Reflections On Mediation

Mediation is a facilitated settlement negotiation.

It’s an effective tool to settle cases. In part that’s because there’s a cultural expectation that cases will settle at mediation.

And also because the parties invest significant resources (time and money) in the process.

Mediations used to start with opening statements. The parties would get together in a conference room. Most of the time the opening statements would be inflammatory.

It would take the mediator until noon to get the parties back to ground zero. Not long after I started mediating cases opening statements were abandoned.

Now the parties are kept in separate conference or Zoom breakout rooms. The mediator shuttles back and forth between the rooms.

There’s a traditional framework for the mediation. But there’s no formal agenda.

The process starts in a very facilitative way. (Sometimes—at the very end of a mediation—the mediator may be more evaluative. But the mediator doesn’t make any decisions about the facts, law or what the case is worth.)

At the outset mediators tell the parties about themselves, the process and then spend a fair amount of time gathering information about the parties and the dispute.

On the surface it looks like the mediators want to know more about the case. But really the time spent talking (before negotiating) is designed to make the parties feel heard and to establish rapport. Later the mediator will use that rapport when working to get the parties to re-evaluate initial impressions/positions.

Mediations are like blind dates. They all start out about the same. But who knows where they’ll go from there….

Mediators want to hear from both clients and attorneys. It’s always informal and unscripted.

There’s no testimony at mediation. No evidence is presented. The mediator doesn’t decide any disputed issues.

In mediations involving insurance there’s usually some degree of suspended disbelief. It feels like the mediation is the same as a negotiation to sell a car or a house. (After all the plaintiff is selling a release and the insurance company is buying it.)

There’s a difference between negotiating the settlement of a personal injury claim and selling a house. The insurance company authorizes the claims representative to pay up to $X. That’s it. The home buyer is making a mixed financial and emotional decision. He may go to the house with a budget of $X but decides that it’s going to be his forever-house and offers substantially more.

At the mediation the plaintiff is really negotiating for the opportunity to see the insurance company’s best number ($X). When that last, best and final number is revealed she can decide whether or not to take it.

Even though there’s sometimes a ceremonial dance at the end of the mediation that involves calls to HQ, it’s very unlikely that the insurance company will pay any more than $X to settle the case.

During mediation participants have a sense that the mediator is on their side. They feel like the mediator hears them and is really working the other side over.

But the reality is that the mediator doesn’t care whether the case settles for $1 or $1,000,000,000. A settlement is a win for the mediator. A case that doesn’t settle is a loss.

Mediation may feel like a performance piece for parties and their attorneys. But it really isn’t.

Preparing for mediation isn’t like getting ready to make a speech, take a test or give a presentation. Decision-making is very important at mediation. What’s said to the mediator (or how it’s said to the mediator) isn’t particularly important. (The other side has already assessed the strengths and weaknesses of the plaintiff’s case. Even if the mediator said something important, it’s unlikely it would translate into additional settlement authority.)

Preparation for a personal injury mediation involves understanding the strengths and weaknesses of the case, and also having awareness of what that likely range of outcomes will be if the case doesn’t settle at mediation.

I don’t like to spend a lot of time at mediation re-hashing what’s already been shared with the other side. It’s more effective to reinforce trial themes than go back over data everyone has already reviewed.

There’s truth in numbers. Do the facts create risk for the defendants? Does the testimony from a defense expert create risk for us? The only way to know is by what is ultimately demanded and what is ultimately offered.

Sometimes parties want to walk out after the first offer or the first demand. A release in a personal injury case—especially where liability or causation is disputed—is not the same as negotiating the sale of a 2017 Honda Accord or a townhome in a development of 200 other identical townhomes.

In those transactions there is a very tight range of value and a lot to market data. In a personal injury case with disputed liability or causation, the value may be $0. Or it may be a lot of money.

So the negotiation is always going to start with the plaintiff asking for a lot and the defendant offering a little. We’re not interested in the first number. We’re interested in the last number.

The more rounds of numeric negotiation the better. Each round gets the plaintiff closer to the insurance company’s last, best and final number. And to making the choice of whether to sell a release of her claims or let a jury of 12 decide the outcome.