Mar. 30, 2023
A Few Good Mediators
While the mediator’s job is not to evaluate the case, the best mediators help the parties adjust their altitudes, bringing the high-flying plaintiffs and the ground-hugging defendants onto the same path. Telling a party he is too high or too low is a recipe for failure.
We have had the privilege of working with some terrific mediators, and the disappointment of working with many mediocre mediators. While the great mediators have talents that probably cannot be taught, all mediators can benefit from some of the common practices of the best mediators.
In a mediation prior to the pandemic, one of us was sitting in a conference room with our client when he saw the opposing attorney and his client walk past the door towards the elevator, carrying their briefcases and coats. The mediator - one of the best - stepped into our room to let us know the other side had decided to walk out. We all reached for our coats and briefcases, but the mediator held up a hand, "Don't go anywhere. We're going to settle this case today." He calmly walked out of the room, intercepted the others at the elevator, and facilitated a settlement that day.
Unfortunately, the opposite approach is too common. We have participated in many mediations where the mediator communicates a few rounds of offers and demands, then announces in mid-afternoon, "The parties are too far apart, so this case is not going to settle today." Even the best mediators cannot settle every case, but they have the tenacity to forge ahead even when the parties have reached an impasse and there is no clear road to settlement.
Many Roads to Settlement
We are all familiar with the standard process: Plaintiff makes a demand, defendant makes an offer, and the parties continue to exchange demands and offers until the case is settled or, more often, not settled. The best mediators realize that a stalemate in the offers and demands does not mean the end of the process; rather it marks the start of their real work.
There are approaches, strategies, and tactics to advance the stalled settlement negotiations. Sometimes it takes an assortment of tools used in the right sequence to break the impasse. And sometimes it's helpful to pursue an approach which almost certainly will not directly achieve a settlement but which may pave the path to the successful use of another approach.
For example, a common tactic is to discuss brackets after the traditional offer-demand process bogs down. The mediator asks one side to propose a bracket within which they would be willing to negotiate further, provided the other side agrees to the same bracket. A defendant might propose a bracket of $1 million and $2 million, and a plaintiff might propose a bracket of $3 million and $4 million. We have engaged in many bracket-discussions, yet the parties almost never reach agreement on the bracket. So that's a failed strategy, right? No, because after the bracket discussions, one party often makes a new offer or demand reflecting significant movement. The bracket discussion did not open the pickle jar, but it loosened the lid by keeping the parties talking and giving each party further insight into the other's settlement position.
A Few Good Questions
One important tactic for advancing negotiations is to ask the right questions at the right time. The best mediators ask the best questions. Questions can help educate the mediator, advance the negotiations, and highlight the strengths or weaknesses of a case.
Outside of the presence of the opposition, a mediator asked permission to pose a few questions to our client. We agreed. The mediator asked two questions that went to the heart of the case. Our client - who had not yet been deposed - fumbled the answers to both. The mediator then glanced at us, saying only with his eyes that we need to consider that our client will be a lousy witness when deposed.
Questions can help a party to adjust its settlement position and help the mediator discern the party's settlement limits. For example: What do you see as the major strength of your case? What is the major weakness? What's the best realistic verdict? What's the worst realistic verdict? What percentage of the time will your client win? What do you think the damages will be if plaintiff wins? What will be the likely comparative fault if plaintiff wins? What do you think the legal fees will be through trial? What will happen to your client if she loses this case? How would you react if I could get the other side to move to X? How would you feel if I told the other side that I thought you would move to X, provided I told them that is entirely my guess? Would you be willing to recommend X to your client? The art, of course, is to ask the right question at the right time. While the answers are rarely 100 percent candid, they provide the mediator with insights and sometimes adjust a party's settlement expectations.
Adjusting the Altitude
While the mediator's job is not to evaluate the case, the best mediators help the parties adjust their altitudes, bringing the high-flying plaintiffs and the ground-hugging defendants onto the same path. Telling a party he is too high or too low is a recipe for failure. The best mediators assist the parties in fine tuning their expectations and evaluations throughout the mediation process by asking the right questions, conveying information from the other side, devoting the time to understand each party's arguments, allowing the parties to express their emotions, and helping the parties to understand the settlement opportunity.
Judgment Withheld, Please
Most effective mediators do not announce their opinions on the major issues of the case. A mediator who thought he was doing us a favor told our client that she would win the case if it went to trial. That was a fatal mistake because the mediator was unduly optimistic about our client's case and his comment destroyed our client's willingness to compromise.
Conversely, mediators have told us the judge or jury would decide various issues or the entire case against our client. Such opinions are generally ill-informed and disrespectful. The best mediators - regardless of how smart or experienced they are - recognize that the attorneys handling the case almost always know more about the facts and relevant law than the mediator and have a much better-informed judgment as to the likely outcome of the case.
However, the mediator should stay attuned to facts or arguments that may first come to light at the mediation. The best mediators help the parties identify and flesh out new information that could impact a party's settlement position.
Seeing Through the Veil
One of the primary tasks of a mediator is to help each side understand the settlement opportunity, i.e., what amount the other side would likely pay or accept to settle. At the beginning of the day, parties often do not know their own settlement limits. The best mediators help the parties to adjust their settlement boundaries and are constantly gathering information to discern each party's evolving assessment. That latter task, however, is almost never accomplished by directly asking a party to reveal its settlement limits.
The best mediators utilize an array of tools, combined with an abundance of experience, to indirectly estimate each party's settlement boundaries. A mediators' tools include patience, time, discussions, questions, the ability to understand subtle, often unintended signals, and an understanding of the case, the parties and the settlement dynamics.
By the end of the day, the best mediators generally can identify each party's settlement limits with considerable accuracy. But even the best mediators communicate, or indirectly signal, their perception of the settlement boundaries with careful timing and humility. At 4 pm at a mediation one of us attended, the mediator told us the plaintiff would "never" accept less than $500,000. The mediator's certainty indicated he lacked experience or allowed his arrogance to overshadow his judgment. The case settled later that day for $325,000 after the attorneys - having lost confidence in the mediator - bypassed the mediator to meet one-on-one.
Why is it so important to identify the settlement opportunity? It's easy to reject an unrealistic demand or stingy offer. But it's much more difficult to reject the possibility of a settlement at a more realistic amount which appears to be the best, or nearly the best, potential settlement outcome. A mediator's ability to see through the veil of settlement posturing is a critical ingredient for a successful mediation.
Many years ago, one of us was before a preeminent mediator in San Francisco. It was early afternoon and we believed that the case could not settle that day, so we told the mediator we should terminate the mediation. The mediator said he agreed the case would probably not settle that day, but that it was much better to end the mediation as close as possible because that would make it much easier to settle the case in the next few days, or even a few months later at a second mediation. As predicted, the case did not settle that day, but the gap between the offer and demand narrowed in the late afternoon, and the case settled two weeks later. Perhaps more importantly, as the gap between the parties' settlement positions narrows, the case that was impossible to settle sometimes settles at the mediation.
Close the Deal
While getting close is better than ending the mediation far apart, the ultimate objective is to close the deal, and the best mediators know when and how to do that. While we do not plan to discuss every closing technique, we will briefly discuss the "mediator's proposal," which can be an effective tool, but should only be used if every other viable strategy has failed and both sides consent to it.
At a mediation one of us attended, the mediator announced that he had provided the other side with a mediator's proposal of $750,000 and he wanted our client to consider the same. Of course, the mediator provided the standard rules, e.g., that he would not communicate either side's response to the proposal unless both sides said yes, and the parties must respond to the proposal in a specified time. We were shocked the mediator did this without our consent because he had not exhausted the negotiation process and his proposal nearly destroyed the chance of any settlement outside of his proposal. When a mediator provides a proposal, it is often construed - albeit incorrectly - by the parties as an opinion on the true value of the case, thus making it very unappealing for a party to pay more or accept less. Nonetheless, as a last resort and with the consent of all the parties, a mediators' proposal can be an effective tool.
And because tenacity is critical, even a last-resort mediator's proposal is not the last effort by the best mediators. We recently took over a case after the parties and prior counsel had participated in a mediation that ended with a failed mediator's proposal. Our first question to the client and prior counsel was, "Who rejected the mediator's proposal and why?" No one knew the answer. The mediator washed his hands of the mediation when his proposal was rejected by one of the parties. After talking with all the attorneys, we learned they only had small issues with some of the terms of the mediator's proposal. We settled the case within a few days.
Finally, the best mediators strongly urge the parties to sign a settlement agreement before the mediation ends. Parties often resist finalizing the paperwork because they are tired, hungry and anxious to go home, but they are almost always appreciative when they take the time to finalize the deal on the day of the mediation. If the parties walk away without a signed agreement, they sometimes take weeks or even months to negotiate the settlement terms, or (on rare occasion) a party simply changes its mind. One way to expedite the process is for the mediator to ask the defense counsel before the mediation to draft a settlement agreement to be exchanged if the parties reach agreement at the mediation.
Mediation has become a critical part of the litigation process. The cost is high, and the consequences are huge. A short article cannot transform every mediator into a great mediator, but we hope it will give attorneys a yardstick by which to measure mediators and give mediators some ideas to hone their craft.