The Background
As a mediator who is also an executive in a hi-tech company, I know how important timing is to success. Increasing globalisation brings both opportunities and risks – product cycles become shorter, and if you fail to strike at the right time, you will miss out. 

Real-world examples include a software giant missing the internet wave, requiring it to put in enormous effort to catch up; and a top mobile company losing its edge in just months after the birth of new smartphone systems.

I learnt this the hard way and have always wished someone had warned me about it. However, sometimes we have to learn the hard way.

As mediators, we always help parties to focus on the future rather than the time-consuming fault-finding game. It is especially true when parties are in the hi-tech industry. There is no time to lose. If you spend too much time and effort in litigation, your company might miss the next wave.

The Case
A Hong Kong hi-tech company, which owns a patent in cutting-edge wearable device technology, had teamed up with a mainland manufacturer to win a contract from a famous global consumer electronics maker. Both of the companies are small but innovative and were founded by passionate young men in their mid-thirties. 
 
The contract was a good opportunity for both companies, which had never been able to get an order from a major player. As the product was new, they had no experience to draw from others and it took extra effort, creativity and collaboration to improve design and manufacturing techniques to bring the new wearable device into production.

The product was a big hit. Unfortunately, they lost the next order from the customer shortly afterwards. Both companies started to argue over intellectual property rights, leaked information and materials selection. 

They sought legal advice and took the dispute to court. The amount in dispute was enormous and could have taken several years to resolve in court. Finally, both parties agreed to try mediation instead of litigation to resolve their disputes.

The Mediation
The mediation was scheduled in Hong Kong, with senior staff attending. Mediation follows a facilitative model in which parties take turns to speak about the problem in their own words. 
It was surprising to see how much hatred had built up in just a few months, considering their past collaboration. The talk became heated when both research directors started accusing the other party of stealing their technology. Other department heads followed suit and it soon turned into a fierce quarrel. 
After an hour, the mediator called for private sessions, wherein the parties were asked to think about the risks, especially legal risks, that come with cross-border trade. They were urged to think about the costs and time that could come with lengthy litigation, and the consequences of unsettled disputes on young players in the hi-tech industry.

It is natural that parties will focus on the merits of their arguments and upholding the values they believed in. These young entrepreneurs were no exception. Moreover, they also overestimated their technological ability and undermined the risks of change in new technology. 

As a result, they stood firm, fighting their own positions, rather than addressing their concerns. The mediation ended after half a day.

The Resolution
In the following months, some undesirable consequences started to appear. Firstly, the bank accounts of both parties were frozen due to litigation and business deals were unable to proceed. 

As business slowed down, key staff resigned as they were worried about the future of both companies. Investors withdrew their interest in buying shares. Bankers refused to grant them favorable terms for cash flow. Both companies were in deep financial trouble. 
 
After three months of struggling, the parties agreed to have another mediation meeting. The session was still emotionally charged as both parties were encouraged to share the reasons for their action and remember how good their partnership had been. 

They were also encouraged to acknowledge the other’s feelings and apologise for their actions. 

They started to have a better understanding of the dispute and actively participated in resolving it. After months of struggle, they came to take a more realistic approach to the situation. They soon realised that collaboration was much more important than winning an argument.

 They became more constructive and started to brainstorm on ways to resolve the dispute. By the end of the day, not only did they find lots of practical solutions, they also came up with a resolution to serve as a base framework for their future collaboration.

The Conclusion
People sometimes associate whether parties can reach an agreement with the success of the mediation. Quite often, this is misguided. 

Mediation helps parties to remove the emotional part of the argument and help parties to appreciate the concerns behind the dispute. 

After parties have a realistic assessment of their risk and opportunities, they are in better position to make informed decisions. Success depends on whether the parties insist on their position rather than honestly addressing their own concerns.

Time is at a premium in the hi-tech industry. Several months can already see in a new generation of technology. Do we want to waste time in fighting, thus putting the business at risk of being buried by the next wave of technology? 

However, when anger rises, most of us will lose our focus. It is important to have an experienced neutral third party, in this case the mediator, to put us back on the right track.

Brian Ng Sze-hung is a member of the Commercial Interest Group of the Hong Kong International Arbitration Centre’s Hong Kong Mediation Council.