General Practice, Solo & Small Firm DivisionMagazine
Volume 17, Number 7
From Conflict to Resolution
When to Negotiate the Litigated Case
By Jeffrey Krivis
There are two eternal truths about litigated cases. First, there is a tremendous likelihood the case will be settled without trial. Second, the settlement could occur at any time from the moment the case is filed until the eve of trial. That span of time provides many opportunities to negotiate a resolution to a case that is satisfactory to your client. It’s how you use the time that counts.
Picture a continuum of conflict—at one end, a case is filed; at the other end, a trial begins. In between, the parties have various opportunities to come to the table and negotiate a deal. Determining when to come to the table depends on your confidence in the case and on overcoming the fear that the other side will misinterpret a suggestion of negotiation or mediation as a sign of weakness. Figuring out how to inquire about settlement, either through direct negotiation or mediation, also requires strategic choices.
What Is Negotiation?
Negotiation is generally defined as a communication process that we use to put deals together or resolve conflict. In negotiation, litigators have control over both the outcome and the process of a dispute. Procedurally, the parties in negotiation are responsible for designing the process. Similarly, by definition, the parties have control over the outcome.
This is in sharp contrast to arbitration or trial, where power is clearly delegated. In traditional litigated cases, a litigator relinquishes the power over the outcome because the decision-making process is given to someone else. All procedural decisions are taken from parties. Like a cafeteria, litigated cases require you to put down a tray and select items from a menu, such as what discovery processes or motions you might utilize to get an advantage over the other side.
Because negotiation is a communication process, problems sometimes occur that lead the dispute to an impasse. This is where civil litigators and even the court system have chosen to introduce mediation as a preferred option for resolving disputes.
The reason that mediation has worked so well for litigators is that it is basically a facilitated negotiation. Litigators can choose a mediator from a pool of well-respected retired judges and established trial lawyers. This gives litigators a sense of comfort because the neutral has more than likely been in their shoes before and can speak the same language. The neutral knows that the goal of the facilitated negotiation is to get the case closed, which is something the litigator was unable to accomplish.
Top Ten Factors for Getting the Other Side to the Table
The key to a successful facilitated negotiation is getting the other side to agree to mediate in the first place. To set yourself up for success, there are several factors to consider when convening a mediation:
1. Never request mediation with-in two weeks after you’ve lost any motion, no matter how insignificant.
2. The most profitable mediation on a great case generally occurs before expert discovery, although it can happen closer to the trial date.
3. The most profitable mediation on a so-so case occurs close to the trial date, assuming your experts have not betrayed you.
4. The most profitable mediation on a bad case occurs before you file the lawsuit, or as soon thereafter as you can manage with a straight face.
5. Ask for mediation in a letter that accompanies a motion to compel discovery. Offer to postpone the motion if the other party agrees to mediation.
6. Where you have a belief in the merits of your case, send out a letter demanding mediation, and specify your good faith estimate of the value of the case. Indicate that you will only agree to mediation if the other party fully understands and acknowledges your approximated value. If you then show up at the mediation and the other party comes in substantially below that approximated value, leave promptly.
7. Allow the judge to propose mediation at the initial status conference.
8. Mediation often works best for a defendant after a summary judgment motion has been filed, but before the hearing and before plaintiff’s opposition is due. Mediation often works best for a plaintiff just after the summary judgment motion has been denied. Schedule accordingly.
9. Consider a cost basis analysis. For every month you have the case open, the time you have committed to the case increases, yet there is no guarantee that the value of the case goes up.
10. Many provider organizations will take on the responsibility of contacting the other side about the prospect of mediating. This can be effective because these organizations usually have people trained to sell the process in a way that doesn’t make you look vulnerable.
Dealing with the Competitive Negotiator
Tactics for negotiating a litigated case depends upon the style of the mediator and the approach of the advocate. Before beginning the mediation session, ask the mediator to define his or her style. Some mediators choose an approach much like that of a messenger, where they exchange numbers back and forth and actively make recommendations on the numbers. Others might use a more facilitated evaluation, which tends to encourage the parties to come up with their own understanding of risk that might also be more interest-based. Whatever the approach, a litigator must be aware of the direction in which the mediation might go before it begins.
Many litigators approach mediation in a competitive manner. They view the session as an extension of the litigation battlefield and make negotiations difficult. The cooperative litigator is hopeful that the negotiation will achieve her ultimate goal—to settle the case—and will assume that the other side is at the bargaining table for the same purpose. It is not unusual for cooperative litigators to put all their cards face up on the table and hope for a cooperative solution. Unfortunately, the competitive litigator might view this willingness to cooperate as a sign of weakness and attempt to take advantage of the negotiation.
Studies have demonstrated that cooperation as an affirmative strategy will more likely than not achieve the objectives of mutual gains for all parties (see Robert Axelrod, The Evolution of Cooperation, Basic Books, 1985). However, litigators in a mediation must be mindful of the possibility of losing opportunities for the client by maintaining a cooperative attitude throughout a negotiation with a competitive player.
Under these conditions, an advocate in a mediation should be aware of strategic options that can be used to avoid becoming exploited in the negotiation. Fortunately, those options have been studied extensively by educators through such game theories as the well-known "Prisoner’s Dilemma." In the Prisoner’s Dilemma game, there are two players. Each has two choices—cooperate or defect. Each must make the choice without knowing what the other will do. It is a dilemma because if both defect, they will do worse than if they both had chosen to cooperate.
Following extensive computer testing of the Prisoner’s Dilemma, Professor Robert Axelrod came to the conclusion that the best strategy for achieving goals through cooperation is a simple process he calls "tit for tat." This strategy proposes that during a negotiation, a party must match the opponent’s move either competitively or cooperatively. If your opponent chooses to whack you over the head, you must hit back. If your opponent offers an olive branch, you must offer one back, and so on. Axelrod developed five basic rules to follow in achieving cooperative solutions:
1. Begin cooperatively.
2. Retaliate if the other side is competitive.
3. Forgive if the other side becomes cooperative.
4. Be clear and consistent in the approach.
5. Be flexible.
Those litigators who come to the negotiating table assuming they are still at war sometimes create an imbalance in power with the advocates who choose to be cooperative. One approach to disarming a competitive negotiator is to use the mediators to get your adversary to commit to the principle that they might have more liability and/or damage exposure than they originally thought. Once that occurs, be prepared with additional information demonstrating that you are capable of continued retaliation. At the same time, have the mediator extend a signal that you are prepared to forgive, i.e., work cooperatively, provided they acknowledge that exposure exists.
This must be done slowly and strategically, without giving away too much information until you have verified with the mediator that your adversary is beginning to believe in your position. It requires a delicate balance by the mediator and, of course, your full and complete trust in the mediator’s representations.
The goal of this technique is to lull your adversary into a state of vulnerability. After considering possible downside scenarios, the mediator can provide your adversary with a face-saving option either to pay out more or take less than they brought to the table.
A Case Example
Suppose you represent a person who has undergone a hip replacement due to a slip and fall at a department store. During your investigation, you learn through inside information that the store has had other similar falls in the same area, and that the company was well aware of the need to correct the condition that caused the falls. In fact, you have talked to several people who have sustained injury in the same area and they are prepared to testify if necessary. The company doesn’t know that you have this information, and they take the position that there was no "notice" of the problem and therefore no liability.
During the mediation, you begin cooperatively by offering to discuss the issues openly. In response you receive a lecture in front of your client by your opponent’s counsel about what a bad case you have. You ask the mediator to check with the store’s lawyer to see whether there have been any other falls in the area where people sustained injury. Immediately that sparks some interest from the other side, which wonders what you are fishing for. They initially resist, but it gets them talking about potential minefields that they don’t want unearthed. The mediator tells you she hasn’t learned anything new, so you send her back in to force the issue. You also float the name of another claimant who sustained injuries and ask the store’s lawyer if they would like to discuss the situation further. In essence, you are using the power of the mediator to make statements about the strength of your case without throwing it in the other side’s face.
After several rounds of private meetings, you finally tell the mediator to ask the company if they feel there might be some exposure in this case. You ask the question because you know there really have been similar incidents, and you suspect the company doesn’t want this known publicly. You are prepared to negotiate a confidentiality agreement in exchange for a reasonable settlement. When you get a positive signal from the mediator, you start asking for money, while at the same time being "flexible" with your response so that the other side will know that the retaliation has worn off.
Timing Is Key
A litigated case can be negotiated anytime from the filing of the case until trial. Selecting the most strategic time to engage the other side is the key to a successful outcome. The menu of dispute resolution options available to litigators has expanded over the past 50 years, such that settlement opportunities are available to the creative practitioner at almost every stage of a litigation.
Indeed, negotiated settlements even occur during various phases of trial. Often, an insurer will have a claims representative present to monitor the trial. If it appears that the evidence is shaping up against the defendant, the insurer might engage the plaintiff in settlement discussions. Beyond that, many appellate courts around the country have instituted successful mediation programs before a final judicial decision occurs.
Jeffrey Krivis has mediated more than 3,000 cases since 1989. He is an adjunct professor at Pepperdine Law School/Straus Institute for Dispute Resolution and serves as the chair of the ABA Dispute Resolution Section’s Technology Committee.