Donal Nugent, journalist

As accounting practices seek to grow, so the question of whether to broaden the service offering will inevitably arise. Mediation may not seem an obvious choice for a new line of business, even if money has long been recognised as the basis of many disputes. The perception that mediation is a last stopgap before an issue is settled in the courts makes it seem more the preserve of the legal profession.

‘Accountants’ unique combination of skills and ethical code makes them superbly equipped’

However, the experience in a number of countries points to a growing body of accountancy firms making a distinct and successful offering in this area, in particular those with expertise in forensic accounting.

As AB columnist Alnoor Amlani FCCA points out, ‘accountants’ unique combination of finance skills, business insight and ethical code makes them superbly equipped for the mediator role’.

He also argues that the accounting mindset brings particular advantages in this area. ‘Mediation is not a legal process,’ he points out. ‘Accountants often make better mediators than lawyers because they can work the numbers, saving everyone’s time and money in the process’.

A 2016 Deloitte report examined the role of forensic accountants in mediation cases involving complex commercial disputes. In litigation, forensic accountants are often engaged to act as expert witnesses to provide an independent assessment of the damages being claimed, or advise on business valuations. In addition, they can provide insights into the application of technical accounting standards, along with experience in a particular industry or sector.

Often in a mediation, the period of loss is an area of dispute, and a forensic accountant will be able to provide calculations of the losses arising for different scenarios, depending on timescale, volume of sales or other influencing factors.

Opportunities for accountants

Austin Kenny is among a small number of professional mediators in Ireland whose background is primarily in accounting. Specialising in insolvency, forensic accounting and corporate finance, he saw many of his clients struggling as a result of the economic crash. ‘I began working with them in 2010 to resolve those issues, in many cases as an intermediary between the client and the bank. This expanded over time into a specific mediation practice.’

Kenny says his motivation was about more than simply a capacity to analyse financial data. ‘In doing forensic work, I was exposed to the legal system and saw its effect on the people caught up in it. Trying to keep people out of the system of law as much as possible was a real motivation for me, as I believe it is for many who work in mediation.’

Five phases of mediation

Mediation typically involves five phases:

  1. Preparation. The mediator is selected and the terms of the mediation agreed (including time and venue, fees, documentation, attendees and role of mediator).
  2. Opening. The parties meet, the procedure is outlined and the parties make a short opening statement. The mediator decides if an opening joint meeting is appropriate.
  3. Exploration. Private meetings are held between each party and the mediator, exploring each side’s objectives and building trust.
  4. Negotiation. Direct and indirect negotiations take place, with the mediator presenting, reframing and helping settlement possibilities.
  5. Conclusion. Lawyers representing both sides draw up the agreement recording the settlement. The mediator ensures the agreement is viable and sustainable, minimising the possibility of future dispute. Once agreed, the settlement becomes legally binding.

Source: Irish Commercial Mediation Association

Not about agreement

As to what fundamentally differentiates mediation from its alternatives, Kenny says that ‘in other forms of dispute resolution, a judge or arbitrator will ultimately decide who is right or wrong. The people I work with sometimes look to me for that decision.'

While Kenny notes that understanding the case is important, ‘I don’t tell them what to do or decide who is right. People also sometimes feel that in mediation they have to get the other party to agree with them to make progress, but that goes nowhere. What I tell them is that we don’t have to agree to reach a settlement.’

Ultimately, Kenny says, mediation is not about uncovering the truth. ‘Everyone has their own version of events, and two people will see the same set of facts completely differently. People move on, not because we got them to agree but because the alternative will be so much worse.’

‘If you are good with people and have the capacity to work with money and numbers, you can be a good mediator’

Professional development

Kenny is clear on the potential role for mediation in terms of professional development for practitioners. Aside from the opportunity to build fee income, he points to the value of ‘having that calmness and presence to work in spaces with people in conflict and keep a logical frame of mind’.

In the more than 300 disputes he has been involved in, Kenny says that he cannot remember any that settled on a matter of law. ‘It’s about people and money,’ he says. ‘If you are good with people and have the capacity to work with money and numbers, you can be a good mediator.’

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