Julian Gresser

The rapid rise of strategic alliances as the business vehicle of choice throughout the world is creating new opportunities for lawyers and other professionals interested in the effective management of disputes. The strategic alliance?in particular the high performance or ?breakthrough strategic alliance?--is a special case for two reasons. First, although its potential rewards can be extraordinary, it is at present legally uncertain, unstable, highly risky, and fraught with possibilities for misunderstanding, miscommunication, mistrust and outright conflict. This is especially true of transborder alliances. Second, established judicial processes, even the new methodologies of alternative dispute resolution (ADR), are not completely suited to the special needs of business parties involved in these transactions. As a result, a new discipline of ?alliance mediation? is beginning to emerge with some distinctive features described below.

HIGH STRATEGIC CONCERN

After completing most mediations?some estimate 75%-80% of the cases?the parties usually part company and have no further interest in continuing their relationship. In alliance mediation, the relationship is of critical importance. Because of the strategic nature of the relationship, in which often hundreds of millions of dollars and vast amounts of top management time, effort, and creativity are at stake, the effective handling of disputes rises to a high strategic concern. Top management simply cannot afford to have its investments spin out of control. Effective alliance mediation is fast being recognized as one of the core ingredients of success.

ALLIANCE LIFE CYCLE

Whereas most instances of mediation arise when the parties are heading toward or directly involved in litigation, the scope of alliance mediation is broader, including not only entrenched conflict, but also a broader range of differences, misunderstandings and dislocations. Alliance mediation encompasses the full life cycle of an alliance from formation, initial negotiation, legal structuring, early growth, implementation, retooling, rejuvenation, and termination.

CAPTURING SYNERGY

The goal of conventional mediation is to help settle disputes efficiently. The primary objective of alliance mediation is to assist the parties in discovering and liberating ?uncaptured synergy? in the form of new cost and time savings, innovations, and other economic rewards. In alliance mediation, conflict is not presumed to threaten an alliance. A skillful mediator will seek to help the parties tap the energy locked inside their conflict to advance the alliance to its next level of higher value and creativity.

NEW PROCESSES AND PROCEDURES

To accomplish the alchemy of transmuting disputes into opportunities, the alliance mediator must supplement basic training in mediation with at least three new skills. These are: 1) a familiarity with the standards and best practices of alliance architecture, which provide a scaffolding for the mediation; 2) an understanding of how most effectively to help the parties explore their ?opponent?s? perspective, and finally move to a creative synthesis based on compatible differences. The effective mediator acts as a ?container? stabilizing and holding the process of transformation. 3) The mediator must embody integrity in its original and deepest sense of connectedness, wholeness, coherence, and adaptive vitality. When the mediator can restore steadiness and stability?integrity?to the process, there is an opening for the parties to regain life force and to deal courageously with their differences.

PRINCIPLES OF EFFECTIVE COLLABORATION

In every high performance alliance the parties negotiate basic principles which will serve as their covenant or constitution. The principles can be extremely useful to a mediator because they provide a basic point of reference and a common ground. Generally, the principles establish a standard of care?usually a fiduciary standard?guidelines for effective communication and operations, treatment of intellectual property and special business relationships, rules for enhanced performance, management of disputes and dignified termination. When the parties to an alliance fail to make these guidelines explicit, the mediator?s first task is to help bring them to consciousness.

FACILITATION, EVALUATION, AND INTERVENTION

One of the sacred cows of orthodox mediation is the tenet??do not intervene or pass judgment?. The parties must be allowed to decide by themselves. The mediator?s role, some maintain, must be purely facilitative. In alliance mediation, the balance between facilitation and evaluation is delicate. The mediator is not constrained by orthodoxy. He or she will have a developed sense of when and how to intervene to help the parties create real value. The role of mediator and consultant overlaps.

TEAM MEDIATION

Alliance mediation is best conducted in teams, which is the exception in conventional mediation. Facilitation is usually preceded by a diagnosis in which the differences and difficulties of the alliance are analyzed and the remedies assessed. During the actual mediation, one member acts as the principal neutral, while the other observes and takes notes. In some cases both mediators act separately during caucus sessions, then meet privately to discuss their findings before formulating a plan together with the parties.

A CASE

The case involved one of the major American oil companies and its real estate broker/consultant. Their arm?s length contractual relationship had not proved profitable, and so they hoped to discover new synergies by forming an outsourcing joint venture. The CEO and president of the real estate firm and senior management from the oil company were just ending three enjoyable days of a joint implementation workshop, where they had hammered out a memorandum of understanding and a 120-day implementation plan. Suddenly, and for no apparent reason, their fragile trust collapsed. The parties moved into caucus and all the old hungry ghosts reemerged. The real estate broker accused the oil people of being devious and exploitative; the oil men saw the real estate high flyers ?as playing both ends against the middle?. The gentle voice of the alliance was quickly forgotten.

By listening carefully to the fears and grievances of each side, and by giving each a sense of its legitimacy, the alliance mediation team quickly reestablished trust. (Actually the implementation workshop itself can be viewed as a form of ?soft mediation?, since the workshop leaders were neutral, without bias, and receive compensation from both sides.) The immediate services of a neutral third party helped to anchor the process, and with a few incisive questions the mediators were able to help the parties discover a bridge across their differences. Indeed, thanks to the conflict, the parties came up with a better understanding of each other?s character and concerns and a reinvigorated commitment to their fledgling alliance.

TWO TIER STRUCTURE

The best alliances build two tiers of mediation into the foundation. The first is an internal team consisting of at least two people who have the trust of both sides and some practical experience in mediation. If the candidates lack this experience, the parties must commit, as an essential condition of the 120-day roll out, to see that they are trained properly. The internal alliance team acts as a first line of defense, trouble-shooting all kinds of mishaps in communication and other problems. If the internal team is unsuccessful, they must be backed up by an external team of experienced alliance mediators, who are specifically nominated in the basic alliance agreement. In this way the parties can have confidence that no matter what difficulties arise, they will receive immediate and careful professional attention.

CONCLUSION:

The benefits of strategic alliances such as powerful leverage, reduced costs, and quicker time to market are fast being recognized. Less well assessed, however, are the risks. Alliance mediation is one of the core competencies that will give business persons a fortified security and confidence as they circumnavigate the 21^st century?s global markets.