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April 01, 2018

A View from the Middle of the Table – A Mediator’s Practical Observations and Recommendations

John E. Bulman

Having mediated over 300 cases in the last twenty years, I have found that a successful mediation of a complex matter requires thoughtful preparation and collaboration by counsel, parties and the mediator.  The hallmarks of a failed mediation include: an inadequate objective evaluation of one’s case, a failure to fully support or vet the damages claimed, failure to make a cogent and competent case presentation in the joint session, and a failure to accurately estimate the transaction cost of proceeding to judgment (attorneys’ fees, expert fees, discounted risk of adverse judgment etc.).  What follows are some practical observations and suggestions on how to be effective as an advocate in mediation.  This is not meant to be exhaustive; it is meant to orient (or re-orient) counsel’s thinking as a mediation approaches.

1. Choose the Right Mediator

There are many schools of thought on how to pick the right mediator.  Some favor picking a mediator with deep substantive knowledge in the subject matter is best.  The rationale is that the mediator will not need to be educated and instead will be a “quick study” and able to work more effectively with the parties and issues.

Others favor different qualities.  Some believe that a senior, well-respected member of the bar can wield influence on recalcitrant parties.  Some value the lack of any connections to the parties and counsel, so as to ensure objectivity and neutrality. Some experienced practitioners maintain that connections to parties and counsel do not matter in consensual negotiations, as long as the mediator is “effective.”  Part of the rationale is that agreeing to a mediator selected by the opposing party can have a positive effect since the opposing party already has confidence in the chosen mediator.

In my practice, I have consistently observed that picking a seasoned and effective mediator with subject matter expertise is usually productive, regardless of real or perceived connections to the parties or counsel.

2. Timing is Critical

Finding the right time for mediation requires balancing readiness and cost.  Having a mediation too early, before the issues and factual background is sufficiently vetted, can lead to extreme, but eventually unsupported, party positions.  Deferring mediation until the eve of trial, while it does sharpen focus and risk, can exhaust resources that could have been used earlier to settle.  Mediation is most successful when counsel have done enough investigation to competently prepare, but not so much that client funds are exhausted.

In cases where liability is relatively certain, pre-litigation mediation can be very effective.  Similarly, in multi-party cases with several insurers, where the transactional costs will be substantial, early mediation is often productive.

3. Bring a Person with Appropriate Authority

a. Common sense and court rules generally mandate that a party representative attend the mediation “with full settlement authority.” What this term means has turned out to be somewhat elusive, particularly when the party is a corporation.  The federal court in the Southern District of New York tried to capture the meaning by suggesting that the authority requirement is met where the designated representative has “authority to settle for the anticipated amount in controversy” and is in a position to negotiate “all issues that can be reasonably expected to arise.” Sometimes presenting someone without authority is a negotiation gambit by the party.  Such a gambit can lead to sanctions in court mandated mediations.  See, e.g., Nick v. Morgan’s Foods, Inc., 270 F.3d 590 (8th Cir. 2001).

b. More frequently in the insured claim context, the adjuster has limited authority and must, if additional authority is needed, go back up the channels at the insurer and make a case – certainly not optimum for the process.  Sometimes, an initial rosy pre-mediation picture painted by counsel and the adjuster up the chain of command at the insurer or surety, evaporates early in the mediation session.  As discussed below, it is important for each party to fairly and thoroughly assess the case to develop a realistic settlement position and come to the mediation with commensurate authority.  It is equally important for the mediator to test this preparation in advance of the mediation.

c. Counsel and the mediator also need to ensure that the right person with authority attends.  The court in Dvorak v. Shibata, 123 F.R.D. 608, 609 (D. Neb. 1988), captured the mediation dynamic and need for a person with authority to attend when it awarded sanctions and commented:

During the [mediation], counsel for both sides are given an opportunity to argue their clients’ respective positions . . . , including pointing out strengths and weaknesses of each party’s case.  In this discussion, it is often true that client representatives and insurers learn, for the first time, the difficulties they may have in prevailing at a trial.  They must, during the conference, weigh their own positions in light of the statements and arguments made by counsel for the opposing parties.  It is often true that as a result of such presentations, the clients’ positions soften to the extent that meaningful negotiation, previously not seriously entertained, becomes possible.  This dynamic is not possible if the only person with authority to negotiate … can be reached only by telephone, if at all.

4. Preparation of the Client, Opposing Counsel and the Mediator

a. Do your best to negate or curb the oft-held client belief that the mediation process leads to “justice”.  To paraphrase Marlon Brando in A Dry White Season: “Justice and law can be described as distant cousins and they’re simply not on speaking terms at all.” While true that mediation can be rough justice, practitioners should remind themselves that litigation has been described as “eye surgery with a meat axe.”

b. Fully prepare and educate your client on the claims, likelihood of success, and expected transactional costs.  This requires a full, objective and introspective evaluation of the other party’s case and avoidance of confirmation or “myside bias”.  As described by David Perkins, referenced in Jonathan Baron’s 2006 book, Thinking and Deciding, 4th Edition, “myside bias” is the tendency to interpret new evidence as confirmation of one’s existing beliefs or theories.  Particularly with ambiguous evidence, there is a strong tendency of an advocate to interpret it as supporting his or her existing position.  This is not to say that counsel should take the gloves off in presentation before the opposing party and mediator, but it does suggest the need to provide the client with effective and objective evaluation privately and in advance.

c. Push for early pre-hearing submissions and make a clear demand in the submission.  Particularly with surety or insurance adjusters involved, it is important to have an early date for pre-mediation submissions and have at least some exchanges of demands/offers.  Counsel for a surety or insurer has to prepare a pre-mediation evaluation that is used to assess the matter and set authority limits.  This process not only takes time, but also tends to establish a hard negotiating position.  A common mistake made by claimants in mediation is to withhold some beneficial points until the mediation session, thus effectively preventing the adjuster or counsel from factoring the points into his or her efforts to secure authority.

d. Claimants should also make a clear demand with the necessary supporting materials in advance of the mediation session.  This also sharpens the analysis by the opposing party, counsel and adjuster.  If the opposing party does not have at least a general sense of what the demand is, its case evaluation will suffer and the mediation will likely get off on the wrong foot.

e. Effective preparation should always include a thorough vetting of claimed damages.  Meaningful cost/benefit analysis cannot be done without understanding the strength and recoverability of damages.  Frequently, counsel will fully develop and argue liability issues and give short shrift to damages.  This is not good practice and often gives the opposing side another argument with which to grind down a claim.

f.  Deal with your weaknesses; do not hide from them.  Running away from weak points in one’s case emboldens opposing counsel to hammer on those weaknesses.  Showing that you recognize the issues and are prepared to effectively deal with them at trial or arbitration sends a productive message.

g. To the extent possible, fully prepare the mediator in advance of the mediation session.  The mediation session is not the time to expect the mediator (or the opposing party) to absorb and understand a complex factual history and expert testimony.  Depending on the size and complexity of the matter, this preparation can be done in advance through the pre-mediation submissions, telephone conferences and even in-person meetings with counsel and/or experts.

5. Observations on Effective Advocacy During the Mediation Session

a. Adopt a matter-of-fact tone and approach.  Leave histrionics back in the office (no personal attacks, ad hominem insults, gratuitous accusations, etc.).  Mediation provides a platform for parties and counsel to communicate directly with each other. Experience has shown that personal attacks dramatically reduce the effectiveness of communication.

b. If counsel wants his or her case to be taken seriously, they must demonstrate in the joint session that he or she is prepared to competently try the case.  Do not give up the joint session; it is a perhaps your best opportunity to persuade the other side of your case bona fides and your willingness to try the matter.

c. Never assume a case will not settle in mediation.  Counsel should be prepared to be surprised.  Sometimes, undisclosed dynamics or party concerns will drive to an unanticipated settlement.

d. Making a sky high demand will usually result in a low ball offer.  The resulting polarization often leads to quick impasse.  Making a demand more reasonably tied to the actual value of the case and the expected transaction costs will generally result in a more efficient and successful mediation.

e. The mediation session is not the time to either reveal or learn new information.  It is much more difficult for negotiators to process new information (good or bad) “on the fly.”  The mediation process is much more effective if the parties, through their own preparation and review of pre-hearing memoranda, understand and have assessed the other side’s positions.  Basic fact gathering and “free discovery” are not appropriate or productive uses of mediation.  Since nothing is under oath, you cannot rely on much of what is said.

f. Don’t try to make the mediator an advocate.  It is counsel’s job to persuade the opposing party of the merits of the party position, and the capability of counsel to see it through to judgment or award.  It is rarely effective to withhold key positions and advocacy points during a joint session and then try to enlist the mediator to advocate those points in caucuses.  An effective mediator can take publicly stated advocacy points and put them into a more balanced context in private caucuses. Parties should consider preparing brief bullet point statements of key points for the mediator to use confidentially as the day progresses.

g. As a corollary to the last two points, do not get stuck in the weeds and 1) endlessly argue facts that the other side either doesn’t or won’t recognize or 2) ask the mediator to do the same.  Effective negotiation advocacy is not limited to a thorough grasp of the facts.

6. Memorialize the Agreement or Regret It

a. Not all disputes are simple trades of money for a general release.  Some might involve limited releases, intellectual property rights, complex definitional structures, non-compete language, non-disparagement language, continuing business relationships, timed payments, or settlement of one dispute while having ongoing unrelated business.

b. Understand and articulate all of the matters that need to be included in the settlement.  Mediators will often ask early in the joint session for the parties to identify what issues other than money need to be addressed (e.g., form of release).  Thinking this issue through in advance is critical.  Reaching agreement with the opposing party in advance of mediation on the “elements” of a settlement agreement is even better.

c. Memorialize your agreement.  In some cases, preparing a draft settlement agreement in advance is productive, so long as you bring a laptop and modify the draft as matters develop.  At a minimum, the basic elements of a settlement, in the rough form of a memorandum of understanding, should be signed by the parties and counsel.

If properly handled, mediation is a powerfully effective tool for reaching negotiated resolutions of complex cases. The suggestions and observations above, if heeded, make for a more productive mediation and a better-informed client.

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John E. Bulman

Pierce Atwood, LLP, Providence, RI, Division 1 (Litigation and Dispute Resolution)