The Mediator’s Proposal: The Ultimate Impasse Buster

The end of the day is nearing and the mediation has ground to a halt.  The parties have narrowed the gap between them, but cannot close it.  Is it time to suggest a mediator’s  proposal?  Does a proposed settlement amount coming from the mediator have a reasonable likelihood of acceptance?  Are the parties interested in having the mediator make a proposal?  If the answer to these questions is yes, then it is time to employ the ultimate impasse busting technique, the mediator’s proposal.

But what amount should the mediator propose?  Splitting the difference between the last demand and offer has undoubtedly been discussed with the parties and rejected.  Otherwise, a mediator’s proposal would not be necessary.  How does the mediator avoid the appearance of favoring one side over the other when the contemplated mediator’s proposal is closer to one party’s last position than the other’s?  Should the mediator have a reasonable degree of confidence that the plaintiff will accept the proposed amount?Should the mediator have a reasonable degree of confidence that the defendant will pay the proposed amount?   Is one of these factors more important than the other?

Negotiation with the Mediator – Another Impasse Buster for Your Consideration

You have reviewed and analyzed the mediation briefs and the parties have disclosed prior settlement negotiations and where they would like to end up at the conclusion of the mediation; or the parties disclose to you during the course of early caucus meetings what they would accept or pay in settlement.  Often, their goals are simply not in the same ballpark and a traditional negotiation, a series of demands and offers may not be the most productive way to proceed.  In fact, it may be a very counterproductive method of trying to resolve the case.What about having the parties negotiate with the mediator instead of one another?  Instead of carrying a non-starter demand or offer to the other side, why not tell the plaintiff that based on your discussions with defendants, the amount that they are seeking is not in the range that defendants will pay.  Of course, this can only happen after you have had a discussion with the defendants so that you can confidently make such a statement.  The discussion will then turn to why the plaintiff’s contemplated demand is too high in an effort to get the plaintiff to give the mediator a more realistic figure.  The same discussion then occurs with the defendant as to why their contemplated bottom line is not realistic and does not properly assess the risk of loss.

Ranges and Brackets — Impasse Busting Techniques for Your Consideration

The negotiation has ground to a halt.  The parties have been at it all day and they are frustrated that there remains a big distance between them.  The negotiations have proceeded in a traditional incremental way.  Plaintiff’s last number is over $1,000,000 and the defendant is stuck at $100,000.   At the rate things are going, it would take days to bring them into a zone of agreement.  Again, this is an opportunity for the mediator to strut her stuff.  Possible techniques to break the logjam include a consideration of ranges.  For example, the mediator might suggest the following:  Would you, defendant, settle the case in the low six figures meaning between $100,000 and $300,000 if the plaintiff would accept a number in the high 6 figures, $700,000 to $900,000?

If the parties do not like the mediator’s numbers, then the discussion turns to what numbers they would consider.  This is an invaluable discussion from the mediator’s perspective. It gives the mediator information about where the parties are willing to settle and provides a means to determine whether and at what ultimate figure the case can settle.  If the parties agree to the suggested range, the mediation has taken a big step forward toward settlement and compromise can ultimately be reached.

Winning At Mediation

A famous trial lawyer welcomed his junior partner back from a hard fought trial.  The lawyer congratulated his mentee on her win at trial.  The junior partner responded that, “you must be mistaken, I lost at trial.  The jury returned a verdict against our client.”  The senior partner responded, “But wasn’t the verdict less than the plaintiff’s last settlement demand?”  “Yes,” replied the junior partner.  “Then you won!” said the senior partner, “It is all about how you define win!”

What It Takes to Settle

I am a true believer in the evaluative approach to mediation.  I not only enjoy engaging counsel and the parties in a discussion of the issues in a case, but I know that this discussion will eventually lead the parties down the path to settlement of the case.  When the actual negotiation begins, I am a proponent of a principled negotiation in which the settlement offers and counter offers are tied to the evaluation of the issues of the case and the likelihood of success or failure at trial.  But the evaluative method only goes so far.  It is an effective way to narrow the gap between the parties, but it may not be enough to close the gap.  I see this routinely in cases where one party has a much stronger case than the other and in light of the strength of the case and based on the evaluative approach, that party’s last and best offer is close, but not enough to settle the case.  The reason lies in the mediation process and the psychological effect on the party with the weaker case of having the mediator consistently holding up the mirror to the case and working that party up or down during the course of the mediation.  Ultimately, I hear the refrain, “they just don’t respect us and our case.”  In spite of my efforts to persuade counsel and party that it is not personal.  It is personal for them.

After the evaluative method has been exhausted, and the parties have narrowed the gap between them, the question on the table is what does it take to settle the case.  Should the party with the stronger case, make a final effort to bridge the gap?  Is there a settlement premium that should be paid or accepted?

I believe that there is a settlement premium that comes into play and should be seriously considered for a number of very important reasons.

1.  The evaluation approach is not science.  Reasonable minds can differ.  There is the old adage that even the best case has no better than 80/20 odds attached to it and no one could quibble with the odds dropping to 70/30 or even 60/40;

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