How a Mediator Can Help. July By Carolyn Cairns

Transcription

1 How a Mediator Can Help July 2012 By Carolyn Cairns Stokes Lawrence, P.S th Ave, Suite 400 Seattle, WA (206) carolyn.cairns@stokeslaw.com CAROLYN CAIRNS practice focuses on employment litigation and client advice, both to employers and employees. A significant portion of her practice is devoted to serving as a mediator, arbitrator, neutral evaluator and fact-finder in employment and commercial cases. She has served as the Chair of the Labor and Employment Law Section of the King County Bar Association and the Washington State Trial Lawyers Association Employment Law Section. She served as a Trustee of the King County Bar Association, as President of the Federal Bar Association of the Western District of Washington, and as Co-Chair of the Lawyer Representatives to the Ninth Circuit Judicial Conference. She is a member of the ADR Roundtable, and the 39.1 and American Arbitration Association panels for mediation and arbitration in employment and commercial matters. She is co-chair of the ADR Committee of the Federal Bar Association of the Western District.

2 I. UNDERSTANDING THE MEDIATION PROCESS Much has been written about mediation and its various theoretical models. Although it may not be important to understand the fine points of these models, it is important that you and your client understand what the mediation process is (and is not), what your client needs (versus wants), what the opposing party needs, and what the case is worth. Your client must be able to consider the possibility that a court or jury may see your case differently than the client does. If the client cannot do so, the case is not likely to settle unless, of course, the other side is certain it will lose. For both parties, mediation is also an opportunity to address interests that cannot be addressed by a trial, e.g., a desire, however faint, to work together in the future, or a preference for confidentiality. It is essential that the parties be able to focus on their own interests rather than their feelings about the other side. A. Early or Late Mediation? II. WHEN TO MEDIATE In the past, lawyers typically did not think about mediation until they were required to do so by the court, or discovery had closed and/or trial was near. In some cases, plaintiff s counsel had not even sent a demand letter to opposing counsel. The advantage to a late mediation is that you know everything you are likely to know about the case and that provides a degree of comfort that one s assessment of the case is based on complete information. The problem with late mediations, however, is that by that time, fees and costs on both sides are high, as are bad feelings between the parties, since litigation does little to create a conciliatory attitude. Attorneys have traditionally been reluctant, however, to suggest earlier mediations for fear that discovery would disclose a smoking gun that would remain uncovered, or perhaps that opposing counsel would see such a suggestion as a sign of weakness. As a result, it was not unusual for the parties to come to mediation with joint fees and costs that exceeded anything the plaintiff was likely to achieve in litigation. This made it more difficult to settle cases, particularly fee-shifting cases or contingent fee cases, and created particular problems for a plaintiff whose case may have declined in value but whose fees and costs had skyrocketed in the course of discovery. If the plaintiff wanted to settle because of the increased risks he or she was facing, plaintiff s counsel generally had to take a substantial reduction in fees to make settlement happen. The economics of a plaintiffs practice cannot sustain too many such scenarios. By the time of a late mediation, defendants also have so much in fees and costs (which they are unlikely to recover in the absence of a contract that provides for them) that they are tempted to roll the dice and take their chances at trial. The economics and risks to both sides have caused a sea change, both in the popularity of mediation and the desire to reach a settlement earlier in the process. This has caused parties to reconsider the assumption that everything must be known in order to consider settlement. Parties will often mediate their disputes early in the discovery process after crucial discovery has been obtained or even before a complaint has been filed. The concern that the mere suggestion of mediation might be seen as a weakness is evaporating. In order to achieve early settlement, however, both sides have to let go of the possibility that continued discovery will improve their case. Some cases lend themselves to early mediation better than others, but early mediation should always be considered. When one or both parties case hinges on what a few key witnesses will say, it will often be preferable to take the depositions of those witnesses or at least get their declarations. Cases that rely heavily on documents and experts tend not to be good candidates for pre-discovery mediations. That said, these are the cases that are the most expensive to litigate. 2

3 Frequently, there is a reduced possibility of impasse at mediation if the parties have made good faith efforts to narrow the issues between them. It is also true, however, that parties often come to mediation because they have not been able to engage in constructive negotiation on their own. B. Mediation with Limited or Informal Discovery If a party suggests mediation and there are specific documents you need or certain key witnesses you have to interview or depose, say so and see if you can arrange for some informal discovery. Similarly, if you have an interest in early mediation, ask the other side what additional information they might need in order to mediate in a meaningful way. C. Mediation While a Summary Judgment Motion Is Pending If you have scheduled a mediation and the other side then files a motion for summary judgment, consider your position carefully. If you are reasonably certain that you can survive the motion and your client is willing to take the risk, you may want to suggest to opposing counsel that, in light of its motion, you think it would be more productive to put the mediation over until after the motion is heard. If opposing counsel urges you to go forward with the mediation, despite the pending motion, it could well mean that your opponent is not confident that the motion will be granted. Obviously, this is not a good strategy if you face a reasonable risk that the motion will be granted. III. CHOOSING A MEDIATOR A. Choosing the Right Mediator for Your Case The right mediator for your case may not be the person who was a good mediator for someone else s case, or for that matter, for your last case. In choosing the right mediator there are several variables to consider. First, consider that mediators have different styles, although experienced mediators will alter their approach to fit the needs of the case. There are, for example, mediators who essentially serve as nonbinding decision-makers and who, after reviewing the parties materials and talking to each side, announce to the parties what the mediator thinks the case is worth. At the other end of the spectrum are mediators who will offer no opinions either as to the value of the case or the strengths and weaknesses of the case. Mediators who specialize in particular practice areas may be more likely to discuss the merits of the case in separate sessions with the parties because they assume they were chosen in part because of their knowledge of the area of law at issue. Also consider the emotional dynamics of your case. If there is a lot of anger or distress on either or both sides, do not choose a mediator who is uncomfortable or impatient with these feelings and the emotional needs of the client. The best construction mediator in town could be a disaster in a sexual harassment case. When choosing a mediator, think objectively about who needs to be persuaded or educated. Is it your client, who tends to receive all of your concerns about the case as evidence of disloyalty? Is it opposing counsel who has drafted the contract that is the subject of the dispute? Is it you, who has not practiced regularly or for long in the subject area? These are important questions to ask and answer honestly. If the problem is your client, you may be well served by retaining a mediator who has experience representing people on your side. On the other hand, if the problem is the other side, you probably do not want to insist on a mediator who practices on your side simply because you think that person will be more sympathetic to your case. After all, mediation is not arbitration. You will want someone to whom the other side 3

4 (and you) will listen. In some cases, your client may be more persuaded by a judge or a former judge. Be aware, however, that a settlement judge is generally not able or willing to devote the kind of time to settling your case as is an attorney or a former judge turned mediator. Talk to your colleagues, not just about a mediator s settlement rate but also about style, temperament and whether it appeared that the mediator was respected by the other side. Talk to several other lawyers before putting together your own list. Some lawyers have great success with certain mediators, others do not. If you want to talk to potential mediators or ask for their resumes, call and ask them about their experience and their mediation styles. A. The Mediation Statement IV. PREPARING FOR MEDIATION Mediation is one of the most important events in the life of a case and should be treated as such. A well thought out and carefully prepared mediation letter will communicate to the other side the strength of your case and your skill as a lawyer. It will also assist the mediator in discussing risks with your opponent. Conversely, if you simply restate the allegations in your complaint, you will send a message that you do not want to send that you don t think enough of your client s case to do a more thoughtful presentation; that you have no genuine interest in settlement; or perhaps that you are just not a hard worker and can be depended upon to do sloppy preparation for trial if mediation fails. Take the time. What should be included in a mediation brief depends upon who will be reading it. If the mediator and opposing counsel have subject matter expertise, an exhaustive discussion of seminal Supreme Court decisions is probably not necessary, although you should point out any recent cases that may affect the outcome of your case. If, on the other hand, either the mediator or opposing counsel does not regularly practice in the area of law at issue, treat the mediation brief as you would any other brief and explain your legal claim in detail. If you expect that there will be a dispute as to how key witnesses testified, attach deposition excerpts and highlight what you want the mediator to read. The same goes for key documents do not simply attach a document without directing the mediator to the specific language you think is pertinent. Never send a one-page summary with a huge stack of attachments and expect the mediator to figure out your case. Tell the mediator about your case, attach highlighted key documents and explain why they re important. Prepare a summary of damages and show how you reached your figures. Attach or bring documentation where needed. If a treating therapist believes that an additional year of therapy with weekly visits is necessary, bring a written opinion from the therapist to the mediation. If your case involves a fee-shifting statute, plaintiff s counsel should determine precisely what the fees and costs are and bring supporting documentation. Simply estimating your fees and costs at the mediation without actually knowing the correct numbers or being able to support your numbers will undermine your claim for fees. Bad feelings on the other side will result that are unnecessary and serve no purpose of yours. Be realistic if half of your case has been dismissed on summary judgment, you will likely take a reduction in fees if you prevail on the remaining claims at trial. Acknowledge this fact and state the discount you have taken. This will enhance the defendant s perception that you are straightforward and know what you re doing. 4

5 B. Your Client s Settlement Needs and Adequate Notice Discuss the client s needs in advance of the mediation. If there are settlement points that are important to your client that will require your opponent to consult with others who are not at the mediation, it is wise to let them know well in advance. If the type of relief you are seeking is not possible, you will want to understand your opponent s position in advance of the mediation so that you can get your own expert advice on the issue or consider alternative proposals. If a party is interested in a structured settlement, advance notice should be given and you should have access to annuity specialists at the mediation. C. Exchanging Mediation Statements Should you exchange mediation materials with the other side? If you are in federal court in the Western District of Washington, you are required by Local Rule 39.1 to exchange materials. That Rule further provides that the parties send a confidential statement to the mediator that is not shared with the other side, but this is in addition to the memo that is exchanged, not in lieu of it. As a practical matter, if you draft mediation materials and then decline to send a copy to the other side, your opponent will simply assume that you have made claims in the memo that you cannot support. In addition, the failure to exchange materials will require the mediator to spend additional time learning from the parties those facts that are confidential and those that are not. The exchanged memo is a good opportunity to put your case in the best light while still being accurate. The other side will not take you seriously if you make statements that are not supported by the evidence and you will lose ground with the mediator as well. Moreover, each side must understand how the other side sees the case in order to negotiate successfully. Exchange the materials well in advance, so that opposing counsel and the opposing party have an opportunity to read them, get over being annoyed, and think about them. Don t show your own client the other side s materials the day of the mediation. That is not enough time for the client to go through the changes necessary to have a meaningful discussion. If you have serious problems in your case or problems that the other side is not yet aware of or that you feel are not appropriate to include in an exchanged memo, a confidential memo to the mediator is a good vehicle for that kind of information. Examples include such issues as information in medical records that have not yet been turned over, an impending merger, changes in your client s personal life that could affect settlement and the like. If you want the mediator to know something that could create an impediment to settlement but you do not want to put it in writing, call the mediator and discuss it over the phone. Ex parte conversations are not prohibited since the mediator is not the decision maker. D. Who to bring Rule 39.1 requires each party to bring to the mediation a representative who not only has settlement authority but also has the authority to change preexisting authority. This does not mean sending a representative with a set number he or she has no discretion to change. Even if the case is not subject to 39.1, you will do a great disservice to the process and the chances of settlement if you do not bring the representative who is required by

6 A. Explain the Mediation Process V. PREPARING YOUR CLIENT FOR MEDIATION As with all aspects of litigation, it is important to explain to your client what to expect of the mediation. You should help the mediator by telling your client that you respect the mediator s views, will want to hear them, and recommend that your client be receptive as well (if you don t respect the mediator s views, pick another mediator). You should tell your client in advance that it is part of the mediator s job to ask questions and discuss your case s weaknesses, and that the mediator will be doing the same thing with the other side. Your client should understand that these discussions do not mean that the mediator is biased but only that the mediator is trying to help the parties evaluate their case. Your client must understand that although the mediator is not a decision maker, the client should not lose his or her temper, make hostile remarks or appear unreasonable. It does not hurt your position for the mediator to feel that your client will make a compelling witness. B. Discuss Goals and Risks in Advance You and your client should discuss goals in advance of the mediation but not bottom lines. If you come to the mediation with a bottom line, you have essentially made up your mind that what is learned and exchanged in the mediation is immaterial to your assessment of the case, in which case, why mediate? It is not productive to simply look at the mediation process as one in which the mediator gets your opponent to accept what you want them to do. The discussion with your client regarding goals for the mediation should be an extension of the discussions you have been having with your client since your first meeting, with an updated discussion of the current known strengths and weaknesses of the case, the client s needs for the future, the client s willingness to undertake the risks and costs of trial and other factors that affect settlement value. Do not expect the mediator to be the only one to give your client bad news about the risks in the case. Your client should certainly not hear bad news for the first time at the mediation. It is your job to tell the client about any risks he or she faces. You can then use the observations of the mediator to bolster the discussions you have already had with the client. C. Pre-Mediation Evaluation If you know that you and your opponent are miles apart in your assessments of the case, or if you and your own client are miles apart, consider retaining the services of another lawyer for a few hours for a settlement evaluation. Select a lawyer who is good at evaluating his or her own cases. It could be a separate mediator who is used for this evaluation mediators have the benefit of knowing what hundreds of other cases have settled for. If you do not know who is skilled at case evaluation (often not the same skill as trial practice), call a few mediators and ask them for recommendations. Having your case evaluated by a neutral is only valuable if you are able and willing to present your case in an objective manner, warts and all. If your purpose in having the case evaluated is to convince your client that his or her position is unrealistic, you may want to bring the client to this meeting. The value in such an undertaking can be significant. Although you can use your mediator to serve in the role of case evaluator, it may be more difficult to adjust a preexisting mind set by the time mediation occurs. 6

7 D. Understand the Other Side s Interests It is important that you also consider what will be most effective in persuading your opponent to settle on terms that will be at least satisfactory to your client. What are their interests? They may be more complex than simply paying as little money or getting as much money as possible. Does one of the parties have disagreement within its management ranks? A key witness who will not come across well? Embarrassing facts that may be only marginally relevant to your client s case but that they do not wish to publicize? An impending merger or public offering? Concern about competition from the plaintiff? A desire to be released from a noncompete? An insurance carrier who is applying pressure or assessing the case differently? Is the defendant concerned about similar claims in the future? Understanding these concerns and interests and knowing how to address them (and use them) without creating unnecessary hostility is a critical part of the mediation process. A word about adverse publicity: it is rarely a good idea to use this as a threat. If there is a real risk of adverse publicity, your opponent is well aware of it. A. Joint Sessions VI. DURING THE MEDIATION Before you come to the mediation, think about whether you want to have a joint session. If you do not know the mediator s practice regarding joint sessions, call and find out. Some mediators hold them routinely; others never do. Generally, mediators will defer to the wishes of the parties. In thinking about a joint session, think about what you want to accomplish and, given your goals, what will be productive. For example, it may be useful to have a joint session if the party representatives have never met. Showing the other side that there is a real human being, one who will elicit sympathy from a jury, can be useful in elevating your opponent s sense of risk. This is most effective when the client is able to tell his or her own story effectively. If you are telling the client s story in the joint session, do so in a confident but not accusatory or hostile manner. Avoid harsh words such as liar, abusive, racist. These words, however accurately they may reflect your client s experience or perspective, rarely put the other side in a conciliatory frame of mind. You do not want your opponent to dig in their heels and feel that they must vindicate their honor; you want them to agree with you that it would be a prudent business decision to settle on favorable terms now. B. Opening Offers Deciding on the amount of an opening offer is both art and science. Over time you will develop a reputation based on your negotiating style, e.g., a lawyer who starts and stays high because he or she does not know how to evaluate cases, a lawyer who starts too high because the lawyer would rather try the case anyway regardless of the client s wishes, a lawyer who blows smoke by making unreasonably high demands and then drops to a reasonable number at the end of the day, a lawyer who starts in high numbers when the case is good and only when the case is good, a lawyer who always settles for exactly half of the opening offer, a lawyer who makes a fair assessment of the case and then adds a reasonable amount of negotiating room. Where you begin negotiations will also be affected by your client s desire to settle, which may well involve factors other than money or the legal merits of the case. Mediations can end prematurely when either side makes a ridiculous offer and the other side either decides not to stick around to see if the offer is more than posturing, or makes an equally ridiculous reactive offer. The mediator can help you here. This is part of what you re paying for assistance in 7

8 making offers that may prompt the best response from the other side and sending appropriate messages with your offers. C. An Alternative to Back and Forth The traditional model for mediation sessions envisions the parties seated in separate conference rooms, sometimes after a joint session, with the mediator moving back and forth between the parties seeking offers and counter offers. There are cases, however, where that model may not be the most effective strategy for finding a resolution and may, in fact, be more likely to result in impasse. This could be due to many factors, including the presence of multiple issues besides money, pattern bargaining (e.g., matching percentage for percentage or dollar for dollar), or mounting exhaustion and irritability from the constant pressure of trading offers. In an appropriate case, it may be more beneficial for the mediator to do at least one round to fully understand the parties positions, interests and hot spots. By the time the mediator has spent this necessary time with the parties, the mediator will likely have a feel for what might be possible as a global resolution. At that point the mediator can begin to discuss parameters of such a resolution, making it clear that the mediator is not conveying an offer from the other side but simply sharing the mediator s own thoughts. Adjustments in the mediator s thinking may be necessary after listening to the parties reactions to such discussions. By the time the mediator then asks the parties to make specific offers, it is likely the parties will have already jumped past positional offers and moved into a range where settlement might actually be possible. This reduces the frustration that can result from ping pong bargaining and reduce the possibility of impasse. D. Taking the Mediator Into Your Confidence How much to disclose to the mediator and when requires some combination of selfprotection, trust and strategy. If your client has an interest that is not obvious from the materials provided but nonetheless affects settlement, it may be to your advantage to take the mediator into your confidence at some point during the day so that the mediator can help you achieve the best resolution given your client s interest. On the other hand, disclosing your bottom line to the mediator early in the day may cause the mediator to terminate the mediation session prematurely because he or she concludes that the parties are too far apart or it may create a floor that the mediator may have to try to change. The mediator will not want the parties to take absolute positions early in the process because of the risk of impasse. Obviously, knowing the mediator or developing a rapport with the mediator will help you make good choices. One thing is certain at some point in the day, the mediator will have to believe what you say about what is possible and what is not. Avoid misleading the mediator, especially late in the day it could backfire and result in a failed mediation when your client was not ready to quit. A. Final Offers and Impasse Strategies VII. CLOSING THE DEAL Generally you will see final offers coming. The mediator can assist you and your client in making assessments of how close the other side is to the best they will do. Consider whether it may be productive to split differences (timing is critical here) or to make a counter offer that is close to what a party has stated it is willing to do or to make a final offer that remains open for a set period of time. There are risks in such strategies that can only be taken if your client is willing to take those risks. Sometimes it may be helpful to have the mediator make a recommendation as to settlement value, but this should generally be done at last, not at first. 8

9 When a mediator s proposal is made, it must be a double blind recommendation so that if one side does not accept it, each side has preserved its bargaining position for the future Other strategies that may be effective when the parties are having difficulty reaching closure: Agree that each will give the mediator its best number and that if the parties are within a certain dollar amount of each other, they will split the difference. Neither side will know exactly what the other side s number is because the mediator only discloses those numbers if it works, that is, if the parties are actually within the predetermined range. The parties can thereby avoid setting floors or ceilings for future negotiations. Obviously, what is critical to this process is not only choosing one s best offer, but also determining what the spread should be the range that the parties will split. The wider the range, the greater the chances for success. Baseball Mediation, where each party writes down its best number and the mediator separately writes down the number the mediator thinks is an appropriate settlement figure. The number of the party that is closest to the mediator s number is the amount of the settlement. A variation on this theme is to agree in advance that the settlement number will be a number halfway between the mediator s number and the number of the closest party this alternative reduces risk. A device such as this should be put in writing before numbers are chosen, along with nonmonetary terms; once the parties agree to the method, they have settled they just don t know the dollar figure. This is not a strategy that works for every case and it is not a strategy that will appeal to all or even most parties. It is a drastic measure when all else appears to be failing but the parties truly want to settle. One situation in which it seems to work well is where the parties have so much animosity toward each other that they cannot make productive settlement moves because every move is seen as a concession to someone they detest. This method of getting past that impasse allows the party to take a reasonable settlement position out of a self-interested strategy rather than as a concession to the other side, because the party that makes an unreasonable offer in light of the merits of their case is likely to do poorly with this type of strategy. Sometimes the strategy is not possible towards the end of the day because the mediator has already shared his or her views about the merits of the claim, which could cause one or both sides anxiety about putting their fate in that mediator s hands. It is a strategy that cannot be used if the mediator has offered an opinion to either side about the settlement value of the case. If the device cannot be used with that mediator, the parties could consider going to a different mediator for that purpose. Med-Arb, where the parties agree in writing that if they are unable to reach agreement within a certain time frame, an arbitrator (who may or may not be the mediator) will then decide the remaining issues or a mediator will decide what the settlement should be. Although this can work in the right case and certainly puts pressure on the parties to reach agreement, it is rarely used, at least where the parties have decided in advance to use the mediator as the arbitrator, because it is difficult to share confidences and discuss problems in your case with a mediator who may become a decision maker in a few hours. Where the parties choose this method of settlement, it will often be best to agree to use a different decision maker should negotiations fail. Occasionally, parties who retained a neutral only as a mediator will later decide to have that neutral serve as an arbitrator, often because 9

10 the mediator knows the case well and the parties trust the mediator. That agreement must be in writing and there must be appropriate waivers and informed consent. B. Leave the Door Open If the parties are unable to reach agreement, the mediator should explore steps that can be taken to keep open the possibility of a settlement. For example, if it is an early mediation or a presuit mediation, it may be that the mediation discussions have revealed that the parties disagree about what critical documents will disclose or an important witness will say. The mediator may be able to assist the parties in agreeing that a certain amount of limited discovery will be done, even presuit, and that the parties will then get back together and try again. Most mediators are also willing to do follow up work by phone in order to close a deal after the day of mediation. C. Commit Your Agreement to Writing Before You Leave the Mediation Where agreement is reached, commit at least the essential terms of the agreement to paper before leaving the mediation session. This ensures that there is no misunderstanding about the material provisions of the agreement. The lawyers can draft a more formal document the next day if desired, but the parties have greater security if they leave the mediation session knowing that the deal is closed and in writing. Some mediators have forms or outlines that can be used or you may bring your own. A handwritten outline will also suffice. It is not unusual for the parties to agree that if there are disputes over the language of the more formal document, the mediator will resolve such disputes. CC-000 \ doc 10