Average Settlement Offers During Mediation

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Average settlement offers during mediation

Average settlement offers during mediation are essential when a party considers using mediation to settle a lawsuit.

Combining this knowledge with other tips and tricks for settling a lawsuit through mediation can ensure that a party is prepared to tackle a mediation during a civil lawsuit and achieve the best possible outcome. Having a researched and thorough plan heading into a mediation can also give a party the peace of mind that they have given the settlement the best possible try and can move into the lawsuit confidently. This article will discuss the average settlement offers in mediation as well as other tips and tricks for having the best mediation plan possible.

Why Mediate?

Before discussing the strategies for preparation in mediation, it’s important to understand the benefits of using mediation to potentially settle a lawsuit over regular settlement discussions and proceeding with litigation.

These benefits include:

Control: Mediation allows the parties to control the outcome of the dispute. When a dispute goes to litigation, the parties lose control over the dispute resolution outcome to the finder of fact.

Voluntariness: The parties can withdraw from mediation at any point and are not bound to the process as they would be in litigation.

Compliance: Parties are more likely to comply with a mediation settlement agreement that they came to together than a judgment handed down by the court.

Confidentiality: Mediations are confidential and allow the parties to settle disputes without a public record. If a lawsuit has begun, the parties may have to file a mediation statement stating that they have agreed to a settlement, but this still allows a degree of privacy.

Speed:  Mediation will settle a dispute faster than litigation. Reaching the final settlement agreement through litigation often takes months or years, and mediation can take a day or two.

Relationships: Mediation allows the parties to come together to find a settlement agreement that works for both parties, while litigation forces the parties to be adversarial.

Empowerment: Unlike settlement offers and litigation, alternative dispute resolution allows the opposing parties to choose and control the outcome rather than just speaking through their lawyers, which gives the parties a greater sense of empowerment moving forward.

These benefits set mediation apart as a great possibility to secure mediation for the parties. While there are different success rates for mediation, it is common for mediation to, at the very least, begin the bargaining process for the parties. In cases where the parties are already preparing for litigation and have made discovery, they are more likely to settle in mediation because they have a good idea of the case’s outcome and can effectively negotiate. Even in cases where mediation is not successful during the formal mediation process, there is usually a higher chance of settlement because the parties are aware of what the other party would need to settle. This makes mediation an effective option for parties hoping to settle.

Average Settlement Offer:

While every case and dispute will differ, there are some truths about an average settlement offer that can help the parties understand where the offers are coming from and how they can effectively counter these offers and bring the settlement more in line with what they are hoping.

An important consideration when considering average settlements and creating a reasonable plan is that the plaintiff and defendant will approach the settlement differently. The plaintiff hopes to get as much money as possible out of the settlement, while the defendant hopes to give up as little money as possible.

The other truths to consider are:

  • The other side does not know all the facts that affect the offers.

Even in mediations that happen late in discovery, both sides will be unaware of the underlying interests that will affect their approaches to and offers to the settlement. Keeping this in mind will help a party understand and react appropriately when a surprising offer is made.

  • The first offer will usually be very low or high.

Because the parties want to avoid paying more or losing money and because of the interests at play, as discussed in the first point, the first offer will be very low if it comes from the defendant or very high if it comes from the plaintiff. Parties will often offer very conservative ways to show the other side that they are not willing to give too much too quickly.

  • The outcome will be somewhere in the middle.

The plaintiffs will likely leave with less than they wanted, and the defendants will likely pay more than they wanted to pay. This is because the parties will start far apart and move toward each other as the day progresses.

  • Mediation can take a long time.

At the beginning of the day, the parties will be less likely to move quickly toward each other because they want to remain strong; however, as the day moves on, the parties will start to see where a settlement is headed and will either begin to move toward a final settlement or decide that they are not going to be agreeable.

Understanding these common threads through mediation settlements can help a party feel prepared for mediation, combined with the tips mentioned below.

Tips for Preparing for Mediation:

When a party has a mediation coming up, they will often have a lot of questions. For many people, mediation feels very different. Litigation is common and most people understand that they should dress nicely and speak respectfully to the judge. However, mediation is not as common, and it can feel very informal. The rest of this article will focus on answering common questions about mediation and providing ideas to consider as the parties move toward a successful mediation. First, this article will go over the basics of mediation for people without much experience.

These basics include:

  • Neutral

The mediator is a neutral third party that will help the parties agree. They do not work for either party and cannot make a binding decision. They will encourage the parties to consider agreeable settlements and help the parties understand where the offers are coming from.

  • Formality

Mediations are not as formal as litigation. The relationship with the mediator tends to be more like a peer’s than a superior. The mediation will also often occur in a conference room or a set of rooms, rather than a courtroom. It would still be good to dress in business clothes to show respect to the mediator, an insurance company (in case of personal injury cases), and the other parties.

  • Competition

Depending on the mediator’s style, the overall feeling of the mediation may be competitive or cooperative. However, even in cooperative mediation, there will still be a competitive nature when the parties negotiate because each side hopes to achieve the best possible result.

  • Layout

Again, the way a mediator runs a mediation depends on their style, but many mediations start with an opening statement by the mediator to the parties to explain the rules and how the day will go. Then negotiations start. Negotiations may take place in the same room, or the mediator may split up the parties and speak to both of them separately to decide how to help the parties move toward settlement.

Additionally, there are some tips to consider when preparing for a successful mediation.

These tips include:

  • Evaluate the Case

Going into mediation with an accurate evaluation of the case will help the parties be realistic with offers and have a plan to be able to achieve a settlement. This includes understanding how much a party can give and evaluating what the other parties may need to feel comfortable with a settlement.

  • Be Creative

Mediation allows the parties the option to be creative with the ways that they settle their disputes. Litigation is often limited to injunctive relief or monetary awards, but mediation allows the parties to find creative ways to make each other whole. This can include apologies, positive references, and other relief that a court would not provide. A creative solution that would allow the other party to pay less or take less money but still give something of value can procure a settlement.

  • Know When to Walk

There may come a point in mediation when the bargaining point is not moving in the direction that one party needs. That party needs to know when it would be better to change litigation or further settlement discussions past mediation than to continue.

  • Be Patient

While it may seem like mediation is taking a very long time, or that the other side is moving slowly, it is important not to rush a settlement by giving too much too quickly. Making a big move and asking the other side to follow can be strategic, but it may not always work in a party’s favor.

Conclusion:

Mediation can be a fantastic resource to help parties settle before litigation, especially in cases where discovery has changed or shifted a party’s position and in cases where the parties are already close to a settlement but need help agreeing to a settlement. While no two settlements are alike, there are some basics at the heart of each mediated settlement that must be considered when approaching a mediation. Finally, it is important to understand the process and be prepared for mediation to ensure an easy process and give the parties the most significant chance for a settlement. While mediation may not always result in a settlement, it does give the parties a chance to meet and consider what a settlement could look like, which may encourage the parties to come together later for a settlement.

We hope this article has answered your questions about average settlement offers during mediation.

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Mark Fotohabadi
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