By William D. Gilbride Jr.
Mediation is a private, voluntary dispute resolution process in which a neutral third party — either appointed by a court or invited by all parties to the dispute — assists the parties by identifying issues of mutual concern, helping them develop options for resolving those issues, and finding resolutions acceptable to all parties. In recent years there has been a strong emphasis on utilizing mediation as a means of resolving civil cases. “Facilitative mediation” or, simply, “mediation” as defined in the Michigan court rules is a less intrusive form of third-party involvement in the dispute, since the parties retain control over vital decisions affecting their lives. Mediated outcomes may be tailored to meet the needs and interests of the parties and reflect the parties’ own preferences and priorities in an effort to create a “win-win” result.
Recent experience has shown that in mediation, since parties create their own resolution and because mediators have a duty to ensure that agreements reached are “durable,” there is greater satisfaction by the parties to the dispute with the mediated outcome, and with that satisfaction comes a higher level of compliance than with court judgments. The mediation process empowers the parties to understand both sides of the dispute and to fully engage in the process themselves to resolve the disputes: in essence, the participants in the mediation process retain control over the outcome. Since the process is confidential, the parties can keep their matters—and their resolution—private. All of the foregoing virtues of the mediation process have been successful in developing mediated settlements of civil cases.
Prior to January 1, 2022, the Michigan court rules allowed for case evaluation. Under MCR 2.403, 2.404 and 2.503 case evaluation was established to obtain an “objective assessment” of the claims, defenses and counterclaims in a civil proceeding. The case evaluation process was in place for many years and it allowed litigants to receive an evaluation of their case from an experienced, independent third party (or panel) prior to trial. The theory for case evaluation was that the settlement recommended by the case evaluators would assist in allowing the parties to develop a settlement.
The case evaluation rules included a sanction provision which penalized a party for failure to accept the recommended case evaluation amount. A party who rejected case evaluation faced a financial penalty imposed by the court if they rejected the case evaluation amount and then failed to improve their economic position at trial by 10% or more when compared with the dollar amount of the case evaluation. This sanction provision was effectively removed on January 1, 2022, and ended up being the “death knell” of case evaluation. Once the sanctions provisions were removed from the case evaluation rules, case evaluation became meaningless, so the courts and the litigants stopped utilizing it as a pre-trial reality check on the merits of claims and defenses. However, once case evaluation was discontinued, there was no longer any evaluative component to the pre-trial settlement process, and parties were left with a choice to attend a court-conducted settlement conference or mediation to aid their pretrial settlement negotiations. Once courts stopped sending cases to case evaluation, attorney mediators proliferated and began hearing and assisting the parties to the mediation process in reaching a negotiated settlement.
Since January 2022, mediators have learned that in some cases the parties are appreciative of a neutral’s objective evaluation of the claims, defenses and counterclaims framed by the parties’ pleadings. This objective evaluation made by a mediator is commonly known as a “Mediator’s Proposal.” There is no express court rule or mechanism for the creation of a Mediator’s Proposal and, in many cases, it is unnecessary as a trained mediator is skillful in shepherding the parties to a resolution that they create and then embrace.
Further, a Mediator’s Proposal does not have attached to it any form of sanction or penalty for failing to accept the recommendation; indeed, it is nothing more than a recommendation and it may not be an evaluation in a literal sense.
However, notwithstanding its limitations, situations arise during a mediation in which the Mediator’s Proposal is especially valuable. Examples of common situations in which the parties request that the Mediator generate a Mediator’s Proposal include cases in which one or more of the parties’ have egos or strong emotions which prevent them from fully engaging in the mediation process because of a refusal or unwillingness to concede any points, even in the privacy of a confidential mediation process.
While there are no sanctions involved in a mediator’s recommended settlement, the parties do end up with a settlement proposal that takes into consideration their own assessments of the claims, defenses and counterclaims in the proceeding. If nothing else, following a day of mediation, the parties can at least leave with a concrete proposal to resolve the case that has been generated by a neutral, third party, who has had the benefit of hearing from the parties and has an appreciation for issues which may not lend themselves to a precise mathematical calculation or which involve taking or refraining from taking actions that are beneficial to the situation and result in a settlement of the dispute.
There are a couple of elements commonly found in a Mediator’s Proposal that parties find valuable. When developing a Mediator’s Proposal, the mediator typically states that each party is to respond by a given deadline and only to the mediator as to whether the proposal is or is not acceptable. In this way, if a party rejects the proposal, that party will never know whether the proposal was or was not accepted by the other party or parties. This phenomenon assures that the party who rejects cannot use the mediator’s proposal against the party who accepts by asserting, “if you were willing to take/pay $X, why won’t you pay a little more (or take a little less)”, etc. Generally, once the deadline arrives, the mediator simply announces to the parties that the matter did or did not settle on the recommended terms. If the mediator’s proposal is accepted, counsel for the parties are left to document and implement the settlement; if either side rejects, the mediator’s proposal remains confidential, with only the parties knowing. They can then proceed with the case.
Additionally, if a mediator recommended settlement is requested, it generally doesn’t come up until after the mediator has conducted the mediation in accordance with the conventions that have been developed over the years for successful mediations. Before getting to a Mediator’s Proposal, the mediator can receive opening statements from the parties, prepare an agenda, gather facts, and facilitate ongoing discussions between the parties. The mediator can engage in productive reframing of issues, look for common interests, and assist the parties in considering consequences, all of which considerations are shared with the parties. The mediator can still help the parties understand their case and its strength and weaknesses, their opponent’s case as well as alternatives and options. The mediator can bring opposing perspectives to the parties during the negotiation process. The mediator can continue in the role of examining risks and exploring the process following mediation if there is a failure to obtain a negotiated settlement. All of these mediated techniques will be utilized for the mediation process before getting to a Mediator’s Proposal. And, only in those cases in which the parties are unable to reach a deal and in which all concerned are amenable to obtaining a Mediator’s Proposal is the mediator authorized to prepare a recommended settlement. In this fashion, the mediation process provides the litigants with a sense of security and control and establishes ground rules for further settlement negotiations even if the Mediator’s Proposal is ultimately rejected.
So, while it’s still early in terms of our experience following the demise of the case evaluation process, there are appropriate cases for the Mediator’s Proposal such as the ones described above. In my personal experience there have been a number of situations in which the parties secretly were desiring the input of an objective third party-- such as a trained mediator-- to help them put a settlement on the table. For whatever reason, getting that proposal from an independent third party may be more palatable in some cases than conceding a point or requesting a relief that participants were unable to articulate.
For the foregoing reasons, consideration should be given to a Mediator’s Proposal in appropriate cases so long as the mediation process is carefully applied to the case prior to requesting that the mediator put a recommended settlement figure on the case.
—————
William D. Gilbride Jr. is of Counsel at Miller Johnson Attorneys, in the firm’s Business practice group. Gilbride is an accomplished business attorney who has built a solid reputation resolving disputes before they reach a courtroom. He also is a seasoned litigator who has tried many cases in state and federal courts over business, contract, real estate and other matters. Gilbride provides expert counsel regarding contracts, business and corporate law, real estate law, dispute avoidance and resolution, non-compete agreements, business torts, and zoning and land use law. He also handles patent, trademark and trade secret litigation. Gilbride also served as general business and legal counsel for many for-profit and not-for-profit organizations in such matters as mergers, acquisitions, work-outs, and stock, asset and share exchange transactions. He has served as secretary and general counsel for two non-public corporate clients with more than 100 shareholders each. This experience is invaluable to larger, privately held organizations requiring counsel in handling the many issues affecting closely held corporations and minority shareholder rights.
Mediation is a private, voluntary dispute resolution process in which a neutral third party — either appointed by a court or invited by all parties to the dispute — assists the parties by identifying issues of mutual concern, helping them develop options for resolving those issues, and finding resolutions acceptable to all parties. In recent years there has been a strong emphasis on utilizing mediation as a means of resolving civil cases. “Facilitative mediation” or, simply, “mediation” as defined in the Michigan court rules is a less intrusive form of third-party involvement in the dispute, since the parties retain control over vital decisions affecting their lives. Mediated outcomes may be tailored to meet the needs and interests of the parties and reflect the parties’ own preferences and priorities in an effort to create a “win-win” result.
Recent experience has shown that in mediation, since parties create their own resolution and because mediators have a duty to ensure that agreements reached are “durable,” there is greater satisfaction by the parties to the dispute with the mediated outcome, and with that satisfaction comes a higher level of compliance than with court judgments. The mediation process empowers the parties to understand both sides of the dispute and to fully engage in the process themselves to resolve the disputes: in essence, the participants in the mediation process retain control over the outcome. Since the process is confidential, the parties can keep their matters—and their resolution—private. All of the foregoing virtues of the mediation process have been successful in developing mediated settlements of civil cases.
Prior to January 1, 2022, the Michigan court rules allowed for case evaluation. Under MCR 2.403, 2.404 and 2.503 case evaluation was established to obtain an “objective assessment” of the claims, defenses and counterclaims in a civil proceeding. The case evaluation process was in place for many years and it allowed litigants to receive an evaluation of their case from an experienced, independent third party (or panel) prior to trial. The theory for case evaluation was that the settlement recommended by the case evaluators would assist in allowing the parties to develop a settlement.
The case evaluation rules included a sanction provision which penalized a party for failure to accept the recommended case evaluation amount. A party who rejected case evaluation faced a financial penalty imposed by the court if they rejected the case evaluation amount and then failed to improve their economic position at trial by 10% or more when compared with the dollar amount of the case evaluation. This sanction provision was effectively removed on January 1, 2022, and ended up being the “death knell” of case evaluation. Once the sanctions provisions were removed from the case evaluation rules, case evaluation became meaningless, so the courts and the litigants stopped utilizing it as a pre-trial reality check on the merits of claims and defenses. However, once case evaluation was discontinued, there was no longer any evaluative component to the pre-trial settlement process, and parties were left with a choice to attend a court-conducted settlement conference or mediation to aid their pretrial settlement negotiations. Once courts stopped sending cases to case evaluation, attorney mediators proliferated and began hearing and assisting the parties to the mediation process in reaching a negotiated settlement.
Since January 2022, mediators have learned that in some cases the parties are appreciative of a neutral’s objective evaluation of the claims, defenses and counterclaims framed by the parties’ pleadings. This objective evaluation made by a mediator is commonly known as a “Mediator’s Proposal.” There is no express court rule or mechanism for the creation of a Mediator’s Proposal and, in many cases, it is unnecessary as a trained mediator is skillful in shepherding the parties to a resolution that they create and then embrace.
Further, a Mediator’s Proposal does not have attached to it any form of sanction or penalty for failing to accept the recommendation; indeed, it is nothing more than a recommendation and it may not be an evaluation in a literal sense.
However, notwithstanding its limitations, situations arise during a mediation in which the Mediator’s Proposal is especially valuable. Examples of common situations in which the parties request that the Mediator generate a Mediator’s Proposal include cases in which one or more of the parties’ have egos or strong emotions which prevent them from fully engaging in the mediation process because of a refusal or unwillingness to concede any points, even in the privacy of a confidential mediation process.
While there are no sanctions involved in a mediator’s recommended settlement, the parties do end up with a settlement proposal that takes into consideration their own assessments of the claims, defenses and counterclaims in the proceeding. If nothing else, following a day of mediation, the parties can at least leave with a concrete proposal to resolve the case that has been generated by a neutral, third party, who has had the benefit of hearing from the parties and has an appreciation for issues which may not lend themselves to a precise mathematical calculation or which involve taking or refraining from taking actions that are beneficial to the situation and result in a settlement of the dispute.
There are a couple of elements commonly found in a Mediator’s Proposal that parties find valuable. When developing a Mediator’s Proposal, the mediator typically states that each party is to respond by a given deadline and only to the mediator as to whether the proposal is or is not acceptable. In this way, if a party rejects the proposal, that party will never know whether the proposal was or was not accepted by the other party or parties. This phenomenon assures that the party who rejects cannot use the mediator’s proposal against the party who accepts by asserting, “if you were willing to take/pay $X, why won’t you pay a little more (or take a little less)”, etc. Generally, once the deadline arrives, the mediator simply announces to the parties that the matter did or did not settle on the recommended terms. If the mediator’s proposal is accepted, counsel for the parties are left to document and implement the settlement; if either side rejects, the mediator’s proposal remains confidential, with only the parties knowing. They can then proceed with the case.
Additionally, if a mediator recommended settlement is requested, it generally doesn’t come up until after the mediator has conducted the mediation in accordance with the conventions that have been developed over the years for successful mediations. Before getting to a Mediator’s Proposal, the mediator can receive opening statements from the parties, prepare an agenda, gather facts, and facilitate ongoing discussions between the parties. The mediator can engage in productive reframing of issues, look for common interests, and assist the parties in considering consequences, all of which considerations are shared with the parties. The mediator can still help the parties understand their case and its strength and weaknesses, their opponent’s case as well as alternatives and options. The mediator can bring opposing perspectives to the parties during the negotiation process. The mediator can continue in the role of examining risks and exploring the process following mediation if there is a failure to obtain a negotiated settlement. All of these mediated techniques will be utilized for the mediation process before getting to a Mediator’s Proposal. And, only in those cases in which the parties are unable to reach a deal and in which all concerned are amenable to obtaining a Mediator’s Proposal is the mediator authorized to prepare a recommended settlement. In this fashion, the mediation process provides the litigants with a sense of security and control and establishes ground rules for further settlement negotiations even if the Mediator’s Proposal is ultimately rejected.
So, while it’s still early in terms of our experience following the demise of the case evaluation process, there are appropriate cases for the Mediator’s Proposal such as the ones described above. In my personal experience there have been a number of situations in which the parties secretly were desiring the input of an objective third party-- such as a trained mediator-- to help them put a settlement on the table. For whatever reason, getting that proposal from an independent third party may be more palatable in some cases than conceding a point or requesting a relief that participants were unable to articulate.
For the foregoing reasons, consideration should be given to a Mediator’s Proposal in appropriate cases so long as the mediation process is carefully applied to the case prior to requesting that the mediator put a recommended settlement figure on the case.
—————
William D. Gilbride Jr. is of Counsel at Miller Johnson Attorneys, in the firm’s Business practice group. Gilbride is an accomplished business attorney who has built a solid reputation resolving disputes before they reach a courtroom. He also is a seasoned litigator who has tried many cases in state and federal courts over business, contract, real estate and other matters. Gilbride provides expert counsel regarding contracts, business and corporate law, real estate law, dispute avoidance and resolution, non-compete agreements, business torts, and zoning and land use law. He also handles patent, trademark and trade secret litigation. Gilbride also served as general business and legal counsel for many for-profit and not-for-profit organizations in such matters as mergers, acquisitions, work-outs, and stock, asset and share exchange transactions. He has served as secretary and general counsel for two non-public corporate clients with more than 100 shareholders each. This experience is invaluable to larger, privately held organizations requiring counsel in handling the many issues affecting closely held corporations and minority shareholder rights.
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