LAWYERS, PREPARE FOR MEDIATION
Copyright © Joyce F. Glucksman, P.C.All rights reserved.
Mediator ~ Arbitrator
Mediation is one of the most important and powerful tools in a litigator’s arsenal. If used correctly, it can bring a much more satisfactory resolution to a client’s case than one that ends in court with the attendant stress, expense and potential heartbreak of a trial. As Mahatma Gandhi, the revered Indian leader, lawyer and philosopher once said, “An eye for an eye only ends up making the whole world blind,” yet this attitude prevails at trial where one side wins and one side loses. In reality, both sides lose something when a case goes to trial. Mediation allows the parties to craft their own solution to a problem. This solution meets the parties’ needs and, in many cases, results in a better outcome than a win in Court. It also eliminates the uncertainty of an appeal and possible retrial.
To begin with, it is imperative that Counsel choose a mediator with the right skill set. Something to consider is whether this is a mediation between two entities who will never have to deal with each other again such as parties to a personal injury or commercial contract case? If so, you will want someone skilled in facilitative mediation to help the parties come to a common ground. The mediator will facilitate the exchange of information and help brain storm ideas for resolving the dispute. He or she may ask questions designed to show the parties the other side's strengths and their own weaknesses. Is one party or their attorney unrealistic about the value of the case? In that case you want an evaluative mediator who is familiar with what the juries and courts in the area typically award as damages in the particular type of case involved. Unlike the facilitative mediator, he or she is sought to give their opinion of the value of the case. This approach is best done towards the end of discovery when the facts have been fully developed. Be aware however, that if the case does not settle, one party may use the last settlement offer as the basis of an offer of judgment and subsequent request for attorneys fees if the court verdict was not at least 25% higher than the last defense offer. If the parties will have continuing involvement with each other consider someone skilled in transformative mediation, which seeks to improve the relationship between the parties as part of the solution to a matter. In transformative mediation the goal is to empower and recognize each person capacity while appreciating the other party's interests and views. Transformative mediation is especially useful in employment cases involving reasonable accommodation for a disability or religious requirement. Most mediators use a combination of two or more of these styles to help the parties reach an agreement.
To illustrate, Acorn, Inc. has a 10 year contract to deliver 100 widgets to Best, Ltd. by June 1 each year in order for Best, Ltd. to be ready for the 4th of July celebrations. The parties included a liquidated damage clause if the delivery is late. In year five Best, Ltd. received the widgets on June 15 but, by canceling vacations and using workers overtime they are ready for the 4th of July celebration. These actions caused morale at the company to plunge to an all time low. Best, Ltd. sues Acorn, Inc. for breach of contract claiming actual and liquidated damages and seeks to terminate the contract. A good mediator, in addition to using her facilitative skills including good interpersonal skills and good judgment, might also do reality testing in a caucus with Best, Ltd. By reframing one of the the issue to be the dollar value of employee morale and asking the question "aren't liquidated damages used where the parties can not determine the exact amount of damages" the mediator leads Best, Ltd. to agree that a court would probably not award both liquidated and actual damages. The mediator might also ask if some of the overtime could have been avoided if Best, Ltd. recalled one furloughed employee for a week of straight time. Looking at it that way Best, Ltd. agrees this would have saved money and mitigated some of its damages. The mediator also talks to Best Ltd. about why the parties included a liquidated damage clause and whether that precluded early termination of the contract for delivering the widgets late. Acorn, Inc. takes the position that it owes no damages because Best, Ltd. was ready for the 4th of July. In a caucus with Acorn, Inc. the mediator discusses the cost of recalling the furloughed employee versus the overtime payments and notes that the personnel cost either way is still greater than the liquidated damages. Acorn, Inc. wants to enforce the contract for the next five years. The mediator might further suggest that the first four years of the contract were very lucrative for Acorn, Inc. and the next five years could also be as lucrative if the parties could get past this issue. Acorn, Inc. sees the value in this and agrees to pay some damages in excess of the liquidated damages as a gesture of good will even though they were not required to do so. The parties can now come to an agreement about the amount of damages and continue their association successfully.
Counsel should consider whether the case calls for a mediator who is empathetic and engages in “shuttle diplomacy”or one that is all business and who will pressure the parties to settle. It is important that the opposing counsel respect the mediator, especially if it will be necessary to engage in reality testing. Other things to consider include whether either party or the case require an authoritative mediator like a former judge? The mediator must be able to gain the client’s trust particularly where the client thinks their “fender bender” is a “million dollar case.” Some mediators are better dealing with emotional issues than others. These mediators are needed in many divorce cases. In every case counsel should seek a mediator who has patience, is tenacious and creative, one who can go behind the pleadings and see each party’s real interest. While knowledge of a subject matter may be helpful, mediation is a process which requires skill. A subject matter expert is not necessarily the best mediator. Personalities and gender may also come into play in selecting a mediator. You want a mediator who is easy to talk to but someone the other side trusts and respects too. Mediators must be sincere and empathetic, intuitively understand interpersonal dynamics, be confident and open minded.
Counsel should also consider the timing of mediation. In some cases such as those with insurance that has a single limit for defense and damages, early mediation before large attorney’s fees limit the money for damages available may be the best course. In some cases, especially where the courts are prone to issuing summary judgments, defense counsel often want to wait to see if the case survives summary judgment. In cases where the parties will continue dealing with each other, early resolution and return to a positive relationship is often sought.
Once the mediator is selected, counsel should talk to him or her and/or prepare a pre- mediation statement. Whether orally or in writing, the mediator should be informed of the issues in the case, the positions of the parties, previous offers of settlement and impediments to settlement. Let the mediator know if the client has difficulty accepting the real value of the case and the negatives which could cause him to lose the case. If opposing counsel is the problem because he feels the need to grandstand for his client, alert the mediator to this as well. Counsel should tell the mediator if there are special emotional issues involved or if a party is overly concerned about setting a precedent such as in the employment setting. Attach the most relevant documents to a pre-mediation statement including the complaint, answer, dispositive motions, responses and replies and court orders. If the mediator has this information before the mediation he or she can begin thinking about ways to deal with issues and problems and not allow them to derail settlement.
Counsel should prepare their client for mediation. A responsible party representative with authority to settle the case should always be present at any meeting when the party is a business. If the other party is an individual, having a corporate manager or executive present shows the individual that the business takes the matter seriously. If someone with full settlement authority is not present, as is often the case with insurance adjusters, they should be immediately available by telephone. It is a waste of everybody's time and creates a negative impression if the defendant's representative has unrealistically limited settlement authority.
In addition to explaining the process (and it is a process), the attorney must probe his or her client for what they want to get out of the mediation, and what they really need to resolve the case. The lawyer and client should discuss interim positions which might be proposed by either side or the mediator and still be acceptable. Counsel should help the client understand each part of the process and his or her role in it. The joint meeting at the beginning of the mediation may be hard for the client. Whether the client or the lawyer gives the opening statement, the client must be prepared to hear the other side’s factual allegations and view of the case. It may be unpleasant, critical of the client, demeaning, dismissive, condescending or bombastic because that is opposing counsel’s style or opposing counsel is trying to impress their client or intimidate this lawyer’s client. Being forewarned may help the client endure a difficult time.
Some mediators want the lawyer to give the opening statement while others prefer to hear from the client. Some allow the parties to chose who will give the opening statement. Unless you know for certain that the lawyer will give the opening, the client should be well prepared to do so. For many people, public speaking is the greatest fear in life. If this is true, counsel should try to get the mediator to allow counsel to give the opening statement. If the client must give the opening statement, a well rehearsed opening can calm some fears. Point out that this is the client’s time to shine. Work on things such as eye contact, gestures and posture. Your aim here is to convince the other side that you can make the case easy for a jury to understand and, that the client will be a formidable witness should the case not settle.
Counsel should also explain the caucus process including the fact that just because the mediator spends more time with one side than the other does not mean that he or she is biased. Inform the client that there may be times when the mediator will want to speak to the lawyer or both lawyers alone or perhaps the client alone and she should not be concerned or read anything into it. The mediator is just trying to facilitate the parties in reaching an agreement. Advise the client they should be prepared to stay at the mediation a long time, even into the evening if progress is being made so they should arrange their schedule accordingly. In preparation for mediation the lawyer and client should discuss questions that the mediator may ask, either on his own or that the other side has asked in caucus, which could facilitate reaching a solution. Prepare for questions which will seek clarification of the party’s positions and obstacles to resolution. Counsel should point out that all discussions in caucus will be confidential unless the party gives permission to the mediator to share that information..
The client should be asked to think about what a jury would think of her case. Counsel may share with her client possible mediation outcomes other than money such as obtaining an apology or providing for the purchase of life insurance to cover the payment of a debt over time. These are things which may be obtained in mediation which could not be obtained in a trial. Most mediators are skilled at thinking of creative options. Indeed, one of the benefits of mediation is that there is a wider range of solutions available in mediation than those which are available in court. In all cases, mediation is a compromise where each party gets some of what it wants and loses some of what it wants. Indeed, some lawyers think that if both sides are a little disappointed, it is probably a fair settlement. As part of preparation, the attorney should go over the weaknesses in the case and the strengths in the other side’s case, not to discourage the client, but rather to prepare her for the inevitable reality testing. Mediation may be the first time a client hears the weaknesses in their case from a neutral third party. Attorney and client should also discuss the costs of a trial and the possible capriciousness of a jury. Finally, the conversation should turn to the intangible benefits of a settlement. It brings a matter to a conclusion so that the parties can go their separate ways or continue what could have been a broken relationship.
If the case settles the parties’ attorneys with the help of the mediator should write a settlement agreement while everybody is present. It should include all the agreed upon terms. If there isn’t time to write an agreement then all the terms of the agreement should be written and signed by the attorneys and their clients. In the alternative all the terms can be dictated and agreed to in the dictation by all parties and counsel. An agreement “in principle” or with the major terms specified is not good enough. Inevitably one party or the other will insist on a term which they consider essential “housekeeping” or “boilerplate” such as confidentiality which was not mentioned when the parties were in mediation. Many attorneys find it useful to take a partially completed draft settlement agreement to the mediation. This draft would include all “boiler plate” or the client's required terms such as confidentiality, the obligation to notify the other side if subpoenaed for a deposition or records, the amount of time a party has to complete whatever that party agrees to do, etc. That way important terms are not forgotten in the rush to leave the mediation when everybody is tired and relieved that an agreement is reached.
If the parties fail to reach an agreement, don’t despair. In many cases the negotiation continues with or without the assistance of the mediator. Settlement may occur days, weeks or even months later.
In conclusion, with proper preparation and selection of a good mediator, eighty (80%) per cent of cases can and are settled to the parties satisfaction. Just make sure to put all the settlement terms in writing.