Volume 18, Number 2
March 2001

DISPUTE RESOLUTION

Should Parties Tell Mediators Their Bottom Line?

By Peter Contuzzi

As lawyers increasingly make mediation the forum of choice to attempt negotiating settlements for their cases, they also confront the issue of what to say when a mediator asks them what their bottom line is. Are there mediation process techniques, to be employed at the end of a money negotiation that will otherwise conclude in a stalemate, which can allow a negotiating party to find out simply and without risk if its bottom line would be acceptable to the other side, and which also encourage candid responses?

In a separate meeting, I can ask a party to disclose its bottom line to me and then ask the other party whether that number would be acceptable if it could be obtained. This garden variety "what if" technique offers some protection because the hypothetical language used does not constitute a formal settlement proposal. That can be a pretty thin veil, though, and some negotiators will speculate that the hypothetical number has already been approved by the other party. Alternatively, I can ask each party to tell me its bottom line and then advise them whether the numbers are the same or whether they overlap, are near each other, or are far apart. These common techniques lack sufficient incentives for candor and protections against manipulation. They may also leave unclear what will happen if an agreement is not reached. Given these risks and uncertainties, how candid can they afford to be?

To address these shortcomings, I have experimented with a technique in money negotiations I call the Safety Deposit Box. Mine is a deadline-oriented process, and if the parties are not close to agreement as we approach the end of the allotted time, I sometimes convene a joint meeting to tell them that there is a final technique that is often effective at this point. I ask them to think of me as a safety deposit box and explain that numbers go into the box but not out—they remain locked in the box. My explanation continues with words similar to the following.

"I will separate you one last time in a few minutes and ask you to put your final bottom line number into the Safety Deposit Box. Please give careful thought to your number, because it will be used by me in several ways.

"These numbers will not be disclosed unless, as happens occasionally, they are the same. If they are the same, I will bring you together to sign a settlement agreement. A few times in the past, these numbers have overlapped, i.e., the plaintiff’s final number was lower than the defendant’s. That is the one and only situation in which the midpoint between your final numbers will arbitrarily become the settlement amount.

"If there is a gap of any significance between your final numbers, I will inform each party that a gap exists, without disclosing either number or the size of the gap. You may then choose among three options: (1) to keep your number confidential, (2) to disclose your number to the other side, or (3) to condition your disclosure on the other party’s agreeing to disclose its number to you.

"If this step does not lead to an agreement, the mediation will conclude with a brief joint meeting during which you will have an opportunity to decide if you wish to move on to the optional last stage of the process—a joint request for a final settlement proposal from the mediator. If you jointly request a settlement proposal from me, I will use the final numbers you put in the Safety Deposit Box in the following way.

"Sometimes, I believe the final number of one party is significantly more fair than the other. Then I adopt that same number as my own number in my proposal. In fact, my preference is to do this in order to provide an extra incentive for you to be as candid as possible when putting your number in the Safety Deposit Box. I obviously do not indicate if my number is an adopted one, although if you have already chosen to disclose your final number, the other side will know that.

"Sometimes, however, I develop my own number. It is my strong policy not to propose the midpoint between your two numbers. My proposed number will always be closer to whichever of your numbers I consider more fair.

"You will have some time to consider the proposal and then respond confidentially to me with a simple "yes" or "no." If you say "yes," you are entitled to hear the other party’s response, but your "yes" is not communicated by me to the other party unless it also said "yes." If you say "no," you are not entitled to hear the other party’s response. The case either settles for the proposed terms or else nobody’s position changes."

If the numbers are close, a little shuttling normally produces a mutually acceptable number. If their numbers are not close, I convene a final joint meeting and offer them the option of a final settlement proposal from the mediator. I explain that I will do my best to provide them with a proposal that reflects my opinion of the case’s settlement value and meets my standard of fairness: reasonable to my mind as well as comfortable to my conscience. I also advise them that in the past, there have been some cases in which I declined a request for a proposal because I could not develop one that met my standard of fairness. I make a proposal only if both parties jointly request it.

Thus, each party knows exactly how its Safety Deposit Box number will be used during these final steps, each maintains complete control over disclosure of its number, and each has veto power over the making of a settlement proposal by the mediator. If they jointly decide to request a proposal, it will not be a mindless one "splitting the difference." I am required to either adopt or at least be nearer to one party’s number. My stated preference for the adoption alternative provides an incentive for honesty, but the ambiguity created by the other option provides cover for a party that would like a proposal but does not want its final number revealed under any circumstances.

These aspects of the Safety Deposit Box technique resolve the process uncertainty problems surrounding bottom line information, provide meaningful protections against manipulation by the mediator, and encourage candor from the negotiators. If the parties remain in a stalement despite all that, they have an additional opportunity to reach agreement should they jointly request a settlement proposal.

I use this technique only when we are near our deadline and the parties remain substantially apart, so the overlap scenario is by far the rarest. However, in a significant minority of cases, the numbers placed in the Safety Deposit Box have either been the same or close enough so that some follow-up shuttling quickly produced agreement.

The most common result is for there to be a significant gap between the final numbers. The option most frequently chosen by the parties has been to keep their numbers confidential, but many have selected conditional disclosure. Unilateral disclosure has occurred in only a few cases. More often than not, the parties jointly request a final settlement proposal, and a majority of these cases then settle. Even in the cases that do not settle, the parties often express procedural satisfaction with the control they maintain and with the clearly defined "end game."

The limitations of this procedure should also be noted. It does not guarantee protection against all forms of manipulation, and there is no way to know if the parties are placing their actual bottom line numbers in the Safety Deposit Box. If the parties’ views on the probable outcome of a trial remain significantly different even after digesting all the information generated during the mediation, this technique is unlikely to help them reach agreement. However, in money negotiations involving experienced lawyers, the parties’ real opinions on ultimate case value are typically not so far apart as to make them unmanageable.

The Safety Deposit Box technique is only one example of mediation process solutions that can advance the goal of lessening uncertainty about how information will be used.

Peter Contuzzi is an attorney-mediator based in Massachusetts.

- This article is an abridged and edited version of one that originally appeared on page 30 of Dispute Resolution Magazine, Spring 2000.

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