Several times in the past, I have discussed the need for each party to prepare for mediation for it to be successful. As you may guess, I return to this topic again because I just conducted a mediation that went nowhere fast because plaintiff was not prepared. It truly did not know what it wanted in settlement other than some vague emotional objectives. And plaintiff was operating on pure emotion throughout the mediation.
The matter involved an equipment lease worth less than $200,000. In the complaint, the plaintiff alleged that the terms of the equipment lease and the financing involved were not as represented to it. Plaintiff alleged the effective interest rate was much higher than represented and that Plaintiff was “stuck” with equipment it did not want or order and due to the way in which the lender invoiced the deposits on the equipment, the plaintiff had to dip into its own pocket to pay the remaining deposit to acquire the equipment.
Prior to the mediation, there had been some settlement discussions. After speaking with Plaintiff for a while, I asked what was the demand. The retort was that defendants should propose something: plaintiff wanted to see what defendants would offer. So, I went into the defendants’ conference room and conveyed this message. Taking their lead from the prior discussions on settlement, the defendants offered slightly more than the prior offer.
When I conveyed this new offer to plaintiff, it exploded, exclaiming how ridiculous was the offer. When I tried to explain that it was based on their prior discussions regarding settlement, plaintiff explained that the reason it never responded to the prior offer was because it was ludicrous. I also tried to ask, nicely, what did plaintiff expect when it refused to provide me with a demand and had not given defendants any feedback on their prior offer. No one is a mind reader, including the mediator.
Plaintiff’s response was to demand a sum in many of millions of dollars. Rather than convey it, I suggested that plaintiff talk it over with counsel. That discussion did not really help. (It became clear that counsel was not much more than a “potted plant”.) While plaintiff lowered its demand, it was still in the many of millions of dollars. When I asked for the reasoning behind it, I was given very vague, emotional responses: no facts or rational bases. Clearly (and plaintiff even admitted it), it was operating on pure emotion with absolutely no logic involved. It sole goal was to “teach defendants a lesson” and to “punish them” for the purported wrongs it had heaped upon plaintiff.
I conveyed the multi-million-dollar demand to defendants whose response was to end the mediation. Despite being at mediation for several hours, no progress had been made. They could not respond to demands that to them made no sense and were based purely on emotion; to “teach them a lesson” in plaintiff’s words.
So, I went back to plaintiff and indicated that defendants wished to leave. Only then, did plaintiff asked me to have defendants stay while it spoke to counsel further. I did.
Close to an hour later, plaintiff made a new proposal – still extremely high but this time gave me some “facts” or “rationale” behind the sum. When I conveyed it to defendants, it was still too unrealistic for them but they were intrigued by the factual basis as this was the first time they were hearing it. In response to prior written discovery to plaintiff asking for itemized damages, this information had not been revealed by plaintiff.
But, it was too late in the day. Defendants did not want to spend several more hours trying to negotiate plaintiff down to what they believed to be a realistic settlement sum. They had already spent too many hours trying to rationally deal with an irrational emotional plaintiff who was “winging it” every step of the way and whose sole goal was to “teach defendants a lesson” and “punish them for what they allegedly did.”
In retrospect, the matter did not settle for at least two reasons. One, it was obvious to me that at no point prior to the mediation did counsel sit down with its client and discuss the strengths and weaknesses of the case. There had been no discussion of what the jury instructions would be and what proof would be needed to prove the case under those instructions. Rather than counseling the client, counsel allowed the client to take the lead in the matter, doing all of the talking and demanding. It became obvious to me that there had been no discussion of what it was that plaintiff wanted as settlement; of what it hoped to accomplish in mediation or by this lawsuit (other than to “teach” defendants a “lesson” and to “punish” them.) Clearly, no forethought much less discussion was given regarding Plaintiff’s best case and worst-case scenarios. Plaintiff was simply convinced it was going to win this case at trial, hands down. And… counsel seemingly did nothing to caution that some risk is involved. That realistically, everyone has a 50% chance of winning and 50% chance of losing. In short, plaintiff was totally “winging it”, saying whatever popped into its mind at the moment.
The second reason is that plaintiff was operating on pure emotion, and irrationally. While our decisions are usually based more on emotion than logic, plaintiff took this to the extreme… and to its detriment. Plaintiff was so emotional, that logic or any calm discussion of the strengths or weaknesses of the case was useless. Plaintiff was simply demanding unrealistic amounts, in defendants’ view and without any ability to listen and absorb counter arguments (due to its emotionality). Plaintiff was defeated before it even started. (When I did attempt to explain the defendants’ view of the case to plaintiff, I was abruptly cut off!)
So… the moral… do not “wing it” at mediation. Give some thought to your goals and what you hope to accomplish as a resolution before you walk in the door to mediate. And… keep your emotions in check. If you allow them to take control… you will have lost an opportunity to resolve a dispute before you even start negotiating.
….Just something to think about.
By Phyllis G. Pollack