Earlier this week I criticized an article in the last month’s ABA Journal saying that there’s work to be had as an ADR neutral due to the economic downturn. You can see the post here. Since then a colleague brought an article that backs up my assertions about the difficulties of entering the profession and the problem with the distribution of work. The article, by Urska Velikonja entitled Making Peace and Making Money: Economic Analysis of the Market for Mediators in Private Practice, suggests that the market for mediation providers is a winner-take-all market where the top mediators are busy and well-paid, while the rest toil looking for work and making little or no money. The article can be accessed on SSRN here, and here’s my edited version of the article’s abstract.
Mediation has grown tremendously in the last three decades, yet only a small number of mediators have been able to benefit financially from its growth. Mediator trainee over-optimism and the lack of formal barriers to entry result in excess entry in the market for mediators. However, the existence of de facto barriers to entry, such as mediator selection practices and specialization, creates inefficiently high levels of entry. This is socially suboptimal: many aspirant mediators spend money pursuing what is likely an illusory career and forego other career options, even though they were never going to be able to make money as mediators.
The article presents data that income distribution in the market for private mediation is uneven where a few mediators at the top of the pyramid are busy and well-paid while the vast majority are constantly looking for work, yet make little or no money.
Thanks for this post. My heart sinks every time some trusted authority – whether the ABA or someone else – trumpets ADR as the ideal career. It always triggers another round of emails and calls to my office from people eager to become a mediator, figuring that it’s a great way for them to make piles of cash fast and get back on their feet quickly following a layoff. The reality of course is otherwise.
Thanks so much for sharing this. In the past 25 years since I’ve been in the profession (full-time as my only profession), I get calls about making a living as a mediator. The calls are increasing and more people are arguing with me when I tell them that they must be entrepreneurial, consider ADR as a business venture just like any other business venture, and be willing to invest both time and capital – and be good! They just want jobs and they want me to hire them. They also seem to expect to make large law firm salaries after taking a 40 hour training and working part-time. This article will be emailed to my callers. It’s great to have data.