possibly leading to grand gestures like harsh opposition. As a general rule, counsel "barking" at the opposing side seldomly furthers settlement. The same applies to obstructive moves, sometimes motivated by believing in a strong case, sometimes by own interests in continuing a dispute beyond the process of mediation. Within a caucus session, a mediator can address such obstacles more openly.
III. Appeal for modern mediation in Germany – including caucus
Needless to say, a business approach that suits businesspeople wins the race. Unfortunately, this very core of any dispute resolution service is sometimes forgotten amidst legal arguments. Put plastically: The best outlook in the legal arena might not help if it requires spending years at court, oftentimes including significant amounts of lawyer's fees and other resources that will not be reimbursable.
Our hypothesis is that mediation in the business context resorting to caucus where suitable is innovative, and will meet a basic demand in dispute resolution in sometimes unprecedented, yet shockingly simple ways: A business approach that suits businesspeople.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
