After the second amended complaint has been answered and the contentious first round of depositions has been taken, the parties finally reach their first agreement in almost a year: Let’s try mediation.
As they invest the time and effort to prepare a comprehensive and compelling mediation brief, the defense attorney, a classic pessimist, discovers a secret that will affect every aspect of the case: The plaintiff has committed resume fraud by claiming he got a degree at a university which he did not attend. The defense attorney decides not to reveal the secret to her opposing counsel. Reluctantly, she reveals it to the mediator in the pre-hearing brief, asking her to agree to strict confidentiality. She is fairly certain the case won’t settle on the day of mediation.
The plaintiff, a recent immigrant, has come to his attorney filled with optimism. He has overcome great adversity and found a path to security and good fortune for himself and his family beyond his imagination in the job of his dreams. Unfortunately, after only three years as a junior executive, he was let go without explanation. He believes it was in retaliation for his protest about the misclassification of junior executives as exempt employees. His attorney, an optimist, offers hope for a great outcome through this litigation.
Arthur C. Brooks, president of the American Enterprise Institute and author of “The Conservative Heart,” recently wrote an article in the New York Times titled “We Need Optimists” (July 26, 2015). His thesis was that the deadlock in American politics is largely attributable to the two competing worldviews of optimists and pessimists. Optimists look for solutions and believe the world is filled with hope and change. Pessimists see people as liabilities to manage, burdens and threats to minimize or contain.
Optimists are generally physically healthier than pessimists and have a better ability to cope with setbacks. They will self-describe as happier people, too. Unfortunately, there are downsides to being an optimist that affect litigation. Optimists may be “gamblers” in the sense they will keep playing for longer, hoping (and perhaps expecting) that their luck will change. On the road, optimists may be more likely to cause or contribute to accidents, as they overrate their ability to avoid or navigate around dangerous conditions. They are, in a word, risk-takers, because they expect that they will be rewarded for taking such risks.
In litigation, we would expect most contingency fee lawyers to be optimists. They bet that each case they accept is worth their own personal risk and they offer hope for a better outcome through litigation to each client they agree to represent.
Pessimists have a less rosy prediction of the future. Their worldview includes both fear and anger. Pessimists are often cynical and even depressed about the future. Typically, a pessimist does not believe that our children’s life will be better than our own. Pessimists are wary of being able to find any solution to life’s most challenging problems and approach litigation as a way to manage the risks and threats to their client’s stability and wealth.
Interestingly, the clients who the pessimist represents are not equally predictable. Brooks points out that immigrants who have enjoyed a kind of “transcendent destiny” from rags to riches are usually optimists. Entrepreneurs and charismatic leaders of companies large and small are generally optimistic, too. This may create a clash between lawyers and their clients.
The mediator must be that “happy warrior” that brings optimism into every dispute. This brings the analysis back to the initial example of the pessimistic defense lawyer who believes she cannot settle her case based upon the secret information she has discovered, meeting the optimistic plaintiff’s counsel who perhaps has “over sold” his client on the positive outcome he expects to achieve through this litigation.
When the pessimist and optimist meet at mediation, the parties and their lawyers may bring a host of biases to the negotiation. First, the initial demand will be met with “reactive devaluation.” If the plaintiff demands an opening at $1 million, the defense will often respond at $10,000 or even less. Both concepts of optimism and pessimism are demonstrated here. Had the plaintiff been less optimistic, and started at what most would consider a more realistic number (say, $250,000), the defendant might be slightly less pessimistic, thinking that the matter had a chance to settle at $85,000. Accordingly, the defense might respond at more than a nuisance-type value.
The pessimist, being temperamentally risk averse, might ultimately agree to pay more than he believes is the value of the case when presented with the realistic analysis of the downside risk of taking the matter to trial, especially where there is the possibility of attorney fees being awarded to the opposing side, as in employment cases and real estate sales.
Where there is an opportunity to settle and the lawyer fails to advise or encourage settlement, failing to settle when a larger verdict comes out against the client may subject the lawyer to claims of professional negligence. Of course, in the context of mediation, these claims will not have much of a chance, since the negotiation, even between lawyer and client, is strictly confidential. Still, no professional wants to invite such claims, and negotiations outside of mediation are not protected from later disclosure in a malpractice action. Being risk averse would suggest that a prudent, but pessimistic lawyer would encourage settlement if it can be done reasonably in most cases.
The pessimist also is typically uncertainty avoidant. They want to control the outcome and the best way to do that is through negotiation, not leaving it in the hands of a judge or jury. The optimistic mediator knows that and can use it to get even the most change resistant litigant to engage in negotiations, which can be controlled in a mediation setting. The optimistic plaintiff’s lawyer and his client may want to take that risk. Ultimately, they will need to be persuaded that their optimism may be overstated, their confidence overly certain, and their ultimate result may not be as rosy as the one they are presented with at the mediation. Generally, an optimist will see the benefits over the risks and accept the reasonable deal with pleasure.
Which brings us to “the long tail of mediation,” a phrase coined by a member of the International Academy of Mediators in New Zealand, Geoff Sharp. Many commercial mediators who have been doing this for five years or more are experiencing a shift in the practice. More and more cases are continuing negotiation through the mediator after the face-to-face mediation hearing day has adjourned. Both pessimists and optimists are now seeing that the mediation is a process, not an event.
Once the ever-optimistic mediator has her hands around a dispute, she can follow up via phone and email (and once in a while, with a second session) until the parties can get to a mutual meeting of the minds. The initial face-to-face meeting can be the beginning of an understanding of the obstacles to settlement. In can be a gradual loosening of the tight grip on the assumption that things will never get better. It can be the beginning of a careful and detailed analysis of the realistic risks of continuing the litigation and marching towards trial. It can be the beginning of a softening of that assured and optimistic view this is a “slam dunk” winner. It can be the beginning of a dialogue between a pessimistic lawyer and his optimistic client. It can be the start of a path away from the darkness of the past and towards a breakout from the negative equilibrium that Brooks sees in the American congress.
Like a small dog with a long tail, the optimist will continue to chase it, just for the sport of it. If they don’t succeed today, there is always tomorrow.
Jan Frankel Schau is a full time neutral with ADR Services Inc. in Los Angeles. You can reach her at: www.schaumediation.com or (310) 201-0010.