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December 18, 2015 Articles

Essential Attributes of an Effective Mediator

By Edmund J. Sikorski, Jr.

Over the time spectrum of mediating monetary claims, impasse-causing problems can be categorized as Front-End, Mid-Point, and Late-Point. The focus of this article is to discuss some of the symptoms and prescriptions for dealing with impasses in each category.

Front-End Impasse

1. The "Who Goes First?" Problem
There is no right or wrong way to get the bargaining process started, but the traditional approach is to have the claimant make the first offer. The real question, however, is: "Why go first?"

Studies have demonstrated that the "party that made the first offer shifted less from the initial offer than the party who responded to it." Barry Goldman, First Offer, 94 Mich. B. J. 22 (2015). This is known as the "first offer advantage." The explanation for it has to do with the concept of "anchoring." "The first offer sets the anchor and establishes the negotiating 'neighborhood.' No other number has the psychological power of the first offer. No other psychological principle has the same punch as the anchoring effect." Id. at 23; see generally Richard Birke & Craig R. Fox, Psychological Principles in Negotiating Civil Settlements, 4 Harv. Negot. L. Rev. 1 (1999) (Birke & Fox).

To avoid an impasse when the "Who goes first?" problem arises, a mediator must intelligently discuss the advantages and disadvantages of the foregoing so that the parties can make an informed, calculated decision over how to proceed and avoid getting locked up on this issue.

2. The "Out-Of-The-Ballpark" Problem
It is not uncommon for either or both parties to make an unprincipled "out of the ball park" demand or offer that exceeds or ignores their own "best day in court" case valuations. When that happens, the receiving party often: a) declares that the mediation is a waste of time; b) complains that the opposite party is not negotiating in good faith; or c) refuses to respond unless the offering party gives them a new number—thus attempting to have the other side bid against itself.

Avoiding this problem from the outset is particularly important because when a party refuses to "counter" an "out of the ballpark" demand or offer, it forces the original party to bid against itself. This is something parties almost never do and can often result in an impasse. And, because parties almost never bid against themselves, a mediator who asks a party to do so risks losing his or her credibility.

The impasse avoidance prescription for this problem is for the mediator to point out from the beginning that it will be much more productive for each party to start the negotiation by making a "principled" offer grounded in an objective and reasonable evaluation of the case. For example, the defendant in a personal injury action might make an offer that is based on a line-by-line analysis of the plaintiff's schedule of damages with a stated amount allowed for each category of damage claimed by the plaintiff and, where appropriate, support that analysis with verdicts substantiating each element of damages.

Mid-Point Impasse

1. The "It's Not the Money, It's the Principle" Problem
From time to time, one party or the other declares that it will not settle for any amount of money because it would be unprincipled to do so. Of course, if the declarant literally means that statement, the case will not settle without unconditional surrender by the other side. However, given the reality that only a tiny fraction of cases are taken to trial, it is highly unlikely that the declarant truly believes his or her own statement. Patricia Lee Refo, Opening Statement: The Vanishing Trial, 30 ABA J. Sec. Litig. 2, 2–4 (2004).

The impasse avoidance prescription for this problem is for the mediator to encourage a realistic reassessment of damage calculations. After all, when a party makes the "it's not the money, it's the principle" declaration, it usually means that the other side has not offered an amount of money to settle that does justice to the loss suffered, and the other side is taking it personally (i.e., emotionally). This may also be a good time for the mediator to review what is and is not possible to accomplish in a court of law, and the expense and risk of trial. Perhaps the mediator can also explore non-monetary elements of a potential settlement package, including, for example, in a wrongful-death case suggesting a donation to the decedent's favorite charity, a change in practice that would help prevent incidents like the one that caused the decedent's death, or some memorial to the decedent.

2. The "We Want Them to Know We're Serious/ We Don't Want to Move Too Fast Too Soon/ They Aren't Getting It" Problem
These statements are variations on a single theme—and eachsignals a mid-mediation impasse. The underlying assumption of the declarant is that by making small moves, it will result in the other party making larger moves. This tactic is recognized as a hardball tactic (Keith Lutz, BATNA: Examples of 10 Hard Bargaining Negotiating Skills and Negotiation Strategies, Harv. L. Sch. Program on Negot. Daily Blog (Nov. 2, 2015)), that is likely to lead to nothing more than a small move by the other side. Moreover, the declarant's frustration often will increase as time goes on with very little progress towards a resolution. The underlying problem is that the negotiating principle of reciprocity is being ignored. Birke & Fox, supra at 40–41. If the speaker is indeed getting close to his or her bottom line, then this might be the correct strategy—but if this is a result of fear that a larger move will be viewed as a concession then it can be a counter-productive strategy that leads to frustration on both sides.

The mediator's prescription is to encourage the parties to re-think their strategy of small movements and to consider a more direct way of asserting and justifying their settlement position in a way that will not be viewed as a weakness. It may helpful to analogize the mediation to a dance and to explain that everyone's goal should be to keep the dance going but not to make it a marathon.

As in a dance, both parties must make reciprocal movements if the process is to be successful. Reciprocal movements have two components: a) time and b) distance. Time, so that the negotiators can continually re-evaluate their positions; distance, i.e., how far will they increase the offer or decrease the demand, so that the process continues to make genuine progress. The longer this process goes, the more likely an agreement will be reached so long as both parties keep closing the distance between them without frustrating the other party. In this regard, it is interesting that people tend to be more sensitive to the rate of concessions than to the magnitude of them. Id. at 43. The pattern of reciprocal movements is even predictable. See generally Don Philbin, Picture It Settled: Negotiation Art Informed By Science, last visited Dec. 17, 2015).

The foregoing does not imply that the moves must be equal (that is a clear signal that the meeting is in the middle of the negotiating gap), but that the moves are sufficient to keep the negotiating parties in the mood to continue until one or both sides reach their best numbers and the distance gap is narrowed to something that can be bridged by a final compromise.

3. The "Nobody Gets Free Discovery/I'm Not Doing Their Homework" Problem
The stark reality is that withholding information in the mediation context is an exercise in futility for three basic reasons:

First: The mediation model is totally dependent on full disclosure—all parties must have access to the same information.

Second: Well over 98 percent of cases settle before actual trial meaning that the withheld information either comes out at some time before trial or the withheld information was irrelevant or useless.

Third: In the context of insured claims, the reality is that carriers will not pay money to resolve the claim without documentation of damage, injuries, and treatment.

The mediator's prescription is to review the foregoing reasoning and encourage the full disclosure of all relevant information.

Late-Point Impasse: The "Let's Just Cut to the Chase/We're Not Going Any Higher/Lower" Problem
The commonality in these impasse indicators is the expression of a high degree of frustration with the negotiating process. These perceptions often drive one party or the other to quit making proposals, which guarantees impasse. There are at least two prescriptions.

First, help the parties slow down, create additional options, and/or "chunk" up their respective remaining available range (if they indeed have any remaining range) into multiple moves without getting beyond their acceptable range of settlement. The basic idea is to narrow the gap between the parties to make it more attractive to close the final gap between their positions.

Second, ask the parties if they would consider and/or suggest a bracket in which they could continue the negotiating process. If indeed the parties have reached their best numbers and a seemingly unbridgeable gap still exists, the mediator may then ask the parties to focus on their best alternatives to a negotiated settlement agreement (BATNA), by employing decision-tree analysis to bring new focus to evaluation probabilities. One way to do this is to request that each party review their respective positions by asking the following questions:

a) "How likely do you believe you are to prevail (expressed as a percentage) if mediation fails and the case is resolved through adjudication?" At this point, the mediator then adds the two responses together. If the sum of the responses exceeds 100 percent, this reveals that one or both parties are overconfident about their chances of success, because the chance of plaintiff's success plus the chance of defendant's success logically must equal 100 percent. Russell B. Korobkin, Psychological Impediments to Mediation Success: Theory and Practice, 21 Ohio St. J. Disp. Resol. 281, 290 (2006).

b) "Assuming that you actually lose the case in court, how would you explain the reasoning of the judge (or jury) that would most likely be provided to support this adverse judgment?" Asking a lawyer to identify weakness in his/her case is not likely to cause him to access ideas or information that was not previously considered. However, requesting a specific explanation for an undesirable judicial determination can increase its perceived plausibility and often reduce, if not eliminate overconfidence. Id. at 297.

This article combined descriptions of recurring impasse-creating problems with impasse-avoidance prescriptions to be administered by an effective mediator. The remedies suggested are based upon principles of party self-determination advanced in the ABA Model Standards of Conduct for Mediators and in particular Section I (A) which provides in material part: "Self-determination is the act of coming to a voluntary, uncoerced decision in which each party makes free and informed choices as to process and outcome." ABA, Am. Arbitration Ass'n, & Ass'n. Conflict Resol., Model Standards of Conduct for Mediators, 3 (2005). This author believes that the prescriptions advanced emphasize the value of party autonomy, self-determination, and responsibility and hence argue for the view that mediation should be facilitative rather than evaluative. These prescriptions are also consistent with the proposition that a mediator "owns the process" while the parties "own the result." Fair and impartial processes are central to the legitimacy of decisions reached and the individuals' acceptance of those decisions.

Keywords: alternative dispute resolution, adr, litigation, mediation, impasse, bargaining offer, disclosure

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