I had a mediation recently that epitomized a wasted opportunity. It lasted only an hour and did not settle. Why? Plaintiff’s counsel had not done the necessary preparatory work. It was a wrongful termination action against one of the cities here in the Los Angeles area. At no time prior to the mediation had plaintiff’s counsel conveyed a settlement demand to the defendant city. Based on my prior experience in mediating with municipalities, I knew that its city attorney probably had only minimal authority to settle a case; if it needed more, the city attorney had to go up the bureaucratic chain, and depending upon the amount, even to the City Council, itself. Plaintiff’s attorney, an experienced practitioner, knew this as well.
Prior to the mediation, I read the briefs and saw that Plaintiff was demanding more than a million dollars. I also learned from the briefs that this demand had NOT been shared with the city attorney. Consequently, guessing that the city attorney probably had no more than $50,000 in authority, I knew even before this mediation started, that this mediation was going to go nowhere fast.
Unfortunately, I was right. The plaintiff’s attorney demanded the more than one million dollars for her client. She also admitted that the city attorney had repeatedly requested a demand prior to mediation so that she could do the proper evaluation and get a decent amount of monetary authority (it turns out, her authority limit was $25,000; I had guessed wrong!) prior to the mediation.
So, I held a session with the attorneys, explaining that because the preparatory work had not been done, I could not help them. They thanked me and left.
Sitting there, I thought about an article that Jeff Krivis had written in August 2010 entitled How Did They Price The File. In it, he analogizes a file or a case to a loan file. When one applies for a loan, one must first “prequalify.” Similarly, prior to attending a mediation, the plaintiff needs to “prequalify” or share sufficient information with defendant so that it comes to the mediation with sufficient authority to settle the matter. As Mr. Krivis explains:
Conversely, the Plaintiff’s side rarely seeks insight from the Defense counsel or their principal as to what criteria they will be using to price the file. For example, will they be relying on objective standards from other cases, or simply using a formula based on a multiplier of special damages? Are there unusual factors about this case that militate in favor of higher value than normal? This is critical information that plaintiffs might consider before entering the mediation room.
The prequalification work that goes into understanding how a file is priced will make all the difference in the world in determining success at mediation. Here are five simple tools that can be done to prequalify a case in order to maximize success at mediation:
1. Determine in advance who will be attending the mediation. While it is impossible to get final decision makers at every mediation, knowing you have people investing in travel to attend the mediation will certainly increase the chance of success.
2. Ask your adversary before the negotiation what he or she feels is the fair market value for this type of case in general. You might be surprised at catching them off guard such that they give you information that’s taken directly from their report to their principal.
3. Ask your adversary if it would be helpful for you to give a large demand so that the case can be sent to the upper levels of the corporate defendant that is making decisions on the case.
4. Consider exchanging briefs with the other side that actually include a risk analysis. Save the confidential information for the mediator.
5. Ask the mediator to contact each side before the mediation in order to diagnose expectations and objectives.
Had the Plaintiff’s counsel shared the critical information with the city attorney prior to the mediation, giving the city attorney sufficient time to digest it, evaluate it and confer with those up the chain of command, the mediation may have been meaningful. Oh Well…
As a caveat, I also wonder whether the fact that this was a “free” mediation under the Los Angeles County Superior Court’s program made a difference as well. Neither side was paying for my services. If they had, would they had taken it more seriously and prepared for it? Too often, I have found that where the parties have “no skin in the game,” the mediation goes nowhere fast. Is this just another example of that?