by Margaret Heffernan - Friday, 7th September 2007 -

In 1999, I was asked to take over a company whose chief executive had been fired. This meant I would inherit people and deals that I hadn’t been responsible for, many of which turned out to be disastrous.

But I like a challenge so I said yes.

I had to breathe life into the initiatives on which the company’s future depended; that was the fun part. I also had to dismantle the people, initiatives and deals that weren’t working.

What made it worse was that the chairman who had hired me was furious about agreements made by my predecessor. He didn’t just want him out; he wanted blood.

I hate law suits. Not because I’m a wimp but because I’ve seen what they do to people.

Legal action takes over people’s lives, their brains and their bank accounts. It is an extreme indulgence. I persuaded my chairman to try mediation.

I was lucky that my opposite party also preferred that route. We found a way to stay out of court, resolve our differences and salve my chairman’s ego. No one made money, but we all saved a lot.

Conflict is the stuff of drama – but it is the stuff of business, too. At the Centre for Effective Dispute Resolution (www.cedr.co.uk) on Fleet Street, London, Eileen Carroll estimates that confl ict – contractual, customer and employee disputes – costs British business £33bn a year.

That doesn’t reflect the true cost, which is opportunity cost. The time I spend resolving conflict is time I am not creating new business.

In a law suit, almost everything gets delegated to lawyers; that’s what makes it so appealing.

As a chief executive, you feel it’s in the hands of others. You imagine that will save you time and effort. But because it is in the hands of others everything escalates, lawyers adopt polarised positions, and reparations grow costlier.

“I’ve been the lawyer,” Carroll recalls. “I’ve been there, listening to two interpretations getting further apart; the numbers getting bigger.

The parties start to believe it. The lawyers distance themselves. It all becomes slightly unreal. And I was shocked that we spent so much time preparing for court – and then after three years, we’d just do a deal in the corridor.

I thought the clients weren’t getting a good deal.

They got lost in the mix.” By contrast, in our mediation, nothing was delegated. We each gave up a day, had to meet face to face in a neutral space, and had to define the grievance, and design a remedy.

I had always thought the mediator did the hard work. I was wrong. Everyone worked hard – to stay reasonable but also not to be walked all over. Carroll’s right when she says that mediation isn’t fluffy.

Ours was not an immensely complex contract – but finding an honourable way out of it needed creative thinking.

Carroll also says mediation is about deal making, not winning.

Maybe that’s why I liked it – and why my chairman felt uncomfortable with it. He liked winning, and could only really believe he’d won when the other guy had been seen to lose.

So when our arbitration found a solution, I had to sell it to him. I made a spreadsheet that set time and legal fees against the business I could bring in when not spending time with lawyers.

Sure, I loaded my case – but the comparison amazed even me. He remained sceptical until the new business materialised. Then, even he recognised an excellent investment.

He saw the money he’d saved. I saw the time I’d gained. Taking on this company, I had to deal with the past and the future.

What I felt then, and what I still believe, is that entrepreneurship must be focused on the future. The past is over and spending time on it is too expensive.