After the evaluative method has been exhausted, and the parties have narrowed the gap between them, the question on the table is what does it take to settle the case.  Should the party with the stronger case, make a final effort to bridge the gap?  Is there a settlement premium that should be paid or accepted?

I believe that there is a settlement premium that comes into play and should be seriously considered for a number of very important reasons.

  1. The evaluation approach is not science.  Reasonable minds can differ.  There is the old adage that even the best case has no better than 80/20 odds attached to it and no one could quibble with the odds dropping to 70/30 or even 60/40;
  2. There is significant economic value in resolving a case.  Savings of time, money, and the opportunity costs in devoting time to the case in mediation as opposed to others that may be more valuable  or require attention.
  3. The ability  of the client to move on with life, close the file, move on to the next matter are all real and psychological benefits of settlement.

When you get to the point late in the mediation where the evaluative approach has narrowed but not closed the gap, I recommend your consideration of the settlement premium.  I do not think that you will regret it.  If you do, it will be with far less regret than getting close, but leaving with no settlement at all.

By Bruce A. Friedman

Bruce Friedman is an experienced mediator and arbitrator with over 35 years of complex litigation experience in the areas of insurance, financial services, professional liability, business, real estate, entertainment and consumer and securities class actions. His mediation philosophy is to provide an evaluative analysis within the context of a facilitative process. Bruce’s approach to arbitration is to make the process as efficient as possible resulting in a principled decision based on the facts and law.