September 08, 2016 Articles

Why Negotiate? In-House Counsel Explains Three Key Benefits for Clients

By Natalie Fabian

No one likes to be sued. A lawsuit is an indication that you might have done something wrong, or at the very least that someone thinks you did. As in-house counsel, I know my client very well. And I know that executives everywhere are often upset about the filing of a lawsuit against their companies in the first place. They say, “I did nothing wrong,” or “They injured me!” Why should a company negotiate, especially before a court orders it to do so? What if the company ends up paying money that it wouldn’t have had to pay? It is my job to answer these tough questions and to explain why negotiation before litigation can be the best course of action. Even though we may eventually win a case and may even get attorney fees, the company’s interests are frequently best served by early mediation of a dispute. This is because early mediation offers three key benefits.

Mediation Allows Both Sides to Air Their Grievances
When two parties have a disagreement, both want to tell their sides of the story. A mediation allows that storytelling to unfold in a controlled environment. The cathartic exercise of airing grievances can make both parties more open to listening and coming to a resolution that may not have occurred otherwise. Once both sides have had a chance to explain their positions, they will be better prepared to work toward a mutually acceptable agreement.

Mediation Provides a Baseline of the Other Side’s Evidence and Theories
Mediation frequently provides an opportunity to learn more about the other side’s case against you. Each side comes into a mediation believing it has a winning case. The plaintiff is certain it will win, and the defense is also certain it will win. The information provided through a mediation allows the parties to explore the weaknesses and strengths of each argument and the defenses the parties may have. As both sides present some evidence, the mediator can help adjust the expectations on both sides as necessary. Maybe the plaintiff will not get what it asked for, but maybe the defense is relying too much on a weak argument. A mediator can help both sides see the issues with their respective cases in a way that a judge will not.

Compared to Litigation, Mediation Is Less Risky and Requires Fewer Resources
Litigation is extremely expensive, especially when companies need to hire outside counsel to handle the litigation. Moreover, the loss in employee productivity associated with use of employee time to help with the litigation is a cost that adds up quickly. Instead of doing the job that they were hired to do, employees are tasked with finding documents or giving deposition testimony. In addition to being expensive, the result of litigation is not guaranteed. No one can predict with 100 percent accuracy how a court will rule. And if the case goes to trial, that trial can last anywhere from a day to several weeks (or months, if it is very complicated).

By contrast, a mediation generally lasts a day. If I’m able to convince the company to mediate early and I’m able to settle the matter today, we may be able to avoid hiring outside counsel at all and can certainly avoid the high costs of litigation. Even when it makes sense to take outside counsel with you to a mediation, you have the authority to settle. As in-house counsel, you are the company’s authorized representative. There are no phone calls or emails back and forth asking for authorization. Many times, mediation is a fast way to end a case, and it requires substantially fewer resources than litigation would require.

Of course, not all cases will be resolved through mediation. Either party can walk away. Sometimes talks dissolve before any issues can be resolved. This is an unfortunate reality. But if you can explain to your client why mediation is useful, and why it is important, then you may be able to settle more cases efficiently.

Keywords: litigation, woman advocate, mediation, negotiation, settlement, in-house counsel, cost savings, managing expectations, discovery costs


Copyright © 2018, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).