Why Mediations Fail
Continuing our conversation, Gene proceeded to ask me several questions around good mediation strategies and tips to settle matters successfully.
GENE: What about the idea of using retired judges as mediators? I do a lot of insurance coverage work for policyholders, and the insurance companies usually insist on it.
MICHAEL: I mean no disrespect to retired judges, but really, I would rather pick 12 mediators off the street than 12 retired judges to mediate. Retired judges are accustomed to settlement conferences where they often suggest to each side privately, very early in the process, that their case has huge problems, and they need to get the case resolved. Effective mediation requires a lot more than that. I don’t view my role as simply carrying numbers back and forth. I’m usually on the phone with both sides well before the actual mediation to start getting information and to try to position the case for a favorable outcome. One other thing I’d like to say, though. For a matter to settle, all parties have to have skin in the game. That’s why I’m not a fan of mandatory mediation in the court system. It’s simply checking a box.
GENE: What kind of information do you look for in a pre-mediation submission or discussion?
MICHAEL: The first thing I want to know is, what is the procedural posture of the case? Have there been discovery motions? What’s been done? If one side claims they don’t have enough information, I will nicely ask them why a discovery motion hasn’t been filed. I also want to know about each side’s relationship with opposing counsel. Have you worked with them before? I find that there is less animosity between lawyers these days. But if there are issues, I need to know about them so that I can do my best to remove roadblocks. But with so many lawyers, often I get into a situation in which the lawyers don’t know each other. But I basically want to know about the personalities involved so I can begin identifying potential obstacles to getting the matter resolved. I also want to know whether there are any client control issues involved, because I can help with that as a mediator. I generally like to get the mediation briefs and review them before I call the lawyers from both sides and begin working the phones before the actual mediation session.
GENE: Are there some specific negotiation tips you can give?
MICHAEL: The most important thing is to do your homework thoroughly. I like to analogize to the issues with buying a car. Car salesmen like to have you drive the car first and picture yourself in it, so they can begin getting you hooked. Then a lot of them use the “4-square” method. You may be familiar with it. The salesman divides a sheet of paper into four boxes: your trade value, the purchase price, down payment, and monthly payment. This is supposed to help you and the dealership come to an agreement, but it’s really kind of a scam. The numbers are generally nonsense and are designed to distract you from the overall price of the car. They almost always lead to the old “good cop/bad cop” scenario where the salesperson tries to convince you that he’s negotiating on your behalf with the sales manager. To avoid getting the wool pulled over your eyes, you should do serious homework before going in. How long has the been on the lot? What’s the going rate is for that kind of car? Stay focused on the actual price of the car. Complex negotiations aren’t much different. You have to stay focused on the actual goals and not get distracted by all the noise, and the only way to do that is through serious homework. All the wonderful negotiation strategies in the world won’t help you if you didn’t do your homework. And I would say the second most important thing is patience. Don’t be in such a hurry to get to resolution. Take your time, ask your questions, get information so you can make good decisions.
GENE: What do you do when one side in a mediation is being unreasonable, especially with the first number? Because I do insurance coverage work, I often see that. Insurance companies and their lawyers like to prove how tough they are by coming in with lowball offers, even in horrific cases with clear coverage. I expect it after doing this for 37 years, so it doesn’t faze me, but clients, even sophisticated business clients, sometimes get angry and the negotiation goes off the rails.
MICHAEL: It’s an interesting question. I handle a lot of employment cases, and as a rule of thumb, plaintiffs’ lawyers usually come in with demands that are 3 to 5 times what they believe the claim is worth. But if I think an initial demand is so high that it may throw the discussion off the rails, I will take the lawyer aside and say, “that is not a productive first offer.” I will try to get them focused on turning the map around, which usually helps if they are really interested in getting the matter settled. I may say something like “if you demand $1.3 million, what do you think their counter will be?” If they’re honest, they will generally tell me a number that is quite a bit removed from the demand. My next question will be “how is that helpful then?” Also, I will usually spend time before the mediation working on getting numbers into a reasonable range. If one side or the other insists on an unreasonable first number, I will say something like, “I just spent time getting them into a better range. The number they’re giving you is just a signal.” My theory is that if I can do the groundwork in getting the first demand and counter into a somewhat reasonable range, I’m serving both parties well. My goal is to settle the case and not let either lawyer look bad in front of their client.
GENE: What do you do if you get the sense that either lawyer is being unreasonable?
MICHAEL: Well, the truth is that sometimes the clients can be smarter than the lawyers. I don’t try to drive a wedge between the lawyer and the client. I don’t think that’s productive. What I usually say is something like, “You’re paying the lawyers for their expertise, and they’re very good lawyers. But let me tell you how I’m looking at this, and how a court might look at it. I want you to be aware of the risks.”
GENE: You talked to me earlier about your “mediation bingo card.” I thought that was hilarious. What does it mean?
MICHAEL: It’s a collection of the sayings I often hear. “This is extortion” is a big one. The other big one, which is actually the center square on my bingo card, is “This is not about money, it’s about principle.” We all know it’s almost always about money. Sometimes I’ll ask the person who says this, “Are you rich enough to litigate on principle? Because litigation is pretty expensive.” So, I try to ask pointed questions to keep people focused on the goal, which is to reach resolution. I also try to give both sides as much control as possible over what the settlement looks like. Going back to my car analogy, I want them to see themselves driving the car. I personally try to keep focused on the fact that 95% of cases settle anyway, without mediators, so what’s my value add? My value add is to help deliver both sides a settlement that gives them confidence that they weren’t taken advantage of and eliminates any buyer’s remorse.
GENE: Mike, this has been great. Thank you so much.
MICHAEL: My pleasure.