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Bar News - October 15, 2014

Alternative Dispute Resolution: Preparation at the Onset, Patience at the End


Two Keys to Success in Mediation

Proper preparation of the first demand or offer and patience near the end of the mediation are two keys to obtaining optimal results.

Opening demands and offers can have a major effect on the outcome of a mediation. Most advocates know that an extreme opening demand or paltry opening offer can derail serious negotiations.

Some parties prefer to show they are serious by making a first offer or demand that shows real concession. But studies show that a first demand that is too low or first offer that is too high can have the unintended effect of causing the opponent to become more optimistic about her own case, and to adjust expectations accordingly.

Identifying the ideal opening move involves careful preparation and an understanding of the bargaining process. It should only be determined after establishing the bottom line and the aspirational goal for your client and attempting to determine those things for your opponent.

The Bottom Line

The bottom line is the minimum outcome for which your client should be willing to settle. It can only be determined by carefully exploring the available alternatives to a settlement, so you know the extent of your client’s options.

The bottom line will depend on the facts of the case. In matters that do not involve litigation or potential litigation – like transactional negotiations – there may be other purchasers or sellers, or other potential license partners. But in matters involving litigation or the likelihood of litigation if not resolved, the alternative to settlement is usually proceeding with some form of litigation resulting in adjudication through trial, arbitration or administrative hearing.

Advocates should evaluate the likelihood of success in the event of adjudication and compare that to what can be accomplished at the mediation that could not happen through adjudication. For example, in a business case, a court cannot order an ongoing relationship between a manufacturer and a supplier. In an employment case, the court cannot order the employer to write a letter of recommendation. In an auto case, the court cannot order a structured settlement or a special needs trust. And from the defense perspective, a court cannot order confidentiality.

Determine what you can potentially accomplish at trial and the cost of accomplishing it, what you think your chances are of success, the value of obtaining the things at mediation that you cannot get at trial and the things you might get at trial but cannot guaranty – starting with a verdict in your client’s favor. At what point does it make more sense to decline settlement, lose control of the outcome and proceed to an adjudication? This is your bottom line.

Once you have fully evaluated your bottom line, you need to do the same thing from your opponent’s perspective. What can she hope to accomplish at mediation? What is she concerned about? What is she confident of? What are her fears? What do you think is her bottom line? If the case is going to settle, there will be on overlap between her bottom line and yours. If you have correctly approximated hers, the overlap between your two bottom lines is the area in which settlement can occur.

After you have completed this analysis, you can then set your aspirational goal for the mediation. You should be prepared to negotiate toward your aspirational goal, which should be well above your bottom line, but low enough so that it does not doom the negotiation to failure.

Because you can only estimate your opponent’s bottom line, and you do not want to concede more than you need to, your aspirational goal should be an outcome that is somewhat better for you than your estimate of your opponent’s bottom line. (If you find that you are consistently reaching your aspirational goal, you are not setting it high enough.)

Based on your aspirational goal, you should determine your principled opening demand or offer. This should be the highest demand or lowest offer you can rationally defend. It should be higher than your aspirational goal, or you will have no chance of reaching it.

Patience as You near the End of the Mediation

Near the end of the mediation, after the parties have moved substantially from their original positions, the participants realize that a settlement is likely to occur. They feel a sense of relief, because the anxiety generated by the uncertainty of the litigation/mediation process is being replaced by a sense that there will be an agreement.

Mediators can often see signs of relief around the mouths of the negotiators, who often exhibit more relaxed postures. But as the parties become psychologically committed to settlement, they may move too quickly toward the conclusion of the negotiation.

This phase of the mediation can be critical to maximizing outcome. Important concessions tend to be made near the end of negotiations, and overly anxious participants may give up more than is required. You must remain patient and allow this stage to develop in a deliberate fashion. Endeavor to make smaller, and, if possible, less frequent position changes than your opponents. If you move too quickly toward a conclusion, you are likely to close most of the gap remaining between the parties.

Once your preparation and patience have resulted in a favorable agreement, make sure to get it in writing, signed by all of the people who need to be bound. Remember that in New Hampshire, a lawyer can bind her client, so it is good to get the signatures of the lawyers as well as the clients. If a deal is too complicated to fully memorialize, at least get a memorandum of agreement that sufficiently identifies the salient details to allow for the preparation of closing documents.

John Burwell Garvey
John Garvey is a mediator, arbitrator and published textbook author on Negotiations and ADR. A professor at UNH School of Law, he directs the Daniel Webster Scholar Honors Program and teaches simulation courses, including negotiations and ADR.

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