A cake recipe says to add all of the required ingredients, and then place it in the oven for 45 minutes at 350 degrees. The chef, who is in a rush, takes a shortcut and leaves out an important cooling process and places the cakes in the oven at 400 degrees for 35 minutes, hoping for a good result. Instead, the chef has unhappy customers when the resulting product is not satisfactory in taste and texture.
The attorney has what she and her client believe to be a strong case. She allows the other side to do all the work in discovery but does not do her own and fails to lock down evidence of how her client has been damaged or for the defense of the claims against her client. She and the client “have a number in mind” that the other side will have to meet. However, they can’t or won’t explain how they arrived at this number or provide proof of the damages.
In a distributive bargaining situation, mediators often see counsel that come to the mediation looking for the mediator to, “Get me the money” or “Convince them their claim has little to no value.” When beginning to manage expectations during a mediation, mediators often wonder why parties would choose to waste everyone’s time coming to the mediation unprepared. To a mediator, this shows either that the unprepared party doesn’t know what mediation is, or doesn’t mind wasting a real opportunity to settle her case.
Mediation is not an opportunity to settle the case without groundwork or expense. The process requires that the parties know what they want, and why the case is worth what they expect to get. It also ideally includes some idea of the other party’s strengths and weaknesses – which usually means prior investigation or discovery. Notably, a good mediator can help the parties decide what it is they want, or discuss the outcome of similar cases in terms of settlement value or the outcome at trial. Preparing adequately for mediation requires a significant commitment of time and resources, which could be better devoted to talking directly about settlement.
A mediator is better equipped to push the parties toward settlement if the parties provide some data or information about the value of their case. If a plaintiff says his case is worth X, the mediator will be in a good position to push that number down if there are hard facts casting doubt on liability, even if there is contrary evidence. For example, in an auto accident case where serious injury is claimed, a plaintiff should share with the neutral evidence undermining defendant’s arguments about the slow speed of the vehicles at the time of impact (ideally information or testimony under oath). Again, preparation and discovery are essential, because the mediator starts out with no knowledge of the case – that’s one of the reasons we believe her to be neutral.
Why all this emphasis on developing evidence? Why can’t we just sit down and pick a number together? We could if both sides were perfectly rational, both sides had perfect information, and both sides wanted only money. But we aren’t and we don’t. For example, humans tend to irrationally distrust information that comes from an opponent. Such “reactive devaluation” assumes that what is good for you must be bad for me. Humans (also irrationally) assume without support that our position is correct, that the information, as known to us, supports our case, and that a jury will think as we do. These are phenomena called “naïve realism” and the “false consensus effect.”
Litigants lack perfect information and distrust what is given to them. This makes it harder to settle. Preparing for mediation by doing discovery mitigates this problem. Information developed in verified responses is trusted more because we know that the penalties for lying under penalty of perjury are severe and we expect our opponents to avoid that risk.
Another reason that failing to prepare for mediation can hurt the chances for settlement is that it violates our opponents’ expectations and sends the wrong signal about a case. The litigation process – including mediation or negotiation, to some degree – is seen as rational and competitive. Parties are expected to develop evidence, come up with demands or offers based on that evidence, and make the strongest case possible at the mediation table.
Like the baker, some attorneys do not carry their burden in the mediation process. They underestimate the value of preparing for the mediation. Many come to the mediation knowing very little about the file or have not prepared their bargaining positions, hoping that something will develop to enhance their position at the table. Others think they can bluff their way to a settlement on terms more favorable than they could get with a frank and open conversation about the value of their case based upon what they can show at trial.
A mediator can assist in eliciting the known or provable facts necessary to keep the parties at the table, highlighting both the potential risks and rewards. However, mediators don’t carry the mandate to figure out the case for one side or the other. A mediator’s neutrality and role as an honest broker can be subverted by coming up with theories or unexpressed positions for one side or another.
When counsel make a demand for money without adequate support, they signal that they either have a weak case or are unprepared or both. Why would they not present strong evidence? The assumption is that they either can’t do so or that they are grasping at straws. In either case, they send a message that not settling is a low risk proposition. Their counterparts smell blood in the water and either close their coffers or jack up their evaluation and demands. The perceived weakness leads to a hardening of positions, not based on the real strength of their case but on the holes in the other side’s case that are left after the opening statements.
Unpreparedness also leads to poor results in mediation because it robs the litigants of reasons to compromise. Culturally, humans tend to enter a distributive bargaining situation having built “room to move” up or down into different positions. But (especially when clients are present) attorneys want to be given some reason to move – to feel that they are being logical in compromising their position while still being strong advocates. Sometimes this reason is a significant position- change by another party, but often, it is tied to some evidence presented, or to a risk evaluation by the mediator, also based on the evidence. Movement for its own sake feels like weakness even if a party may have expected to settle for far lower than it originally started. The result: a party doesn’t move or feels uncomfortable about it.
In cases that aren’t “ripe” for mediation, one or both sides are often dissatisfied with the resulting negotiations and blame the other side for not negotiating in good faith. Worse yet, the attorneys blame the mediator or the process used, finding either one or both “unfair.” Even if the case settles, one or both of the parties may feel unhappy with the terms or may feel taken advantage of. Many times, the mediation is terminated or it is continued until the party or parties have done their homework. In the case of judicially-ordered mediations, the parties have now wasted their least expensive opportunity to have their case settled and must either book a paid mediation or go to trial.
Consider the case where a very nice man slipped in one of the garden centers at a big box retailer. The man claimed that he slipped and fell on a small puddle of water in the section of fresh house plants and vegetables. He claimed that he couldn’t remember seeing a “Piso Mojado / Wet Floor” warning sign. The slip caused knee damage and required surgery to repair his MCL. He had successful surgery and according to his doctors had made a good recovery.
This gentleman made a good appearance and seemed very honest in his presentation of the facts surrounding the accident. The man was a stay at home dad. He had not worked for a very long time and could not present a lost wages claim or future lost earning capacity. His chief issues aside from the surgery and recovery period were that he felt pain / discomfort while doing housework for prolonged periods and he couldn’t wear certain favorite shoes any longer as they made his knee uncomfortable.
While that store didn’t argue that the medical expenses were unnecessary or unreasonable, they felt that given all the circumstances there was a responsibility on the part of the man to be aware of his surroundings, especially in the live plants department, where there is often water on the floor. They also said that they believed there was a warning sign in place.
One party had avoided doing any discovery, and it became clear that the negotiation process was also a discovery exercise. After only a few rounds of offer and counteroffer, it was clear that neither side could satisfy the other based on the evidence presented. Critical pieces of information were missing. Both sides needed this information to realistically evaluate their positions. The negotiations stopped dead. One side had reached their number and couldn’t be moved – because without evidence there was no persuasive force to the arguments made.
This was a case that could have settled. But there were unmet needs on both sides. One side wanted more evidence before going above a certain offer while the other side refused to reduce a certain demand it thought it could reach at trial relying on facts yet to be fully developed.
Not doing the work to “ripen” a case can delay or even doom settlement and may lead to the uncertainties and expense of trial. In addition, failure to prepare adequately may make an attorney appear incompetent, weak, or just plain rude for wasting others’ time and may adversely impact counsel’s reputation in the community. Ultimately, attorneys and parties must take the time to set the table for settlement – you’ll be glad you did.
by Mark Grossman & Scott Van Soye