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Linda Toyo Obayashi

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Reprinted Courtesy of The Daily Record
Volume: 3 Number: 46_statewide August 24, 2002

Man in the Middle

By ROBYN LAMB
Daily Record Business Writer

Maryland courts have long been privy to the benefits of mediation — a kinder, gentler alternative for resolving conflict. But business, in general, has been a little slower to embrace it.

Miller and Obayashi
Daniel Miller and Linda Toyo Obayashi, partners in a mediation firm, discuss both sides of the issue as they attempt to bring the dispute to resolution without going through a court proceeding.

“People confuse mediation with meditation,” said Linda Toyo Obayashi. She and Daniel Miller are a local co-mediation team on a mission to change the way business deals with conflict.

Miller and Obayashi, both attorneys turned mediators, started their conflict resolution and mediation firm, Miller and Obayashi Mediation LLC, more than a year ago to help clients avoid what they see as the downfalls associated with conventional means of resolving dispute.

Miller, who has practiced civil litigation and business law since 1982, turned to mediation after one of his clients committed suicide in the midst of a particularly grueling trial.

“Most suits would never be filed if people had had a chance to be heard,” said Obayashi.

The mediation process, she said, ultimately saves businesses time and money, and preserves the employee and commercial relationships that make businesses tick.

“The problem is that people don’t understand; they think they have to wait until a lawsuit is filed,” said Obayashi.

Because conflict is left unmanaged, they say, it festers and eventually becomes costly in terms of legal expenses, turnover rates and an overall decay in workplace morale.

Research indicates that Fortune 500 senior executives spend 20 percent of their time in litigation activities. Typical managers spend up to 30 percent of their time dealing with conflict, while turnover costs for an employee are anywhere from between 75 percent and 150 percent of the annual salary. And many employees who leave their companies or organizations cite conflict with a supervisor as their main reasons.

The average fee for a mediator in Maryland: between $150 and $200 per hour, split between the parties. A mediation session usually lasts between two and four hours, less than what it costs to take a single deposition in preparation for a trial.

In its first full year of using mediation, Constellation Energy Group and BGE, a leader in corporate use of alternative dispute resolution, saved close to $400,000. During three years, the company’s savings were about $1.4 million, said Bob Fleishman, vice present and general counsel. He declined to divulge the company’s total expenditures.

Cases involving personal injury, property damage and breach of contract are often naturals for alternative dispute resolution. Some, however, are not, such as frivolous lawsuits and matters of long standing precedent, said Fleishman.

Big savings

Until recently, no cost- or time-savings analysis had been done to really gage the benefits of mediation across the board.

But a recent study released by the Maryland Institute for Policy Analysis and Research of about 400 workers’ compensation cases filed at the Baltimore City Circuit Court found that the savings, both in terms of money and court resources, were big.

Obayashi & Miller
Linda Toyo Obayashi and Daniel Miller, attorneys turned mediators, want to help their clients avoid the pitfalls of conventional means of settling disputes.

The study — divided into a mediation group and a control group — found that 24 percent of cases in the mediation group were resolved before the discovery deadline, as opposed to only 11 percent of those in the control group. Forty-two percent of the cases in the mediation group, against 28 percent in the control group, were resolved within 180 days, or prior to scheduled settlement conferences.

And of the 197 cases scheduled for trial within the study’s chronological parameters, 82 percent in the mediation group were resolved prior to trial, compared with only 70 percent in the control group.

“It is an impetus to expand in professional liability, technology and business,” said Baltimore City Circuit Administrative Judge Ellen M. Heller, who commissioned the study. “It is common sense that when parties sit down and reasonably discuss the issue, there is a good chance things can be resolved.”

As a way to resolve conflict, advocates of mediation say the process has many advantages over the courts.

For one, it strips conflict of its adversarial undertones. It reverses the programmed inclination to seek a resolution in the courts and puts it in the hands of the parties involved.

A mediator is a neutral third party. Even if they are attorneys — and many are — they won’t give legal advice, they won’t recommend the terms of an agreement, and they won’t make any decisions.

So what is it they do? Each uses a different metaphor to describe his or her role. For mediator Sheila Russian, who is an attorney and also a rabbi specializing in family disputes, it is about putting people in the driver’s seat.

How do they do it? “Listen,” “direct,” “guide,” “structure” and “identify” are all words commonly used when mediators describe their work.

“The parties come in with a lot of heat,” said Rachel Wohl, executive director of the state judiciary’s Mediation and Conflict Resolution Office. “In mediation, they blow off the steam of the past.”

Once the steam clears, it is up to the mediator to steer dialogue toward the real issues percolating at the core of the dispute.

Making sure all parties get heard is critical, say mediators. It is what distinguishes the process from the courts, where the best argument reigns supreme and rights and obligations determine the outcome.

“In mediation, we look for needs and interests,” said Obayashi.

“It is about common ground,” explained Russian. “Our role is to point out the differences and common ground and then bridge the gaps.”

When it works, the process is transformative, they say: Parties come in thinking their dispute is about one thing and walk out realizing it is about something altogether different.

Sexual harassment cases, for example, often turn out to be as much about personality conflict as power plays.

Creative decisions

The solutions that evolve from mediation’s focus on individual interests and needs are endlessly flexible and often highly creative, according to Miller and Obayashi. Unlike court decisions, the outcome does not always have financial implications. The settlement is a “mutually” beneficial agreement, altogether unlike a court decision, which generally grants everything to one party and nothing to the other.

Mediator Sheila Russian says mediation is about pointing out the differences and common ground and then bridging the gaps.

A manager at a small taxi company in Baltimore, for example, settled a discrimination claim on its way to investigation by the Human Relations Commission with the promise to send any of his drivers found discriminating during pickups to an afternoon of sensitivity training.

In the complaint, a customer alleged a driver refused to transport her because of race. But the manager, who did not want to be identified, felt the driver’s refusal stemmed from concern for his own safety.

“By the time I walked out of there, I felt like she understood our side, and I felt like she had some legitimate concerns, just not in this case,” he said.

As part of the settlement, he is trying to find her a permanent driver to transport her during scheduled times.

Miller and Obayashi even settled one workplace dispute with an apology and a prayer.

A big buzzword revolving around settlement is “reality check.”

“It is my job to look at things realistically and not through rose-colored glasses,” said Russian. In a business agreement, for example, Russian points out every worst-case scenario she can imagine, leaving no rock unturned. She calls them “informed solutions” and to their end, she often will assign her clients homework and another session.

Ultimately, Russian said, nobody will come out with everything he or she wants, but usually it’s something everyone can live with.

“It is a win/win situation,” said Miller.

Of course, not all cases settle. According to Miller and Obayashi, 70 percent to 80 percent of mediated cases on average end with an agreement of some kind. Occasionally, only some of the issues are settled during mediation, while others are left unresolved, streamlining the cases that are eventually taken to court.

Mediation is used in a whole host of workplace conflicts: discrimination, privacy issues, benefits, promotions, performance evaluations and terminations, to name a few. Partnerships and joint ventures, commercial contracts, credit and consumer disputes too are often successfully mediated, while family business issues are particularly conducive to mediation.

Corporate resistance

But the use the of mediation and alternative dispute resolution on the whole tends to be more common with bigger corporations.

A 1998 Cornell University survey of Fortune 1,000 companies, one of the most extensive studies of corporate use to date, found that 88 percent of America’s top corporations had used mediation. Most said the process saves time and money, and over half said it preserved good working relationships.

While the study showed that mediation grew between 1995 and 1997, it is clustered within certain industries. The mining and construction industries, for example, are big users, while the finance industry lags behind.

As most of the corporations in the study reported using mediation, they do not use it extensively.

Miller and Obayashi believe that many in the business community are just not aware of the benefits.

“It is not resistance, it is ignorance,” said Wohl.

Corporate resistance stems a lot from a widespread denial of conflict in general.

“A lot of companies we talk to say, ‘No, we don’t have any conflict,’” said Obayashi. “They say, ‘If we have a problem, we’ll see you in court.’”

Most think the only avenue for dealing with conflict is through litigation.

Rachel Wohl, executive director of the judiciary’s Mediation and Conflict Resolution Office, says during mediation sessions, the two sides end up blowing off the steam of the past.

One of the most important criteria for making alternative conflict resolution work is that there be commitment to it all the way up the hierarchy of an organization, Obayashi said.

“You have got to have buy-in from the top,” she said.

Others in the corporate world are apprehensive about the quality of mediators. In Maryland, there are no standard requirements — anyone can hang a shingle out and call themselves mediators.

Some companies have concerns about the cost of implementing the kind of rigorous education program needed to implement alternative approaches. Small businesses, in particular, are reluctant to explore new systems because of cost.

Often, small-business owners would rather wait, risking the price of litigation, rather than spend money before it is necessary. That approach is especially harmful for small and medium-sized business, said Obayashi. “All it takes it one suit and they could be out of business.”

Many attorneys — taught to fight the good fight — worry that they will not only lose out on their fees, they worry that their client may not come out of mediation with what they want.

In an effort to garner business community support, MACRO recently implemented a business initiative. More than 20 area companies have signed a pledge to use alternative dispute resolution in cases they deem appropriate. The organization will soon launch a benchmark study of 500 medium to large Maryland businesses to gage the use in the business community around the state.

“There is a growing level of interest,” said Louis Gieszl, deputy executive director for MACRO. “The circuit court has been referring more out so there is more exposure — there is a trend.”

The study will measure what effect that trend has had.

For their part, mediators like Miller and Obayashi have made it their mission to show businesses the benefits of mediation.

The team offers alternative dispute resolution at every stage — from employee training and conflict assessment to mediation and arbitration for legal complaints and lawsuits.

They are particularly enthusiastic about their ombudsmen service, which businesses can use to outsource conflict, both within the organization and externally, with customers and vendors.

“It is coming and we are trying to set the stage,” said Obayashi.