How to Prepare Strategically for Commercial Mediation

Why Strategic Preparation Determines the Outcome

The quality of your preparation for a commercial mediation is one of the biggest determinants of the outcome you achieve. Parties who arrive at mediation without a clear understanding of their commercial objectives, their realistic best and worst alternatives to settlement, the other side’s likely interests and positions, and the range of settlement options they would consider, are at a significant disadvantage compared with parties who have thought these questions through carefully in advance. Good preparation does not just improve your negotiating position. It improves the quality of the decisions you make under pressure on the day.

This page is part of the Commercial Mediation Knowledge Guide. If you need a commercial mediator or mediation advocate see my commercial mediator page and my mediation advocacy page.

Identifying Your Commercial Objectives

The starting point for strategic preparation is clarity about what you are actually trying to achieve. Commercial disputes generate a range of objectives that go beyond the simple legal claim: protecting cashflow, preserving a commercial relationship, maintaining market reputation, achieving certainty and closure, avoiding the cost and distraction of continued litigation, and protecting personal and family interests alongside business ones.

Before the mediation, identify your commercial objectives and rank them in order of priority. Which are essential and which are desirable? Which would you sacrifice in return for others? Understanding your own priority ranking allows you to make intelligent concessions on matters of lower priority in order to achieve your most important objectives, rather than defending every position as if all were equally important.

BATNA, WATNA and MLATNA

Three concepts from negotiation theory are particularly valuable in strategic mediation preparation. BATNA is your Best Alternative To a Negotiated Agreement: what is the best realistic outcome you can achieve if mediation fails and you pursue the dispute through some other process? WATNA is your Worst Alternative To a Negotiated Agreement: what is the worst realistic outcome if mediation fails? And MLATNA is your Most Likely Alternative To a Negotiated Agreement: what outcome is most likely if the dispute continues?

Understanding your BATNA, WATNA and MLATNA, and doing the same analysis from the other party’s perspective, is essential to making rational settlement decisions. A settlement that looks unattractive in isolation may be very attractive when compared with a realistic assessment of what continuing the dispute would produce. Conversely, a settlement offer that appears generous may be less attractive than the realistic litigation outcome if the other side’s position is much weaker than they are presenting it.

ZOPA, the Zone of Possible Agreement, is the range within which a mutually acceptable settlement exists: the overlap between the minimum each party would accept and the maximum each party would offer. Understanding where the ZOPA is, even approximately, helps focus the negotiation on the productive territory rather than on positions that cannot produce agreement.

Understanding the Other Side’s Interests and Position

Effective negotiation in commercial mediation requires understanding not just your own position but the other party’s. What are they really trying to achieve? What pressures are they under, financially, commercially and personally? What would a good outcome look like for them, and what would be genuinely unacceptable? How strong is their legal position, and how well do they know it?

Thinking carefully about the other party’s interests and constraints, rather than simply assuming they are wrong and you are right, often reveals settlement possibilities that neither party had previously considered. A dispute about a commercial contract might be resolved not by financial compensation but by a modification of the contract that addresses the other party’s underlying concern. A shareholder dispute might be resolved by a restructuring of roles or governance rather than a buyout, if the real issue is participation rather than exit.

Preparing Your Position Statement

Most mediators ask each party to provide a position statement before the mediation, setting out their case, their key issues and what they are hoping to achieve. The position statement serves two purposes: it gives the mediator an understanding of each party’s position before the day begins, and it may be exchanged with the other side to give both parties a shared understanding of each other’s basic position.

A good position statement is focused, clear and proportionate. It sets out the key facts and issues without reproducing the entire legal case. It identifies the main interests and objectives rather than simply restating the claim or defence. And it opens the door to settlement by signalling that the party is approaching the mediation constructively rather than as a continuation of adversarial litigation.

Thinking About Concessions

Before the mediation, you should be clear about what concessions you are willing to make and in what order. Which concessions would you make first to build momentum toward settlement? Which concessions would you hold back for the final stages of negotiation? Which concessions are you absolutely not willing to make regardless of the pressure applied?

Planned concessions, made deliberately and strategically rather than reactively under pressure, are significantly more effective in moving negotiations toward a satisfactory outcome than concessions extracted from a party that has not thought through its negotiating strategy in advance. The mediator can help structure the exchange of concessions, but the party that has done the work to understand its own concession hierarchy in advance will use the mediator’s assistance much more effectively.

Whether to Bring a Barrister to Mediation

For significant commercial disputes, having a barrister present at the mediation as a mediation advocate is worth serious consideration. A barrister with experience of the specific type of dispute being mediated can advise on legal issues as they arise, assess the realistic litigation prospects from a position of informed expertise, assist in evaluating settlement proposals, help draft complex settlement terms, and provide strategic support throughout the negotiation.

The specific skills of a mediation advocate go beyond general legal competence. An effective mediation advocate understands the dynamics of the process, knows how to position their client for the negotiation, manages the client’s expectations and emotional responses on the day, and uses the mediator effectively as a conduit for proposals and reality-testing. For more detail see my mediation advocacy page.

Published Resources

My book Winning in Commercial Mediation: A Business User’s Guide covers strategic preparation in extensive detail, including the complete BATNA, WATNA, MLATNA and ZOPA frameworks, principled negotiation theory, how to distinguish positions from interests, common negotiation tactics and how to respond to them, and a comprehensive action checklist for preparation. It also includes a full treatment of preparation strategy applied to the Whitcombe Family Business mediation scenario.

See all books.

Frequently Asked Questions

How do I assess my BATNA without knowing how strong my legal case is?

Assessing your BATNA requires legal advice from a specialist in the relevant area of law. Your BATNA is not the outcome you want if mediation fails. It is a realistic assessment of the best outcome you would actually achieve through litigation, arbitration or some other process, taking into account the strength of the legal arguments on both sides, the available evidence, the time and cost of the process, and the range of remedies the court or arbitrator might award. This assessment should be provided by your legal adviser before the mediation, not estimated by yourself on the day.

Should I share my BATNA assessment with the mediator?

Sharing your honest assessment of your litigation position with the mediator in a private session is generally productive. The mediator can only help you if they understand the realistic alternatives to settlement from your perspective, and they can use that understanding to help you assess whether any particular settlement proposal genuinely improves on your alternatives. What you share with the mediator in private session will not be shared with the other side without your permission.

What is principled negotiation and how does it apply in commercial mediation?

Principled negotiation, developed by Fisher and Ury in Getting to Yes, is an approach to negotiation that focuses on the underlying interests of the parties rather than their stated positions, generates multiple options for mutual gain rather than simply haggling over a single variable, insists on objective criteria to evaluate proposals rather than subjective assertions of what is fair, and separates the people from the problem. These principles are directly applicable in commercial mediation and are addressed in detail in my book Winning in Commercial Mediation.

Get in Touch

If you need strategic advice on preparing for a commercial mediation, or if you need a mediation advocate to represent you at the mediation, I would be glad to discuss your situation.

Call 020 4538 0246, use the contact form below, or book a call directly.

Important disclaimer: This page is provided for general information and educational purposes only and does not constitute legal advice. The content relates to the law of England and Wales only. Always seek independent legal advice from a qualified specialist before making decisions that affect your legal rights or commercial interests. The author accepts no responsibility for any decisions made or outcomes arising from use of this material. If you would like specific advice, contact me here.

Mediation – How Should I Prepare Strategically for the Commercial Mediation?