Friday, July 4, 2008

Finding Those Fifty Cent Dollars

Party A thinks it owes fifty cents to Party B. Party B believes it is entitled to a dollar. Simple solution, right. Just have Party A pay Party B a fifty cent dollar. How does a mediator find those fifty cent dollars?

In reality, they are all around.

When you go to the supermarket, you prefer a half gallon of milk to $4 in your pocket. The supermarket prefers to sell you for $4 a half gallon of milk, for which it paid the farmer $2, than to keep the milk in its case. Markets are where fifty cent dollars are traded, whether they are stock markets, supermarkets or the tag sales that sprout up on country roads on the 4th of July.

Buyers usually do not begrudge the seller for selling a fifty cent dollar, because the fifty cent profit is only a business profit...nothing insidious, no suspicion that the seller is reaching into the buyer's pocket. The buyer either thinks the product is worth a dollar to it, and is not concerned that the product cost the seller fifty cents to make, and the deal is made, or seller and buyer pass like ships in the night.

Parties in conflict have a much harder time finding their fifty cent dollars than parties seeking to consummate a normal transaction. There is a pain sharing formula which is not easily shared between settling parties...each wants the other to give up more. This kind of behavior is as common in settling mode as it would be peculiar in normal transaction mode.

That is why in mediation, after the parties discuss and understand each others' positions, interests and objectives, the mediator is well advised to transition the discussion to considering value-creating trades. These are trades that may have nothing to do with the conflict, but which enable a party to pay fifty cents, and be satisfied, and enable the other party to receive a dollar, and be satisfied.