Top 10 Reasons Why Cases Do Not Settle at Mediation

Here are my top ten reasons why cases do not settle at mediation with some brief comments about each. You probably can add more. But give these some thought.

No. 10: You are not ready. This is an obvious reason, so not much need be said. It is better to postpone a scheduled mediation if you believe that you are simply not at a readiness level that will maximize your client’s chance for a productive and successful day.

No. 9: Your client is not prepared. What have you done to educate your client about the mediation process and its important aspects? Is your client prepared to discuss the economics of settlement? Are his/her expectations reasonable? Is your client willing to listen to the other side and the mediator about the issues? Does your client understand this is a non-binding process in which he/she does not have to testify or even say anything, and that the mediator is not a decision maker? Have you explained how the process works, so that your client understands this is not like being in court? Most importantly, does your client understand the concept of confidentiality? Finally, if your client is going to say anything, have you rehearsed what is to be said and planned for it?

No. 8: Your opposition is not prepared or does not understand your case. Sometimes this is difficult to assess. I have on occasion called opposing counsel to determine for myself if he or she understands the case or issues, and also if the claims representative or client representative is well informed on the issues and will be present to participate in the mediation. I want the check writer there. If there are problems in this arena, I call the mediator to see what can be done to insure that the client representative has authority to negotiate in the financial arena into which I believe the case falls.

No. 7: The mediator is not prepared or ineffective. Frankly, I have experienced a few situations in which I was sorry that the chosen mediator was selected. This is particularly true when the mediator a) limits his or her participation in caucuses with your client and you (e.g. does not provide constructive guidance on how to posture demands and responses to offers), or simply wants to be a messenger to transmit demands and offers back and forth. There are some occasions in which the mediator has been ineffective and I have had to guide the mediator during the mediation. Believe it or not, in the couple of instances in which this has happened, we have achieved a settlement. Essentially, however, we were negotiating directly with an intermediary to carry the mail back and forth. That is not my idea of how a mediation should be conducted!

No. 6: The emotions of the parties or their counsel interfere with the process. We all know that in many cases, the emotions of the parties run high. In those cases, a mediation is likely to fuel them despite the best counsel from a lawyer. First, it is important for you to assess if this will be the situation on your client’s mediation day. Second, if that is the case, then obviously you need to counsel the client to see if emotions can be tempered. You might also discuss potential hot points with opposing counsel and involve the mediator so that tensions can be tempered and the day managed with the clients in control. Most important is to be honest in assessing the circumstances so that you can anticipate any problems of this kind interfering with the process.

No. 5: The parties do not understand the economics of the case. This is a common problem in mediation. Clients must understand and be prepared for talk about dollars and cents. What is the realistic potential for damages if liability is found? What are the various scenarios for a jury or court on the damages issues? Given these, what is it going to cost to get there, and what numbers might a party see at the end of the day? The defense must also understand the exposure. I respectfully refer you to the September 2008 Journal of Empirical Legal Studies (Vol. 5, No. 30, pp. 451-491), a joint venture of Cornell Law School and the Society of Empirical Studies, in which there are published results of a quantitative evaluation of “the incidence and magnitude of errors made by attorneys and their clients in unsuccessful settlement negotiations.” The study entitled, “Let’s Not Make A Deal: An Empirical Study of the Decision Making In Unsuccessful Settlement Negotiations,” was done by two faculty members and a graduate student from the Wharton School of Finance, University of Pennsylvania. The study analyzed 2,054 California cases in which the plaintiffs and defendants participated in settlement negotiations unsuccessfully and proceeded to arbitration or trial, and compared the parties’ settlement positions with the award or verdict. The study “reveal[s] a high incidence of decision-making error by both plaintiffs and defendants in failing to reach a negotiated resolution.” I discussed this study in my December column last year.

No. 4: The parties lack credibility. The Three C’s of mediation are: Credibility, Confidentiality, and Communication. I work very hard to gain the confidence of my opposition and avoid hostilities. Our clients may disagree, vent, and be angry during the litigation, but counsel must establish a credible basis for dealing with each other. If so, there is a high chance that the mediation day will be successful. If not, then the mediator should know that the parties are having difficulty communicating, and the lawyers are too!

No. 3: The parties are not candid with each other and the mediator. Misleading a mediator or an adversary will only lessen the ability of the parties to work together. Advocacy at mediation is different from advocacy in the ordinary process of litigation. I don’t mean to suggest that being dishonest is acceptable in any way at any time. However, the spin doctors don’t do well at mediation. It is important to recognize the issues, and discuss them candidly and honestly with the mediator and even the opposition. Open discussion leads to a fair assessment of the case which leads to resolution.

No. 2: Client expectations are too high. This is a corollary to the principle that the parties understand the economics of the case. A plaintiff may have expectations of a recovery which are not justified given the picture regarding liability, causation and damages – and maybe even collection. A defendant may believe that a mediation is a “fire sale” for the plaintiff. On both sides the costs of proceeding must be assessed. Without a clear understanding of the economics of the case, the parties cannot bargain responsibly.

No. 1: Counsel is unable to control the client. We have all had experiences in which a client simply will not process the information we provide, as well as our advice and counsel. Each of us all has ways to get around and pierce through the stubborn exterior of a client. But sometimes we are not as successful as we would like. I do not hesitate to have a private conversation with our mediator about the expectations for client behavior. Often I find a mediator can have a great influence on a client by repeating – perhaps in different words – the message about the case that the client seems to resist hearing.