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January 01, 2016

The Seven Deadly Sins of Mediation

An experienced mediator explains how to avoid self-inflicted wounds.

Joel Levine

After mediating hundreds of cases in all different fields and parts of the country over 18 years, I’ve reached a few conclusions about mediation that might be helpful to trial lawyers and that I’ve boiled down to seven deadly sins. Just as avoiding religious sins may not guarantee a place in heaven, avoiding my mediation sins can’t guarantee a favorable settlement. But they might at least lower the odds of self-inflicted wounds.Before laying out the sins, two caveats: First, let me say that my style of mediation is rather intensely proactive, and this article reflects the views of one who believes counsel, parties, and mediators must actively persuade each other in order to achieve their desired goals. Mediation theory is replete with references to “facilitation” and “party empowerment.” While I don’t diminish these characterizations, I truly believe participants in mediation are more concerned with results than process, and the road map that follows will lead you to that destination.

Second, I should also say that much, though not all, of my advice is specific to mediation with private mediators chosen by the parties. This issue of Litigation features an article by a magistrate judge about how to handle settlement conferences with the court. Unlike court-ordered settlement conferences with judges, mediation with private mediators presents greater opportunities for influence by the parties. Parties can select the mediator with the best style and subject matter background possible for their specific case. As lawyers with mediation practices to promote, private mediators often go the extra mile to bring about a settlement, while judges necessarily have less time and much more on their plates. Lawyers won’t refer or rehire mediators who aren’t all in, whereas judges have the ultimate job security. In private mediation, parties can be less guarded and don’t have to worry about things they say or do somehow bleeding into later rulings from the court, as hard as judges may consciously try to prevent that from happening. Clients are often present and more involved in mediation than in court-ordered settlement conferences. All of these differences color somewhat how lawyers should approach the two different processes.

Those disclaimers out of the way, the seven deadly sins:

1. Not Preparing

Without conducting an extensive statistical study, I’d guess that something like 85 percent of all cases settle in mediation. Yet, many attorneys who meticulously prepare for trial come relatively unprepared to mediations. Perhaps the traditional deadly sin of sloth is the culprit. Or maybe parties are trying to keep costs down. Thrift is often a virtue, but skimping on preparation for mediation can keep the results down as well.

First, when preparing, master the law. Advocates often quote it at mediation. Sometimes they’re right on point, sometimes their view of the current legal framework is debatable, and sometimes they’re more akin to Aesop. I’ve found one side’s adept use of statutes or cases that disprove “the law” presented as gospel by the other side (but without backup) is quite effective.

I recently mediated a case in which a defendant was reluctant to offer an amount sufficient to settle. He relied on an appellate decision that was generally on point, but his adversary produced a different decision rendered only seven days before the mediation with a similar fact pattern and contrary result. Factoring in the cost of an appeal to that state’s supreme court to resolve the conflicting appellate court decisions, the defendant increased its offer to an amount acceptable to the plaintiff. In another case—an employment dispute in which the plaintiff sought $1 million in compensatory damages—the company produced several cases holding that $150,000 was the upper limit for noneconomic damages and was available only in the most extreme situations involving clear proof of serious physical and psychological trauma. After agreeing on back pay and attorney fees, the amount allocated for consequential damages in the settlement was within the much lower range prescribed by the courts. In other words, come prepared to cover the governing statutes, rules, and precedents.

Then there are the facts. I’m always impressed when counsel hands me email, affidavits, deposition testimony, or other concrete evidence that the argument I’m delivering from the other side has more holes than Pebble Beach. Proactive mediators use all the ammunition parties will allow, so why not stock the armory?

Yes, I know you might want to save things for trial. But because so few cases actually go to trial and mediation might be your last, best chance of producing a tolerable result, rethink the balance between using what you have at mediation and waiting to surprise the other side at trial. Remember that the other side probably already knows about it, and the trial may never happen anyway. The statistics say it probably won’t.

Finally, understand your expert reports. Great trial lawyers know as much about the subject matter, economics, and calculations in their reports as the experts do. But for some reason, less capable attorneys sometimes decide to present expert reports at mediation without the ability to defend them or answer basic questions asked by the mediator or opposing counsel. The entire purpose of offering the report is defeated. In one case, I asked a well-regarded attorney some questions about assumptions used to derive various damage models and was told that he was going to rely on his expert (absent from the mediation, of course) when the time came. I asked why he was presenting the report to me if he couldn’t explain its conclusions. My question was innocent—I simply wondered what I could do to help when the other side asked the same questions I was asking. He then surprised me by saying, “What are you trying to do—embarrass me in front of my client?” You can guess whether I responded or merely thought: “No, you’re doing a good job of that yourself.”

Whether born of sloth or pride, lack of preparation contaminates all aspects of mediation. Given your duty as an advocate to ethically obtain the best results for clients and the number of cases that will be resolved at mediation, it would seem obvious that you should thoroughly prepare for the day before it inevitably arrives.

2. Choosing the Wrong Mediator

Mediation styles vary. Personalities vary. Compatibility varies. Cases vary. Fees vary. And as prospectuses prepared for investors state, results vary. This is why everyone has a bad mediator story. “He missed a critical point.” “She communicated our position incorrectly.” “He was too aggressive . . . passive . . . blasé . . . offensive . . . smarmy . . . sycophantic . . . distracted . . . unfocused . . . critical . . . uncritical . . . naïve . . . accepting . . . argumentative . . . un-mediatorial (one of my favorites) . . . insulting . . . arrogant . . . inflexible . . . [fill in the pejorative blank].”

This isn’t surprising—not everyone wants the same thing, and not every mediator can supply it. Mediators have different approaches, though the best try to adjust their styles to fit the circumstances of the case. They range from strongly proactive, evaluative, judgmental, and assertive to passively transformative—asking few questions and allowing the parties to lead in every aspect of the process. Similarly, some mediators have substantial legal experience while others don’t. Some have substantial backgrounds in commerce and business, while others are generalists. Some have conducted many mediations and enjoy excellent reputations in the community; others are tyros and relatively unknown.

Ask yourself what type of mediator you want in your specific situation. Do you want someone who will battle with the other side, dissecting their weaknesses? Can you tolerate it when the mediator exposes yours? Or do you want someone non-confrontational to calm the contentious waters?

Many mediators use the traditional facilitative, non-judgmental method. Some organizations, like the U.S. Postal Service, require mediators to exclusively use the “transformative” style of mediation. This approach eschews direction, judgment, evaluation, and opinion, and it encourages the parties to take charge of the process.

Still, attorneys typically tell me they prefer proactive and evaluative mediators rather than traditionalists whose passive goal is to simply get people to talk to each other without interjecting themselves into the dialogue. Perhaps it depends on whether you are mediating a one-off situation where the parties will never see each other again. An assertive mediator who settles a case despite a host of bruised feelings might be more appropriate in “kiss goodbye” scenarios than in ongoing situations pitting employers against employees, husbands against wives, or business partners against business partners. Of course, nothing prevents a proactive mediator from settling a one-off case without a scorched-earth approach.

If you do select a proactive mediator in hopes she will clearly pinpoint weaknesses in the opposing party’s case, don’t attack her when she does the same to yours. Many proactive mediators know they’re doing a good job when each side accuses them of favoring the other.

Styles vary a great deal too. One mediator goes around the room asking everyone to talk about themselves for a couple of minutes. Some litigators have told me this was a colossal waste of time. Others said it humanizes people and creates an environment conducive for settlement. Some mediators book half days and tell you that if you haven’t settled by 1:00 p.m., it’s over. I’ve heard both that this is ineffective because negotiations ripen at their own pace and settlements are lost when everyone has to leave prematurely, and that the artificially imposed pressure moves people along and accelerates a process that would otherwise just waste lots of time.

Using retired judges brings prestige and authority to the table. Many are very effective, and some even might dare tell you how the case will come out if you don’t settle. Non-judges might do the same. Of course, no one can predict the outcome of a case, but you might prefer a mediator who offers an opinion. Along the same lines, some maintain that a mediator need not have significant experience in the subject matter of the dispute. But in my experience, parties seem more at ease with a mediator knowledgeable in the relevant field or fields.

While not everyone agrees with me, I’d suggest choosing a creative, proactive mediator who has an understanding of the mediation process and a track record of bringing people together in various settings. It’s helpful but not necessary if the mediator has mediated lots of cases. What counts is a flexible, intelligent person able to handle a wide range of situations. Look for someone with subject matter experience who is also fair and just.

You might not think “fair and just” matter much in a mediator. After all, the mediator isn’t the decision maker in what is quintessentially a consensual, self-determinative process. But consider this: A time comes in most mediations when the parties approach the final number. The paying party wants to be certain it pays the absolute minimum it can get away with, and the payee wants to be certain it is receiving the absolute maximum possible. At this point, counsel often look to the mediator to wrap things up and rely on the mediator to bring the parties to the ultimate amount. If your mediator is knowledgeable in the area, experienced in negotiations and settlements, and, perhaps most importantly of all, a fair and just person, the parties will feel more comfortable with the settlement sum. While the cynical essence of most good settlements is that everyone goes away unhappy, I like to think that, in most of the cases I mediate, the parties are, if not ecstatic, at least satisfied that a fair resolution was reached.

The bottom line: Mediators are different, have different personalities and temperaments, and work with different attorneys in different ways. Ask yourself what you wish to accomplish at the mediation and what you think is the best way of achieving that is; then choose the best mediator for the job. And choose one who leaves a settlement with joy and an impasse with abject dejection. The mediator should care as much or more about your matter as you do.

3. Not Preparing the Mediator

The benefit of preparing a proactive mediator is incalculable. Mediators aren’t arbitrators or judges, and they don’t render decisions. But they do influence the ultimate outcome, very subtly at times. The more the mediator understands your positions and the weaknesses of the opposing side, the more persuasive the mediator can be presenting your views.

A well-prepared mediator can jump-start the process and bring comfort to all participants because he understands the case. This will save a great deal of time—particularly in cases with complicated factual and legal situations. Some cases are settled by restructuring financial obligations, and a creative mediator equipped by the parties to thoroughly review the situation in advance can analyze the impact of various formulae, payment terms, collateral, interest, guaranties, fees, and other components of a settlement. The mediator can help restructure businesses; leases; calculations of earnings before interest, tax, and amortization; disability payouts; fair use agreements; license terms; reimbursements; outsourcing; coverage and allocations; structured settlements; franchise reinstatements; and a wide variety of resolution mechanisms. But no matter how bright or experienced the mediator, you significantly limit the mediator’s ability to digest information, synthesize the necessary material, and assist you if you present him with situations for the first time at the mediation session.

Most mediators will give you an opportunity to speak to them in advance of the mediation. Not enough attorneys take advantage of this. Mediation summaries or statements that discuss matters not obvious from the documents or pleadings are also very helpful. Not only will the mediator gain insight into your view of the history and present posture of the case, she will use your summary as a checklist of points to challenge the other side. Although mediation statements are confidential, it’s most helpful if you allow the mediator to use it in conversations with your adversary.

Mediators are neutral, but they’re also human and will inevitably be affected by the facts and law presented to them. There’s nothing wrong with legitimately influencing the mediator. After all, the mediator is, in a way, your spokesperson in the caucus room. Consider providing the mediator questions to ask the other side. My openings include a brief review of the case and questions I’d like addressed. These are neutrally presented; emanate from the law and the facts provided me; and would be, I assume, more or less the same questions a judge or jury would ask.

Would your client prefer to resolve this matter and continue a relationship with the other side? Do you fear showing weakness if you broach the subject of such an ongoing relationship? Ask the mediator to suggest “on his own” the possibility of resolving this unfortunate dispute and reestablishing a relationship going forward. Before we start, I often privately ask parties if they would like to continue a productive relationship. Yet, many other mediators don’t approach reconciliation unless counsel suggests it in their mediation statements or pre-mediation phone conferences.

The permutations are endless, but it’s axiomatic that a well-prepared mediator will do better than one showing up tabula rasa. So help the mediator help you.

4. Not Preparing the Client

Ugh, more preparation. Boning up on the case as counsel and working with the mediator aren’t enough. Most clients need it too. Some are very familiar with litigation and the mediation process. Many are not. Explain it to them.

First offers are often the biggest shocks to mediation novices. In a case that should settle for $1 million, the plaintiff demands $15 million and the defendant counters with $10,000—each morally outraged at the “bad faith” of the other. Yes, I know you’re smiling right now—I certainly am as I write this—but what’s commonplace for us can often alienate and polarize parties. While good mediators have ways of shortcutting to the nub, the Turkish bazaar process of protracted bargaining toward a settlement is often anathema to first-timers unless they’ve been filled in on what’s coming.

The second biggest shock to parties is when a neutral mediator begins disassembling their case and lauding the merits of the opposition. Please, as a favor to the brotherhood and sisterhood of mediators, let your clients know what to expect from the mediation process. Make them understand that the same process is occurring in reverse across the hall. This doesn’t mean clients should disregard the mediator’s observations; it’s just that they should understand that a good proactive mediator is an equal opportunity offender.

Explain the world of mediation so that your client is comfortable from the start. It will make progress easier and certainly lower your client’s blood pressure.

5. Not Asking the Mediator for Help

This mediation foible might most resemble the deadly sin of pride. It always amazes me how the very best trial lawyers will ask for my help at various times during the mediation process while neophytes trying to impress will often attempt to appear omniscient. I recently conducted a four-party/four–law firm construction mediation with multiple counter- and cross-claims. Three groups asked me to structure settlements among them, but one side was uncooperative. After protracted negotiations and wasted hours caused by the maverick attorney’s refusal to participate in the normal give-and-take of the group’s dynamic, I have little doubt his client sought other counsel for future matters.

A good mediator can help restructure a severance or suggest payment terms for a buyout or escalators in a ground lease. If you choose an attorney with extensive business or legal experience in a particular area, you can ask the mediator to help you. I think I’d feel underutilized if all I did was carry messages and numbers back and forth between caucus rooms. Not all mediators can recommend that prepayments first be applied to principal rather than monthly installments, or that the license fee on Brazilian nuts be reduced to $0.02 per dozen, or that a buyer suspicious of a seller’s rent roll nevertheless close on a shopping center with the seller leasing (back) 20 percent of the center with a right to sublease. But many can suggest these structures and more—whatever you need—if you’d only ask.

Best of all, doing this won’t embarrass you in front of your client. In fact you can score points with your client by letting on that the reason you chose this mediator was because he was knowledgeable in this area and can help you frame proposals as well as evaluate whether the bad guys’ ideas are fair. It takes strength and confidence to ask for help, as most clients will appreciate. He who knows all, knows nothing.

6. Insulting Everyone

Now we come to the deadly sin of wrath. For some reason, certain attorneys think it’s helpful during their opening to look directly at the opposing party and advise them of their shortcomings and questionable birthright. How they think calling someone a crooked son of a you-know-what will be conducive to a mutual settlement is beyond me. I also get a kick out of the lawyer who repeatedly lets the other side know what a good attorney he is—far better than his counterpart sitting across the table, the implication is clear—and how he has never lost a case. There are an infinite number of ways to be offensive, and if your goal is to kill the mediation by creating an environment no reasonable human being would tolerate while maximizing the amount you can charge during the contentious litigation to follow, you are on the right track.

On the other hand, if your goal is to resolve the dispute, the prudent approach is to acknowledge that you’re there because both sides have points of varying merit, you appreciate the costs and expenses and unpredictability of litigation, and it would be in everyone’s interest to try to fairly resolve your differences. It’s OK to add that we are here in the spirit of productive resolution—maybe even conciliation. The purpose of mediation is to explore possibilities of settlement. You believe strongly in your client’s case, have tried many cases before, and are obviously fully prepared to go forward if need be.

In other words, during the opening you want to create as collegial an atmosphere as possible while letting the other side know you are capable of going the distance if necessary. If you do create a harmonious atmosphere, there are things you can do later in the mediation that would otherwise have been precluded by earlier offensive behavior. I recently brought one side’s counsel into a caucus with the other side to explain a very complicated set of regulations I didn’t fully understand. In the process, both lawyers began explaining things as if we were all on the same team. We rejoined the entire group. I sat quietly and watched the beginnings of a resolution unfold. The key was that the client trusted the attorney for his opponent; thus, the conversation took on a tone of “we have a mutual problem to solve,” rather than “your client is trying to screw me.” This sense of joint purpose also works among attorneys when they treat each other with respect during the mediation. Remember, mediation isn’t about you—it’s about getting your client out of litigation with as fair a result as possible.

Last, I guess I should also say be nice to the mediator. “Nice,” a quality shunned when being offered a blind date, is greatly underrated in real-world interaction. Because mediators can influence the outcome of a settlement—even if only within a narrow range—it never makes sense to alienate people who are trying to help you. Niceness entices.

7. Lack of Clarity

You remember the game of telephone you played when you were a kid. The idea was to form a line of people and whisper a few sentences in the ear of the first person in line. She whispers what you said to the next person, and so on down the line. When the last person repeats what he heard, it differs significantly from the original.

Even communications between two people become muddled in the minds of the listeners. During mediation, I’m often told of a statement “candidly” made by opposing counsel during an unguarded moment, only to learn a few minutes later that the lawyer who supposedly said it has a completely different memory. The person relaying the conversation tells me opposing counsel said his client would take $500,000 to settle the case, but opposing counsel is incensed because “what he actually said” was that his client wouldn’t consider an offer of less than $1.5 million. If I had a peppercorn for every time attorneys recounted conversations differently, I’d have a ton of peppercorns without the foggiest idea of what to do with them.

Now interpose another ear and mouth, and imagine how imprecise communications can be. Good mediators repeat what they should say before leaving the caucus room and write it down to be doubly sure. Good litigators make certain there is perfect communication, first between them and their clients and then with the mediator.

Three common examples illustrate the point. After six hours of mediation, the defendant made an offer acceptable to the plaintiff. When drafting the settlement, the defendant said for the first time that its offer included everything paid to the plaintiff in the past. Because the defendant had paid the plaintiff $1 million before any dispute arose and then ultimately agreed to settle the case for $1.5 million, the plaintiff naturally believed it was receiving a new $1.5 million, not $1.5 million less that $1 million already paid. In reality the defendant was offering $500,000 to settle, though the plaintiff thought the entire mediation had been working toward $1.5 million. The plaintiff was understandably infuriated, and the mediation cratered.

My second example needs no illustration for anyone who has settled many cases. It’s the situation where, all day long, the parties negotiate over a sum of money, and after they agree, the defendant says for the first time: “Well, of course, we can’t pay this all at once.” It’s one thing to raise installment payments early on or later to try to discount the payment stream with a reduced flat sum upon signing. But it borders on bad faith to wait until the very end of the mediation to attempt to modify the deal with gradual payments, despite knowing the other side has been negotiating for a lump sum all along. Not only does this ploy polarize people and create an obstacle to settlement; it seldom works. The recipient’s response usually is that if the paying party wants to pay over time, the principal balance will increase and bear interest. Then security comes up, adding several more hours to the mediation. Of course, these cases also get settled, but whether through intent and artifice or just sloppy communication, the settlement has unnecessarily been jeopardized.

The third example consists of waiting until the end of the mediation to state that the deal is subject to approval of the board, chief executive officer, executive committee, commission, municipality, wife, spiritual advisor, whomever. In many cases dealing with government, the parties know that getting later approval from some official body or public officer is a prerequisite to completing the deal, but if that isn’t obvious, parties should say so at an appropriate time during the mediation. My suggestion is to state it during the opening. Some attorneys believe that if they mention it prematurely, they are signaling too enthusiastic a willingness to compromise. If that’s true, waiting until the end could be destructive. “I’m not sure where this will go, but you need to understand that if we do manage to reach an agreement, it will have to be subject to the approval of the board” is a rather benign formulation of the prerequisite.

The more complex the issues, the more precise counsel and the mediator must be. Many settlements involve 5, 10, 20, or more different deal points, and the number of language points in the settlement agreement can exceed 100. But even with more manageable settlements, precision of communication is critical.

Some believe the real seven deadly sins threaten the soul. In mediation, they will threaten what might be a valuable opportunity to resolve the case, to say nothing of saving time and legal fees. Because most of your cases will settle, make the most of mediation by preparing diligently, choosing the right mediator, asking for help when appropriate, and being collegial and clear. Good, and maybe even divine, consequences will follow.

Joel Levine

The author is a full-time alternative dispute resolution practitioner based in Florida.