In my experience, in the mediation of commercial cases, the parties and their counsel want an evaluative mediation approach. I have found that even if a mediation is unsuccessful, the parties and counsel seem satisfied if they have received an honest appraisal of the strengths and weaknesses of their case.
TYPES OF MEDIATION
As any experienced neutral knows, there are several different approaches to mediation: facilitative, evaluative and transformative.
Evaluative mediation is a process modeled on settlement conferenc- es held by judges, where the goal is often to address the legal rights of the parties, as opposed to their needs and interests. An evaluative mediator assists the parties in reaching resolution by pointing out the weaknesses of their cases and predicting the conclusion a judge or jury might come to. Next, an evaluative mediator might make formal or informal recommendations to the parties as to the outcome of the issues. An evaluative mediator structures the mediation process and directly influences the outcome of mediation.
Facilitative mediation is a process where the neutral creates a process designed to assist the parties in reaching a mutually agreeable resolu- tion. The mediator asks questions, validates, and normalizes parties’ points of view. The mediator helps the parties search for interests underneath the positions taken by the parties, and assists the parties in finding and analyzing options for resolution. However, the facilitative mediator does not make recommendations to the parties, give his or her advice or opinion as to the outcome of the case, or predict what a court would do in the case. The neutral’s goal in facilitative mediation is to have the parties make the decisions.
Transformative mediation is the newest mediation type, and most “liberal.” Based on the goal of establishing the parties’ individual empowerment, this type of mediation allows each party to recognize the other party’s needs, interests, values, and points of view. Transfor- mative mediators hope to allow and support the parties in mediation in determining the direction of their own process. In transformative mediation, the parties structure both the process and the outcome of mediation and the mediator follows their lead.
WHICH TYPE TO USE IN COMMERCIAL MEDIATIONS
While each approach has its merits and may be useful depending on the circumstances of a given mediation, I have found that the facilitative process is not as useful in the business litigation context. For the most part, the parties are not interested in directly engaging one another during the mediation process. Instead, they are looking for a rational analysis of the factual and legal issues of their case.
I refer to this evaluative approach as a principled negotiation. By “Principled Negotiation,” I mean a negotiation where the settlement figure is based on provable damages, reflecting the strengths and weaknesses of the case and the risks presented by the facts, law, and legal process. A principled negotiation is not a discussion based on what the plaintiff wants and what the defendant will pay.
A few examples of the application of evaluative mediation to com- mercial cases may be helpful:
- In an insurance coverage mediation, there is no substitute for a sub- stantive discussion of the policy provisions at issue, the cases inter- preting them, and the underlying pleadings and facts in a third party case or the facts in a first party dispute.
- The same is true for a professional liability case. An evaluation of the professional standard, its breach, causation, and recoverable dam- ages is necessary to successful resolution of the case.
- Class Actions present a plethora of issues to address as the class is- sues of the adequacy of the class representative and whether the claim is appropriate for class treatment sit on top of the substantive allega- tions of the case itself. There is also the important element of what the court will approve. Even when the evaluation of class and substantive issues are resolved, a case is not settled until the issue of class coun- sel’s attorney’s fees is negotiated and resolved.
PREPARING FOR AN EVALUATIVE MEDIATION
The mediator needs to provide a rational argument of the issues to each party in an effort to allow the party and counsel to reach a settle- ment figure that reflects the strengths and weaknesses of the case and the risks of litigation. This evaluative approach requires careful prep- aration by the mediator. It is not enough to simply read the briefs and show up at the mediation. The mediator must also read the statutory and case law that is critical to the case and develop a list of questions, both factual and legal, to address to the parties. In my experience, pre-mediation telephone conversations and/or meetings with counsel are very helpful in understanding the dynamics of a case – elements or intricacies that may not jump off the pages of a mediation brief.
As any trial lawyer would do, I have found that it is important to re- search the judge in the case. Understanding the judge and review- ing his or her profile has enabled me to speak intelligently about the chance of a successful pre-trial motion; such as a motion for summary judgment, motion in limine, or Daubert motion regarding the quali- fications of an expert witness. In that same vein, knowledge of the forum, state or federal, and the jury pool also provide useful tools in a discussion of litigation risks. Federal judges are more likely to dispose of a case on a motion for summary judgment than a state court judge. The federal jury pool may be more conservative than the state court pool. Federal juries are smaller and require a unanimous verdict even in civil cases. A state jury may decide a case on less than a unani- mous verdict. All of these court and process related issues are very helpful in a discussion of the risks inherent in the judicial process.
Of course, evaluative mediation has its limits. A mediator should not succumb to answering counsel’s inevitable question: who will win the case? or what is the case worth? Answering either question does not promote a settlement. After all, why should a party settle, offer more, or accept less, if the mediator has told them that they are going to win? As far as the question regarding settlement value is concerned, a mediator can never know enough about the case and / or motivations of the parties to place an accurate value on the settlement. The settle- ment value of the case is the amount the parties agree upon in a settle- ment agreement, not the mediator’s number arrived at without review of the documentary evidence and an assessment of the credibility of the witnesses.
I am not suggesting that successful mediation of a business case can only be accomplished based on a purely evaluative approach. There are times when elements of a facilitative approach are useful in promoting a resolution. In the vast majority of commercial cases, however, the evaluative approach is necessary to the successful resolution of the case. The lawyers demand this type of approach to mediation, and are reluctant to return if they don’t get it.
by Bruce Friedman