What a mess. Recently, you were driving the middle car during a three-car accident. Your car was totaled, you had to have leg surgery. You have missed a lot of work and are way behind on many of your bills.
You have been negotiating with all three insurance companies by yourself. You don’t think there will be enough coverage to meet your needs, and lawyers are expensive. But you don’t seem to be making much progress. Even your own insurer seems to be dragging its feet and giving you low offers.
Now one of the adjusters has suggested mediation. You have never mediated, but you know that it is a form of alternative dispute resolution in which a neutral third party helps people reach mutually acceptable solutions to conflict. If you do mediate, you don’t have to settle. But neither is anyone else. So, it could be a waste of time.
Should you go to mediation? If you do go, how much will it cost? Would it be cheaper to just file a lawsuit? Do you need a lawyer, or can you represent yourself? If you want a lawyer in mediation, do you need a special mediation lawyer? Before deciding whether to go to mediation, let’s look at each of these questions
Should I mediate?
The answer to “should I mediate?” should almost always be yes. While estimates vary, mediation ends in settlement about 85% of the time. Even if the parties are forced to mediate by the court, the process is successful about 75% of the time. Most astonishing of all, federal court surveys report that even when mediation initially fails, the case settles within two weeks in 80% of those failed cases. Why? Because the mediation process got the parties thinking about ways to settle, and about the real strengths and weaknesses of the parties’ arguments. So, even if mediation fails, it is rarely a waste of time.
The only times when you should not mediate are when the case is not “ripe” or when the amount in dispute does not justify the expense. Actually, though, these situations deal with when and how to mediate, not whether to mediate. Because the mediated case is so likely to settle, the process should be embraced.
Ripeness refers to whether the parties and mediator have enough information to effectively understand, value, and negotiate a claim. If too many unknowns exist, the parties will either need to voluntarily exchange data or wait for discovery to develop sufficiently in formal litigation. What information is gathered and the case is ripe, mediation can take place.
There are cases where paying for private mediation doesn’t seem worth it (more about the likely cost below). But no matter what the stakes are, mediation is likely to be available. Small claims courts offer mediation programs staffed by trained volunteers; s and federal courts at the trial and appellate level are required to offer ADR programs as part of litigation. Mandatory mediation is a big part of these programs. County-funded Neighborhood Justice Centers offer free mediation for conflicts between neighbors, family’s members, small business owners and their customers, and landlords and their tenants. Trade groups often offer mediation between members. Family law courts require mediation of child custody disputes and visitation arrangements. Law schools and bar associations may offer free clinics as part of training mediators. If you think you can’t afford mediation, look around. There is probably an opportunity for no-cost or low-cost mediation available.
Do I really need a lawyer for mediation?
Technically, no one needs a lawyer for mediation. Nothing happens there without the consent of all concerned. So, no legal rights can be lost. What can be lost or damaged is a good opportunity for settling a dispute, an important business or personal relationship, or a chance to avoid bankruptcy or foreclosure if you can’t resolve a debt and lack other options. Or, if you do settle, you might do so badly, leaving money on the table, overpaying, or agreeing to a deal you can’t afford.
Whether you need a mediation lawyer depends on your tolerance for risk, the magnitude of the consequences of a poor mediation result, and your ability to understand those risks and consequences. If you are dealing with potentially serious legal issues, hard choices for your business, disaster if there is no settlement or the possibility of a significant upside, it’s probably best to get a mediation lawyer. If you don’t know how to negotiate, you certainly need a mediation lawyer
What is a mediation lawyer?
The phrase “mediation lawyer” is ambiguous. It can mean one of three things:
- A mediator who is also a lawyer.
- A lawyer who assists you at mediation as part of his or her representation of you, including possible litigation.
- A lawyer who specializes in settlement through negotiation and mediation.
Let’s look at each of these in turn.
Does a mediator have to be a lawyer? No. Although many mediators are lawyers, retired lawyers, or judges, there is no uniform licensing, training, or education requirement for mediators in the United States. There are a few institutions that offer degrees in dispute resolution, but such training is exceptional. Most mediation programs require forty hours of training. Some require prior mediation experience. Although court-connected mediation generally uses lawyers as mediators for litigated cases, this is not necessary.
While lawyer-mediators sometimes evaluate the strength of the parties’ legal positions, point out risks and act as a confidential reality check, this is not true in every case and should be by party choice. Lastly, while some lawyer-mediators will give legal advice to unrepresented parties (particularly when other parties have attorneys), most will not. Proponents argue they are merely leveling the playing field, making things fair. But mediators must be neutral. They cannot do this while giving legal advice. If you want advice, bring your own lawyer.
Mediation as part of other representation
Depending on which study one consults, between 95% and 98 1/2% of cases are resolved before trial. A few are disposed of procedurally; the rest are successfully negotiated or mediated.
The litigation process is filled with opportunities to use alternative dispute resolution, and civil litigators are necessarily familiar with them. Negotiation, voluntary and mandatory settlement conferences, court-affiliated mediation, and private mediation all are part of the daily routine that will prepare your lawyer to assist you in mediation.
It may seem like the most important phase of mediation is reaching an agreement. But the most important part is preparation. What is the most you can expect to recover in mediation? What is the best outcome if mediation fails? And the worst? What is a high-but-reasonable opening offer? What concessions should be made and when? (Concessions must be made. It is the social pressure of reciprocal concessions that drives bargaining forward. And most importantly, why do you want what you want? Understanding the reasons behind a party’s demands helps achieve creative solutions in mediation.
Your goals and expectations may change during mediation, as you take other parties’ concerns and the mediator’s input into account, but one must prepare for all but the simplest mediations to have a hope of success. If your attorney does not seem to want to prepare, you should at least question their commitment to the mediation process.
Why use a settlement specialist?
For years, some have argued that having litigation counsel perform settlement negotiation was a poor choice. First, there is an inherent conflict of interest if your attorney bills by the hour. When a case settles, income to the attorney stops. Contingency fees may pull either way— to settle now for quick money or settle much later (or even go to trial) to maximize potential income. Of course, most attorneys resolve conflicts of interest in favor of the client. But the tension is still there.
Also, a hyper-aggressive litigator, who sees the case as a competition and the goal as winning, may not be the best person to negotiate if he or she cannot change to fit the circumstances. Academic research shows that ninety percent of aggressive negotiators are rated as ineffective. Also, aggressive behavior breeds anger, which psychologists tell us can make us competitive, overconfident, and overeager to act, and even lead us to make a poor deal — as long as we feel we are somehow “winning.”
Anger is not the only emotion that can affect our negotiation behavior. Sadness, guilt, and even happiness have been extensively studied and impair our ability to succeed. This highlights another point. Dispute resolution theory is much more sophisticated than it used to be. Understanding the dynamics of a given mediation or negotiation may require insights taken from psychology, sociology, economics, game theory, or even neurobiology. In some cases, there is also a need to understand a particular business or technology. It’s not surprising that, depending on the complexity of the negotiation, a specialist may be desired. This is particularly true where the matter is very complex or where the consequences of resorting to litigation could be disastrous. Examples are the loss of a major business client or damage to a key personal relationship.
How much does mediation cost? Is mediation really cheaper than litigation? Unsuccessful mediation may lead to a quick resolution, or simply be another cost. But, as discussed above, the process is usually successful. There is no doubt that a successful mediation is cheaper than litigation. For the most part, in a straightforward case, mediation will only take a day or two, while litigation could drag on for years. Mediation costs vary by the type and number of participants, as well as geographical location, experience, and training of the mediators. In general, complex multiparty or multi-issue mediation will take longer and cost more, but not nearly as much as litigation.
Nationwide, usual mediation costs vary between $300 and $825 per hour. Some mediation providers split the fee between the parties. Others change “per party.” Top mediators may charge over ten thousand dollars per day, but this is limited to a small percentage of neutrals in major urban areas. Likewise, multi-party, multiple issue mediation, such as construction defect or mass tort cases, may take weeks rather than days to resolve, but the litigation of such cases would be commensurately lengthier and more expensive.
As a basis for comparison, below are median fees and costs for various types of litigation:
- Automobile torts: $55,040
- Premises liability: $69,120
- Real property cases: $84,480
- Employment litigation: $112,620
- Contract litigation: $116,480
- Malpractice litigation: $156,160
- Trademark litigation: $560,000
- Patent litigation: $2,240,000
Clearly, the cost difference justifies attempting mediation, especially given the high success rate. The right mediation lawyer can help you reach a satisfying result, by knowing the appropriate opening number, the right bottom line, the proper timing, and pace for concessions and offers. He or she can help you stick to the plan despite your emotions or decide when and how to change your expectations. Along with a good mediator, a good mediation lawyer is a key to maximizing your results in the mediation process.