The Benefits of a “Failed” Mediation

Mediations can be frustrating. And frustration is a growing concern in our current circumstances with instant gratification and a partisan divide shadowing our days. Still, we need to remind ourselves that all parties share a goal for resolution—even if they arrive with diametrically opposed ideas as to the respective merits of their cases. If progress towards resolution is slow (or non-existent), the level of frustration can blossom further. Mediators may find themselves in challenging scenarios early in a mediation, trying to persuade parties to continue the process rather than having them storm out.

A wise counsel once posited that a lawsuit was a mere commodity, which could be bought or sold like any other commodity—a powerful concept that’s still valid today. While the sale price of the lawsuit may evolve with the strengths or weaknesses of the case, the parties define the value of the lawsuit. Although a mediator can offer views on the various merits, the parties are the ones who determine if the “sale” price is acceptable to the prospective purchaser.

Before packing your bags, feeling the mediation has been futile, it’s worth considering the following:

 

1. Is there really no chance of settlement?

Offers made by the parties are often separated by hundreds of thousands of dollars, and the gap narrows at a glacial pace. While the tenor of negotiations suggests that settlement won’t occur, strange things happen in the midnight hour of mediations. Surprisingly large movements often occur in the final round of offers, or just before the “closing bell.”  If parties grow frustrated and leave early, an opportunity for a satisfactory resolution can be missed.  Instead, why not dig in your heels and push through the point of frustration, working hard to discover whether a settlement is possible that day.

 

2. Can you make progress on some issues?

Usually, a number of issues impede settlement in a case. You may want to ask yourself if the major concern is liability or multiple damages. Perhaps it’s possible to agree that liability should be admitted, or that liability should be divided between the parties on a fixed basis. For example, can an agreement be reached on general damages and past loss of income, leaving only future loss of income as the main area of dispute? A thorough airing of all issues will help clarify the impediments to settlement.

 

3. Is this an appropriate case for bifurcation of the trial?

If the defendant has a strong position on liability, and damages are not really in dispute, consider setting aside the liability issue and just negotiating the damages. If the damages can be agreed upon, it may be far more efficient to simply go to trial on the liability issue.

 

4. Can you narrow the gap?

If the initial offer from the Plaintiff is $1,000,000.00 and the initial offer from the defendant is $50,000.00, the gap may be too pronounced for settlement that day. But don’t end the mediation precipitously. It’s wiser to keep negotiating so the anchor positions have the Plaintiff at $500,000.00 and the Defendant at $300,000.00. Even if an agreement can’t be reached, you have made significant progress, which enhances the chances of settlement down the road.

 

5. Is there a problem with authority?

Sometimes the parties are on the cusp of settling when defendants hit a wall because they don’t have sufficient authority and they need to contact a superior who is not readily available. Similarly, a Plaintiff may need to consult with an absent party before making a final decision. Consider whether the final offer can be left open for acceptance for a few days or it there are other alternatives.”

 

6. Can a mediator’s proposal help?

If the parties have reached their “final” positions and a gap remains, it may be appropriate to ask the mediator for a suggested settlement figure. This proposal can be left open for a short period of time, with each party left to contact the mediator privately with a yes or no answer. If both parties respond positively, then the mediator can advise everyone a settlement has been reached, but if one (or both) parties say no, the mediator can simply advise both parties that there is no settlement. In a scenario where one party agrees but the other refuses, the refusing party will never learn that the other side was agreeable to settling—a practice that protects the negotiating position of both parties.

 

Conclusion

While the ultimate goal of mediation is settlement, real value can be delivered even when the mediation results in no settlement.  Mediations should never be considered failures unless one or both parties have refused to engage in the process in good faith.  Instead, “failed” mediations are most commonly a powerful catalyst towards eventual success.