At Impasse? Consider Final Offer Arbitration
When negotiations reach an impasse, and both sides still desire a settlement, they often consider utilizing a third party to assist them. The most common third party dispute resolution methods are the traditional methods of mediation and interest arbitration. Both of these methods are commonly accepted and offer substantial records of success in terms of resolving stalled negotiations. Yet both traditional methods of mediation and arbitration also include disadvantages which can cause the parties involved to seek yet another form of dispute resolution. In cases where these two methods don't quite fit the parties needs, final-offer arbitration (FOA), also known as "last, best offer" or "baseball arbitration" might be considered as an alternative option of dispute resolution. In selective cases where the parties believe traditional mediation may not result in a decision, and they are not comfortable with submitting the unresolved issue(s) to interest arbitration for a decision, final offer arbitration may provide a third alternative that can combine the major advantages of mediation and arbitration while eliminating or minimizing the major disadvantages of both.
Traditional forms of mediation and interest arbitration offer the parties the potential advantages of utilizing third party neutrals who can utilize their skills and knowledge gained through training and practice to enable the parties to reach a settlement. Both methods often provide, in comparison to litigation; a faster, less expensive, and more confidential process. In mediation the third party works as a facilitator to help the parties develop a mutually agreeable solution. The parties are not required to accept any proposal and thus avoid the possibility of an imposed decision they find unreasonable. This distinctive mediation attribute - any settlement reached has been mutually agreed to by both parties, is extremely appealing to parties seeking a method of resolution. However, this same major attribute of mediation also brings with it the major disadvantage - the possibility of no settlement. And thus the parties might find themselves back at square one - impasse - after having expended time, money, energy and emotional capital on the mediation process. Surveys and estimates of the success rate of mediation vary but general fall around 66% to 75% depending on the circumstances of the conflict.
As the above success rate indicates, mediation is highly effective. But the fact still remains that it is the parties themselves, who with the assistance of a third-party mediator, determine the outcome of a settlement. Experienced mediators upon entering a dispute introduce the best of traditional and interest-based techniques to the parties' discussions and negotiations in their efforts to help the parties resolve their dispute.
At Impasse? Consider Final Offer Arbitration by Michael R. Carrell and Louis J. Manchise.
Copyright © 2013 Michael R. Carrell and Louis J. Manchise
Copyright © 2013 The Negotiator Magazine
The Negotiator Magazine December 2013 - January 2014