Just because many mediators don’t require mediation statements before the session is no reason to forgo them. Indeed, setting up a mediation for success often begins with a well-constructed mediation statement. That is especially true for commercial mediations.
These disputes often involve claims and counterclaims, disputes about unsettled areas of the law, and industries that may be unfamiliar to the mediator. There also may be human dynamics at play that—unlike in personal injury cases—lurk far below the surface. These factors make mediations of business disputes more difficult. A good mediation statement addresses these issues well enough for the mediator to get a handle on them.
Although preparing a mediation statement is more of an art than a science, there are several things that advocates can do to make the most of them.
First among those is to keep the objective in mind. The principal goal of a mediation statement is to prime the mediator to understand the dispute from the client’s point of view while giving the mediator enough ammunition to work with to see if there is a way to settle the case. It’s also a vehicle for an attorney to get his or her client to think about the dispute framed as a settlement discussion rather than a war ending in a jury verdict. The latter option is always on the table. But, especially after litigating for some time, it takes great effort for a client (and sometimes the advocate) to change mind-sets. The act of preparing a statement can help alter that mind-set before the session.
Looking at a case from the standpoint of possible settlement forces advocates and their clients to think about what the other side might need to make concessions. Perhaps they need an expert report on damages that shows that they have exposure that exceeds their insurance limits, or they need testimony of a third-party witness with key testimony, or certain discovery is critical, or they need to know about an opportunity for future business that both sides could benefit from that hasn’t been offered until now.
One of the few variables that advocates do control in a mediation is timing. Sending in a mediation statement early takes advantage of timing. The first party to submit its mediation statement gets the first chance to educate the mediator, to tell the story from its point of view, to set the agenda, and to frame the issues. When the mediation statement does that convincingly, it can be the single most powerful thing that an advocate does to set the mediation up for success. As the dispute becomes more complex, setting the stage before the mediation becomes more important.
Regardless of whether a party is the first to submit a mediation statement, sending a statement to a mediator well in advance of the session has another advantage: It gives the mediator time to digest the dispute, to allow the issues to percolate. Submitting the mediation statement at least a week before the session is a chance to get the mediator to start thinking about and working on the case. So, by the time the mediation session begins, the mediator is likely to already have a plan in place to mediate the matter most effectively.
The foregoing advice assumes that the mediation statement is confidential and only going to the mediator. But some disputes call for the parties to exchange mediation statements. There are many reasons to do this. Chief among them is that, unlike confidential mediation statements that are submitted only to the mediator, nonconfidential mediation statements that are exchanged by the parties enable the parties to state their case in a submission that all the decision makers likely will see, from opposing counsel, to insurance adjusters, to in-house counsel and key decision makers for the other parties. That ability to reach the people who will decide whether to settle is one of the advantages of exchanging mediation statements among the parties rather than submitting them confidentially to only the mediator.
If a mediation statement will be exchanged with the other parties, counsel should consider who specifically will be involved. If the other party likely will have a group of people involved in its decision making, which is common in large disputes and in large organizations, it can be beneficial to exchange mediation statements well in advance of the mediation to ensure that the other side receives it before it makes a decision on its settlement position.
While a party undoubtedly will discount its opponent’s arguments, those arguments and information will have even less impact if the opposing party has already determined how it is going to approach settlement. To avoid that problem, send the statement to the other side early, with three or four weeks being a good rule of thumb.
The mediation statement should make clear whether the document as a whole is for the mediator’s eyes only or is also being sent to the other side. Even mediation statements that are submitted to the mediator only should explicitly state which specific facts, defenses, and arguments have been revealed to the other side, what has not been revealed yet, what can be revealed at the mediation session, and what cannot be revealed.
Deciding what to keep confidential is not always obvious. While a key document or a report from an expert who will testify at trial will obviously come from a party, some revelations may be better left to the mediator. That is to avoid the skepticism—i.e., the reactive devaluation—that comes from receiving information directly from an adversary. Using the mediator as a vehicle for revealing information is particularly helpful in highly contentious disputes or those that have lasted for a long time. A good mediation statement should carefully calibrate what is revealed directly and what is better revealed through the mediator.
There should be enough law in a mediation statement that the mediator understands the legal claims being made, the major defenses, and the procedural posture of the case. Usually, there is no reason for long discussions of the law because the mediator is not a judge and won’t be deciding who wins and who loses.
There are exceptions, of course. If the dispute involves esoteric areas of the law or an area of law that is very unsettled, an overview of the law may be necessary. For example, consider a dispute between a depositor and its bank over the unauthorized wire transfer of millions of dollars out of the business’s account. The dispute would be covered by Article 4A of the Uniform Commercial Code, which is not an area of law that many commercial mediators are readily familiar with. It also involves statutory provisions that have not been tested often by the courts. In that type of case, the mediator is likely to need an overview of the law and enough of a discussion to give the mediator confidence that he or she both understands it and can apply it to the parties in the case at hand.
The economics of litigation is a topic in virtually every mediation. If a mediation is taking place and the underlying dispute is in arbitration, the tens of thousands of dollars that the parties will pay to the arbitrator is an issue. If the case is headed for trial in a month, the cost of litigating that trial, including attorney fees, experts’ fees, and travel costs, is an issue. When a trial is imminent, the disruption to business and witnesses’ lives becomes very real, too. If the case is a contingency fee case, the out-of-pocket expenses that the attorney hopes to recoup from a settlement are an issue.
Because a mediated settlement is an alternative to continuing litigation, estimating the economic costs of that alternative is almost always valuable. The more likely it is that a dispute cannot reasonably be litigated to verdict and still be economically viable, the more valuable a detailed discussion of those economics usually becomes. While an advocate ought to know the litigation economics of his or her own side, understanding those economics from the other side may be even more valuable. If one of the pressure points in a dispute revolves around the economics of litigation, the statement should address the issue.
While some mediations call for a settlement overture before mediation, some do not. In difficult disputes, the parties may need to spend some time mediating before one of them is ready to make a settlement proposal.
The hope—and the danger—is that a settlement proposal made in a mediation statement will be the place where the mediator begins when numbers begin to be exchanged. Whether a party makes a settlement overture before or in the mediation statement or not, parties should always carefully consider whether to make one.
It takes faith for a mediation to be successful; belief in the process, and trust in the mediator. The mediation statement should reflect that. Still, there are some cards that advocates won’t want to reveal on paper and others that may never be revealed at all. For items that fall between those two extremes, the mediation session itself is the best place to determine what to reveal.
Following the tips above can help advocates craft an effective mediation statement that both tells a compelling story to the right audience and gives the parties the best chance of having a successful mediation.
