As a dispute resolution lawyer of more than 26 years, the most common question which I get asked is what is the difference between negotiation, mediation, arbitration and litigation? I understand why such a question maybe important. Knowing the answer, helps my client decide which option to choose. I must admit that there is no easy answer to such a question. Why is this the case?
From my own personal experience, I believe it was partly historical on account of traditional law school training systems. I recall that my training as a barrister (UK), was mainly to teach me litigation and arbitration skills. Negotiation and mediation skills were mainly taught either in Business Schools or Schools of Social Sciences. Much has now changed. I am glad to see that many law schools, especially here in Singapore, have incorporated mediation into their program. I am confident that in the years to come, negotiation skills will come to be taught as well.
WHAT IS THE DIFFERENCE?
Having the formal training in the 3 skill sets, I now offer an explanation of the difference. For arbitration and litigation, it is the art of presenting evidence and the law to a judge or decision maker. Whereas negotiation is the art of communicating with the other side, so that a mutually acceptable outcome can be achieved. Mediation is when the parties appoints a neutral person to facilitate the negotiation process.
COSTS FOR EACH METHOD
Therefore, and in terms of cost, it would be plain to see that negotiation is the lest costly way to resolve a dispute. Moving up the scale will be mediation and then lastly arbitration and litigation. Ironically, in my experience, nearly all of my clients come to me asking for assistance in arbitration or litigation. They make the assumption that the other party (or their lawyers) are “bad people” with “bad motives”, therefore negotiations and mediations are not possible.
MEDIATE NOT LITIGATE
However, statistics have shown that normally people are not “bad” or harbour “bad motives”. It is a cognitive bias to think so. More often than not, it is because they themselves are poor negotiators or they have appointed poor mediators.
As the financial crisis deepens, many small businesses will likely face conflicts. Some of these conflicts may even involve people or entities in power position. It is becoming important that small businesses learn to negotiate and if not learn to consider alternatives like Online Mediation.
Come to listen to our expert guest on GoSME Live! to learn or be aware of some basic negotiation skills. Our Founder, Mark Goh will be hosting this session with our special guest, Dr. Marta Coehlo from the Oxford Said Business School’s programme on Negotiation. Look out for the announcement!