Strategies for Successful Mediation and Settlement

Let’s face it; we all like to settle cases! However, a fundamental truth that must resonate with trial lawyers is there will never be a great settlement in any case unless it is being worked up as if it is going to trial. You can know all the strategies and techniques for negotiating, but unless your case is worked up as if it will be tried to a jury, it will not achieve top value figures.

Negotiation Techniques During Litigation

• Silent Treatment. When your case is falling into place as you planned and discovery keeps making your case stronger and stronger, sometimes the best thing to do is just remain quiet. Keep pushing to get the case set for trial and do not mention settlement. This makes the adverse party think you have no interest in resolving the case, and that trial is your destination.  There is no reality like impending finality. Eventually, the adverse party will crack and ask you if you have an offer. Slow playing your response to that will even make matters more difficult for them. You have to have a patient client who knows this tactic could push the case to the jury.
• Hammer on the Head. In this technique, you know there are some backside weaknesses to your case, so you spend your best bullet(s), and you spend them with a loud, hard strike. Then you make your demand. The goal is to convince the adverse party to settle before they get deep into the case that will uncover the underbelly of your case. The downside to this tactic is that if you use your hammer on the head and it does not phase the adverse party, or they are determined to overcome the setback, you are left without something to fall back on.
• Hammer Over the Head. As your case progresses, you take steps in discovery and ask questions that lead the adverse party to the point of knowing that you know their greatest weakness, and you have positioned your case to expose it. This means you use depositions to set up boxes to box the deponents in that the only way out of would be to trip the hammer being hung over their head. In this technique, you become active in negotiating after they know what you have held over their head, but before you pull the string on it all. The goal is to get the Defendant to pay more and more the closer and closer you get to pulling the string on the hammer.
• Reverse Negotiating. My favorite technique is very effective when there is a possibility that you can lose your case on summary judgment. Before the summary judgment or dispositive motion, you approach the adverse party and make a demand. In that demand, you set out the reasons why the case will survive the dispositive motion. You make a demand and then, in that demand, clearly communicate that this offer is only good until the Court rules on the motion. Point out that if you win the dispositive motion, the demand is withdrawn, and the demand will be a much higher number. Be sure to put the number in the demand.
• Artificial Inflating of Settlement Values. Many attorneys use initial settlement figures that clearly have no reasonable relationship to the value of the case. I have been told that attorneys do this because they believe it will loosen up the reserves of the adjuster. I believe that artificially inflated demands are counter-productive. First, it will require an attorney to make a series of enormous drops, thereby affecting the attorney’s credibility. Second, adjusters grow to think all attorneys build in this artificial inflation and expect all attorneys to make such drops. The better approach is to value your case, assuming all the best-case scenarios, and then move in very slow and small increments.

Mediation as a Settlement Tool

In its beginning, mediation was viewed by most lawyers and insurance adjusters as a “last resort before trial.” People in dispute who could not settle by any other means often made a final attempt at resolution through mediation. We have all seen pictures of smoke-filled rooms with labor lawyers and union officials working through the night, negotiating labor & management contracts.

Today, mediation has become the single most sensible method of Alternative Dispute Resolution (ADR) in America. Mediation offers both sides in a dispute a cost-effective and risk-free method of meeting informally, and under the guidance of an impartial Mediator, examining and discussing all the merits of a claim or dispute, and reaching a resolution to the dispute while still maintaining full and personal control of the decision-making process.

Mediation is widely popular and the norm, as opposed to the exception, in personal injury cases. While liability may not be argued in each and every claim, damages are always argued. They are always subject to individual evaluation by one side versus the other, i.e., the value of pain and suffering, medical causation, or medical necessity. Mediation offers both sides the opportunity to examine and discuss each other’s personal evaluation of liability and damages and to gain an understanding of each other’s position.

In private caucus with the Mediator, each side can engage in a thorough and honest analysis of the claim’s strength and weakness, in total candor and complete confidentiality, and without the posturing that often occurs when the parties are facing one another.

Only in mediation can both sides argue their position and not be subjected to rules of evidence, objections, and judicial restraints. Only through mediation can an impartial third-party be allowed the benefit of hearing each side’s honest and candid evaluation of the claim and eliciting their real settlement expectations.

Without mediation, the claimant is never an active participant in the settlement process. Demands and offers made between the lawyers and adjusters, and later relayed to the claimant, become nothing more than “dollar figures” that the claimant must compare to their original expectations. If the offer is less than the claimant has been previously told the claim is worth, the offer is certain to be rejected. Both sides will continue to spend a great deal of time and effort negotiating with settlement dialogue that never involves the claimant. If settlement efforts are fruitless, litigation will surely follow, and both sides will be forced to spend time and money in discovery and preparation for trial.

Without the benefit of mediation, the claimant will never have the opportunity to hear the adjuster’s or Defense lawyer’s position or reasoning behind the offer and will seldom hear and perhaps never fully understand the ultimate risks and costs versus the potential rewards of a jury verdict. If the case is never mediated but eventually settles, before trial, “you can be certain that someone left money on the table.”

Suggestions for Effective Mediation

Certain tactics and general preparation tips help ensure you are prepared to negotiate for your client effectively. The following may assist as a good guideline of essentials to consider in any mediation.

Consider the Timing

Timing can be critical. If you want to look at an early resolution of a case, mediation might be beneficial prior to taking expensive depositions. Alternatively, if you’ve gone through the entire discovery process, mediation may be helpful before trial to see if a settlement can be reached to avoid the expensive costs of a trial.

That being said, mediation is not useful if neither side has any expectation or intention of settling the case. If the opposition suggests mediation and you know your client is absolutely against settlement, don’t mediate. Doing so only creates further animosity and wastes time that could be used for discovery or trial preparation.

Be Prepared

It is important to convey to the Mediator and opposing party that you are prepared and well-versed in the facts and law of your case. Attorneys that are unprepared on those fronts are automatically behind in the mediation. You can’t sell your position and case strengths if you don’t know what they are. Take the time before the mediation to review and address key facts and issues of law.

Research

A large factor in negotiating successfully for your client is doing the necessary research beforehand. What are you researching?

• Research your Mediator. Determine the approach and experience you want from your Mediator and ask peers about experiences with proposed mediators. It is important to ask not only about experiences with a mediator who has served in that capacity for other cases but also to inquire about the Mediator’s prior legal experiences.
• Research key legal issues. Review cases for and against your position on key legal issues and be prepared to explain why your position is correct—having the cases with you doesn’t hurt.
• Research jury verdicts. Conduct jury-verdict analysis for cases with similar facts to determine what verdict might be expected at trial. It’s important to know if facts similar to yours resulted in a million-dollar verdict or summary judgment for failure to prove an essential element. Be prepared to distinguish facts or legal issues from jury verdicts you believe the other side will use to support its damages analysis.

Use the Mediation Statement and Opening Statement

Use the mediation statement as a roadmap for the Mediator. The mediation statement is your first opportunity to gain credibility and support with the Mediator. Be concise in your positions, and set forth the background facts, contended facts, legal theories, and defenses for the case. Also, anticipate and address the other side’s positions. If the mediation statement is done well, the Mediator will have a quick synopsis of the case and settlement positions.  The opening statement is one of the few times you will have the opportunity to speak directly to the opposing party. Use this to your advantage. Speak to the opposing party in your opening. Explain your positions, including both strengths and weaknesses of your opponent’s case, and why at the end of the day, you believe your client will prevail. Try to avoid being overly confrontational or accusatory. If your opening statement has only the effect of further polarizing the negotiation, you might as well go home.

Prepare Your Client

Before the mediation, meet with your client and go over your negotiation strategy, what you expect your client’s role to be in mediation, and how the mediation process works generally. If you have a client who has never participated in mediation, informing your client of how the process works and what they can expect will help alleviate anxiety and keep your client focused on the settlement issues. Ensure you have authority or can get authority from your client during the mediation.

Many times, insurance companies are involved in litigation. If the claims adjuster is not attending the mediation, communicate with him or her before the mediation and go over the case’s strengths and weaknesses.

Keeping the client and insurance company informed can only help the mediation process. Make sure in these discussions that you don’t oversell your case. Giving your client a false expectation of the result will not help resolve the matter at the end of the day.

Play the Devil’s Advocate

To be prepared for any mediation, you must consider the strengths and weaknesses of your opponent’s case. Try to consider what your approach would be if you were on the other side. What facts and legal theories would you emphasize? What would you try to negotiate as a settlement price? If you can look at the facts of the opposition and know its strengths and weaknesses, you will be better prepared to address and counter those facts in your negotiations.

Be Principled

This theory is one that cannot be overlooked in negotiating at any time, but particularly in settlement discussions. Be principled in your negotiating. What does that mean? If you make a counteroffer or demand, make sure it is because the other party has demonstrated something that you believe actually impacts the value of the case. Know and explain to the Mediator and opposing counsel why you are making a counteroffer or demand. If you are mediating a case and you begin to go back and forth on the settlement numbers, you convey to the other side, “I have a certain amount of authority, and I’m just negotiating price until I reach it.” At that point, you’ve lost credibility and negotiating power.

Don’t Be Afraid to Walk Away or Continue Negotiations

If it is apparent from the settlement figures being negotiated that the parties are worlds apart, don’t be afraid to end the mediation and walk away. It is only frustrating to both the parties and counsel to work on a mediation that has no chance of settlement.

Alternatively, if the parties are close to a deal, but it is the end of the day, agree to continue the negotiations for a week before reengaging in the litigation process. Doing so will give the parties a chance to consider their settlement positions and see if a final deal can be reached.

Use a Negotiating Approach that Works for You

Everyone has his or her own approach to negotiating. Some individuals are quiet and unwavering. Others are loud and tenacious. Whatever your preference, know your negotiating style and use it to your advantage. Play to your negotiating strengths. If you are the quiet type, use your steady approach to convey strength and conviction in your positions. If you tend for the more flamboyant approach, use your outgoing nature to intimidate. If you tend to the more aggressive approach, remember you have an intermediate third party conveying your position. Don’t be so aggressive that you irritate and alienate your Mediator.

Listen to the Mediator’s Observations

Mediation is the opportunity for both sides to hear their strengths and weaknesses. So, LISTEN. If the Mediator says, “Hey, I think you may really be in trouble with your expert’s report on the issue of fault,” consider his position and reasoning. If the case doesn’t settle, you can use the Mediator’s observations to conduct further discovery, amend pleadings, or supplement expert reports. If the mediation is right before trial, the Mediator can be an invaluable third party to practice the persuasion of your trial themes.

Prepare for and use mediation for the negotiating tool it is—a great opportunity to learn more about your opposition’s strengths and weaknesses, a chance to test trial theories on an impartial third party, and an opportunity to resolve litigation in a cost-effective manner.