Do Lawyers Really Understand What They Need to do to Prepare for Mediation

Recently I was invited by our local legal publication to be one of five persons on a Mediation Roundtable to discuss mediation techniques. We were interviewed by a moderator on various topics about mediation. I was the only lawyer in private practice on the panel. The others were all mediators; three were lawyers who are now doing full time mediation and the other was a retired trial court judge who for the last seven years has been mediating privately with a local service.

What I heard shocked me: Lawyers don’t know how to prepare for a mediation, and most of the lawyers who attend mediations just are not doing a very good job. The mediators all explained the hurdles they had to overcome. Their chief complaints could be listed as follows:

• There is no strategy or plan by the lawyers for their clients;

• The briefs submitted are “too brief,” and cursory;

• The lawyers have not prepared the client for the process; the clients have little understanding of how a mediation works and what can be accomplished;
• The parties are hostile to each other, or the lawyers are, which detracts substantially from the need to candidly communicate;

• The clients are not prepared to discuss “the numbers”; the client has no idea what the value of the case is;

• The lawyers have not discussed mediation as an alternative to trial – i.e., the “present value” of money (i.e., a settlement) versus the uncertainty of a recovery in the future;

• The client believes that the mediator is going to decide something and does not understand the role that the mediator plays as a neutral.

• The mediators spend too much time (one said 30%) of the initial time doing what the lawyers should have done to educate the clients;

• The lawyer is impatient with the process, so the client is as well.
  

So there you have it. The perception of at least these mediators was that we are not doing a good job for our clients by taking advantage of the mediation process, participating in it and educating our clients so that they have a real opportunity to resolve their cases. They seemed to uniformly agree that the “mediation process” begins with education by us of the client about that process and how the client can gain from the dialogue about the case and perhaps achieve a resolution of the dispute.

In my experience, the “mediation process” begins when the client first meets with our lawyers and staff to discuss the case. It is important for us to factor in mediation as part of the Litigation Management Plan, and make it an event in the process of representing the client just like a deposition or hearing on a key motion. We discuss mediation as a way of testing the case, as well as posturing it for resolution. We also advise the client how a mediation works, what its advantages are, and alert the client to mediation as part of the evolution of the case – a main event for which we will prepare just like we prepare for trial. I also stress that our advocacy is not comprised by our participating in a mediation. Indeed, I tell clients (after I agree to take the case) that offering to mediate is a show of confidence and strength in our position, BUT mediation involves looking realistically at the issues – liability, damages and collection of any judgment – and the costs of going to trial in comparison to the value of a settlement.

Since courts are sending many cases to mediation and parties seem more interested in participating, we need to be more mindful that clients need to be educated from day one about this important part of the litigation mechanism. While many courts require lawyers to inform their clients about this process at the outset, it seems that at least my mediator colleagues believe we need to pay more attention to, involve and educate our clients, and make this a part of the ongoing discussion of the case.

Listening to the Story as a Tool in Mediating

Being able to listen is an important trait in our profession. We need to hear what our clients recite as "their story" and develop a plan around that story for resolving their dispute or obtaining compensation for the wrong done to them. From the day we first meet our clients, we must open our ears to their plight; a tragic injury, a loss of a loved one, a business or investment that has been stymied by wrongdoers. Whatever the matter, it is important that we understand what happened, how it happened, and what relief is available to bring the clients back to where they were before.

Listening is an important part of negotiations. We must listen to our opposition to understand the other side’s views as to the facts or story of the case. Without a clear understanding of their position, we cannot fashion responses, nor put together a plan for representing our clients. What is their story? Who are the story tellers in the “theater of the real” (i.e. the trial court)? How will the sides be viewed by the trier of fact – court or jury? How will the story tellers be perceived? Will the trier of fact hear our story or theirs? Thus, we have to anticipate these questions and answers to the questions in planning the case and managing it for our client.

I often talk about the “laser beam to resolution,” i.e. the shortest line to a fair ending of the dispute in obtaining rightful compensation for our clients. That first test of this plan is in direct negotiations. Generally, I try to engage the other side in an early dialogue about the case, but at that point I am trying to listen to their story. I need to hear their version as soon as I can. I don’t just rely on the pleadings or discovery. I want to hear it from them or their counsel.

If direct negotiations don’t work, then mediation is next. By that time I may have listened to witnesses in deposition, or heard the oral argument of counsel at a motion or listened to counsel during a deposition with objections that may reveal the other side’s thinking. All along the way I am listening to what is being said by those participating, including the judge’s comments at case management conferences or hearings.

A mediation provides another opportunity to listen and hear – this time from a neutral whose views are important because they should provide an objective assessment of the stories being told by the parties in their briefs and sessions with the mediator. But it is important to the process for you as counsel for your client to listen and hear what is being said. Then, you need to discuss what has been heard with your clients and, again, listen to how they respond. Are they rational? Do they understand the issues? Are the responses purely emotional? Do they understand the litigation process and how they can lose as well as prevail? What is a “win” in their minds? How does that track with a realistic appraisal of the case and the probable results? Do they understand the value of the opportunity, logic and rationality of resolution by mediation, and how that process can work for them?

All of this requires you, as counsel for your client, to be a good listener, and to hear what is being said. Then you must translate that into a dialogue with your clients, and a mediator if that is the process you are involved in, so that a course can be fashioned which leads to a positive resolution of your clients’ case.

Listening, hearing – important qualities of counsel in providing high quality representation for your clients in the dispute resolution process!

The Three C's of Negotiation

Three basic principles are at the heart of settlement negotiations, whether they are direct or supervised in the more formal setting of a mediation: candor, communication , and confidentiality.

The level of candor required depends on the parties, their relationship and the forum. That is, the parties may be more guarded in direct negotiations, whereas in a supervised mediation, the presence of the mediator and the use of such as an intermediary may persuade the parties to be more candid about their case during the negotiations.

Communication is critical to the process. Once the parties stop talking, then there is no chance of a settlement even with a mediator. As long as the parties are talking to each other, even if through a third party, there is a chance for a negotiated resolution.

Confidentiality is also critical to the process. It encourages both communication and candor. The parties must understand that they will not be prejudiced by their exchanges, and that such will not be used against them in subsequent proceedings in the litigation. This assurance of confidentiality is at the heart of negotiations, whether direct or supervised.

These are the three essential underlying principles which allow the parties to reach a point where they together decide if the matter can be resolved. It is the policy that the decision making rests with the parties that requires that the three “C’s” underlie and support the process of negotiation.

Without an assurance of confidentiality, the parties are not going to candidly exchange information. Without confidentiality and communication, open discussion are stymied, as the parties will believe that whatever is said may end up being part of the other sides’ case at trial. The integrity of the process of negotiation in any format can only be assured if the parties are confident that their exchanges, disclosures, and bargaining will be protected from being used against them in subsequent proceedings. The parties must believe that they will not be prejudiced if they engage in any settlement exchanges.

As the Preface the Uniform Mediation Act states, “. . .[T]he law has the unique capacity to assure that the reasonable expectations of participants regarding the confidentiality of the mediation process are met, rather than frustrated. For this reason a central thrust of the Act is to provide a privilege that assures confidentiality in legal proceedings.”

The Federal Rules of Evidence do not contain any specific provision relating to communications during mediation. Rule 408 protects some communications during negotiations, but does not address mediation itself. District courts have specific rules adopted to protect what takes place during mediation and serve the purpose of carrying out the policies of encouraging candor and communication in supervised negotiations.

The protection of rules and statutes relating to direct negotiations is narrower than the confidentiality which attaches to the mediation process. For example, California Evidence Code section 1152 applies to an offer for compromise or to furnish something of value to another person who has sustained, or claims to have sustained, loss or damage, and also applies to “conduct or statements made in negotiation thereof…”

Despite the legal niceties, the parties should approach any negotiations with the understanding that they will all cooperate in implementing a principle of confidentiality so that the negotiations can progress towards an agreed upon resolution of the case.

A Look Back at the Process of Dispute Resolution

I am privileged to do a column for the LCA, and have been asked to contribute quarterly. My focus will be on the negotiation and settlement of cases, which is a subject near and dear to my heart for many reasons.

I grew up in the Midwest; the son of a lawyer who specialized in defending tort and insurance cases. My Dad, also Guy, was also General Counsel for one of the first regional insurance brokerage houses that handled claims for its insureds locally. It was innovative for a brokerage to have that authority, but it worked. My Dad ran that claims operation for several decades until he “retired” in his late 70’s. He was an excellent negotiator and stressed the importance of resolution before trial as usually the best solution. Oh, he knew some cases had to be tried, but he subscribed to the line from the Kenny Rogers song, “You got to know when to hold ‘em, know when to fold ‘em,” a phrase that is occasionally heard from my colleagues when talking to a client about settlement.

When I started law practice in the mid 1960's, the word “mediation” was not commonly used. I am not sure I had heard the word more than a couple of times while in law school.

As a young trial lawyer, the common practice was that settlement was not really discussed until a mandatory settlement conference right before trial. Before that, if a case settled it was because the attorneys did so, or the insurance adjuster jumped in and negotiated “the file” directly with the plaintiff’s lawyer. Often, the first real opportunity to negotiate a case was the “Mandatory Settlement Conference,” which later became part of the court rules, and which ordinarily was held quite close to trial. Other than direct negotiations, there was little involvement by the court in settlement talks before then. At that time, there were no Case Management Conferences. Courts were ordinarily not very active in the case until a Pre-trial Conference was held, at which time the court might inquire about what settlement talks have taken place, and if the parties were interested in a judge, other than the trial judge, meeting with them to see if some settlement efforts could result in a resolution.

The federal courts were required to provide for ADR procedures in civil actions in the Alternative Dispute Resolution Act of 1988 (28 U.S.C. sec 651 et seq.). Prior to that in 1985, California provided for Mandatory Settlement Conferences in Rule 222, California Rules of Court.

The words “alternate dispute resolution” or “ADR” were not in our vocabularies. Private dispute resolution services did not exist. Judges were elected or appointed to the bench and stayed to retirement. They did not leave these careers until that time. There were no jobs as private mediators to lure them away or provide employment after retiring. Frankly, as I look back on this, we were wasting a valuable resource in good settlement judges leaving the bench and essentially retiring from the profession altogether.

Now, the situation is much different. Private dispute resolution services and full time mediators abound. There are excellent training courses for mediators and new rules for governing that practice. Certification for mediators will soon be common, if not required. Standards have been set for mediators in the conduct of a mediation. (See, e.g., Cal. Rules Court 3.850 et seq.) While it seems that there are more mediators than lawyers, the litigation process seems to demand this resource for dispute resolution as an alternative to plodding through the litigation machinery at the courthouse.

Also, lawyers are doing a better job of managing litigation, at least in the more complex cases, so that resolution and settlement are part of the planning mechanism. That is good because it forces the parties to think about where they are going, what the results might be, and how much it will cost. That is, a “cost/benefit” analysis is part of the initial planning process and evaluation of the case.

One of the very important skills of a true trial lawyer or “litigator” is to know how to leverage a case to the point at which the parties are motivated to discuss settlement. I describe this point as a “plateau for resolution.” That is, it is a point where the parties have an opportunity to see what has occurred, evaluate the results for motions and discovery, and then look down the line at what will be done as the case progresses towards trial and a “forced resolution.” Does your client want to proceed? Does it know the risks? Is it aware of the significant costs involved? What is the potential settlement range versus the “net” that is likely to result if the case is tried?

Recognition of this plateau and then communicating with the client about the case – both past and future – is an essential ingredient of qualified trial counsel. It is our duty to explore the out of court resolution and advise the client about the several alternatives for direct negotiation, mediation, or other alternatives to dispute resolution, such as non-binding arbitration, submission of the case to a neutral evaluator (or panel) to get a read on the merits and value, or even focus groups to gain information as to how a jury might perceive a case which can contribute to a client’s willingness to negotiate or mediate the matter.

In future columns, I will give you my thoughts on various topics regarding negotiating and settling cases, including how to recognize the “plateaus,” guidelines for improving your chances of resolution in direct negotiations and mediation, what you need to do to prepare your client and the mediator for the mediation day, and other topics designed to assist you in getting the best out of court results for your clients.

Preparing Your Client for Mediation

Martin Peterson, Ph.D., is a long time colleague of mine. He is a litigation consultant who has been providing these services for 30 years. He tells this story:

In a recent case, our 25 year old female client had been sexually harassed on a work site by having a work elevator dropped on her while working underneath it. This was intended to teach her a lesson! The elevator crushed her spine. The other side continued to discount her, offering a low settlement. We went to mediation. She waited in another room until everyone had assembled for the start of the mediation. She then wheeled into the room, directly approaching the defendants’ attorney. She leaned forward out of the wheelchair, extended her hand and said, "Thank you so much for coming here today. I appreciate your concern and efforts." She then wheeled around the room, shaking everyone's hand and thanking each person for taking time to come to the mediation. When she got beside her lawyer, she said, "Time to get to work" and wheeled herself out of the room. Her demeanor and behavior added another $1Million to the settlement.

Winners help their attorney win; whiners hinder their attorneys.

Well, my good friend and professional colleague is very correct. The client is a key to a successful mediation in many ways. While the story that Dr. Peterson relates is unique in my experience because of the ability of this client to impact the mediation environment, it is important that our clients be well prepared for the mediation process. This does not mean preparing them to make a presentation, or influence the other side in the way that Dr. Peterson relates, but it does mean making sure the client is ready to participate in the process. This means also making sure the client understands what the process is designed to do, and how it works.

In some cases, the other side may have already seen and heard from the client in deposition. I would be reluctant to participate in a mediation as a defendant unless I had some insight into who the plaintiff is and what impression that plaintiff will have on the fact finder, court or jury. Whether a deposition is the proper means of assessing that depends on the case. I have often offered up the client for a limited deposition to the defendant for this purpose, or even an informal interview.

In some cases, like wrongful death for example, where you have a surviving widow and children, or parents in a case involving a death of a child, an interview may be all that is needed – a “looksee” is enough. The same may be true with a catastrophically injured plaintiff. These are highly emotional cases, and it is just a matter of assessing that level of emotionality and its influence on the outcome. So, I welcome a brief deposition session or interview of my plaintiff client for this purpose.

But there are other aspects where preparation of the client is required. It is just as important to prepare the client for the mediation as to do the other preparation. A prepared client will be able to make decisions as the mediation progresses on what terms and conditions of a settlement are to be considered and acceptable. Often, the client’s perspective on settlement will change as the mediation progresses. That is good because the client hears what the other side has to say and can consider the points and counter-points of the case and factor those into the decision-making process.

Here are some thoughts:

· Prepare for the Process: Your client needs to be prepared for the process by having the appropriate attitude before attending the mediation. I usually have a pre-mediation conference several days before the mediation. During this conference I describe the informality of a mediation, that it is not a trial as the mediator has no power to decide anything, and that the mediator’s role is to facilitate negotiations and resolution. I also describe the “give” and “take” of the process, and tell the client not to be discouraged by this bargaining process, nor be offended by it.

· Understand Confidentiality and What that Means: I also make sure the client understands that what takes place at the mediation is confidential. I stress that nothing which is said or done during a mediation can be brought up in court during the trial of the client’s case. Clients often are surprised at this. They need to know that they will not be prejudiced by the process.

· Get Down to Business: This is where the client enters the business process of resolving disputes and essentially steps outside the courtroom. I stress that it is the client’s decision whether to settle, and I make sure the client has all necessary information to make an informed decision about whether or not to settle.

· A Chance for an Objective View of the Case: I explain that the mediation is a chance for us to get an objective view of our case, so we should listen carefully to what the mediator says. The mediator will often comment on the issues and give his or her views on each side’s case and the pros and cons of settlement versus proceeding further. This provides an objective, third-party’s view of the matter, which can be very valuable.

· Using the Proper Words: The proper words should be used in getting the client ready for a mediation (or for settlement for that matter). Words like “victory,” “doing battle,” “defeating the other side,” or words of war and combat have no place in getting a client ready for mediation and setting the right tone for the negotiation process. This is not war; this is negotiation and compromise, so words appropriate to that process should be used. I prefer words like, “educating the other side about our case,” “working with the mediator [and the other side] to resolve the dispute,” “resolution,” “settlement,” and “compromise.” I also stress that we are not giving in, and these words don’t mean that. I remind the client that it takes all parties having the same attitude to get a settlement that works for all.

· Settlement is Voluntary; There is No Decision Unless All Agree: Some clients think a mediation is an arbitration and the neutral will decide the case. I stress that no one is forcing the parties to settle. A deal will be done only if all agree to all terms and conditions. No one is going to shove a settlement down a party’s throat; they should not even try, although sometimes a little persuasive effort may be used to make clear what a settlement means in the client’s case and how the client can benefit from this process.

Here are some more thoughts:

· Do you give the client your views on the settlement value of the case, or do you reserve that for discussion during the mediation?

· What do you tell the client about the expectations at the mediation?

· Clients will often ask: What is my case worth? What will the other side offer? How much should I expect to get? What should I be prepared to settle for? Why should I take anything less than full value? I try to avoid giving the client a predicted range, although sometimes it is necessary to get a client to think in terms of a realistic figure for settlement.

There are three ways to approach this:

· Don’t give the client a number at all, but tell the client that a “demand” should be made first (if you are the plaintiff), and you and the client need to see how the defense responds and what the mediator says before you line up any numbers;

· Give the client a reasonable but fairly wide range for settlement, suggesting that the ultimate number will be affected by how the defense postures during the mediation and how effective the mediator is at moving to the higher number;

· Just set a rock bottom “walk away” number and work from there.

One of the major tasks in preparing for mediation, and any settlement negotiations for that matter, is to inquire about a client’s expectations of how a settlement will benefit them. This involves advising the client of the pros and cons of a settlement, whether directly negotiated or resulting from a mediation:

· The costs of further proceeding;

· The certainty of a settlement versus the uncertainty of a result by trial or arbitration;

· The emotional drain on the client and family or business partners;

· Adverse publicity that might result;

· Public “airing” of personal life and issues, particularly sensitive medical or psychological problems;

· The present value of money in hand versus the chance of a greater gain at trial [which can very much effect, and in fact lower, a client’s unrealistic expectations];

· The positive impact on life planning of having money now rather than the long wait through trial and appeal.

I try to go over the major points in favor of a mediated resolution. I point out that a mediated result is a business-like way of resolving a dispute through a third party neutral who may comment on the issues in the case. The client should be ready to engage in this process and understand that this can be a productive, positive way for resolution. And, the client has control over the outcome! That is not true if the case is left to a jury’s discretion.