09/20/2016
THE VILLAGE ELDER
Many mediators try to avoid the question, “what do you think the case is worth?” The position is understandable given mediation’s traditional roots in scrupulous neutrality:
“An essential characteristic of mediation is facilitated negotiation. Unlike a judge or arbitrator who ultimately sides with one party in pronouncing ‘winners’ and ‘losers,’ a mediator must remain neutral throughout the process. Only by remaining neutral can a mediator use the tools of facilitated negotiation: encourage parties to examine and articulate underlying interests; recognize common interests and complementary goals; and engage in creative problem-solving to find resolutions acceptable and optimal for all parties. [Kovatch, K. & Love, L., “Evaluative” Mediation is an Oxymoron, 14 Alternatives (March 1996)].
Articles defending mediation in its “pure,” facilitative form inevitably focus on a dispute between parties bound together in an ongoing relationship forced to address an issue that was unforseen at the beginning of the relationship or assumed by one of the parties to be governed by industry or community standard. For example, in Riskin, L, Understanding Mediator Orientations, Strategies, and Techniques: A Grid for the Perplexed, 1 Harv. Neg. L. Rev. 7 (1996), the parties–a savings & loan and a computer consulting firm–are locked in a ten-year contract to operate the savings & loan’s data processing system when a dispute arises as to whether costs incurred during the first year of the contract by the consulting firm’s staff should be born by the consulting firm or billed to the savings & loan. While the costs are substantial, they are outweighed by the consulting and administrative fee of over $1 million per year for the remaining nine years of the contract.
But how often does a similar scenario wind up in mediation in the real world? Not that it doesn’t, but, more often the parties have met quite literally “by accident,” and at least one of them has been injured. There is no ongoing relationship and the parties have no interest in whether the settlement is “optimal” for the other side, especially when an insurance company is issuing the check.
More often than not, the key issue in the majority of real world mediations is: “what is this case worth?” One–or both–of the parties have assumed an unrealistic valuation of the case that must be corrected before meaningful negotiations can occur. Rather than simply informing the party of the mediator’s opinion of a case’s value when asked, what I am suggesting is an honest and good faith process through which an experienced mediator can help one or more parties explore additional facets of the case that have previously been overlooked or undervalued. I have encountered many situations where one party seeks a large settlement for a case that suffers from many inadequacies such as liability disputes and questionable damages. Similarly, defense attorneys and claims professionals may undervalue unique aspects of a plaintiff’s case that may increase its value before a jury.
When the mediator shares his or her past experiences with similar cases–the difficulties in proving the necessary elements of the case at trial, the challenges, the cost of proof, and many other uncertainties likely to be encountered at trial–the attorney and party may learn additional information about the case that brings its perceived settlement value more in line with the other side’s. Instead of alienating the party and attorney, the additional information may create more trust in the mediator, allowing for more moderate positions and a smoother overall negotiation process.
