Closing the Deal in Mediation: How do you Speed the Process?

As another year has seemingly flown by, I close this year's blog with a question about rushing through the process of negotiation.  After reading the briefs, and 10 years of experience as a mediator,  I am sometimes tempted to predict the outcome of the negotiation and once the discussions get "on track"--would like to get to 6:00 at about 4:00 P.M.  This is, in my opinion, always a mistake! 

Just as childhood or work experience, the trying moments in life pass excruciatingly slowly, yet the years fly swiftly by.  I read an editorial in the New York Times last weekend about a man who worked in a prison where the prisoner wanted to change the clock to mark the months, rather than the minutes that he had left to remain in prison.  Minutes and even hours, were immaterial to him.  Only years matter when he was serving time behind bars.

People in conflict usually come to a mediation after months or years equally imprisoned by their anger, frustration, griefs and fears.  In a single day, we mediators hope to guide them through the ordeal and set them free.  Clients and their lawyers, on the other hand, need to vent and be heard.  Both client and lawyer need a chance to fully articulate their well-considered opinion before compromise can be achieved. Skipping over the facts towards the march to an inevitable negotiation is an error for the overly eager! 

I wish you all a happy and successful New Year and I wish for each of us to have the wisdom and grace to slow down, if only for a moment, before another year has passed.

Some things are Better Left Unsaid

     I lost an Uncle this week unexpectedly.  My father's youngest brother was a figure larger than life.  He was our family Accountant, bon vivant, treasured confidante and friend.  Through the years, he held the position of the "go to" consultant for most important decisions relating to business, finance, vacations and celebrations.  He was the guy who referred the family to virtually all professionals needed throughout my life:  bankers, lawyers (for adoptions, estate planning or litigation), investment counselors, even wine merchants, caterers and home decorators.  His loss will be felt deeply by all who knew and admired him. 
      He had an opinion on everything and was willing to offer it.  But here is what I learned last night from my older sister:  he was also willing to offer up that not all disagreements were meant to be fully vetted, discourse engaged in, transparency revealed and happy conclusions derived through consensus.  Indeed, it was his belief that some things were better left un-resolved, for the sake of peace in the family, or mutual respect or deference.  Essentially, he was willing to proffer that we might not accept his opinion or view of things, and that he would never accept ours, and that it was okay to disagree.
     I never had this conversation with my Uncle before his passing:  yet another position that remained unsaid.  Yet, I can see great wisdom and applicability in mediation.  Indeed, not every dispute ends in agreement.  Most disputes end in a rough resolution of the case that does not concede that the adversary was right or that one side or the other has been convinced they were wrong.  Most disputes end in a tacit agreement that the parties prefer to resolve the dispute quietly and confidentially rather than air the dirty laundry in court and expect that a Judge or jury will decide who is right and who is wrong and what damage has been caused.
     My Uncle was right, of course.  Some things are better left unstated. 

Re-Framing to Present the First Offer in a Better Light

    Though sophisticated parties are often frustrated by the length of time it takes to get to the negotiation of numbers in a mediation, the time is always well spent.  During that first hour or two (sometimes many more), the mediator can really listen to the parties and then formulate a plan for how best to approach the delicate dance that is inevitably to follow. 
     This week, I mediated a sad employment situation where an employee was terminated by her Supervisor, 10 years her junior, without a real explanation or what most employees would consider to be "good cause".  The problem is that here in California, an employer doesn't need good cause to terminate an employee who serves "at will". 
     Still, it was clear to me that the owners of the medical practice felt awful about the way this termination had occurred.  It was simply a reaction by a new Supervisor to a seemingly insubordinate, though much more experienced employee.  When she challenged him in the presence of other co-workers and a client, he simply couldn't tolerate her and exercised his broad managerial discretion in firing her on the very next day.  I am reminded of the situations which I observe increasingly where counsel on the one side have 3-5 years experience (making them under 30 years old) and their adversaries have 30 or more years experience.  It's a challenge to assert the authority without the experience in those circumstances, too.  What she saw as retaliation for whistleblowing, he saw as firing an at will employee for cause.
     The tool I engaged in order to begin the negotiation on that case was to articulate the employer's remorse that this loyal and competent employee had been fired without any severance or explanation (without admitting any liability for retaliatory misconduct, as she had alleged).  I did that by framing the first offer as a severance offer:  based upon her years of service, they began with an offer that was equivalent to a one month's severance pay.  Ultimately, the case settled on a mediator's proposal of several times that amount, but by carefully re-framing the initial offer from what appeared to be a "nuisance value" (less than $5,000) to a calculated offer based upon two weeks per year of service (often considered a fair severance package pre-termination), I was able to drive home the legitimate feelings behind the offer in a way that the Plaintiff could, for the first time in the life of the case, appreciate and ultimately accept.
     The Employers too, felt better about paying a "severance" than they would have had I couched it as a penalty or actual damages for wrongful termination.  While they believed the termination was wrongful, they also understood that the way this employee was terminated (the day after she had raised legitimate concerns about overtime pay) was problematic.  Settlement was the best solution.  Re-framing to hang the whole incident neatly on a wall, behind both parties, was the best way to conclude the dispute and look forward to using more caution in managing other employees in the future.

Ask the Hard Questions before the Negotiation Begins

     Not all lawsuits are motivated by a desire to obtain monetary damages from a party who has aggrieved another.  There are, in fact, a myriad of reasons why someone may want to sue another party:  to bring a company who they believe has wronged them down, to shame another person, to vindicate one's rights,  to be heard, to prove to himself and/or his spouse or the world that he was right in standing up on his own behalf, or even to show someone their personal strength, intelligence and experience in a way that was not previously recognized by the other.  It's hard to predict, because by the time a matter gets to mediation, it is typically framed in conventional pleadings covering a series of causes of action which are taken, element by element, from Forms of Pleading and Practice--not revealing the true motivation for bringing the suit. 

     Most Judges will agree that once a jury gets a case, they make decisions not based upon law, but upon personality: who do they like and who do they believe?  The legal questions are all decided before trial.  The jury is left only to decide matters of fact, based upon their own determination on credibility, and often, likability.
  
     The motivation for bringing a legal action, will almost always reveal critical keys for unlocking it.  If, for example, the aggrieved party is acting because he wants to prove that he was right, sometimes money alone can't do that:  an acknowledgement, public exposure, an agreement to take steps to prevent such misconduct in the future may be necessary.  If, on the other hand, the lawyers have become passionately embroiled in a contest of strength and skill between them, sometimes a few rounds of litigation, or even a concession or two may be what's needed to empower the advocate to recommend settling the lawsuit at any amount.

     The cautious mediator will give voice to every participant's true objectives by asking them probing questions early on which are designed to dig deeper than the initial demands or offers and to uncover the true motivations for moving forward or pushing back.  It is only after this initial sensitive work is done that the process of negotiation can begin in earnest.

Use Caution Not to attempt to Predict Outcomes

I've had a hard week.  I mediated four employment cases:  allegations of pregnancy discrimination (termination while on leave after the baby was born), disability discrimination (failure to promote by a current governmental employee), sexual harassment and a whistleblower case (by a warehouse worker based on his complaints of noxious fumes in the workplace).  It's been ten years now that I have been mediating.  It's a real risk that I believe I can predict values and outcomes based upon the briefs even before I meet any of the disputants.  Also, I work with a group of highly skilled mediators and former Judge's, who often engage in banter during our cases about their guess on values and outcomes. 
     My week's efforts were met with varying degrees of success.  In the first, I would never have imagined that the case or the facts had such a high value--but it settled easily and to the great relief and satisfaction of both parties.  In the next, the government's attorney refused to make any offer, despite the Plaintiff's attorney reducing his demand to 1/4 of his initial demand.  In that one, I believed that if I could just get Plaintiff to come down to a reasonable number, the Defendant would reward that gesture by making an offer, particularly since the Plaintiff was still working there.  Alas, complete and utter shut down.  Inexplicable and unexpected.  The sexual harassment case is still being negotiated, but suffice it to say the values being discussed are beyond my highest expectations. 
     The point in all of this rant is that after awhile, a seasoned mediator has a tendency to make predictions of outcomes which can obfuscate the negotiation.  Yes, it's helpful to get everyone into that coveted "zone of possible agreement" early on, but occasionally the contours of the end zone are entirely different than my expectations and I am reminded that there are many factors beyond the facts and law that influence the ultimate settlement (or not) in every case. 

Mine for the Unspoken Interests at the Heart of the Matter

I had the privilege of attending a training with Kenneth Cloke this past week.  That was not unusual, I have attended many trainings with him before.  He is the author of many ADR books and articles and a local treasure here in Southern California. 
     What was unusual was that he was addressing an audience of United States District Court Attorney Settlement Officers:  those of us who mediate disputes within Federal Court.  All of us have at least 10 years of experience as attorneys in Federal Court and are sophisticated commercial mediators dealing with high stakes cases. 
     But Ken speaks and trains on a different plane:  he looks for the underlying issues in every conflict:  the root of the anger and the fear which underlies it.  And then he digs deeper:  into the love that drives the fear of the possibility of loss, pain and grief.  Ken sees a direct connection between anger and caring in a relationship.  He prodded us into deep listening in order to excavate the truth that goes well beyond the pleadings in a lawsuit.  He reminded us to bring our own hearts with us to every mediation. 
     Ken quotes both Albert Einstein:  "Make everything as simple as possible, but no simpler" and the poet, Pablo Neruda:  "Every casual encounter is an appointment" as he reminded us to bring ourselves into the mediation room and be fully and actually present and available to the disputants before us.  Only then is it possible to have those dangerous conversations which may ultimately lead to the path towards a lasting resolution of conflict.
     Though we may become complacent in our everyday negotiations which quickly devolve into a conversation that is only about the money being exchanged, it's a critical reminder that we are also engaged in helping people in pain and crisis to get beyond their grief:  indeed, that is the essential heart of every matter in mediation.

Is it Worth It?

Clients are more demanding than ever in evaluating whether the expense of litigation is worth the potential gain.  Mediators, therefore, should always inquire about each disputant's agenda early in the process.  For the Plaintiff and her lawyer, the questions revolve around how much more will they get if they invest in more discovery, spend more hours opposing pivotal motions, spend more money getting witnesses to testify on their behalf.  Are they at the mediation to find that out or to settle for what they may get after a Motion for Summary Judgment has been denied?  For the Defense, it's sometimes a question of how much they will have to spend if they don't settle at that time, in order to get a better result than the one offered at the time of the mediation hearing.  Not all parties come to the mediation with settlement as their ultimate objective!

I find that very often the mediation of a litigated dispute is, in fact, educational.  One side learns what the other is willing to pay and/or accept before all of the unknowns are established.  They begin to appreciate what evidence each side has established and will rely upon to prove or disprove their case.  Yes, there may be a crucial witness who will clarify the issues, but in order to be sure, they have to be found, statementized and then, perhaps, a motion based upon their testimony has to be filed, heard and granted.  There may be disputed issues of law which a Judge may declare in one or the other side's favor.  This, of course, is usually subject to challenge at a higher level and may take years to finally discern.  Finally, there is often a mere question of how much the Plaintiff will take before or after the filing of a Motion for Summary Judgment, and is it worth the expense and risk of moving forward with such a hearing?

In cases with smaller values, it is almost always at least sensible to explore this through mediation before the big expenses are incurred.  Your clients deserve no less and, as Abraham Lincoln, said:  "Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer has superior opportunity of being a good man. There will still be business enough."

The Importance of Pre-Hearing Telephone Conferences

It's not a new concept, but it always bears repeating.  Prior to every mediation, I try to reach the parties to find out what they have discussed by way of settlement before the mediation.  This week, I was unable to reach the Plaintiff's counsel, but the defense told me that he had been trying to reach his opposing counsel by telephone since the lawsuit was initiated.  He had left over 30 messages--and never received a return phone call in the 6 months that the case was pending! 

The case involved a wage and hour claim brought by a disgruntled employee who was terminated last year after an alleged assault and battery of a co-worker at a car maintenance yard.  Because he had been unable to reach the Plaintiff's attorney, Defense counsel earnestly expected that the opposing party would not show up for the mediation and the case would proceed to a trial or default.  But alas, the attorney did show up with his client, and began by informing me that his client had been offered a significant settlement by his former employer before he filed the lawsuit.  The only fact that had changed since then, was that attorneys fees had mounted, so his demand was now twice as much as it had been at the time this purported offer had been made.  The trouble with that logic was that Defendant had been eager to settle at the exact amount of the alleged wage loss before all of the attorneys time had been incurred.  And they weren't budging from that place--rewarding Plaintiff's attorneys for billing a lot of unnecessary time. 

Ultimately, it did settle at the value of the wage loss and Plaintiff and his attorney lost an opportunity to get full value on the case by their stubborn refusal to answer the telephone calls of the defendant.  Telephones are never further than your pocket these days.  The failure to use them is, in my view, is inexcusable!

Priming for Likely Range of Outcomes

It's been a tough week, nationwide.  First there was the Boston Marthon Bombing and then the fertilizer plant explosion in West, Texas.  In between, there were shootouts, captures and loads of probing questions.  I found that it put everyone on edge all week as the news streamed throughout our office.  For those reasons, I paid particular attention to attempting to focus the disputants in two of my mediations this week upon the negotiation at hand. 

On Monday, I mediated a challenging race discrimination case.  The challenge, in part, stemmed from the fact that the Plaintiff was still working for the governmental entity, who, he claimed, had discriminated against him, subtly, but hurtfully, for over a decade.   Before commencing that mediation, I had to caution the defense lawyer that he may need to get more monetary authority than he had previously attained if he wanted to get the case settled.  It was simple "priming" so that when the case got settled for something higher than his original authority (but less than the worst case scenario I painted for him), the defense lawyer and his client were well prepared to accept "the deal".  In another case, I had an out-of-state Plaintiff suing her former divorce lawyer and because she was so long embittered and angry, she had communicated to me that she was prepared to go to trial unless she was certain she could get every last cent on the lawyer's malpractice policy.  When she inevitably fell short in the negotiation, I had to prime her for the likelihood that if she chose to reject the offer at hand, she may have been met with an even smaller "pie" after the Defense lawyers spent considerable time and effort preparing for trial while she considered their "almost policy limits" offer. 

Sometimes the only way to strike oil is to prime the pump until it begins to flow.  It takes some effort and foresight, but the result is all the more satisfying.

Identify the Underlying Interests of the Parties

The true believers in Mediation understand that most disputes are not just about the money.  Sometimes before a negotiation of monetary damages can even begin, it is important to tease out what is really driving the complaint and attempt to address those needs as the hearing proceeds.  In a case I handled this week, a staff member of a synagogue brought a lawsuit for wrongful termination.  After she was let go, she could not understand why the Rabbi did not reach out to her when she suffered a devastating loss in her family.  For his part, the Rabbi could not fathom that she chose to bring a lawsuit against the synagogue after so many years of friendship and loyal service. 

Before any negotiation could begin, the two opposing parties came together in a joint session--which was punctuated with tears and laughter, an exchange of photos via IPhone of grandchildren and weddings, and a true re-opening of a longstanding relationship that later facilitated the settlement of the legal dispute.  Lawyers are adept at making demands for monetary damages and offers in exchange.  Mediators, from my perspective, need to do more if they are truly to bring closure to legal disputes.

Inquire About Each Disputant's Agenda Before you Begin

     Litigation is typically a well-orchestrated process which is initiated by a formal "complaint", which includes several distinct "Causes of Action", together with a list of "remedies" and a "Prayer" for damages resulting from whatever misconduct is claimed.  In response, Defendants file a formal "answer", usually denying all misconduct and perhaps adding a few "affirmative defenses" to the mix.  By the time the case gets to mediation, it is usually less well-defined.

     Between the initial filing and the mediation hearing, both sides have engaged in both formal and informal discovery.  Both sides have felt the discomfort and stress of both the litigation and the attendant expenses of bringing or defending a lawsuit.  Both sides have necessarily had to evaluate both their realistic chances of success and the broad range of damages that may be available.  Each participant has had the chance to gauge his/her opponent and their counsel.  In short, by the time of mediation, there may be much more on the agenda than just monetary damages.

     For example, last week I mediated a medical malpractice case in which the Doctor really wanted a chance to explain the medicine to me and, failing that, to a jury.  He was quite confident that a jury would understand that he bore no liability, and willing to pay his lawyer to get what he considered to be "Justice" at trial.  This week, I'll mediate an employment dispute where a teacher was terminated from a religious school.  The religious leader wants to explain the school's decision, and I have faith that he can do that better than a jury would.  Before we can discuss monetary damages, I think it will be critical to both parties to have an explanation delivered in a way that a religious leader can do with sincerity, truth and clarity.

     This is not a blog post about non-monetary damages as a substitute for money.  It is about honoring the purpose and objectives of each disputant before discussing damages.  It is, in my practice, the exception rather than the rule that the lawsuit is "only about the money".  It's worth exploring the other aspects before making the assumption that the pleadings rule.

Always Clarify the History of Negotiations

It happened again last week.  Plaintiff's brief indicated he had made a Statutory offer to compromise at $100,000 in November.  The mediator takes him at his word, though I check to make sure that he is willing to begin the negotiations at that number, and not, as sometimes happens, at a number higher than that since the offer to compromise has already lapsed and expired.  Then at the mediation, it comes out that the previous offer was never served on the other side.  Those high stakes that are presented when a party makes a written demand, which may serve to either open the insurance policy if there is a verdict beyond it's limits or give the offeror the right to collect fees and costs if the verdict comes in above that amount are all off.  This error in both communication to the mediator and to the Defense counsel cost the Plaintiff plenty.  After two and a half hours, the parties' stalemated because Plaintiff's counsel wasn't prepared to negotiate in a range that could have settled the case based upon his mistaken belief that he had already communicated the $100,000 demand.  The liens on the case were simply too high, and for the defendants, the stakes too low to worry about a real risk.  Even where there are assertions made that one offered something and one demanded something else, it's critical that these communications are clarified in advance of the mediation whereever possible. 
     In another example, which I discuss in the Chapter I call:  "Who Are you Calling Old?" in my upcoming book, "View from the Middle of the Road:  A Mediator's Perspective on Life, Conflict and Human Interaction", the Plaintiff's attorney told the Defense Counsel he thought his case was worth "mid-six figures".  Believing he meant $150,000., Defense Counsel invited Plaintiff to participate in a mediation.  When the first demand was made at $1 million, Defense Counsel was incensed.  But did Plaintiff's counsel mean mid-six figures was $500,000.?  Both cases eventually settled at what was probably a fair value, but clarifying these pre-mediation settlement discussions at the outset or before the hearing begins can save hours of anguish for parties and counsel.

TIMING AND ASKING HARD QUESTIONS

At this time of year, we are acutely aware of timing.  This can affect your mediation in ways of which you should be conscious.  This week, consider the following Mediation Tools:
3) Timing:  In an employment case, does your client want the damages to be taken in this calendar year when earnings are less than last year? Does your client want to settle the lawsuit so that he can return to work without compromising his claim to future lost wages? Can your client afford to suffer further lost earnings for the sake of building damages in the lawsuit?  Does the Defendant have an idea of the value of the claims so that they are fully prepare to negotiate a final resolution? Have critical depositions been completed? Do the parties need to approach that "fiscal cliff" by getting very near to trial in order to be ready to fully settle the dispute?  Does one or the other party need to experience the "brinksmanship" that the U.S. Senate did before they can arrive at a compromise?  These are issues worth addressing in every mediation.
4) Ask the Hard Questions:  Mediators can be most effective if they ask the hard questions of the lawyers or their clients at the outset or even before commencing the hearing.  So often, the events that occurred at the time the dispute arose caused one party to make a decision to pursue a lawsuit and the other party to resist settling the claim.  Take, for example, the dog bite case where, instead of apologizing and offering to pay for medical attention, the owner screams at the victim about scaring the animal.  Upon inquiry, say that dog owner refers the victim to her lawyer or insurance carrier, instead of offering to take care of the bills directly upon presentation.  Where does the victim go next?  Often to a lawyer!  At that point, the communication between the two disputants has completely broken down and settling the lawsuit without formal intervention through a neutral becomes nearly hopeless.  Once you have made clear to the mediator the basis for the dispute and the particular dynamics between the parties, it may be much smoother to resolve the dispute than it was "on the street" without your assistance and the intervention of a neutral third party.

INTRODUCING MEDIATOR'S TOOLS

Great news:  My upcoming book, "View from the Middle of the Road:  A Mediator's Perspective on Life, Conflict and Human Interaction" is out for publication by April, 2013.  This year, I'll be featuring excerpts from the Appendix, which contains 120 "Mediator's Tools".  Here are the first two:
1) Clarify the Issues in Advance of the Hearing:  Litigation can be messy.  Mediators should take care to completely and accurately understand the status of the claims and the parties to the dispute before the hearing begins.  For example, sometimes you'll receive a brief where certain defenses are vigorously asserted, yet have not been raised by the pleadings.  Are they really alleging fraud or do they just think the Defendant lied to them?  Has the Court already ruled that the claim is not barred by the statute of limitations or is it really possible it will get thrown out before trial?
2) Pre-Hearing Telephone Conferences:  Both litigators and mediators should be deliberate about talking to one another before the mediation about those nuances that have kept the parties apart.  What are the dynamics between the principals or lawyers that have become obstacles?  What evidence has already been produced and what is still unknown or unclear?  What does your mediator really need to get your client the best result at the hearing?

My colleague and client, Alex Craigie recently interviewed "Six Top Neutrals" for his blog, "At Counsel Table" (including me, thanks Alex!).  In all six, both Mediators and Counsel agreed that preparation for a successful negotiation is paramount.  In this week's featured Neutral Profile in the Los Angeles Daily Journal, my friend and colleague, Scott Markus was noted for his pre-mediation telephone conferences with each side, which sets the stage for positive outcomes.

Happy New Year and pick up the phone before you attend your next mediation.  There are still a few things that can not or should not be communicated via e-mail or in writing!