Maximizing Settlement Potential in Mediation – From a Non-Mediator’s Perspective
Written by: Neil Pedersen
I deeply respect a great number of those persons who have applied their experience and knowledge to becoming mediators. A trained and skilled mediator is worth every penny of his or her fee when they keep parties struggling down the path toward a meeting of the minds when all those parties want to do is turn their backs on the unreasonable positions of the other side. There is no doubt in my mind that mediation has led to settlement of many cases that otherwise would not have settled, leaving the parties to face the uncertainties of trial.
That said, my experience has been that far too many attorneys use mediation as an expensive substitute for old-fashioned negotiations, and they bring their matters to mediation long before the parties are ready to settle. It is surprising to me how many attorneys see a request to mediate as the necessary first step in the settlement dance without any exchange of demands or counter-offers. Perhaps this is because many attorneys are not comfortable with the adversarial old-fashioned demand/counter-offer approach, especially at the early stages when parties tend to exchange initial “insults” to communicate distaste for the other’s starting position. Perhaps it is because the legal environment has changed so that attorneys are being taught that the first step must be the involvement of a neutral. Regardless, I think all attorneys should look critically at the decision to mediate before initial negotiations have occurred and before certain expectations have been created.
Our firm uniformly rejects requests to mediate unless and until some negotiation has occurred and it becomes clear that the mediation could be fruitful. Far too many mediation-as-the-first-move events have left us frustrated and unsatisfied. Now, we inform our opposing attorneys that we will not agree to mediate unless and until the other side has put either a defined amount or a specified range of money on the table. That amount or range is greater than simple cost of defense, but is still some distance away from the number for which we would settle the case. We also often discuss a range of where we believe the case should settle, and seek an acknowledgement from the opponent that their client understands that position before we will agree to mediation. Those representations are then reduced to a writing. As you might imagine, that writing becomes a prominent document on mediation day.
By properly creating and managing expectations before agreeing to mediate, you arm the mediator with a highly effective tool. When you take the position that you made yourself very clear prior to agreeing to mediate that a certain range was your expectation, it is far easier to stand your ground without cries of foul by your opponents. You also create an environment where those with ultimate authority will have discussed the range you seek, meaning fewer delays caused by the need to go back to the decision-makers. Ultimately, you give yourself a far better chance that your mediation will end in a success rather than it being a frustrating waste of time.
I know many of our mediator colleagues might bristle at my suggestion that parties not immediately start with mediation, although I know a number of them would agree that mediation is most successful if done when the parties are prepared to actually settle the case. There are certainly exceptions to the rule where mediation as a first move might be a good idea. However, as a general rule, it is far more prudent to create and closely manage expectations and be sure the case is ready to settle before investing all the time and money involved in a meaningful mediation process.
*Neil Pedersen is the principal of Pedersen Heck McQueen, APLC, an Irvine, California-based small firm engaged in the practice of employment discrimination, harassment and retaliation litigation, as well as insurance bad faith and business litigation.
From The Big News, June 2012