The paper takes the view that the psychoanalytic process is a form of negotiation or mutually constructed reality and applies these clinical insights to dispute resolution between two municipal entities: a fire department and a city government. The success of the mediation process is described as depending on the disputants' developing awareness of the impact of power struggles on their own thinking and functioning, and how group dynamics shape perceptions. Operating as a change agent, the mediator needs to be aware of three commonly recurring issues that interfere with the negotiation process: transference/counter‐transference enactments, enactment by fundamental attribution error, self‐serving enactments, and self fulfilling enactments. Vignettes are given to illustrate these conceptual issues.

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