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The Solution to Insuring Good Faith in Court Connected Mediation: Self Interest

A commonly litigated issue in connection with mediation arises out of the requirement in most jurisdictions, in which litigants can be ordered to mediate, that parties mediate in good faith. There is a continuing debate among courts, practitioners and commentators as to the effectiveness of such requirements. See i.e. Stoehr v. Yost, 765 N.E.2d 684 (2002); Iur. Ulrich Boettgger, Efficiency Versus Party Empowerment – Against a Good-Faith Requirement in Mandatory Mediation, 23 Rev. Litig. 1 (2004); Kimberlee K. Kovach, Good Faith in Mediation – Requested, Recommended or Required? A New Ethic, 38 S.Tex.L.Rev. 575 (1997).

It is suggested that any rule aimed at subjective factors, such as negotiating from “reasonable” parameters, being willing to actively listen, keeping an open mind and being willing to settle will be ineffective and frustratingly unenforceable. How then can the integrity of the mediation process be protected?

Although the good faith requirement should be retained, the most effective way to insure a productive mediation session is to insure that fully or adequately informed decision makers are personally present at the mediation session.

If the ultimate decision maker, armed with adequate information to evaluate the matter, is present at a mediation session, an experienced and skillful mediator can insure that all possibilities of settlement have been thoroughly and fully explored. In that process, the party’s self interest will work to insure “good faith” participation.

Imagine, for example, in a case involving a closely held corporation manufacturing widgets, one of which allegedly was defective and caused serious injuries to a plaintiff, the ultimate decision maker made a policy decision shortly after the suit was filed to try the case. Perhaps the company wanted to discourage frivolous suits brought for nuisance value, perhaps it was simple pride in the product. Whatever the reason, most observers would agree that the company had the right to take the position that it did; that the ADR Rules should not be interpreted to require that a party settle, even if a settlement could be reached for less than trial expenses.

Under circumstances such as presented by this hypothetical case, best practice, suggests that defense counsel for the corporation should inform plaintiff’s counsel – and perhaps the court – that the company has made a decision not to offer any settlement proposal at the upcoming mediation session.

The plaintiff would then have the option, under most ADR rules, of objecting to the referral to mediation.

If the court orders mediation over the objection, best practice next dictates that the advocates, the trial court and the mediator cooperate to insure that the real decision makers are personally present and that there has been enough information exchanged or discovered to enable that decision maker to reach an informed evaluation.

Once present in the mediation, the decision maker will be confronted with the other side’s position, with the weaknesses in his or her own position, with the details of the various expert reports and relevant pieces of evidence and, perhaps most importantly, he or she will sit across the table from, and see first hand the effect upon, the person allegedly injured as a result of the company’s product.

If, after a full and thorough mediation session, the decision maker still decides not to make a settlement offer, so be it. The trial court does not have to go through the futile exercise of ordering him or her to have an “open mind”. His or her overriding self-interest and goal of preserving the company will work to insure that positions are evaluated, options explored, arguments reconsidered. If the decision maker becomes convinced that a settlement is preferable to going forward, the pre-mediation decision not to settle is alterable, when it might not be if a non-decision maker had been sent to the mediation as a party representative. Further, if a decision to explore settlement seems prudent, an effective mediator can explain and even demonstrate how “unreasonable” or harsh bargaining tactics might make reaching the most advantageous settlement less likely. Again, in such an instance, self-interest is a better guarantee of “good faith” negotiation than a simple requirement by rule.

The mediation process can focus the company’s decision maker on the reality that the company has only two options; settle for the best result, which only the crucible of the mediation negotiations can produce, or continue with the litigation process, exposing the company to the panoply of possible results also developed and discussed in the session. These litigation risks and potential results are often spread out graphically in the form of a decision tree or illustrated bell curve and can crystallize and clarify the choices presented. Often, the pre-mediation decision to try the case was not made after such a full and complete comparative analysis. At a properly conducted mediation, the question should be framed as follows: how do the terms and conditions of the proposed settlement compare to the risks presented by going forward with the litigation? Even if a pre-mediation analysis attempts a comparative analysis, it will miss a crucial element; the best alternative to continuing the litigation, the negotiated agreement, will only be known after the intense negotiation session.

Lawyers and judges with significant trial experience prior to the 1992 institution of mediation will report almost uniformly that this hard comparative analysis was routinely not seriously made until the eve of trial. With the jury coming in on Monday, all the pros and cons were fully explored and debated. The resulting settlements on the courthouse steps were driven by the same basic self-interest analysis which a well conducted – and much earlier – mediation session can produce.

A “good faith” rule will never be a better motivator than the simple self-interest of a fully informed party.


John R. Van Winkle

John R Van Winkle is a full-time mediator from Indianapolis Indiana. He is a former Chair of the American Bar Association’s Section of Dispute Resolution and the author of “Mediation; A Path Back for the Lost Lawyer” MORE >

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