Mediation: Tips for Successful Negotiations

Melissa H. Katz, Esquire
December 2nd, 2009
By: Melissa H. Katz, Esquire and Wesley D. Allen, Esquire

In the mid-1990s, Virginia juries deliberated a case to a verdict in approximately 2500-3000 cases a year. In 2008, however, the number of jury trials reaching a verdict totaled fewer than 700. This decline is heavily attributed to the rise in Alternative Dispute Resolution, including negotiation, arbitration, and mediation. A case that goes all the way to trial is now a rarity, as mediation has become the nature of the practice. While not all cases will settle at a first mediation session, a high percentage of cases will ultimately settle with the assistance of mediation.
With the rise in mediation, it is essential for attorneys to become well acquainted and proficient in meditation, because it will soon be an expectation of attorneys’ clients. This process is preferable as a more cost-efficient, more personable, and less adversarial alternative to a jury trial. The following lists, prepared by TBMHJ for the 2009 VADA Annual Meeting, are helpful guidelines to mediation strategies and the pitfalls of mediation.

Top 10 Facts a Lawyer Should Know about Mediation

1. Know When to Mediate.
a. Evaluate your case. Before you choose to mediate, make sure you have enough information to realistically value your case.
i. Mediation may be ideal in the following cases:
1. When liability is not disputed;
2. When there are issues of comparative fault, if mediating in a comparative negligent state; however, this is inapplicable in Virginia, as it is a contributory negligent state.
3. When there are multiple defendants; and
4. When the cost of litigation is likely to exceed any verdict.
b. When to mediate early. Consider mediating early on if your case will be difficult to prove, or involve few witnesses. This will save the time and money associated with trial preparation and discovery, and you will avoid the unpredictability of a jury verdict.
c. Waiting to mediate. In complex litigation where it is impossible to fully evaluate the case without discovery, the parties are better off waiting to mediate until they have all the information they need to value the case.

2. Know What Kind of Mediation You Want.
a. Before selecting a mediator, discuss with opposing counsel how you want mediation to proceed. For example, a “broad” approach may be more appropriate in a divorce case than in a breach of contract case. A “facilitative” approach may not work for clients with unrealistic expectations, who might be more willing to accept the input from a neutral third-party. Discuss this with your mediator ahead of time.
b. It is helpful to discuss and to reach an agreement with the other side regarding the specific terms of mediation, including who will mediate, when and where the mediation will occur, and the financing of mediation.

3. Prepare Yourself.
a. Prepare yourself by collecting all pertinent facts in order to plan for possible compromises and trade-offs. Make sure that you fully understand your client’s needs, as they will guide your objectives for mediation. Come to mediation with a trial notebook. This could include your position statement, a recitation of the relevant facts, the elements of all causes of action, the evidence to support them, and information regarding damages. This will make it easier for the mediator to focus on the merits of the case.
b. Be able to present your theory of the case persuasively. You will garner respect and increase your credibility among the mediator and opposing party by cogently presenting your client’s theory in your opening statement during mediation.
c. Anticipate the other party’s theory in order to argue against it. Similar to litigation, you will want to address the weaknesses of the other party’s case in mediation, as it will bolster your decision-making in the negotiation process.

4. Prepare Your Client.
a. Prepare your client so that he/she will fully understand the mediation process and what to expect at mediation. After all, it’s the parties’, not the lawyer’s dispute. Therefore, your client should be fully prepared to discuss facts and assert his/her interests. The mediator will likely ask your client questions during the course of mediation. Know ahead of time what questions you expect the mediator to ask, and prepare your client accordingly. Ensure your client has realistic expectations and objectives for the mediation. This may include using role-playing strategies, allowing your client to account for negotiating possible outcomes and assisting them to identify reasonable ranges for settlement.
b. Prepare all parties involved on your side as to who ultimately holds the decision-making authority.
i. For example, in a personal injury suit, you will want to explain to your client that his/her insurance carrier or adjuster may hold the ultimate authority to make financial decisions. Likewise, you will want to prepare the insurance company for what to expect from mediation.
c. Discuss mediation strategies and prepare your client for his/her walk away point.
i. While the goal of mediation is settlement, there is no shame in walking away from mediation if the opposing party is unwilling to budge from an unrealistic settlement offer. If the opposing party is not agreeable to your client’s bottom line, it is time to walk away.
ii. Instances may arise where the client’s walk away point conflicts with the insurance company’s walk away point. It is therefore essential to fully explain to your client who holds the ultimate authority to make financial decisions and when to defer to those decision-maker’s authority.

5. Prepare the Mediator.
a. Prepare a confidential memo for the mediator identifying the issues, your client’s position, applicable law and cases, prior negotiations, and the strengths and weaknesses of your case. You should also come prepared with copies of all relevant documents you intend to present. This memo will prove to be helpful when making your opening statement at mediation.
b. Consider the use of demonstrative exhibits to use during presentation or with mediation statement. While photographs and chronologies often help a mediator to quickly grasp the facts, Powerpoint and video presentations have been described as veteran mediatiors as “boring and pendantic.”

6. Know the Strengths and Weaknesses of Your Client’s Case.
a. Evaluate all possible outcomes. Know the value, cost, and probability of all potential outcomes, for both settlement and trial. Consider more than just the facts and the issues; for example, be familiar with the jury pool and the secondary effects prolonged litigation might have on your client. Involve your client in this process.
b. Consider strengths and weaknesses if case is tried, including possible witnesses, experts, and cross-examination. These are all points to evaluate if the case is tried.

7. Know Your Endgame.
a. Know ahead of time when your client is ready to walk away from mediation, and whether he or she wants to risk the case going to trial. Before the mediation begins, you should identify all necessary components that must be in the written agreement, though some of these may change in the course of mediation. Preparing settlement documents, including the settlement agreement, before the mediation will allow you to effectively address your client’s objectives and assist you with “on the spot” drafting of the settlement agreement at mediation.
b. Again, discuss who has the decision-making authority with your client before mediation and how to reach your client’s objective.

8. Be Ready to Propose the First Reasonable Offer that You Can Explain.
a. Carefully choose your dollar offers and be prepared to explain the bases for these amounts. Proposing a reasonable starting point right away will get the ball rolling and build efficacy in reaching a realistic settlement.
b. Think ahead with regard to negotiating tactics so that you can confidently walk into the mediation.

9. Stay Open and Flexible.
a. Often times, parties come to settlement by employing creative problem-solving strategies. Being rigid and employing adversarial tactics will only quash the collaborative tone and goal of mediation. Viewing the process as a “joint problem requiring a solution” and not as a win-or-lose competition will assist in the goal of settlement.
b. Examples of Mediation Settlements:
i. Structured Settlements
ii. Future Payments
c. Do not limit yourself when brainstorming settlement offers. Think outside of the box. Often times, parties may not seek monetary damages, but rather they ultimately seek an apology or reconciliation. This may be the case not only in disputes among friends and acquaintances, but also in suits against big businesses where plaintiffs’ view the large institution is impersonal and unsympathetic.

10. Have the Authority to Settle.
a. Make sure both parties bring a representative who has authority to settle the case. Input from a third party not present at the mediation can disrupt the negotiating process. Plan accordingly to have all decision makers present. You should immediately notify all parties if a representative who has authority to settle the case cannot be present so that all parties can plan accordingly. Counsel should inquire about any limitations on authority from the outset of the mediation process.
b. Make sure you understand the extent of authority so that you can attempt to resolve the case within that authority.

Top 10 Mistakes Lawyers Make at Mediation

1. Being Confrontational.
a. The tone of mediation should be that of cooperation, congeniality and conciliation. Be professional and courteous. Establish a working relationship with the mediator, using them as an ally and resource. You will earn respect by using language of persuasion, not advocacy. After all, the client is in mediation to bargain in good faith.
b. This is your opportunity to present your theory directly to the other party. Hostility creates resistance to accepting any position. Being respectful when addressing the weaknesses in the other’s side case will only build your credibility among the opposing party and the mediator.

2. Failing to Adequately Prepare the Client.
a. Your client plays a pivotal role in mediation. The mediator will ask your client questions directly and will expect your client to address those questions. Prepare your client for mediation by ensuring that he/she can clearly articulate his/her needs and interests.
b. Prepare all parties and individuals with an interest on your side so that all know their respective decision-making authority. For example, an insurance adjuster needs to understand the process and strategy so as not to undermine it.

3. Don’t be Rigid.
a. Mediation is a collaborative process that requires creative problem-solving strategies by both sides. All too often, counsel treat mediation as an adversarial process, wrought with table pounding and threats to walk out of mediation. Such tactics and refusal to compromise undermine the mediation process and often obstruct any chance of reaching a settlement.
b. Plan ahead for creative settlement proposals. Remember, your client may have interests other than just monetary damages.

4. Showing Your Client’s Whole Hand.
a. Be careful not to reveal your entire trial strategy to opposing counsel. Listen carefully to opposing counsel’s opening statement – should mediation fail and the case go to trial, you should be aware of what arguments will be presented. The mediator will want to know the strengths and weaknesses of your case at the outset. Some litigators suggest you will appear more credible in the eyes of the mediator if you are candid about any weaknesses. However, others caution against revealing the weaknesses of your case, as opposing counsel will inevitably address them, and you may not want the mediator to convey these weaknesses to opposing counsel.
b. You may need to determine ahead of time what information you are not willing to share with the other side and/or mediator, so as to avoid any uncertainty at mediation.

5. Mediating Without Necessary Parties.
a. Often, there are parties that should be represented at mediation, who may not be formally named in the lawsuit, yet whose presence at mediation is essential.
i. Ex: The liability insurer in an insurance coverage dispute, or potential guarantors or indemnitors in a business case may want to participate in the mediation.
b. Counsel should ensure those representatives with the authority to settle the case are present. Input from a third party not present at the mediation can disrupt the negotiating process.

6. Mediating Too Early or Too Late in the Case.
a. There are no concrete rules as to when to mediate, as each case is different. Where parties have a persisting relationship that they seek to protect, and there are exigent circumstances, it is reasonable to mediate earlier rather than later. In any case, counsel should complete the requisite preparation, investigation and discovery in order to reasonably assess their client’s position.
b. Mediation is usually done to protect client and/or save litigation costs. Therefore, you must evaluate if these objectives are viable. If they are not, then mediation may not be in your client’s best interest.

7. Overshadowing Your Client.
a. Allow your client to speak with the mediator. Your client may feel more satisfied with the outcome of mediation, having expressed his or her concerns to a neutral third-party. Consider allowing your client to speak, particularly if he or she is a good witness and sympathetic. Note, however, this may not be appropriate in all cases.
b. Discuss with the mediator his/her manner of conducting mediation and whether it will be helpful to either side for parties to speak.

8. Not Allotting Sufficient Time for Mediation.
a. Mediation may progress over the course of several hours. Due to the nature of mediation, clients need time to “vent,” and re-evaluate positions they have held strongly.
b. All parties need to agree regarding time parameters for the hearing. Do not set yourself up for failure by not allowing sufficient time.

9. Failing to Understand the Status of a Pending Settlement.
a. If and when an agreement is reached, do not always assume the settlement is binding and effective. Problems arise if counsel leaves the client with a misunderstanding as to whether a binding settlement has been reached.
b. If a party seeks a binding settlement before leaving the mediation, one approach is to prepare a “binding term sheet,” which summarizes the agreed-upon terms. The term sheet states that counsel will prepare formal settlement documents, but tentatively, the term sheet, when endorsed by all parties, will reflect a binding and effective agreement.
c. Fully discuss and agree upon whether the Mediation Agreement will be confidential, and if so, the parties must agree to this in writing, pursuant to Va. Code § 8.01-581.22. However, note that while all memoranda, work product and other materials of mediation are confidential, the Virginia Supreme Court has held that the confidentiality concerning a Mediation Agreement is not absolute. See Perrault v. The Free Lance-Star, 276 Va. 374, 666 S.E.2d 352 (2008) (holding the circuit court did not err in ruling that in approving compromise settlements in wrongful death suits, because the court was not subject to a de jure requirement under Va. Code § 8.01-581.22 to place the portion of the mediation settlement detailing the financial terms of the compromise settlement, under seal, as Va. Code § 8.01-581.22 does not trump the requirement for a court to approve a compromise settlement, and the Appellants did not overcome the rebuttable presumption of public access to judicial records in civil proceedings).

10. Failing to Assert to the Mediator and Opposing Counsel Know that You Are Willing to Go to Trial.
a. Depending on the relative strength of your case, you and your client should be firm with the mediator and opposing counsel that you intend to go to trial if you cannot achieve your client’s BATNA (Best Alternative to a Negotiated Agreement). While you should fully participate in mediation with a good faith effort to reach a settlement, know that there are cases where going to trial is an appropriate resolution.
b. Be ready, willing, and able to walk away if you have exercised good faith efforts, but your objectives will not be met.

Disclaimer

This blog and the information provided has been prepared by Bancroft, McGavin, Horvath & Judkins, P.C. (“BMHJ”) for information purposes only and is not intended nor to be construed as legal advice. This blog may contain the opinions of the members and associates of this firm on various legal issues and is not legal advice. Read More