Originally published in the Oregon State Bar Bulletin (November 2009). Republished with permission.
Unable to sleep one night after a particularly arduous, frustrating, and contentious mediation (though the case settled), I found myself fantasizing about The Perfect Mediation.
Can we have a perfect mediation with emotional and unrealistic clients? Complex and confusing facts? Difficult legal issues? Of course! With good lawyering and hard work by all, even tough cases can be effectively mediated, with some level of satisfaction and closure for all the participants — parties, counsel and even the mediator.
Can we have a perfect mediation when a case doesn’t settle? Absolutely! Some cases need to be tried. If counsel and the mediator pursue the best mediation practices, it’s no failure if the case doesn’t settle, especially if each side is better able to evaluate and, if necessary, try or arbitrate its case.
Here are the mediation fantasies I had lying awake that night.
The Case is Right (and Ripe) for Mediation
Most cases need not be mediated. Capable counsel should be able, in most instances, to prepare, evaluate, negotiate, and, if necessary, try most cases. The low-tech tools of meeting for coffee or talking directly on the telephone enable the well-prepared and confident advocate to participate in a discussion of realistic ways to resolve a case, without communicating weakness or fear.
What kinds of cases benefit most from mediation? Mediation makes sense in many multiparty cases, especially those with insurance coverage issues. Mediation also makes sense where there is an unrealistic party (including one’s own client), or a difficult opposing lawyer. I also mean to include the pesky situation of an incompetent, unprepared or unnecessarily aggressive opponent (who nevertheless is willing to recommend mediation to his or her client). Mediation is also well-suited for cases with large dollar amounts or complicated issues in dispute, but is also indicated for the “small” dollar case in which the parties have strong (and perhaps unrealistic) emotional investments.
When is a case “ripe” for mediation? Sometimes a quick mediation makes sense before the parties spend big dollars on discovery and preparation. On the other hand, some level of preparation is necessary to enable counsel to evaluate the strengths and weaknesses of a case. There is also an emotional element to “ripeness.” Often, clients will not be ready to mediate in a useful way until they are deposed and until they attend the depositions taken of the other side. Depositions may not only develop useful information, but can also “soften-up” each side to understand the emotional cost of continued preparation and trial.
All the Appropriate People are Present
In my fantasy, all decision-makers are present, live and in person.
By “appropriate people,” I mean not only individual claimants or individual uninsured defendants, but also insurance claims representatives. I am happy to talk with claims representatives on the telephone during a mediation, but this is just not the same as having the representative in the same room as counsel and the insured client.
By “appropriate people,” I also mean corporate representatives with actual authority. Such authority need not be unlimited (and rarely will be unlimited in other than some closely-held organizations), but the representative should have direct and immediate access to more senior persons from whom the representative can request more authority (if the representative is so persuaded as the mediation progresses).
It is also very helpful for insured defendants to appear, even if there is no coverage issue or concern about adequacy of liability insurance limits. Even if liability is vociferously denied or damages are strongly disputed, the presence of the fully-insured defendant shows respect to the claimant and, in my opinion, makes settlement more likely.
If there is a coverage or limits issue, insurance defense counsel should recommend, well in advance, that the client hire and have present personal counsel. This enables the mediator to discuss coverage with the defendant and the claims representative (or the insurer’s coverage counsel). The presence of personal coverage counsel raises the possibility that a separately advised insured can contribute directly to the settlement fund. Indeed, the fact of such participation (rather than necessarily the dollar amount, which might be relatively small) is another way for the defense side to help the claimant feel respected and increase the chances of settlement.
The Clients are Prepared
No competent lawyer will present his or her client for a deposition without comprehensive preparation. The same goes for mediation.
In my fantasy, counsel focus in advance on preparation of both a candid evaluation of the case and on development of a negotiation strategy.
One’s client needs to believe that his or her lawyer is loyal and enthusiastic about the case. On the other hand, it does no good to create unrealistic expectations. Just about any case can be lost. Just about any case (plaintiff or defense) can be a wash or loss on economic terms, even if nominally a “victory,” after consideration of costs and attorney fees and indirect costs of lost income and time. The litigation process imposes significant emotional stress on the parties, to the point that both mental and physical health can be impaired. The client should not be surprised when counsel tells the mediator that even an apparently strong case has a 60 percent chance of success in front of a jury or arbitrator, or that a case with strong jury appeal may never get ultimately determined by a jury.
You do not want to surprise the client with your answer when I ask you the estimated costs of proceeding, including attorney fees, expert witness fees and other costs. You do not want to surprise the client when I elicit the fact that even in your apparently strong case, there is exposure for reciprocal attorney fees. In my fantasy, counsel prefaces his or answer to these questions with, “As I have already told my client…”
In my fantasy of The Perfect Mediation, counsel for each side are not only loyal, aggressive and articulate on behalf of their clients (even in private caucus), but also candid and realistic. You can be both.
Proper preparation also includes developing ahead of time, with the client, a negotiation strategy. Have a game plan, which should be flexible, as new information is received and considered. While it may be heresy for a mediator to say this, be willing to conclude or adjourn the mediation if it becomes clear that the parties will be unable to achieve a settlement in a range that you and your client believe is fair. On the other hand, if the mediator continues to urge you to stay, it may be because he or she knows or suspects that further efforts might result in significant movement by the other side.
Another important part of preparation is to be sure that the other side is adequately prepared. Don’t leave the impression that you are holding back in discovery. Explain your case ahead of time to opposing counsel. Often, a “surprise” exhibit or dramatically-increased damage amount, delivered for the first time at the mediation, achieves nothing other than pushback and resistance, and sometimes an early adjournment, so that the other side can then take several months to assess the new information.
In my fantasy, both sides already have a pretty good idea of the legal and factual contentions of the other side, and have already made an assessment of the strengths and weaknesses of those contentions.
The Mediator is Prepared
Yes, in my fantasy of The Perfect Mediation, the pre-mediation materials come in on time (or at least earlier than 4:55 p.m., the day before the mediation).
As your torts professor asked when he or she called on you to explain a case on your first day of law school, “who is suing whom for what”? That information, and some commentary, tells me what I need to know. Who are the parties? What are the claims and defenses? What is the key contract provision in dispute? What personality factors affect the relationship between the parties? What financial or personal factors affect the needs of the parties? Have there been any decisions on substantive motions? Is there a summary judgment motion pending? Is there a trial date, and is it firm? Who will be attending the mediation? What is the insurance coverage situation? What previous negotiations have occurred? What is your client’s attitude and level of sophistication?
In many instances, it is not cost-effective to provide the mediator with lengthy summary judgment motions and all their exhibits, complete sets of medical records, or full expert reports. It can be helpful to have excerpts from key portions of summary judgment briefs, the narrative reports from treating physicians and the IME reports, and the executive summary or cover letters from other expert reports. As mediator, I am dealing with the big picture and helping the parties assess risk (factual and legal), but I am not making my own judgments based on the details of the evidence or any final determination of applicable law.
Counsel Make No Aggressive Opening Statements
In my fantasy, all the necessary people are present (see above) at a conference table when the mediation begins. It is good for the parties to see who is there, and for counsel to express the intention to work hard to try to make a deal. This is not the same as expressing a sense of weakness or fear.
These days, most lawyers avoid any detailed explanation of positions or any argument in the opening session, and I think that is best.
The Parties Discuss Most Special Provisions Early in the Process
To create momentum toward settlement, it is often helpful to request special or non-monetary settlement provisions early in the process. For example, while confidentiality clauses are common, they are not necessarily “usual” or “standard.” If one side contemplates less than a complete release or an indemnification provision, I think it is often useful to speak up early. These terms can still be bargaining points: “We’ll provide the indemnification they want, but have to hold back on the settlement amount because of the risk. We’ll go higher, if they’ll take care of any later third-party claims.”
On the other hand, some special provisions can be requested or offered late in the process, to try to break an impasse. Some examples of this kind of provision are apologies, letters of reference in employment cases, transfers of personal property or press releases.
Counsel are Candid — But Not Too Candid — with the Mediator
This is my fantasy mediation, so I can say it: The mediator is not your friend or your co-counsel. He or she is not your enemy, either, but is not retained to achieve the best possible deal for your side.
Thus, where candor is concerned, yes, provide realistic answers in private caucus to the mediator’s questions on risks and costs. Also, keep ethics in mind. Never knowingly or recklessly misstate the facts, evidence, or state of the law to the mediator, or put the mediator in the position of unknowingly transmitting any such misstatement on the other side.
On the other hand, because the mediator’s job is to facilitate a settlement (but not necessarily on your terms), it is usually best not to share a desired “bottom line.” For one thing, this is a matter between attorney and client (and in most instances, should be in a flexible range, not a hard and final number). More importantly, the mediator will argue against a stated “bottom line,” and will try to push you past it. In the common situation in which the parties ultimately consider a “mediator’s proposal,” you can count on the fact the proposal will be less favorable to your client than your stated “bottom line.” Thus, a certain degree of “puffing” on ultimate acceptable terms is not only ethically correct, but also a useful strategy, even with the mediator (though expect searching questions and pushback, so you have to be credible and realistic).
You are negotiating with the mediator, not just the other side. This means to listen to his or her questions and observations, which come from a fresh perspective. It also means to point out where the mediator may be off base.
The Parties Sometimes Surprise the Other Side with Their Reasonableness
Conventional wisdom notwithstanding, an effective negotiation technique sometimes is to surprise the other side with a reasonable opening offer, or to move further than the other side expects in an interim offer — as long as you don’t let your client get stampeded. Anecdotally, I think this approach can achieve favorable results.
The Parties Leave the Mediation with a Signed Settlement Agreement
It is well worth taking the time to avoid litigation over whether or not an “agreement in principle” reached in mediation is enforceable. Rather than deal with the complexities of ORS 36.220 and 36.222, counsel should deal explicitly with this issue.
My own mediation agreement tries to make explicit that an oral “agreement in principle” is not enforceable, unless and until embodied in tangible, acknowledged form, usually a written agreement. Practically speaking, if the parties have reached agreement on all material terms at the mediation, it is almost always worthwhile to prepare an enforceable settlement agreement, then and there. Each side knows where it stands, and the parties avoid the unfortunately very common risk of buyer’s remorse and denial that a binding deal was made.
I bring my laptop and portable printer to most mediations, and usually prepare a settlement memorandum, with input and changes by counsel, which the parties sign. The document recites that counsel may prepare (but are not required to prepare) a later, more formal document, but in the meantime the memorandum is fully enforceable as a settlement agreement, including payment due dates (with me acting as arbitrator, in the event that there is a dispute over language in the later, more formal agreement). Counsel often decide not to draft a subsequent document. When they do prepare one, there is very rarely any dispute over language that I have to resolve as arbitrator.
Sometimes, one side or the other will bring its own proposed comprehensive settlement agreement, with blank spaces for dollar figures to be inserted. This approach also works well, particularly if the drafting side provides the document ahead of time to the other side.
The Parties and Counsel are Satisfied with the Mediation Process
In my fantasy of The Perfect Mediation, the parties do not necessarily settle their case.
If they do settle, they leave with a signed document, covering all the material terms of the deal. While one or both sides may have second thoughts that night, they know that what often has been a lengthy, stressful and expensive process is over. They know where they stand, and have at least some sense of relief that they can get on with their personal and business lives, without the expense, stress, delay and risk of continued litigation. Often both sides will be less than fully satisfied by the deal — one indication of a fair compromise. However, each side believes that its own lawyer was well-prepared and an articulate advocate, while also candid in explaining the costs and risks of proceeding. In my fantasy, each side also leaves with the sense that the mediator favored neither side, understood the case, and understood each side’s interests and concerns.
If the parties do not settle, each side leaves believing that it worked hard to be flexible and realistic, under the circumstances of the case. In my fantasy, while the parties may have been surprised by how hard the mediator pushed, they believe that he or she pushed equally hard in the other room. In my fantasy, the parties also gained a better understanding of the opponent’s point of view (as erroneous as they believe that point of view may be), possibly leading to later settlement before trial. Finally, in my fantasy, if the case is tried, counsel for each side are better prepared, due to what they learned in the mediation, to present coherent, succinct and persuasive cases to the jury, judge or arbitrator.
© 2009 Richard G. Spier