Mediator’s Proposals Redux

Being a trial lawyer, a mediator, and most importantly, a Dodgers fan, I can’t help following the newspaper reports of the juicy ongoing divorce litigation between Frank and Jamie McCourt.  The latest news illustrates some of the pitfalls of mediator’s proposals.  I am speculating to some extent as to what is really going on here, but based on this LA Times report, it seems that Frank’s side accepted, but Jamie’s side rejected LA Superior Court Judge Peter Lichtman’s confidential proposal.  Generally, the way mediator’s proposals work, the mediator provides his settlement recommendation to both sides, giving both a time limit to either accept or reject the proposal.  If both sides reject the proposal, neither side is supposed to know whether or not the other would have accepted it.  But if either side accepts it, at least the accepting party will know how both sides responded.

In this case, everybody now knows.  Frank’s side publicly announced their acceptance of the proposal, which Jamie’s side seems to indicate may have breached the confidentiality restrictions on the whole settlement process.  That shows one pitfall of the mediator’s proposal.  It might allow one or both sides to game the settlement system to some extent, and possibly even to influence the judge who is preparing his ruling after the trial.  Another pitfall is that a failed mediator’s proposal may end the mediator’s effectiveness, and may even stall the whole settlement process.  One or both sides may be so unhappy with the mediator’s proposal that they lose confidence in the mediator, and may be reluctant to return to the table.

When parties seek a mediator’s proposal, they are moving a step away from the spirit of  mediation.  Instead of being empowered to resolve their own dispute, they have submitted to a third party’s recommendation as to how to resolve their dispute, and thus to some extent are allowing a result to be imposed on them.  For these reasons, as I discussed in a previous post, I generally resist making mediator’s proposals.  I think they should only be used as a last resort, and only when both sides request it, or maybe only when both sides beg for it.  Even then, I prefer to indicate to both parties a range that I think would allow the case to be settled, and invite both parties to consider making a proposal within that range.

Sometimes, however, parties themselves are still reluctant to make the kinds of proposals that are needed to settle a case, perhaps fearing the loss of face when they realize they can only settle the case within a range that they previously indicated they will not enter.  What they sometimes need to save face is to receive the number from the mediator, rather than offer it themselves.  If I think that is the only way the case is going to settle, I might be willing to propose a number that I think both sides are willing, but unable to admit they are willing, to take.  Conversely, if I don’t get the sense that both sides really want to be “forced” to accept a number outside their comfort zones, I prefer not to throw out a number.  The danger, as illustrated by the McCourt case, is that if this gambit fails to resolve the case, negotiations may be derailed, and one or both sides may only have succeeded in gaming the trial judge, the mediator, or each other.

(Photos from TMZ)

                       

Joe Markowitz

Joseph C. Markowitz has over 30 years of experience as a business trial lawyer.  He has represented clients ranging from individuals and small businesses to Fortune 500 corporations.  He started practicing with a boutique litigation firm in New York City, then was a partner in a large international firm both… MORE >