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The Mediator’s Proposal: A Great Tool For Yesterday’s Disputes

It was a hot Friday afternoon in Miami, and everyone but the mediator had a flight to catch. The lawyers on the other side knew what they were doing, but we weren’t closing the gap. Sometimes impasse is a good thing, but not here — four conference rooms and a reception area full of lawyers needed to settle, but our steady path to resolution had stopped abruptly. What was the other side up to?

As our mediation closed, the mediator made a proposal — a “mediator’s proposal.” I knew immediately why we had reached an impasse. As I look back on that settlement it’s clear that, as effective as mediator’s proposals might have been back in the day, they aren’t the tool they used to be.

The “Mediator’s Proposal” Defined

Most mediators and settlement veterans know a mediator’s proposal when they see one, but the parties and their lawyers need to understand what it actually represents. First, my definition of “mediator’s proposal,” based on the those I have responded to over the years:

A mediator’s proposal is a set of settlement terms advanced by a mediator in an effort to settle a dispute when the parties have reached an impasse. The mediator’s proposal is made on a double-blind basis to all parties in separate communications; the parties are asked to accept or reject the terms as proposed, with no modification or counteroffer, within a specific time frame.

The typical mediator’s proposal leaves those involved with only two possible outcomes: settlement or continued impasse. But before you respond to the proposal, do you know what it represents?

What Does The Mediator’s Proposal Represent?

Some mediators’ proposals reflect the mediator’s belief of what would happen at a trial of the case, but the concept means something different to others. Richard Webb at the Healthcare Neutral ADR Blog tells us the mediator’s proposal represents “the mediator’s sense of a fair allocation of the remaining ground between the parties, and not an opinion of how the entire conflict would be resolved in court.” Vickie Pynchon tells us it’s a number that she believes “the Plaintiff is likely to accept and the Defendant is likely to pay.” And my mediator in a recent lawsuit gave us a handout that landed somewhere between the two:

This “Mediator’s Settlement Proposal” does not necessarily reflect my opinion of the settlement value of the case. Rather, it simply represents a proposal which may be within the “reach” of all of the parties, although slightly beyond the amount preferred by either party.

No matter how well-intentioned your mediator, this final shot at breaking the impasse may be what created the impasse in the first place.

Spy vs. Spy

Once upon a time the Mad Magazine cartoon “Spy vs. Spy” provided a humorous take on the arms race. Spy White’s efforts met Spy Black’s response, but the response was precisely what White expected, falling in perfectly with his preplanned counter-countermeasures. And so on.

The mediator’s proposal is no different — parties now know the mediator’s proposal is coming, so savvy negotiators angle for an advantageous impasse rather than a settlement. Compromise is no longer the goal of the mediation exercise; instead it becomes a play to the “neutral,” whose power to craft the mediation proposal will make her the real decisionmaker:

  • In cases where the mediator’s proposal will be based on who will pay what, the parties — or worse yet, one party — will spend valuable time and effort constructing an impasse when, in the absence of a mediator’s proposal as a fallback, he might have actually achieved a compromise settlement; or
  • In cases where the mediator’s proposal will be based on the value of the case, no one has an incentive to be candid with the mediator — so positions become more important than interests; or
  • In cases where the parties aren’t sure what will drive the mediator’s proposal, they dig into their positions and hope for impasse — with the most likely result being a mediator’s proposal predicated on those positions.

Given the countermeasures the mediator’s proposal has generated, it seems we might not be any better off than we were when we started. But Spy vs. Spy taught us that when we were 12.

And as for my mediation in Miami, I’ll let you guess whether we were angling for that mediator’s proposal, too.


John DeGroote

John serves as a mediator and arbitrator in complex business, technology, and intellectual property matters involving parties and interests around the country and beyond — often before litigation is filed. Prior to his service as a mediator and arbitrator, John served as the lead settlement negotiator in hundreds of cases,… MORE >

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