Berkeley Program in Law and Economics

This paper analysis the economic incentives that affect the conciliation and mediation of conflicts in the Conciliation Sector of Forum - Joao Mendes Junior (Civil Courts) - in São Paulo, Brazil. The study indicates a greater efficiency of agreements celebrated during the pre-judicial conciliation phase (73 % success rate), if compared to the conciliation taken place in the judicial process (22 % success rate). The civil courts have different levels of efficiency in selecting the cases that fit to conciliation, indication that using a selection criterion seems to be more efficient than simply sending all-and-every case to a conciliation hearing. The data analyzed suggests the existence of a deadline effect, a point in time after which the potential of an agreement to the parties decreases sharply. The negotiation style and strategy adopted b the conciliator are fundamental to the success in reaching an agreement, and his (her) performance could follow a sequential bargaining game in which the conciliator initially suggests an offer immediately accepted by the parties in the first interaction. However, most conciliators do not follow that strategy, and nevertheless achieve good results, indicating the existence of psychological aspects that affect the parties’ decision to negotiate, and also second level effects affecting the negotiation. The participation of the lawyers generally difficult the reaching of an agreement, since they have more propensity to litigation and to avoid agreements, if compared to the cases when the parties negotiate to each other directly. The contract curve indicates that the plaintiff may be quite right about the demand issued, or that the defendant has interest in reaching an agreement only to reduce the value of the debt, in case of an frustrated execution, he will be demanded by this new value, and not by the original value of the litigation. The parties’ personal feeling about winning or loosing the litigation influences the propensity to reach an agreement. The formal training of the conciliator and the judges in necessary, but not sufficient, to the success of the negotiations, and it seems to be below the needs, reducing the success rate in mainly the judicial conciliation procedure. The conciliators that actively participate in negotiations are more successful than the ones that adopt a passive approach.