I have been mediating large commercial disputes for many years now, first as litigation counsel for almost four decades at a major law firm, and then for the past ten-plus years as a mediator. What I share now are approaches and techniques to reach what I describe to the parties at the mediation as “the Promised Land,” where their dispute is resolved. I am always grateful to other mediators who have shared what has worked for them, including many of the ideas discussed in this article, which I have incorporated into my practice.
The very reason for mediation is that the parties are in a dispute that is difficult to resolve on their own.
Sophisticated players recognize that their chances of resolution are multiplied by being able to present their case, and their ideas for resolution, through an experienced neutral who is totally devoted to helping settle their case by:
- listening to and giving credit to their concerns and needs;
- giving unbiased feedback;
- probing or challenging each party’s positions and proposals for resolution;
- asking the difficult questions about the costs and burdens of litigation;
- helping the parties understand the risks and uncertainties of a litigated alternative;
- when insurance is involved, helping bridge the coverage issues among insurers and the defendants;
- helping the parties work through high emotions with dignity and respect;
- probing each side for ideas that could help bridge gaps; and
- displaying optimism, patience, and persistence throughout the process.
Everything I do from day one is aimed at learning from the parties what interests are most important for them and their ideas for a possible solution, while trying to build a true rapport with everyone. I see my role as a mediator as providing the parties and counsel with a guided “process” they can trust to help them reach a solution. When the going gets tough, I can encourage each side not to lose faith and to “trust the process” because I have seen it work so many times before. And most often it does.
Reading, Listening, and Developing Trust: Pre-Mediation Meetings
At an initial video meeting with counsel for all parties, we plan for mediation statements and any relevant documents to be sent to me and usually exchanged as well, except for any portions the parties wish to be “For Mediator’s Eyes Only.” I specifically ask the parties to please confidentially provide me with their ideas for how the dispute might be resolved. I sometimes follow up with a small set of written questions. I also often counsel the parties to begin to work together or separately on a term sheet or settlement agreement background terms such as releases, dismissals, and confidentiality that will likely be part of any agreement, so that when we reach an oral agreement in principle, it can be quickly documented before the risk of buyer or seller remorse. The consideration can be left blank at the outset.
I am a huge believer in pre-mediation video meetings to learn from counsel and their clients about how they see the dispute and how they think I can best help them get to a settlement. If there is time, I will first meet with counsel to find out their thoughts, not just on the case and ideas for potential settlement, but also to get their input on how I can most effectively communicate with their clients and what they think their clients need. I will then meet with counsel along with the client representative(s) as appropriate.
The Main Mediation Session
I have already built a relationship with each side by the time we get to our main mediation session. We introduce everyone, and I give the parties a pep-talk on why I know that the mediation can be successful if everyone gives it their all. I tell them that through this process, they have the complete power to resolve the case on their own terms, and that otherwise they will be outsourcing their outcome to a judge and jury or arbitration tribunal over whom they have no control.
A big question for the mediation is whether to start with each side giving opening statements about what they want the other side to know about their case. Many counsel prefer to skip these presentations that they see as being a waste of time and potentially only antagonizing clients on the other side, but I have seen some of these have a real impact in showing the client representatives on the other side what the downside could look like. I do counsel the parties to avoid invectives and stick to the “facts” that they want to show the other side to make the settlement compelling to them, and to use language that conveys an “olive branch” of desire to compromise to work toward a negotiated resolution.
Most of the main mediation session consists of the separate caucus sessions in which I work with each party separately and shuttle offers and messages between each side and help them focus on (1) their case strengths, weaknesses and risks (2) challenges to their assumptions, (3) the costs and burdens they are likely to face going forward, (3) an offer strategy, and (4) an approach toward each successive offer, that will help bring them closer to the other side.
Moving Far-Apart Parties Toward One Another: The Conditional Offer
More often than any mediator would like, the parties in a monetary dispute can spend considerable time making small moves that leave them solar systems apart from one another. One of the best ways to try to help the parties move closer together is the “conditional offer.” The numbers in the following example illustrate the technique, whether used with bigger or smaller relative sums. If, in initial opening offers, the plaintiffs have moved down to $300 million, and the defendants have moved up to only $7.5 million, the conditional offer presents a good solution for either of the parties to incentivize the other to make a bigger move. The construct of the conditional offer is “if you move to $X, we will move to $Y.” Putting it into our hypothetical, I might advise the defendants to make a conditional offer such as “we will move up to $20 million if the plaintiffs move down to $100 million.” The plaintiffs could either accept the offer, which creates a new bargaining range between $100 million and $20 million, or present the plaintiffs’ own conditional offer in response, such as “plaintiffs will move down to $150 million if defendants move up to $50 million.” Even if these conditional offers are not themselves accepted, they convey enormously helpful information and most often start moving the parties closer to one another in their offers. Moreover, while parties are never obligated to settle at the mid-point between their offers, each conditional offer range has a mid-point that can be examined and tested as a possible solution. With competing conditional offer ranges, one can calculate the mid-point between the two mid-points, and test how close that is to a neighborhood where a settlement might be achieved. The parties can continue to make a number of conditional offers until finally one party will say, “We are now going to make a solid number offer,” and then there can be a further period of solid offer exchanges until we get to a final agreed amount.
Non-Monetary Solutions
As a mediator, I am always looking for non-monetary “compensation” that can add other “currency.” It might be a private or public apology, a joint press release, a newly constructed business arrangement, the transfer of an IP license, or an exchange of brands that could help settle the dispute. The list of possibilities is as long as the creativity of the parties and their counsel, and I am always trying to see if there are non-monetary aspects that can help make a settlement happen. Often, they do!
Tools for Avoiding and Breaking an “Impasse”
There are times when one or both parties will express frustration, with statements to me like: “Well, if that is where they are, we are at an impasse,” or “That’s it. We’re done.” My role as mediator is to calm the parties and to persist in helping get them to the “Promised Land,” a reasonable (even if not optimal) result that will be better than continuing the dispute through litigation or arbitration. Walking out instead of trying to work through an impasse will only make “no deal” a certainty. Here are some tools that I have found helpful to navigate past an impasse:
- Display unrelenting optimism and good cheer, along with some chagrin or disappointment when conveying that more effort is needed from the parties.
- Continually engage and brainstorm with each side and keep asking for ideas or “ammunition” to share with the other side.
- Provide each side with a “Mediator’s Cost and Risk Adjusted [Recovery] [Exposure] Analysis” that shows the probable damages recovery or exposure ranges—after litigation costs—at certain percentage ranges of probability of prevailing (e.g., at 30%, 40%, 50% and 60%). Remind each side that there is almost always a 20% or even 30% chance that either party will not prevail if the case is fully litigated.
- Remind each party that I have settled most of my mediations... and to keep the faith because the “process” works!
- Get each party’s “next to bottom-line number.” Say something like: “It is 4:30 p.m. We need to get real. Don’t tell me your bottom line. Just tell me confidentially-- what is your next to the last number?” That might give me something more with which to work.
- If the parties numbers appear irrationally far apart, suggest the possibility “baseball arbitration”—otherwise known as “final offer arbitration”—which involves an arbitrator selecting just one of the parties two final positions as a means of getting one or both parties to recognize the need to move.
- Play some games with each side:
- Ask the people on each team to write down what number each thinks it will take to settle the case on a fully confidential scrap of paper, and then compare within the room the confidential variations. There could be new numbers!
- Ask each side to play the other side and make the next bid they would make if they were on the other side. It can help the parties see the other side’s perspective.
All this displays to the parties how much I genuinely care about helping them get to a resolution, and hopefully, that feeling will be contagious.
The “Mediator’s Proposal Protocol” is close to the final resort if the parties are still at an impasse after considerable offers and counteroffers and effort, and there is either a party’s request for the protocol or an inability for the parties to otherwise move further toward one another. I explain how the protocol works to both sides:
- If both parties agree to the protocol, I will present in writing to both sides a mediator’s proposed settlement number that I believe has the greatest chance to be accepted by everyone. I tell the parties that this is not the number that I think is right as a moral or legal matter, but one that I believe the parties most likely will accept based upon my separate discussions with each side.
- I explain that it is a double-blind protocol where I will suggest the number in writing, and each side can tell me separately and confidentially in writing whether they accept or reject the proposal, yes or no, after consulting with their counsel.
- I will be available to speak with either or both sides.
- If both sides agree with my proposal, I simply tell everyone that the case is settled at the proposal number, subject to documentation.
- If either side disagrees with my proposal, I simply tell the parties that my proposal was not accepted, and that way, a side that rejects the proposal never knows whether the other side had accepted or rejected the proposal.
The amount of time I give the parties to accept or reject the proposed number depends on what the parties want and what is needed at that time. The Mediator’s Proposal is not for every case. It is one tool that, when desired by the parties, can help get everyone to a final agreement. Nearly all of the cases where I make a mediator’s proposal, there is a settlement with “yes” answers coming from each side, because by that time, I have learned the parties’ true positions. In the one case I can remember where my proposal was rejected, we actually settled the case a few months later by solving an insurance problem that had caused one side to reject the proposal in the first instance.
The Bottom-Line
In the final analysis, I find that most cases will settle when the parties come willing to roll up their sleeves, no matter how far apart they start. My sleeves are rolled up as well!