Bar News - October 18, 2017
Alternative Dispute Resolution: Mediation on the Rocks? Strategies for Rescuing Stalled Negotiations
By: Gregory S. Clayton
The mediation had an inauspicious beginning: The parties spent the first 15 minutes debating who should move first. The plaintiff finally dropped from a pre-mediation demand of $200,000 to $197,500. Calling this a nonstarter and insulting, the defendant responded with an initial offer of $2,500. The plaintiff countered by refusing to move further until there was a “real offer” on the table. The defendant responded by refusing to bid against itself and threatened to leave the mediation. Before any serious negotiation had occurred, the mediation was already at an impasse...
Mediation, like any form of negotiation, involves messaging. Each change in position communicated to the other side is a message delivered between opposing factions. Mediation can quickly devolve into a reactive process where messaging and counter-messaging can become the focus, leading to impasse instead of resolution.
Here are some strategies that counsel can use to help get a stalled mediation back on track.
Wait it out. Senator George Mitchell has described the negotiation process that led to the historic peace accord in Northern Ireland as “700 days of failure and one day of success.” Prepare your client ahead of the mediation for the likelihood of rough spots and the need for patience while the mediation process unfolds. If counsel projects patience and confidence in the process, clients (who often are first-time participants) will remain patient and hopeful. Patience is what allows difficult cases to settle.
Avoid reactive negotiation. Reactive negotiation – determining what ground to give solely based on the preceding move of the opposing party – allows the other side to dictate your own decisions and settlement progress. Small moves seldom beget large moves, and a sequence of incrementally smaller moves can quickly grind a mediation to a halt.
Although it may be satisfying to respond to a bad move with a worse one, usually it will prove more productive to think about the next several moves and whether they will get the case closer to settlement. Don’t cede control by allowing the other party to dictate your moves.
Don’t ride the brakes. Surprising results occur when one party departs from reactive negotiation and instead makes a bold move that sets the negotiation off in a new direction. Feared by some as a show of weakness, a bold unilateral move by one side may prove to be the turning point that heads a mediation toward settlement. New drivers are taught to not “ride the brakes.” The same rule applies in negotiations.
Use tools. Brackets are a form of conditional offer – “we will agree to move to X if you agree to move to Y in response.” While bracketing is not appropriate for every case, it can provide a way around an impasse by signaling what might be possible on each side. When parties exchange counter brackets, the area of dispute narrows, and the path to resolution may become clearer.
Another tool is doubling up moves. If the parties are moving at consistent paces, can some moves be doubled to save time – each party agreeing to move twice to help close a gap?
If the parties have reached the end of a mediation without closure, rather than taking a final offer off the table, consider leaving it open for a week to invite further consideration or further negotiation. The end of the mediation session does not have to mean the end of discussion. Mediators often welcome the chance to get the case resolved, post-mediation.
Consider creative approaches. A typical personal injury mediation is a distributive or zero-sum negotiation: “One man gathers what another man spills” (Grateful Dead, “St. Stephen”). Nevertheless, there still may be opportunities to create value for one side without additional cost to the other side.
Can an insurance carrier expedite payment to help resolve financial issues for a claimant? Can the carrier cut separate checks to counsel and the claimant to help get money where it is needed? If a party is having difficultly coming up with funds personally, is there a role for a consent judgment coupled with a payment plan? Is there a role for a consent judgment coupled with an agreed discount for early payment? Would an apology make a difference? How about a donation to charity in lieu of a cash payment?
Change perspectives. We tend to walk into mediations with a predetermined definition of the problem. This necessarily limits the range of perceived solutions. I have seen situations where neighbors entered a mediation thinking they were negotiating a boundary dispute and ended up walking out at the end of the day with a signed purchase and sale agreement allowing one to buy out the other entirely. In this situation, the boundary issue was a symptom of a more fundamental problem – these folks simply could not live next door to each other and get along.
Once the negotiation was reframed to focus on finding a solution that would eliminate all future interactions, the neighbors suddenly had a convergent interest in working together to hammer out a purchase and sale agreement.
Don’t assume. It is easy to make assumptions about the other side’s “true” position or bottom line based on the moves made during a mediation or other messaging that accompanies those moves. Sometimes those assumptions are completely wrong. I recall one situation where both parties had serious medical conditions that were driving their decision-making, yet neither was aware that the other was facing the identical issue. The case resolved without either suspecting this was the case. Only afterward did the parties share this bond that separately drove a settlement.
A party in a mediation may be facing financial issues, relationship issues, health issues or other personal circumstances that may make the seemingly impossible feasible.
Listen. Parties end up at mediation because of seemingly irreconcilable viewpoints: “Two men say they’re Jesus one of them must be wrong.” (Dire Straits, Industrial Disease).
Solutions come from information. A good negotiator will do more listening than talking, sifting every word from the opposing counsel, the opposing party and even the mediator for clues as to underlying interests and openings for resolution. As George Mitchell aptly put it in The Negotiator, “the only certainty I have is that I have learned little while I was talking.”
Ask the mediator. If, despite hard work on both sides, the parties reach an insurmountable impasse, consider asking the mediator for suggestions. There are times when a mediator can provide an insight or perspective that moves the negotiation forward. Some mediators will agree to circulate a “mediator’s proposal” to settle the case – a number that is difficult for both sides but potentially within reach.
Some mediators will work on a double-blind basis so parties can stretch privately to a settlement without publically sharing that position with the other side. In a true double-blind, the mediator will not disclose an offer to the other side unless it will, in fact, settle the case. That confidentiality allows both sides protection and can sometimes make the difference between failure and success.
A few hours later, the case settled for $60,000. Plaintiff stretched below an original bottom line of $75,000 and Defendant went above its target of $50,000. All parties walked out professing significant disappointment – but sharing a quiet sense of relief.
(The above fact pattern is hypothetical, but illustrates a negotiation sequence that may be familiar.)
A shareholder at Primmer Piper Eggleston & Cramer and an adjunct professor of negotiation at Vermont Law School, Gregory S. Clayton mediates cases throughout Northern New England. He may be contacted by email, (207) 618-6070 or (603) 444-4008.