Sheldon Stark
Mediator and Arbitrator
This is the second part of a two-part article. Part I (March 16 edition) focused on the fundamental differences between the mediation process and other stages in the litigation process necessitating a different approach to advocacy.
a. Search for Common Ground
No matter how deep their differences, no matter how entrenched in their positions, no matter how escalated their emotions, parties often share common ground, areas of agreement overlooked or drowned out by the dispute. Before the termination, for example, the former employee may have loved working for the company; and the company may well have valued the employee’s service. The two businesses now litigating the quality of machine parts were always satisfied with price and delivery in the past. The CEOs of each enterprise, in charge of businesses founded by their grandfathers, have more in common than they might have thought. When the founding partners first came together to establish the enterprise now imploding, they enjoyed each other’s company and respected one another’s ability.
Identifying common ground is sometimes a revelation to the parties and often serves to build trust and establish momentum toward future agreements and resolution.
b. Prepare an Offer/Concession Strategy in Advance
The best negotiators are strategic. They develop an offer/concession approach with their clients long before they reach the mediation table, a strategy which anticipates each move and countermove likely to occur round after round until settlement is reached. Strategic advocates plan out the negotiation in their head, anticipating how each offer will be received, predicting the other side’s response, and carefully working the negotiation through step-by-step until their settlement goal is achieved. Fortified with a plan, they are not buffeted by emotions in the moment and at the table by misbehavior or overly aggressive advocacy from their opponent. A well-conceived plan smooths out an otherwise emotional roller coaster ride. They have a plan and they implement their plan, ignoring distractions. Strategic negotiators generally get what they’re after. Regrettably, strategic negotiators are rare. Too many advocates limit their planning to an opening number and a bottom line, relying on their gut instinct and experience for all the moves in between. Some advocates do not prepare even that much. Seat-of-the-pants negotiation may work in some cases, but it is not a strategy to maximize results over time.
An offer/concession strategy is a prediction. Predictions about the future are fraught with peril. Mistakes will be made. Should unanticipated risks be identified, for example, the value of the claim or defense is impacted accordingly, which, in turn, effects the overall settlement value of the dispute. Accordingly, strategic negotiators must also be flexible. Adjustments in the strategy may be necessary.
In any event, with an offer/concession strategy, party expectations are better managed, and the negotiator retains tighter control of the process. Clients are less frustrated, less likely to become discouraged, and less likely to grow impatient. Parties who are frustrated, angry or impatient are more likely to make mistakes, offering too much, leaving money on the table, or giving up too soon. With an offer/concession strategy, even disappointing moves are anticipated in advance and planned for. By focusing on process, both parties remain in the negotiation. The danger of one party or the other withdrawing is diminished. Indeed, by developing an offer/concession strategy, counsel reduces the risk of error and reading or sending the wrong signal.
If the strategy fails to bring the parties within the settlement “landing zone”, it could be a sign that one or both parties are not ready to settle; or someone’s evaluation is in error. In either case, counsel can learn a great deal from failure. It could be that one side or the other has underestimated the risks and a fresh assessment is necessary. It could be the problem can be resolved by a little additional discovery – the parties disagree, for example, about how a witness will testify. If so, the mediation can be adjourned until the witness is deposed. Perhaps the parties weren’t as ready for mediation as initially thought. The top or bottom line a party brings to the mediation table is the end product of a careful calculation as to risks, a weighing of strengths and weaknesses, an assessment of the judge, the legal foundation of claims and defenses, economic and non-economic loss, the potential jury pool, the state of the law, and more. If participants are paying attention to the information exchanged during the mediation process, their final evaluation should change to incorporate the fresh insights learned.
c. Have a rationale for each proposal or counterproposal
Effective negotiators combine their dollar proposals with a rationale or explanation, so the other side doesn’t conclude the offer is totally arbitrary. In an employment case, for example, how much is allocated for lost wages to date minus interim earnings? Is there money allocated for future lost wages, emotional distress, and attorney fees? Have the numbers been reduced to present value? What interest rate was used? If a party is claiming lost profits, how are they measured and what assumptions are they based upon? Unexplained numbers typically irritate the recipient and lead to counterproposals that are generally unproductive, resulting in equal consternation on the other side and a poisoned negotiation atmosphere. Unexplained numbers are rarely productive. By contrast, a rationale generally leads to a robust and constructive discussion of the assumptions and bases rather than simply complaints about the numbers themselves.
Whatever the explanation for a proposal, any settlement number communicated will be the loudest message heard by the recipient. Accordingly, I present the rationale for the numbers before presenting the numbers themselves. Once the number is presented, parties may stop listening. Because I want the participants to understand where the number came from, how it was derived, and what the offeror was thinking, it only makes sense to save the numbers for last.
d. Make Use of the Mediator
Mediators want to assist the parties in making good judgments about settlement. Typically, they are the only participant in the process who will have been in both rooms with exposure to how litigants are participating. There are many issues about which a mediator might be helpful:
i) Can the mediator share the temperature, mood and thinking in the other room?
ii) Will the mediator serve as a negotiation coach? Ask for suggestions in formulating the most effective proposals to communicate.
iii) Use the mediator as a “sounding board”. Run your questions, concerns and proposals by the mediator for input.
iv) Ask if the mediator can share what seems to be causing the most consternation “next door” and how to move forward.
v) What is the mediator’s reaction to the rationale employed to justify each proposal?
vi) If the mediator has trial or subject matter expertise, seek input as to risk and the magnitude of risk.
vii) As the negotiation process moves forward, request input as to where the negotiation might be leading.
e. Consider Remedies Not Available through the Litigation Process
In litigation, judicial remedies are confined to money damages and limited equitable relief from an often-reluctant judge. In mediation, as in any negotiation, by contrast, the only limit on proposed settlement terms is the creativity of the participants. By considering the underlying needs and interests of each party, i.e., recognizing what may be driving the dispute, participants may be able to expand the pie with proposals unavailable through litigation. For example, mediation may result in a business solution where the parties continue to work together. No judge could order that. In a dispute between a franchisee and a franchisor, modification of oppressive enterprise rules can result in a WIN/WIN success for both parties. In an employment case, a plaintiff claiming wrongful discharge may be offered conversion of an otherwise black mark on their resume (“termination for cause”) with a negotiated resignation or letter of recommendation in its place. Disputes made public in the media can be settled by drafting a joint press release that gives each side cover. Settlement agreements can include non-disparagement clauses, confidentiality, and cooperation in future litigation.
f. Learn From the Process
Many mediators describe the exchange of information during the mediation process as a “learning conversation.” If the dispute does not resolve itself, participants have learned something new or better understand something known in a new light. As noted supra when parties are truly listening, the numbers they’ve brought to the table – their top and bottom lines - should change. In the relatively rare event that mediation does not result in resolution, the parties are better equipped to prosecute and defend their claims and perspectives going forward.
g. Prepare Clients for the Process
Parties are the ultimate decision-makers. As full participants at the mediation table, they should understand the mediation process inside and out. That requires a good deal of advance preparation and party education. How does the process work? How does this mediator do things? What is the mediator’s role? How should the party act? When should they speak up? Should they prepare opening remarks? What is expected of them? What can they expect from the other side? What can they say and what should they not say?
If parties are to make the most of the opportunity to learn, and to exercise good judgment unclouded by emotions and distractions, they must be ready. Some of the topics that should be covered include:
i) If a party is going to make opening remarks in a joint session, they should know well in advance so they can prepare their comments accordingly. Counsel should work with their clients well before the day of mediation to “preview” party presentations for content, format, and tone. Advocates should not be afraid to critique presentations honestly and constructively to be most effective.
ii) Patience is a virtue. No two parties negotiate at the same pace or in the same way. Opening offers and counteroffers do not necessarily reflect where the mediation will end up. Experienced negotiators on the other side may well take advantage should they get the impression that someone is losing their resolve.
iii) One of my favorite quotes: “Expectations are resentments under construction.” Parties unaccustomed to negotiating the resolution of lawsuits may not be comfortable with the pace of things. It may have taken months or years to create the dispute. It may take all day to remove impediments to resolution. Some participants need more time to make decisions than others. For parties, this may be their only case whose outcome could have profound impact on their lives. They need extra time to make up their minds. That may require many hours of patient waiting.
iv) Clients expect their counsel to be zealous advocates. If counsel is observed acting as a joint problem solver who treats the other side respectfully, makes reasonable concessions, and seems to be trying to understand their perspective, parties may fear counsel has lost faith in their claims or defenses. Prudence dictates that parties be given an explanation for the change from zealous advocacy to mediation advocacy.
v) While the word “compromise” has taken on negative connotations in today’s world, finding an off ramp from a dispute often requires that each side make sacrifices. In “Getting to Yes,” Fisher and Ury taught us the value of interest-based bargaining and the possibility of WIN/WIN resolution. In the mediation of disputes over money damages, however, Winston Churchill’s observation still remains apt: the best settlements are those from which both sides walk away equally unhappy. Prudent counsel will, therefore, include preparing clients to be flexible and open minded about resolution.
Conclusion
Savvy litigators and clients understand mediation is a unique opportunity to engage in an effective dispute resolution process: a process designed to save time and money, exchange critical information, reduce consternation, limit disruption, manage risk, and achieve mutually beneficial resolution. When parties proceed as joint problem solvers, properly prepared by advocates who appreciate the power of replacing zealous advocacy with mediation advocacy, their underlying needs and interests are met, and their goals and objectives achieved.
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Sheldon J. Stark offers mediation, arbitration case evaluation and neutral third party investigative services. He is a Distinguished Fellow of the National Academy of Distinguished Neutrals, a Distinguished Fellow with the International Academy of Mediators and an Employment Law Panelist for the American Arbitration Association. He is also a member of the Professional Resolution Experts of Michigan (PREMi).
