By Patrick H. Reilly
Mediation is an unavoidable process in civil litigation. As a result of congested calendars, courts increasingly encourage parties to consider (and sometimes mandate) alternative dispute resolution methods such as mediation and arbitration. This article is intended to help the defense lawyer develop a strategy to achieve the best possible results in selecting, conducting and winning mediations.
Know the mediation type
Mediation can occur in many forms. It can be court-ordered during litigation and involve the trial court judge or the magistrate. It can be originated by the parties with a jointly selected neutral who could be a private practitioner, a former judge or a full-time mediator. It can be with clients present in person, clients present by video-conference or clients present by phone. It can be limited to the current case or fashioned as a global mediation in which multiple cases are discussed and valued at one time.
Know the form your client prefers, the form suggested by the opposing party and the form the tribunal requires. Each has its advantages and disadvantages. As a defense lawyer, you may prefer mediation where clients are present in person – not because your client needs to be present but because it is important for the plaintiff to be present.
When a plaintiff is present at mediation, she is more likely to be actively engaged in the process and form a bond with the mediator. This bond is often crucial to settlement. First, there are times when the plaintiff’s counsel is reluctant to push his client or tell her the weaknesses of her case. Instead, counsel may want to play “good cop” to the mediator’s “bad cop.” If the plaintiff is absent and fails to develop a rapport with the mediator, she will feel little incentive to settle the case. Second, there are times when the plaintiff’s counsel will recommend against settling the case because he believes that it should be tried or (perhaps) that his fees are insufficient. If the plaintiff has formed a bond with the mediator, she can decide, with some persuasion, to settle the case irrespective of the wishes of her counsel.
Know your goal
The goal of mediation is often – but not always – to settle the case. That may seem foreign to the mediator, but your job is to serve the client’s interests. Knowing your client’s goal for mediation beforehand is crucial to the formulation of a clear strategy. Ignorance of your client’s goal can produce poor results.
It is possible that your client may not want to settle the case, particularly if mediation is ordered early in the case when many facts are still unknown. In this instance, your goal entering the mediation should be to gather as much information as possible about the plaintiff. You may find that the plaintiff is in dire financial straits and may be unable to last through the long procedure that constitutes trial and an appeal. That information helps in your future negotiations. Conversely, you may find that the plaintiff is emotionally invested in the case, feels like a victim and is likely to reject almost any offer. This knowledge also provides you with information you need in future negotiations.
Your client may want to send a message through the mediation, even at the risk of foregoing settlement. The client may be defending a flagship product and want to make a statement through its negotiation style that future cases brought by the plaintiff’s counsel will be hard-fought – if not fruitless. In that instance, your negotiation strategy would likely be low, rigid offers that make a point. Although these offers will be unlikely to lead to settlement, your style will convey your client’s message and you will have met the client’s goal, regardless of the mediation outcome.
Your client may wish to resolve the entire inventory of plaintiff’s counsel. The client may be facing financial pressures from the negative press of the cases and could conclude that paying a premium to settle all the cases is in the long-term interests of the company. In that instance, your goal would be to parlay the mediation into a discussion of all the cases. To achieve that goal, you could highlight the value to the plaintiff’s counsel of a guaranteed lump sum without extended time and effort on his part litigating the cases. Using that lump sum as your entrée can serve the client’s interests in another way: It may lower the cost of the per-case settlements. The present value of an up-front check of $250,000 for ten cases may be of more value to a plaintiff’s lawyer than $30,000 payments for 10 cases spread over several years.
Know how to approach opening remarks
A traditional mediation (with a mediator and clients present) typically begins with a joint session in which each party makes opening remarks. The mediator usually informs the plaintiff about the purpose, logistics and rules of mediation. The mediator will often highlight the confidential nature of mediation and the role of the mediator, which is to act neither as judge nor arbiter but as a third-party go-between and confidant to facilitate negotiations.
Usually plaintiff’s counsel speaks first. His remarks may be inaccurate and inflammatory. If they are, you should use restraint and avoid responding, since they may be offered only to impress his client. If plaintiff speaks, she will likely address all the alleged injuries she has suffered as a result of the defendant’s actions. As with the comments of the plaintiff’s counsel, it does no good to attempt to refute the plaintiff’s allegations. Remember, mediation is not about setting the record straight but about settling the case (assuming that is your client’s goal); the former has no bearing on the latter.
In fact, the opening portion of the mediation gives the plaintiff her “day in court” and the opportunity to express directly to the “bad guys” what she has allegedly suffered. Even if you disagree with her allegations and her level of suffering, use restraint and keep quiet. Doing otherwise will make it easy for the plaintiff to view you as the enemy, which may lead to her decisions being based on emotion. Conversely, sitting silently and empathizing with the plaintiff will go a long way toward achieving settlement. Indeed, in my experience, there are few things more frustrating for the plaintiff’s counsel than a likeable and empathetic defense attorney. The plaintiff is more apt to accept a lower offer (sometimes over counsel’s objections) simply because she has come to trust the defense attorney who simply listened and empathized with her suffering.
To that end, if the mediator asks you to say anything at all, keep it simple. Express appreciation for the plaintiff and her counsel taking the time to participate in the mediation, explaining that mediation is a back-and-forth process. Explain further that your disagreement with the facts and allegations does not prevent your empathizing with her suffering. State finally that you hope for a resolution. Your goal should be to pleasantly move onto the next phase as soon as possible.
Know the opening offers
The next phase constitutes the remainder of the mediation. The parties are placed in different rooms, and the mediator will shuttle between them with offers and explanations. In this phase, the plaintiff typically makes the opening demand. Brace your client for this number – it is typically overly high. There are some defense lawyers (and many mediators) who believe that the opening number does not matter. I disagree. A lower demand typically means that the plaintiff and her attorney (1) do not realize the value of the case; (2) are there to get a deal done; or (3) know something bad about the case that you do not. You should alter negotiation tactics accordingly.
A higher demand typically means that the plaintiff and her attorney (1) are overvaluing their case; (2) are negotiating based on emotion; or (3) believe that a higher demand will result in a higher settlement number. Doing your homework on the plaintiff and plaintiff’s counsel could possibly inform your suspicion of what the higher demand means. If you don’t know, you are unlikely to know until their next offer.
Know your math
A degree in mathematics is not a requirement for mediation, but knowing basic math does help. One area of its usefulness is in calculating midpoints. The midpoint is the number halfway between the plaintiff’s demand and your client’s offer. For example, if the plaintiff’s opening demand is $1 million, and your opening offer is $25,000, then the midpoint is $512,500. This number is useful, particularly to the mediator, to get an idea of the high and low numbers for each party (for instance, the mediator could extrapolate that $512,500 is the lowest settlement number for the plaintiff and the highest settlement number for the defendant). While the opening midpoint is usually not indicative of the final settlement number, it is useful for tracking later offers.
Know the mediation moves
Contrary to typical settlement negotiations conducted over the phone, mediation can involve several different moves or offer styles. These include straight number offers/demands, brackets, conditional offers, mediator proposals, final offers, the “I never offered it, but we have a deal if you offer this number,” and “the walk.” The straight number offers/demands are straightforward. A demand is given by the plaintiff, usually consisting of a number (e.g., $1 million) and a counteroffer is given by the defendant (e.g., $25,000).
Sometimes, the parties cannot bridge the gap using straight offers and prefer to use brackets instead. Say the defendant counters at $50,000, and the plaintiff counters at $500,000. The defendant might not see sufficient progress in straight offers. He could therefore suggest a bracket of $100,000 to $200,000. This means that he will negotiate anywhere between $100,000 to $200,000 and no more. It does not mean that he will pay $200,000, but that he will continue negotiating in that range. This tool gives the mediator a chance to breathe life back into stalled negotiations. Even if plaintiff comes back with a bracket of $200,000 to $400,000, it has benefitted the defendant because it has driven the midpoint down to $200,000.
Mediator proposals, final offers and the “I never offered it but we have a deal if you offer this number” are all used at the end of the mediation. They usually occur when the parties are close, and the negotiations simply need a little pressure to close. They can be used to get as close as possible to settling while holding firm at your number. The plaintiff must then decide if she wants to walk away over $5,000 or $10,000, which is usually unwise.
Finally, walking is always an option. This is rejecting the plaintiff’s offer and deciding not to counter. “The walk” seems to occur more often early in mediations when the parties are just too far apart. For instance, say after the plaintiff’s $1 million demand, and the defendant’s $25,000 offer, the plaintiff’s counteroffer is $995,000. Clearly, the plaintiff is negotiating emotionally, or she has an inflated valuation of the case. Defendant can counter at $30,000 to see plaintiff’s counter. If plaintiff counters at $990,000, then consider walking. Further negotiation is accomplishing little and is only raising the floor of future negotiations. As always, that decision is up to the client.
Know what matters
It is critically important to know what matters to your client, to the plaintiff, to the plaintiff’s counsel and to you in order to conduct a successful mediation. For instance, knowing the case inside and out is essential, but oftentimes the defense counsel gets tangled in the unnecessary details of the case. For instance, the plaintiff’s suffering of pain for only a short period is a good fact and something that should be mentioned to the mediator, but it has little impact on settlement. What does matter is whether your client will be giving enough money to the plaintiff; harping on the duration of pain would be a waste of time.
Likewise, what often matters is who calls the shots for the plaintiff. You need to know whether the decisions on offers are coming from the plaintiff, her spouse, her child, or perhaps her lawyer. Knowing this information is important when evaluating the reasons for the plaintiff’s offers. For instance, the plaintiff might be giving emotional, and therefore high, counteroffers because the husband and son believe that the defendant caused the plaintiff to suffer. Alternatively, if the plaintiff’s lawyer is calling the shots, perhaps the offers are higher than they would be otherwise because he is accounting for his fees.
With the rise of alternative methods of dispute resolution, understanding the complexity of mediation is essential for the defense lawyer. Whether you have mediated one or 1,000 cases, it is important to approach each mediation the same way: knowing the preferences and goals of the client; the background of the plaintiff, plaintiff’s counsel, and proposed mediator; the manner in which the mediation will be conducted; what matters to the plaintiff; and how you plan on conducting the mediation, including your strategy for opening remarks and making offers. Know this material and win the mediation.•
Patrick H. Reilly is an attorney at Faegre Baker Daniels LLP and a member of the DTCI. His practice includes product liability litigation as well as sports & entertainment matters. The opinions expressed in this article are those of the author.