The mediation philosophy approach outlined below is the method I have found to be the most successful in resolving actual or potential civil litigation cases. Those cases, at mediation, or if they go to trial, are resolved primarily either with an award of money to the plaintiff, or a defense verdict. In settlement negotiations of such cases, while there are issues that need to be addressed other than money, it usually is the failure of the parties to agree on the financial terms that keeps the case from resolving. The approach outlined below is for cases in which money is a primary concern of the parties.
A mediation usually consists of three phases. During the first phase the mediator gets information from the parties, and facilitates the exchange of information between the parties. Phase 2 is positional bargaining, and further refinement of issues. Phase 3 is closure and settlement. During phase 3, the mediator is often asked to perform an evaluation function, because positional bargaining by the parties has reached an impasse. The mediator, by performing an evaluative function, if an impasse is reached, can assist the parties to reach a settlement on financial terms.
I. Phase One – Exchange information and educate the mediator.
This phase has three goals: understanding each party’s interests; providing efficient due process to the parties; and clarifying which facts and legal positions are agreed upon, and which are disputed, and why the dispute exists.
Goal One – Understanding the Parties’ Interests
One reason that mediation is a more efficient form of justice than litigation, is that in mediation the parties can structure the result they want, rather than having to accept a result that a judge or jury determines for them. At the beginning of the mediation, the mediator needs to determine the parties’ interests, and explore with them settlement structures that are consistent with their goals, some of which may be mutual. The mediator’s job is to understand the parties’ interests and needs, and to be creative when exploring with the parties how these needs can meet as part of a settlement structure.
Goal Two – Provide Efficient Due Process
It is fundamental to our system of justice that, before a legal dispute is resolved, each side is entitled to “due process”. To reach resolution of a dispute it is therefore often important that each side have an opportunity to present their views on the issues, sometimes to each other and certainly to the mediator, and also, by the end of the mediation process, to believe that their views have been heard and understood if not by the other side, at least by the mediator. Mediation is an efficient way for a party to get the due process they deserve before a dispute is resolved, much more efficient and often much more effective method of getting due process than litigation. Often, once a party is convinced their views have been heard, they will then be ready to move toward resolution.
Goal Three – Clarifying Facts and Legal Positions
Prior to the mediation, the parties often have not exchanged enough information to accurately evaluate the case. The mediator’s job is to explore the parties’ financial and legal differences, and, to the extent the relevant facts or applicable laws are undisputed, to let the parties know those aspects of the case on which they agree, and which issues remain in dispute.
In the game of litigation, sometimes one party will have possession of evidence that they consider to be a “smoking gun”, which the other side does not know about. Often a party will want to keep this information secret from the other side. To achieve the fair and efficient justice that mediation can offer, both sides usually need to, at some point, put all their cards on the table. When, and if a party will put all of its cards on the table, is a decision that is solely up to the party, not the mediator. Mediators assist and guide. In mediation, confidentiality is critical. Unless and until disclosure of facts or negotiating positions is authorized, they cannot be disclosed to the other side by the mediator.
Once the facts and legal issues that the parties agree upon are known, some facts or legal issues will remain disputed. They usually fall into 3 categories:
1. Some facts, or the way those facts will be legally interpreted, are simply unknown, and may be impossible, difficult or expensive to determine, or will take a long time to determine (e.g. how the trial court or appellate court will rule on a key legal issue);
2. Some facts are simply disputed – (e.g. a “he said/she said” case);
3. What happened is agreed on, but the event is perceived differently by each side (e.g. a hug was a friendly form of aloha or an offensive act; a contractual breach was immaterial or material; an injury will have long term consequences, or has been virtually completely healed)
On disputed issues, it is the mediator’s job to first understand each side’s view, and then to help each side see the other party’s point of view. In addition, the mediator should educate each party on the risks of their losing on the issue, and why they might lose. This is especially true on issues in in which the evidence or law appears to the mediator, to strongly favor one side or the other.
II. Phase Two – Positional Bargaining
The basic tension in every case that boils down a dispute about the amount of a financial settlement, is that both sides want to get the best deal possible. If a party can get out of a case by paying $45,000, they don’t want to offer to pay $60,000 (even if they would be willing to pay $60,000 to resolve the case if they had to). The other side wants try to get that $60,000, even if they would be willing to accept $50,000 to settle. Settlement is difficult to reach because everyone is playing “chicken”.
Another problem that makes settlement difficult is that lawsuits, unlike most other things such as houses or cars, do not have an objective “true value” or a “ market value” because nobody can accurately predict what amount, if anything, a jury will award for a case, especially one in which a substantial part of the claim is for general or punitive damages. Although cases don’t have a “market value,” they ultimately do have a “settlement value”. That value is usually not determined until after the parties have engaged in positional bargaining.
Given the inherent unpredictability of the ultimate result of a trial, particularly a jury trial, and the desire of the Plaintiff to bargain to maximize the amount of settlement, and the desire of the Defendant to bargain to minimize the amount of the settlement, the mediator has to expect and has to allow each side to bargain hard to achieve their conflicting financial objectives. Sometimes through that hard bargaining, the parties, without the mediator providing any evaluative input, can, after a few exchanges of numbers, agree on a settlement. In that case, the mediator’s job is relatively easy - convey information and negotiating positions back and forth, until the parties reach an agreement. A mediator does not need 36 years of litigation experience and participation in over 2,000 settlement negotiations, to perform this facilitative function. The mediator simply facilitates the parties in reaching an agreement.
III. Phase Three – Closure and Evaluative Assistance.
Often, because parties are bargaining hard, and are locked into entrenched bargaining positions, the parties cannot reach a financial agreement purely through bargaining. It is at that point that the mediator’s experience and judgment comes into play, and the mediator provides the parties with evaluative assistance. This is done usually in two steps:
Step 1. Determining a party’s real bottom line. Despite what a party says when bargaining, one of the mediator’s jobs is to evaluate what amount of money a party really would be willing to accept, or to pay, if this would end the case, and get them closure. This evaluation by the mediator of a party’s real bottom line is a judgment call. If the mediator thinks that despite the parties’ bargaining positions, there is a number the Plaintiff would agree to accept, and the Defendant would agree to pay, then it becomes the job of the mediator to keep both parties negotiating to see if they can get to that number, and not letting them walk out of the negotiation until an agreement is reached.
Step 2. Sometimes even after real bottom lines are determined, there remains a significant difference between the lowest amount the plaintiff is willing to accept, and the highest amount the defendant is willing to pay. At this point, which is usually toward the end of the day, it is the mediator’s job, if requested to do so, and if the mediator thinks the parties are close enough that settlement is still possible, to give the parties his own evaluation of a reasonable number or the reasonable range of value at which the case should be settled.
By that point in the mediation, the parties should believe the mediator has fully explored and listened to their viewpoints, is credible, has good judgment, and has good reasons to justify his proposal. If they do, the parties are often willing to accept the mediator’s evaluation of the case, even though they do not like it. The case can then be settled, despite the fact the parties’ still have different viewpoints on facts, law and case value.
There are some cases that even after all those steps, cannot be settled that day, or soon after the mediation, no matter how skillful or tenacious the mediator has been. In those cases the job of the mediator is to keep working to assist the parties to figure out the most efficient way they can move forward toward getting the case resolved – perhaps they need a judge to rule on an issue; perhaps they need to take a limited number of short depositions – before they reopen settlement negotiations.
Every case is different, and since every case is unique, the path to ultimate resolution can also be unique. For cases that don’t settle at mediation, it is the mediator’s job to stay committed to getting the case resolved as efficiently as possible. Conceivably there are cases in which even though the dispute ultimately boils down to money, the most efficient way to determine whether any money will be paid, and how much will be paid, is to litigate the case through trial and through appeal; but, cases in which litigation is the most efficient way to find that final number are very rare, and if I am selected as your mediator, it is my job to make sure your case is not one of them.