By Edmund J. Sikorski, Jr.
A mediator does much more than a messenger carrying the water bucket of numbers.
A mediator adds value to the negotiating parties by representing the process and assisting the disputants in overcoming barriers to case resolution. Strategic barriers are those that inhibit the exchange of information between parties required to find optimal resolution.
The “standard economic explanation” theory of settlement decision making posits that:
A defendant will be willing to settle for an amount equal to the cost of an adverse trial judgment multiplied by the percentage chance of losing the case, plus trial costs, minus out of court settlement costs. A plaintiff will be willing to accept a settlement offer in the amount of a favorable judgment, minus trial costs, plus out of court settlement costs. Lawsuits will settle if the defendant’s maximum offer is higher than the lowest offer the plaintiff will accept”
{Korobkin and Guthrie “Psychological Barriers to Litigation Settlement” 93 Mich.L.Rev. 107,119 (1994)}
In short, both parties agree on a discounted value of risk/exposure and wish to avoid the higher cost of trial and further unanticipated and uncontrollable adverse occurrences. This model presumes that both parties know the same information.
However, the simplest reason for litigants to disagree about the likely trial outcome is lack of information. The natural tendency is for litigants to maximize their own predetermined outcome. To this end a negotiator may employ hardball tactics, use tools of misdirection, and withhold information to gain an advantage over the other party because they are either afraid of being exploited by non-reciprocation by the other party or hope to somehow manipulate the situation.
This results in a lack of reliable information available to either and/or both contestants making it impossible to craft a resolution that maximizes their gains and minimizing their losses.
Mediators assist the parties in overcoming strategic barriers by:
(1) Acting as a buffer between the parties moderating or eliminating hardball tactics, reframing and translating the information exchanged to remove threats, ultimatums, and extreme offers and demands.
(2) Promoting an exchange of information and suggesting reliance on representations with a right to verification.
(3) Reframing and refocusing the parties on what each hopes to achieve including their goals, aspirations, interests, and needs thus helping the parties build momentum toward a mutually agreeable resolution. This is particularly important in the context of commercial and contract disputes.
(4) Focusing on assumptions about the case and the legitimacy, veracity, reliability, and objectivity thereof while maintain confidentiality. This might include employment of decision tree analysis and predictive analytics software.
Should the process become stuck and the economic model not yield positive resolution results, the mediator then must look to reasons for deadlock that are cognitive in nature.
There is a second social-psychological explanation of why cases settle through the mediation process. This focuses on the process of communication and information exchange as a way to change perception and attitude and centers on providing a forum in which options can be explored and solutions developed.
This approach involves appeals to superordinate goals and values – intangibles that get people from opposing sides to come together and work toward a common end result that all parties need. It plays on the parties’ aspirations for legitimacy and their desire to be part of a larger political/economic community. In this approach, the use of moral persuasion and symbolic rewards or gestures is important. This approach has particular application to commercial and probate /trust disputes where reputation and the need to balance transactional viability with the need for money co-exist.
In actual practice almost every mediation proceeds in some hybrid form of both models.
Both models are however impacted by at least 15 cognitive barriers. (Picker & Relyea, 2010)
Cognitive barriers are factors that unconsciously influence the way information is processed and therefore directly affect assessment of resolution options and ranges of settlement value. Individually and collectively these factors promote escalation of conflict rather than contribute to resolution.
(1) Cognitive Dissonance. Failing to consider data contradicting one’s viewpoint. Justifying conduct and/or blaming everyone else.
(2) Advocacy Bias. Spending too much time identifying one’s strengths but paying insufficient attention to one’s weakness –why the goal might not be achieved.
(3) Assimilation Bias. Behaving as if adverse information was never presented.
(4) Endowment Effect. Over valuating things in which one has a property interest –including the value of claims in dispute.
(5) Certainty Bias. Overestimating assessments of probable outcomes of litigation particularly when predicting the likely result at trial on a percentage basis.
(6) Egocentric Bias. Thinking that one has greater assessment and evaluation abilities than would be given by an outside observer.
(7) Inattentional Blindness. Failing to assess the “big picture” of the case—missing the forest for the trees.
(8) Mistaking a Small Part of the Truth for the Whole. Especially in cases involving a multiplicity of issues/parties, forcefully asserting one’s own arguments while losing sight of the bigger picture, e.g. the themes of the case and appeal of the client.
(9) Reactive Devaluation. Minimizing the value of a proposal because it came from the opposite side. “Consider the Source.”
(10) Competitive Arousal. Grandstanding.
(11) Change Blindness. Overlooking significant factual developments as discovery/mediation proceeds and failing to re-evaluate based on new information.
(12) Risk (Loss) Aversion. Usually from the reference point of the momentary status quo of negotiations, most parties are risk-adverse when protecting settlements regarded as current “gains” and are risk-seeking when making decisions involving results regarded as current losses. This is the calculus of money negotiations.
(13) Hindsight Bias. Failing to consider that hindsight is 20-20. Assessment of whether or not conduct is wrongful is likely to be determined differently by one person making an objective decision before the fact and another person (jury) assessing the same conduct after the fact.
(14) Attribution Bias. Allowing anger and blame to override rational decision making simply because the parties are involved in an escalated dispute.
(15) False Definition of Compromise. Failing to understand that principle need not be compromised by re-evaluation of the claim.
A mediator’s toolbox contains antidotes for each malaise without which the conflict will escalate and a war of attrition will occur until either one or both sides will exhaust themselves or vanquish the other. This zero sum result often triggers the law of unintended consequences where the victor becomes the vanquished.
Mediators ask hard questions that litigants do not like or want to hear much less answer and are often the very questions that jurors would think about but not be able to ask.
Mediators challenge litigants to focus, control heated emotions, and facilitate informed decisions.
Finally, mediators own and control the process of case resolution, while the parties own the result.
(Edmund J. Sikorski Jr., J.D. is a member of the Michigan Bar (Emeritus), an approved civil mediator in Washtenaw County and a Florida Supreme Court Certified Circuit Civil and Appellate Mediator. He can be reached at edsikorski3@gmail.com.)
