By Kevin Thomas McIvers

A monthly series of short articles on successful mediation advocacy.

TIP # 3:   “Pre-Mediation Negotiation”

A key to successful negotiation at mediation is to manage the expectations of the opponent before you get to the table.  Previous articles in this series have discussed other ways of managing expectations to maximize the potential for achieving a good settlement.  None is more important than pre-mediation negotiation.  When should numbers be discussed before mediation?  How should the subject be approached?  Is it best not to convey proposals before mediation in some cases?

In larger cases with uncertain verdict potential, it is essential to get some sense of what the other side is seeking, before mediation.  Without this, the mediation session can be frustrating for both sides, and will often fail.  The problem was evident in a recent insurance Bad Faith mediation.  Both sides privately told the mediator that the verdict range was about $1 million to $5 million, depending upon how much a jury awarded for business losses and punitive damages (if any).  No discussion of numbers occurred between the parties before mediation.  The defense hoped plaintiff would be happy with $750,000 to $1 million, but did little to condition plaintiff for such a number.  Plaintiff hoped for $3.5 million or more, but gave no clues in advance.   Briefs were not exchanged. The insurance carrier came to mediation with insufficient reserves, and the plaintiff with unrealistic hopes.  If numbers had been floated in advance, it would have begun the process of adjusting expectations before mediation.  The case required a second session to resolve, with a lot of effort by the mediator to soothe frayed emotions from the first session.  Neither side was unreasonable.  Both sides simply missed opportunities to adjust the expectations of the other.

In a routine case, where most attorneys will know the settlement range (i.e., a simple PI or business accounting case), it may work to float numbers for the first time at mediation.  Usually, no one will be surprised or caught unprepared by the proposals.  But even here, there is no down side to floating a pre-mediation settlement proposal, and encouraging the opponent to do likewise.  It will help define the “brackets” within which a fruitful negotiation may unfold.  If you are uncomfortable making a pre-mediation proposal, at least sound out your opponent about the range, to make sure the case is ready for negotiation.  There are many creative ways to do this in casual conversation, without revealing too much.   For instance, compare your case to another similar case which settled or went to verdict at a stated figure, and solicit a responsive comment.  Suggest that the case value is more or less than a familiar benchmark (policy limit; appraisal value; “six figures;” a statutory ceiling, etc.), and gauge the reaction.  Most attorneys will give you some hints about their true position.

There are cases in which the perspectives, strong emotions, or fragile egos make it nearly impossible to talk numbers before mediation.  Any hint about one’s position could blow the mediation off calendar, before the mediator has a chance to work with the parties.  In such cases, let the mediator know of your concern, and ask the mediator to sound out the opposition before mediation.  The mediator may be able to begin adjusting their expectations by telephone, and ease your opponent into the negotiation.  

Before mediation, competent attorneys on both sides advise their clients of the possible outcomes, risks and costs of litigation, as well as what to realistically expect in a settlement.  The stated position of the other side is important in assessing what is realistic in settlement, and helps adjust the expectations.  Mediation is often about coming to terms with what is possible. 

Help your opponent adjust their thinking about what is possible by talking numbers or ranges before mediation, whenever possible.  A skilled mediator will take it from there.

Next month, we will look at “Joint Session Creativity.”

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