Anyone who has participated in a multi-party mediation recognizes that there are conflicting dynamics inherent to that process. And when there are multiple and distinct claims involved as well, the endeavor starts to resemble four-dimensional chess. To quote Sherlock Holmes: "The game is on." But what exactly is the game?
Of course, it is critical to engage and involve every party that has potential claims or exposure. With the help of the "principal parties," the mediator must sort out the pecking order for the pivotal claimants and respondents, and prioritize their claims and responses. This in turn will define the process and the strategies used to enhance the prospects of settlement.
Many questions should be asked by the mediator at the outset, and throughout-- and people who write articles like this one are very good at positing questions. Nonetheless, here are some specific issues that should be addressed at the outset, and continually updated as the process unfolds:
Are all necessary parties engaged and involved?
Preliminary conference(s) with all key counsel will structure the process and maximize settlement prospects. While the mediator initially might defer to the counsel for the principal parties in engaging all necessary participants, it is preferable to conduct a series of scheduling conferences with various parties to avoid confusion. "Where’s Waldo?" or "Who’s on first?" are not questions the mediator wants to ask, or hear, halfway through the process.
Are the real decision makers involved? Are insurance carriers/adjusters on board and will they participate?
It is not enough for the Mediation Scheduling Memorandum to simply recite the mantra that "authorized decisionmakers for each party will participate." Specific individuals with full capacity to settle the specific claims that have been asserted must be identified and engaged in the applicable mediation session(s). (We all have experienced the unexpected announcement where the "authorized" adjuster admits at crunch time that he/she is authorized to settle a claim only up to 10% of its claimed value. "Wait a few minutes while I call my boss...")
Is a "global settlement" always the ultimate goal, or is it more prudent to direct everyone’s initial efforts at resolving as many of the larger claims as possible?
Defining this approach, and remaining flexible in its pursuit, is critical when there are multiple claims and multiple parties—some of whom are not involved in some of the claims. This may require multiple sessions with different sets of parties participating—whether sessions are scheduled with different time blocks for various parties throughout the day, or at multiple sessions over a period of time. Settling any significant component of a set of claims can lead to a global settlement; alternatively, this may be impossible without a global settlement. Keep all options open.
This directly leads to the determination of how the mediation process should be structured.
One size definitely does not fit all multi-party mediations. Unless the mediator wants to hold all parties "captive" as part of a settlement strategy, there usually is no good reason to bring ten parties, with counsel and adjusters, into a mediation session at which they will participate for a total of twenty minutes. Also, although it is preferable to have all of the parties and representatives live and in person at a mediation, utilizing Zoom, Teams, or comparable platforms in combination with in-person attendance usually works just fine. It also alleviates many concerns regarding scheduling and travel.
Recitation and Position Statements as to Claims, Counterclaims and Defenses:
The "Goldilocks" Effect re: Information & Discovery: Not too little, not too much—but enough information to facilitate meaningful discussions.
One of the worst things that a mediator encounters in any settlement discussion—all the worse in a multi-party proceeding—is when one or more parties complain about a lack of information or incomplete "disclosure" regarding the nature, basis, and documentation that supports another party’s claims or defenses. Conversely, even the most diligent mediators will drown in the details if the parties submit reams of documents in the belief that the more paper attached, the stronger the claim. This is where good lawyers need to earn their keep. The other parties, and the mediator, need just enough information to intelligently evaluate claims and defenses-- but not to the extent that would be required to arbitrate or try the case. Everyone should be constantly reminded that the guiding principle for mediation is that it is a streamlined process that enables the parties to settle claims without expending the time, aggravation, and money that is spawned by full-blown discovery, depositions, and evidentiary hearings. If the parties want the mediator to conduct a "mini-trial," that can be arranged, but it should be identified, discussed in detail, and defined very early on.
In order for the evaluative process to take hold, all parties should put their substantive cards on the table.
Another "worst thing" that mediators sometimes encounter is when a party plays coy and doesn’t "give away" some supposedly strong argument, or even a damning piece of evidence, because the lawyer wants to "save it for trial." Any lawyer, or party, that plays this game isn’t serious in his/her efforts to settle the case, and this "strategy" should be strongly discouraged. Counsel frequently do not believe mediation will succeed and go through the motions because it is required by contract. But in multi-party cases, there are too many moving parts, and the stakes are usually too high, to justify adopting a strategy that seeks to diminish the chances of settlement. Again, the mediator usually can overcome any such inclination of counsel by setting the parameters for full disclosure, and explication, of claims and defenses from the get-go.
Settlement Discussions—Setting the Brackets and Narrowing the Gaps
Every mediator knows that the key to moving the parties towards settlement is to do just that: bracket demands and offers, and then make every possible effort to narrow the gaps. Keeping the conversations going with the parties is critical to make that happen. In multi-party mediation, this process can get complicated; the larger the number of parties, the more difficult it is to keep positive momentum going. Until all prospects of settlement are eliminated, the mediator should proceed with boundless energy and cautious optimism. Getting the parties to believe that settlement is actually feasible is absolutely essential.
Debunk the "It was the other guy’s fault" defenses as quickly as possible.
Invariably, everyone in multi-party cases tends to blame "the other guy" for whatever liability and damages attach to arguably valid claims. Apportionment of fault, and damages, among parties is absolutely necessary to some degree, and every respondent who bears some potential liability should contribute something to settlement. Human nature, the notion of justice, and the necessity to build momentum towards settlement all require mutual contribution; the mediator’s key role is to provide strong recommendations as to proportionality of contribution for settlement. The magical moment comes when the parties allow themselves to be guided by these recommendations.
Future Costs of Discovery, Depositions & Hearings—in Multiples— may supersede the evaluative analysis of liability and damages.
One critical aspect of multi-party mediation is the simple fact that when there are numerous parties involved in an arbitration or litigation, the costs of not settling the case increase exponentially. There will be more discovery, more depositions, and more days of hearings when more parties, and more lawyers, are involved. It is a bedrock principle of mediation that avoiding the costs, time, and aggravation of arbitration/litigation is the driving impetus for settling a case. Along with elimination of future risk, the avoidance of arbitration/litigation costs provides the mediator’s strongest—and sometimes only-- argument to convince the parties to reach a settlement. As obvious as it may seem, this calculus should be reviewed with each party in substantial detail, and verified by the respective counsel in real time. Also, most parties really do not understand how much time and stress will be required to slog through a complex, multi-party arbitration or lawsuit, and this reality cannot be emphasized enough: "Why would you, and your organization, want to deal with this case for another two years when you could be making money on other jobs, or playing golf, or going fishing?"
Global Settlement versus Claim by Claim/Piecemeal Approach.
This was mentioned above as a key item to be determined as soon as possible. There are pros and cons to each approach, and sometimes the distinctions cannot, and need not, be drawn too fine. In all likelihood, the number of claims and parties—and whether all parties are truly involved with all of the claims—will determine how this strategy plays out. One significant advantage to a global approach, however, is that the mediator can dispense with the delineation of liability and contribution for each respective claim by each party and instead can take a more "holistic" approach to settlement via pro rata contributions. Since each party wants to know what the other parties are contributing towards settlement, whether for single issues or for global resolution, it is easier for a mediator to justify apportionment in a global settlement given the differing involvement, and responsibility, of the various players in multiple claims. To put it another way: Not every party is necessarily involved in every claim, and that involvement will also vary from claim to claim.
A disadvantage of global settlement, of course, is that one or two recalcitrant parties can derail settlement entirely, whereas settlement of individual claims may achieve the "half a loaf is better than none" result.
Embracing the "3:00 p.m." Discussions—Let the horse trading begin in earnest.
For a one-day mediation with two parties, the "witching hour" usually strikes around 3:00 p.m. This is when the parties, with encouragement from the mediator, begin to abandon their principled discussion of claims, defenses, and damages in favor of the incremental negotiation—or horse trading-- that is necessary to settle the case. For multi-party mediations, the mediator must handle this transformative process with caution. All parties must believe they have "had their day in court" via constructive dialogue with the mediator, and that their positions have been adequately expressed to the other parties before they will seriously discuss settlement contributions.
Final Settlement Agreements and Releases—Let the Lawyers Earn Their Keep
To re-state a mediation aphorism: The mediator should not provide legal advice for settlement terms. Once the deal is struck—and clarified with exactitude with the agreement of all parties—the mediator’s work should be done. Settlement of multi-party cases probably will entail more complicated and detailed settlement agreements, and the task of drafting and executing those agreements falls to the lawyers alone. At that point, the mediator only needs to nudge the parties to finalize their agreements within agreed upon timeframes.
About the Author
Steven B. Kaplan is a partner at Michelson, Kane, P.C., in Hartford, CT, where he has practiced litigation, arbitration and mediation of construction and commercial disputes since 1982. As a neutral, he has mediated or arbitrated approximately 100 commercial and construction cases. For the past twenty years, Steve also has been an Adjunct Professor in the Graduate Program for Construction Management at Central Connecticut State University, where he has regularly taught "Construction Law” and “Construction Finance Management.” Between 1988-2001, he taught "Law of Public Construction Contracts" at the University of Connecticut School of Law.
Steve has been a member of the AAA construction and commercial arbitration and mediation panels for over 30 years. He has been designated as an AAA “Master Mediator” (Construction--Northeast Region). He was named Lawyer of the Year for Construction Law (Hartford) in 2020 by Best Lawyers®.
He is a graduate of Columbia University (Bachelor of Arts – 1974); University of Massachusetts (Master of Arts – 1978); and the University of Connecticut School of Law (Juris Doctor – 1982).
Steve is a lifelong Boston Celtics fan.