Happy New Year!

I don’t usually tie my posts to special events or holidays, but I think that celebration of the new year is particularly appropriate for dispute resolution professionals. It is a time to acknowledge the inevitability of change. The old year is gone; the new year is bright with promise. The past has passed; the future beckons.

This is not to suggest, of course, that what has gone before has no bearing on what is to come. As Santayana taught us: "Those who cannot remember the past are condemned to repeat it."* Civil litigants, though, must find a way to put the past behind them; to let go of grievances, whether real or imagined, and go forward. While the past must instruct the future, it shouldn’t control it.

People generally sue other people because they perceive themselves to have been wounded — sometimes literally, sometimes figuratively. Resolution won’t happen until those wounds are dealt with in some fashion. An essential step in dealing with wounds, however, is to recognize that they cannot be undone, or even fully healed. All that can be accomplished is to prevent the wounds from becoming more infected.

"Time," as someone once said, "marches on." You don’t have to forget; you don’t have to forgive; but you do have to move on. People cannot control what has happened, but they can and should control what will happen — because it is inevitable that something will.


* George Santayana, The Life of Reason, Vol. 1, Reason in Common Sense, (Dover Publications edition, 1980; originally published by Charles Scribner & Sons, 1905).

Fear of Being Outfoxed

"Everybody has to save face, and, whether they have to or not, everyone tries to; it’s one of the basic compulsions of men." John D. Voelker, writing as Robert Traver, Anatomy of a Murder (New York: St. Martin’s Press, 1958), 42.

The above-quoted maxim is especially accurate when it comes to lawyers, and even more so when it comes to trial lawyers. Put simply, trial lawyers hate to lose. They are usually willing to moderate their thirst for victory enough to participate in settlement negotiations, but, when the dust settles, they still like to feel they won by doing better for their clients than the other lawyers did for theirs.

In saying this, I do not mean to suggest that it’s all gamesmanship — i.e., the lawyer who dies with the most points wins — or that we trial lawyers are completely driven by our egos. Of course, given Voelker’s observation, there is always going to be some of that. After all, no lawyer worth his or her salt wants to be snookered. But more important than ego to most lawyers is that our clients hire us to get the best results we can. If we take our clients’ money, we’re expected to advocate.

What’s important to most litigants involved in settlement negotiations, assuming the numbers being discussed are in the so-called "zone of possible agreement" (ZOPA),* is knowing that the other side’s best number has been reached. This is why the cautious back and forth negotiation that we call the "mediation dance" happens, and why most people rarely "cut to the chase" right away. The dance is a necessary component in just about all settlement negotiations. Can you imagine two trial lawyers having the following conversation?

Defense Attorney: My client and I think settlement value is between 200 and 250 thousand dollars.

Plaintiff’s Attorney: That’s about where I put it. Want to split the difference at 225?

Whatever the cause of people’s tendency to hide their hole cards, it’s all part of the adversarial process. It has been with us for centuries, and is likely to be with us well into the future, if not forever. It is one of the reasons why it’s wise for parties contemplating mediation to allow for as much time as possible for the process. I have been in mediations where early negotiation results in substantial movement, but hours are spent thereafter in making only tiny incremental changes. Was such extra time wasted? I don’t think so, because when that sort of thing happens, everyone is virtually certain that the other side has reached the end of its rope — and is satisfied that nobody was outfoxed.


* Defined as "the set of all possible deals that would be acceptable to both parties." Deepak Malhotra & Max H. Bazerman, Negotiation Genius, (New York: Bantam Dell, 2007), 23.

Impasse

We’ve all seen it. The parties negotiate back and forth all day, only to bog down in the late afternoon, leaving a sizeable gap between demand and offer. All sides announce that they have gone as far as they can and look to the mediator to figure out a way to reach resolution despite the frozen state of negotiations. Sometimes a good mediator can help find a way to create some additional value to bridge the gap. Unfortunately, though, all too often the parties are not looking for ways to close the gap; instead, their view of the mediator’s job is to make the other side see things their way! When the parties feel like this, the result is called "impasse," a/k/a "a predicament affording no obvious escape."*

True impasse comes about because each party believes it is correct in its analyses. The difference usually arises because there are pieces of the puzzle that haven’t yet been found or, if found, have not been fully understood.

John DeGroote, in his Settlement Perspectives web log, observed: "If you and the other side value the case differently, at least one of you is wrong." See John’s November 7, 2008, post entitled "Better Settlements From Better Information: Early Case Assessments IV." Of course, if the only unknown is what the result of a trial will be sometime in the future, you won’t find out for sure who is wrong until the proverbial "twelve [people] good and true" have rendered their verdict. However, since the parties decided at one point to mediate, I will hopefully be pardoned for assuming that they want to avoid that particular risk.†

On the other hand, if pieces to the puzzle are missing because discovery is incomplete, the parties and the mediator may want to consider adjourning and returning later after gathering further information. But the best way through impasse to resolution may not always be to complete the requisite discovery. Discovery costs money, so deciding whether to go ahead with it will require a cost-benefit analysis: is the cost of finding those additional puzzle pieces justified by the amount of money still at stake? And bear in mind that the parties might end up spending the money only to learn that they were both wrong or the results are still inconclusive.

Often the best way through impasse is to simply bite the bullet, recognize that you have pushed the other side as far as you can, split the difference in some fashion, and go home.


* Merriam-Webster Online, accessed December 11, 2009.

† See "Jury Prognostication," posted October 15, 2009.

When Not to Mediate

I am a strong advocate of settlement. Like Lincoln, I believe that lawyers are at their best when they are advising their clients to make peace.* Having said this, I also understand that peace is not always an option. For true peace to be possible, the parties must want it to be the outcome. If either party — whether plaintiff or defendant — comes to the table with an unshakeable demand for unconditional surrender, there is usually no point in coming to the table at all. See, e.g., "We Got ‘Em Cornered!" posted July 11, 2009.

I know, I know; sometimes such a hard-ball attitude may simply be a ploy, and a skilled mediator may be able to help the parties achieve agreement despite such initial posturing. What I’m talking about, however, are the occasional cases where there is no ploy — i.e., when the "no prisoners" approach is genuine. In such cases, it is unlikely that even the best mediator will be able to truly convince the recalcitrant parties to bend, so it is usually better for the folks who want war to simply say so, and decline to mediate.

This is so because an agreement to mediate a tort case usually implies a willingness by all to compromise to some extent. Therefore, the participants usually expect that the others: (a) want to settle; and (b) are willing bend at least a little in order to accomplish (a). Most people, after going to the trouble of preparing for mediation, tend to react unpleasantly when they show up ready to negotiate only to discover that the others are not. This usually results in more than just a waste of time, because the offended parties can be expected to redouble their efforts to prepare for trial and may end any hope, albeit flickering, of a mutually satisfactory settlement later on. This is one of the reasons I am opposed to mediation being required by the courts. See "Should Mediation be Mandatory?" posted May 17, 2008.

Of course, one doesn’t always know whether a refusal to mediate is itself just another ploy. Many hard-nosed negotiators hold firmly to the belief that you don’t reach agreement without saying "BOO!" at least once. See, e.g., "Driving in Germany" posted June 7, 2008. If you suspect that your opponent’s refusal to participate in mediation is mostly gamesmanship, you might consider unilaterally hiring a mediator to approach the other side and do an independent assessment of the situation before you abandon the effort.

If, however, it is apparent after such efforts that the other side won’t negotiate, don’t keep pushing. Instead, make sure your opponent has your phone number in case he or she has a change of heart, then continue with your trial preparation.


* See The Collected Works of Abraham Lincoln, edited by Roy P. Basler, Volume II, "Notes for a Law Lecture" (July 1, 1850?), p. 81.

Multi-Party Mediation

One on one mediation — that is, one plaintiff versus one defendant — is familiar to most trial attorneys. Depending on the complexity of the facts and the legal issues involved, such mediations can be difficult or easy, but they usually involve a fairly simple concept: the two parties either ultimately agree on the relative responsibility and value or they do not.

The complexities may increase exponentially when more than two parties are involved. In multi-defendant cases, for instance, the principal difficulties may involve the plaintiff (or plaintiffs) very little, if at all. Often, the defendants will come to a basic agreement concerning the total settlement value of the plaintiff’s case, but disagree strenuously on how that amount should be divided among them. In catastrophic injury cases, differing levels of available coverage, both primary and excess, add further complexity to the mix. A carrier with relatively low primary limits insuring a defendant with only marginal liability, for example, may find itself pressured into paying more than it thinks it ought to by an excess carrier that is also the primary carrier for one of the other defendants!

One technique used in cases with multiple defendants is to gather them together for a preliminary session (or sessions) in advance of the mediation in chief. Sometimes the same mediator may be used for all sessions; sometimes not. The object of this pre-mediation, if you will, is to see how much agreement may be achieved among the defendants without forcing the plaintiffs to sit cooling their heels for hours while the people with the money wrangle among themselves. For an example of a technique that has been used with some success to accomplish such agreement, see Jeff Kichaven’s discussion of the so-called "Surowiecki Ballot" in his October 2008 article entitled "A Tool for Multi-Party Insurance Litigation Mediation with ‘Additional Insureds’." Hopefully, by the time of the main event, the defendants will be prepared (up to a point) to work together in a common cause.

Sometimes, the defendants never reach agreement on the percentage each will be willing to make. If that happens, another technique is for the mediator to meet separately with each defendant and obtain the best offer each is willing to make. At the end of this exercise, the mediator then discloses the total package available from all defendants, but does not disclose the individual contributions each has authorized. Having obtained total authority from the defendants, the mediator will then meet with the plaintiff — or plaintiffs, if more than one — and determine if settlement is possible within the authority given. Of course, if it isn’t enough, step one may have to be repeated.

If, after all is said and done, the mediator cannot get substantial commitment from all of the defendants, he or she can explore whether the plaintiff(s) may or may not be willing to settle separately with some of the defendants, while continuing to pursue the others.

As a last ditch effort to achieve at least a partial settlement, the mediator may seek preliminary contributions from the defendants sufficient to settle with the plaintiff(s), with the defendants agreeing to resolve their final contributions through separate arbitration (or litigation) among themselves. This course of action has the advantage of capping the total amount to be paid to the plaintiff(s), thus protecting the defendants from the consequences of a runaway verdict, while allowing them to fully litigate their final contribution percentage vis a vis each other.

Bombs, Wild Cards, the Boogeyman and Other Things That Go “Bump” in the Night

Liability insurance carriers normally have a huge bargaining advantage in personal injury negotiations as compared to personal injury plaintiffs. The reason? Carriers have lots of cases; plaintiffs have just one. Carriers, i.e., can usually afford to lose. Plaintiffs often cannot. Put another way, Plaintiffs typically need to be paid more than carriers need to pay.

Insurance companies are in the risk business, so taking chances is their bread and butter. Of course, all risk is relative. Where the case at hand is fairly routine — a rear-ender whiplash case, e.g. — the company is likely to have a lot of data to back their analysis. In such cases, the risk of an adverse result to the company can be calculated fairly accurately, intensifying its advantage over a lone plaintiff.

The company’s advantage lessens, however, the more unusual the facts are. The more unknowns in a case, the less sure of their ground the company representatives are. Their normal advantage is based on statistics and the laws of probability. Statistics are more reliable as predictors when the applicable database is large, and less reliable when the database is small. Thus, it is normally to a plaintiff’s advantage to structure his or her case so that it falls outside the routine as much as possible.

Explosive facts take a case even more out of the routine. The carriers’ ability to calculate risk is far more difficult with facts that have a high potential for angering members of the jury. A manufacturer’s failure to spend a few bucks to correct a dangerous product design, for example, is particularly hard to price. In cases involving sexual assault against minors, statistics likewise don’t provide a lot of help to a defendant. Even relatively routine cases can quickly turn into problems for insurance companies if some of the defense witnesses tend to be arrogant, are caught lying, altering records, etc.

A word of caution, however. Smoking guns can be two-way streets.* It is possible to be so successful in uncovering or developing egregious facts that the carrier becomes justified in denying coverage. Liability coverage will be excluded, for example, if the defendant’s actions triggered the typical intentional act exclusion.


* How’s that for mixing metaphors?

Underestimating Your Opponents

"There are not Indians enough in the country to whip the Seventh Cavalry!" George Armstrong Custer

Custer made the above-quoted statement eight years before the Battle of the Little Bighorn. The photo at the left illustrates the perils of such bravado.

For trial lawyers, it’s easy to get caught up in the adrenaline rush that usually occurs shortly before trial. The witnesses have been lined up, the trial team has marshaled all the facts and legal arguments, and the lawyers are eager to bring all of their months of effort to fruition. "We are, by God, ready! Bring on the trial!"

Confidence in one’s abilities is, of course, as necessary a trait in trial lawyers as it is in surgeons. Just as patients don’t hire surgeons who faint at the sight of blood, neither do clients have confidence in lawyers who shy away from the courtroom.

But too much confidence can overcome good sense. Leaving settlement discussions to the last minute can cause even the best and most cautious lawyer to overestimate the strength of his or her case and to underestimate the strength of the opponent’s case. This is one of the reasons — in addition to saving costs of trial prep — why serious settlement discussions should be planned for a time well in advance of trial.

From the beginning of a case, the lawyers should be planning for resolution in addition to trial. Discovery should be programmed in advance so that enough information to make settlement negotiations meaningful is expected to be known months before the combatants immerse themselves in final preparation.

But even with the best planning, things have a way of coming out differently than originally anticipated. If it is impossible to mediate a case until the eve of trial, the parties should consider engaging the services of separate settlement counsel to conduct the negotiations. It is usually much easier for such counsel to see things objectively than it is for trial counsel, a/k/a, the people who are more likely to be saying: "Bring on the Indians!"

Maginot Lines in the Sand

The French Maginot Line, a series of impressive fortifications running from Switzerland to Belgium, was conceived in the 1920s and built in the 30s as a defense against possible German invasion. The concept was seen as an improvement over the trench warfare which typified so much of the military experience during World War I from 1914 to 1918. The fortification plan was not thrown together in a slap-dash manner; rather, it was well thought-out by some of the more experienced military minds in France. Nonetheless, with the benefit of hindsight, we all know now that the plan completely failed to deter the German Wehrmacht, which had abandoned such obsolete forms of warfare in favor of a mobile, armor-based attack strategy.

In defense of the French planners, much of the work on the Line was done before Hitler’s massive rearmament during the mid to late 1930s; however, even after it should have been obvious that reliance on the Maginot line was obsolete, the French failed to modify their strategic planning. The Wehrmacht bypassed the Maginot Line, swept through Belgium (again),* and forced France to seek terms about a month later.

The lesson in all this for tort litigators is to avoid becoming too "entrenched" in one’s own plans and calculations, regardless of how well thought-out they may have been. It’s OK — in fact, highly desirable — to come to mediation having strategized about how much you want to get (or spend) to settle your case. But do not draw your line in the sand so deeply that you fail to appreciate risks that become apparent during the mediation. You may miss an opportunity to achieve a settlement that, while not exactly measuring up to your expectations, is nonetheless reasonable.

As I pointed out a few weeks ago, nobody can predict with any precision what is going to happen after a jury starts its deliberations. See "Jury Prognostication," posted October 15, 2009. Rather than basing your side’s "bottom line" on what you believe a jury is likely to award, think of it instead as an amount for which the case ought to settle now. There is a big difference between the two approaches: the first requires a prediction about what 12 strangers are likely to do at some time hence; the second, a prediction about what the people across the table are likely to do now — perhaps based on their fear of what a jury may do at some time hence.

If your original prediction about what it will take to settle is proved wrong at the mediation, it is unwise to walk away from the negotiations without first pausing to rethink your original analysis. Nine times out of ten, if the parties are close — but not close enough — it is best for everybody to take a deep breath, compromise a little more, and get the deal done.


* The Luftwaffe simply flew over the Line.

A Mediator’s Prayer

Lord, grant me the imagination to think outside the box and the wisdom to keep from going off the rails. For the one fosters innovative solutions, while the other leads to train wrecks.

One of the benefits of experience — a/k/a learning from your mistakes — is that it helps you to tell the difference between the two. And one of the things I have learned from experience over the years is that new and "improved" approaches are not always appreciated. Stepping out of familiar territory into the unknown is generally perceived to be risky. People engaged in mediation who are charged with protecting other people’s money (e.g., attorneys and claims reps) are generally reluctant to do risky things with it. After all, they are usually trying to settle a case to avoid risk, not incur more!

For most lawyers, negotiating about money is familiar territory. In tort mediations it’s not always only about the money, but it usually is mostly about the money. Insurance claims reps are primarily interested in: (a) paying the plaintiff something (not too much, please); (b) stopping defense costs; and (c) closing the file. Plaintiffs’ attorneys are interested in: (a) getting a fair price for the case; (b) keeping time and expenses down; and (c) closing the file.

Injured plaintiffs look at things somewhat differently. They are, to be sure, interested in the same things as their attorneys, but they also desire a modicum of justice from the process. And it is this difference where the ability to think outside the box may be most useful. Depending on the strength of the desire for justice — which the liability carrier isn’t usually focused on — pure money negotiations may or may not be enough.

But if the negotiation is clearly one for "just money," too much emphasis on outside-the-box thinking may be counterproductive. If the mediator (perhaps out of boredom) tries to get too innovative, the participants may resent it as a distraction. Rather than moving the parties toward settlement, the mediator who gets too fancy risks discouraging everybody and causing the negotiation to end without a settlement.

On the other hand, when the parties have gone as far as they can go with money negotiations, that is when imagination can and should come into play. If there is a gap between "last and best offers," the mediator and the parties, rather than saying, "well, that’s it, then," packing up and going home, ought to explore things further, looking for ways to maximize value to one side, while minimizing costs to the other. Will a formal and public apology (as opposed to only vaguely expressed remorse) supply value to the plaintiff without costing the defense anything substantial? Will a structured settlement meet some of the plaintiff’s financial needs, while keeping the defense outlay within the budgeted parameters?* Will funding a health insurance policy allay the plaintiff’s fears of being without adequate medical care in the future?

Done right and at the right time, a little out-of-the box thinking can help achieve a settlement, while avoiding the "Casey Jones" syndrome.


* Consider the example in "Show Me the Money!" posted July 18, 2008.

Signals

One of the buzz words in mediation and negotiation circles is "signals." In a tort mediation, after the parties and counsel split up and go into separate rooms, demands and offers are usually filtered through a "what kind of signal are we sending?" lens before they are presented to the other side.

Often — at least for the first couple of hours — the signal each side is trying to send is: "If you were smart, you’d be quaking in your boots; you really don’t want to mess with us!" This approach always reminds me of the inept motorcycle gang in the Clint Eastwood monkey movies ("We’re the Black Widows. We’re feared throughout the land").*

When it becomes obvious that the tough guy approach isn’t working, the parties and their lawyers usually start to moderate their tone and send more realistic signals designed to show a willingness to settle, but without appearing too eager to give away the store. The most common tactic is to give the impression of heading toward a number midway between the last demand and offer. For example, the defense is likely to respond to unreasonably high demands from the plaintiff’s side, with equally unreasonable offers until the plaintiff drops to a point where the mid point is perceived to be "in the ballpark." If the plaintiffs have been in the $250,000 range for a case perceived by the defense to be worth only $75,000 to $80,000, the other side is unlikely to make substantial moves until the demand gets down around $100,000.

One approach that has been used with some success to signal that it is time to get serious, is to make an offer contingent on the plaintiffs lowering their demand to a certain number. This has the advantage of getting the negotiations into the right range without necessarily forcing the defense to show their hole card. For instance, in the example discussed in the previous paragraph, the defense, instead of responding to the last demand with a firm offer, might instead counter by saying that if the demand is lowered to $90,000, the offer will be raised to $45,000. Such a move would likely be designed to signal a settlement range of $65,000 to $70,000. If the plaintiffs also believe that the case is worth $75,000 to $80,000, such a move may encourage them to respond with a demand — or even a suggested range of their own — designed to signal a desired settlement close to, but not quite, where they truly want to go — in the $85,000 to $90,000 range, say. Now the parties probably know that on the surface they are only about $10,000 apart, and it shouldn’t take much to close the remaining gap (which, in reality, is probably no gap at all).

* Any Which Way You Can, Buddy Van Horn, Director (Warner Brothers Pictures, 1980).

Preparing for Mediation

I was reminded recently by my San Francisco colleague, Michael Carbone (Mediation Strategies Web Log), of the importance of thorough preparation prior to mediation. See "Effective Preparation," posted September 26, 2009. In that post, Michael reminds plaintiffs and their attorneys that "[i]f [they] will be negotiating with an insurance carrier or other institutional party who must complete an internal evaluation in advance of the mediation, be sure to provide them with all of the information that they will need."

This advice is especially important if there are factual disputes on the extent of damages or their causal relationship with the events giving rise to liability. Typically, such issues are going to be the subject of expert testimony — usually medical experts, in the case of personal injury — if the case doesn’t settle. Unless the Insurance carrier for the defendant is presented with hard and persuasive documentary evidence of what that testimony is going to be, expect the claims rep and defense counsel to negotiate on the basis that such evidence is unlikely to be forthcoming at trial.

Insurance carriers and defense attorneys know that you have the burden of proof on these issues, and they expect you to demonstrate how you plan to meet that burden before they will write a substantial check. See my post of September 3, 2009, entitled "Little Blank Spaces." Don’t expect to persuade the other side at mediation, e.g., that your client "probably" has a permanent disability caused by the accident at issue unless you have a medical expert’s opinion to back it up.

I know that doctors cost a lot of money and sometimes they are hard to deal with, etc., etc. I also know that in many cases, experienced counsel can guess pretty well from the medical records what the doctors are going to say about fairly routine injuries. And I know as well that it can be frustrating to have to pay several hundred bucks to get a doctor to put in writing what to you may seem obvious. But if you insist on avoiding that expense, be prepared to have the value of your client’s case discounted considerably by the other side. And your chances of changing their perception during the course of a mediation are slim indeed.

Jury Prognostication

Experienced trial attorneys, in advancing their clients’ interests during mediation of tort cases, usually profess to having some ability to estimate what their cases are worth; i.e., figuring what a jury is likely to award and factoring in the cost of trying the case. Unfortunately, making such estimates usually involves trying to predict what twelve strangers — whose identities are not yet known, and whose innermost thoughts, attitudes and life experiences will never be fully known — will react as a group to the evidence that is likely to be presented at trial. In my state, all we know for sure at the time of mediation about the future members of the jury is that they will be at least 18 years old and will either have a driver’s license or be registered to vote.*

When I act as a mediator, I always remind the participants that there is no such thing as an "average jury." Even when a jury is made up of average citizens (whatever those might be), I maintain that it is impossible to accurately predict the group dynamics that will result from the mix of different personalities when they start their deliberations. Even on the eve of trial, when you know who is going to be on the jury, determining in advance who will be the leaders in the jury room, for example, is a pretty imprecise exercise.

The science of statistics, its practitioners will argue, does help to give some predictability to the art of jury divination. But statistics, as I have said before, favors litigants who have lots of cases — insurance companies, e.g. The science has little to offer someone who has only one bite at the apple — the plaintiff, i.e. Every poker player knows that someone who can go all night has the edge over the gambler who has only enough money to sit in for one hand!

The situation faced by litigants is complicated further by the advance of technology. I believe that in the Internet age — Google, Twitter, Facebook, etc. — the unpredictability of juries has increased significantly. Are jurors going to be persuaded by the evidence and arguments they hear in court, or by something one of them read on a blog that morning? Most jurors with whom I have had experience take their role seriously and try to do the right thing. Unfortunately, however, what a lay person may think is the right thing to do can differ significantly from what the judge and the lawyers think is the right thing to do.

The problem arises, in my view, not only from the vast increase in the availability and accessibility of information online, but from the empowering effect all of it has had on the general population. Take a recent example from a criminal trial in my state. One juror did an Internet search of the defendant’s name and learned of a past criminal record. He then shared the information with the rest of the jury "because he thought jurors deserved to know."† His foray into hyperspace was discovered, and he was found in contempt and punished. His attitude of "empowerment" is, I’m afraid, more prevalent than many might suppose, and his example, rather than discouraging such vigilante justice, may instead simply cause others to be more careful about discussing it afterward.

So, getting back to the original point, how are we to assess the probabilities of a favorable jury verdict? Maybe, when all is said and done, we can’t. But I think we can do pretty well in assessing how the other side is likely to approach the risks involved with such unpredictability. People settle cases, after all, to avoid risk. I suspect that, more often than not, a case’s "value" to either litigant depends less on what the parties guess a jury is likely to do, and more on how far each believes it can push the other because of what the jury might do.


* RSA 500-A:1, IV; RSA 500-A:7-a, I.

† Annmarie Timmons, "Juror Becomes a Defendant," Concord Monitor, March 26, 2009. For an analysis of the dangers we face from a newly empowered citizenry, but one which is becoming more and more ignorant of the structure of our legal system, see Retired Justice Souter’s remarks to the ABA on August 1, 2009. The video is worth watching.

The Heart is a Piece of Plumbing

Grant you, it’s a very sophisticated and marvelous piece of plumbing, but, at bottom, its function is to pump liquid, not to serve as a substitute for the brain or for due diligence! Making decisions on important issues "because my heart tells me to" — i.e., based on the emotion of the moment instead of on thoughtful analysis — is a recipe for disappointment at best, and disaster at worst.

Most attorneys and mediators involved in personal injury work recognize that emotion is a fact of life. It is something we’ll have to deal with as long as our business involves helping to pick up the pieces littering peoples’ lives after serious accidents or other traumatic events.

Conventional wisdom has it that venting can help to dispel emotion that may cloud an injured plaintiff’s judgment concerning settlement. There is a lot of truth in this. However, there is a danger that venting may be too cathartic, and cause the parties to relax too much, after having gotten it all off of their chests. Unvented anger may cause people to over value a case, thereby lessening the chances for a fair settlement. But too much relief at having vented may also have the opposite effect. Just because the parties may have started to feel warm and fuzzy doesn’t mean that the case ought to be settled for more or less than it is worth.

It is the lawyer’s job to see that the client gets a fair deal. As I said in an article I wrote a couple of years ago:

In the midst of all the emotion and feeling good about oneself promoted by much of the mediation literature, lawyers must protect their clients. A lawyer cannot allow the client’s emotions of the moment to override his or her good sense. The lawyer absolutely cannot recommend an unfair settlement just because the client is temporarily relieved by venting, or induced into a feeling of euphoria by having had a good cry with the other side. The lawyer must protect the client from the perception of value, if reality lies elsewhere.*

The job of the lawyer is not to accommodate the client’s emotion and use it as an excuse to recommend a settlement that the client may temporarily go along with at the mediation, but regret later on. Instead, the lawyer’s job is to objectively advise the client based on the latter’s long-term interests. A lawyer who believes that the client is being overly influenced by his or her "heart," should try to talk the client out of moving too precipitously and, if that approach fails, should suggest strongly that negotiations be suspended and resumed at a later time after some further reflection and analysis.

The object of mediation is not settlement at all cost, but settlement that fairly addresses the long range interests of the parties.

* See "Of Potted Plants and Personal Injury: a Contrarian View of Mediation," published in the Fall 2007 issue of New Hampshire Trial Bar News (Vol. 29, p. 169), published by the New Hampshire Trial Lawyers Association (now The New Hampshire Association for Justice).

Uncomfortable Truths

Applied to the right cases, there is no doubt that the mediation process can do a lot at a relatively early stage to resolve what would otherwise be protracted and expensive litigation. Having said that, I also believe that there are many cases where a mediator would be superfluous. This proposition may sound like heresy, coming as it does from someone who makes a good part of his living mediating cases, but I think it is borne out by my experience since 1992 as a volunteer neutral for the New Hampshire Court system’s mandatory ADR program.

In my state, civil cases that used to settle "on the court house steps" are now scheduled for mediation or other ADR at a point in the discovery process when the parties expect to have a reasonably good handle on the facts, but have not yet spent the time and money necessary to get their cases completely ready for trial. The program’s statistics show that cases are settling earlier than they used to, but do not appear to indicate a substantial increase in the settlement rate overall.

I have long had a sneaking suspicion that the pre-1992 delays in settlement — at least for the mostly-about-money cases — were primarily due to inertia, rather than to the lack of intervention by mediators, and that improvements since have had more to do with timing and party readiness than with the process of mediation itself. My experience with mediating fairly routine soft-tissue injury cases, for example, suggests that when parties are ready to settle, and come into mediation with a fairly good idea of the reasonable range of values, their cases usually settle. But they settle because the parties and their attorneys are ready and on roughly the same page, rather than because they got a lot of help from the mediator. In many other cases I have mediated, the parties were not ready and needed further discovery before they could begin serious negotiations. Most of those cases went on to settle without outside assistance after further information was obtained and exchanged.

When ADR is scheduled by the courts, lawyers, parties and insurers are (a) required to look at their files at the same time, (b) get together at the same time, and (c) work on resolving their case at the same time. Guess what, folks; with a little extra effort and planning, you don’t always need a mediator when you have that going for you.

In fairly routine cases, instead of reflexively scheduling a mediation, if you have a reasonable level of comfort with your opposing lawyer, sit down for lunch with him or her and see whether direct negotiations might be a better way to go. Kick the case around frankly "off the record," discussing in general terms how you will play your strengths and how you will deal with your weaknesses. Forget all that stuff you may have read about appearing to be weak when you talk about settlement. Hardly anybody thinks like that anymore.

You don’t have to start talking about a specific range of values at this juncture.* There are other ways to get a feel for how your opposite number sees the ballpark. Statements like, "My client isn’t looking to retire on this," or, "my company knows it’s going to be on the hook for something," for example, may be enough. If you think that further negotiations are likely to be fruitful, schedule a face to face settlement conference attended by everybody who would normally attend a mediation — except the mediator. Have separate rooms for private attorney-client discussions, and then just negotiate as you probably would with a mediator — the plaintiff starting high; the defendant starting low; and both meeting somewhere in between.

If this approach doesn’t work, at least you have a pretty good idea what the problem is, and can then hire a mediator — or not.


* In fact, that would probably be a bad idea. If you come right out and suggest a range of values, say, between $25,000 and $40,000, your opponent will regard that as a $25,000 demand if you represent the plaintiff, or a $40,000 offer if you represent the defendant!

The Great Compromise*

What is it about the word "compromise" that tends to raise the hackles of those who hear or read it? To many, any compromise is regarded as the shameful abandonment of principle. Perhaps the best example of the negative visions that the word conjures is the Munich debacle in the fall of 1938. Neville Chamberlain, trying desperately to avoid another catastrophic war with Germany, sold the fledgling Republic of Czechoslovakia down the river, thus, making another catastrophic war with Germany inevitable.

Against such a backdrop, it is well to remember that the word "compromise" was not always considered epithetical. In any society, interests — even principled interests — will inevitably clash. For a society to survive, means must be found to resolve those differences peacefully. And not all conflicts are susceptible to win-win resolutions. The great British statesman, Edmund Burke, for one, regarded compromise as an essential and beneficial part of the human condition. See my post of May 26, 2008, "The Best Compromise That Never Was?."

In order to counter the prejudice against all compromise, it is useful from time to time to discuss historical examples of some that proved to be fortunate. The first that springs to my mind was reached in July of 1787 at Independence Hall in Philadelphia (pictured above). As I have stated before, the drafting of the United States Constitution involved "a high-stakes negotiation among many distinct interest groups." See "Yes, Virginia, There Is a Plan," May 25, 2008. Potentially the most crippling dispute facing the delegates dealt with the question of how the national legislature would be constituted. Delegates from larger states like Virginia favored election of representatives based on population. This, its adherents believed, would assure a legislative body truly national in character. Opponents of this concept, chiefly from the less populous states, believed that each state should have equal representation, else the smaller states would lose all power in the national government.

More than mere self-interest was involved in the debate; both sides supported their positions with principled arguments. The question occupied the delegates for a month, with almost no progress toward resolution being made. The issue was so divisive that many despaired of overcoming it and feared that the Convention would dissolve in failure as a result. Fortunately, most delegates were committed to the success of the endeavor, and ultimately took the larger view that without some compromise of principle, the entire American experiment would miscarry. Thus, they recognized that the larger principle of national unity was on the line, without which all other principles would be irrelevant. A so-called "Grand Committee," with members from each state, was formed to study the issue over the Fourth of July recess. One of its members was Benjamin Franklin, who proposed the concept of proportional representation in the lower house (House of Representatives) — which was to be given the exclusive power to generate revenue bills — but equal representation for each state in the upper house (Senate).†

It took almost two more weeks, but ultimately the delegates approved the compromise by a narrow margin. Eventually even James Madison, one of the most strident of those opposed to anything but 100% proportional representation, put the issue behind him.

And the rest, as they say, is history.


* For background on this post, I am indebted to William L. Shirer’s classic The Rise and Fall of the Third Reich (New York: Simon and Schuster, 1960), Catherine Drinker Bowen’s Miracle at Philadelphia: The Story of the Constitutional Convention, May to September 1787 (Boston: Little Brown and Co., 1966), and Richard Beeman’s more recent Plain, Honest Men: The Making of the American Constitution (New York: Random House, 2009).

† The concept of mixed representation — the people represented in the lower house and the states represented in the upper house — was based on a proposal floated the previous month by Roger Sherman of Connecticut, which is why the result is sometimes called the "Connecticut Compromise." But the idea didn’t get a lot of traction until Franklin wined and dined the members of the Grand Committee, tweaked it a bit, and lent it his support.

The Dick Francis Solution

Long before I ever heard about Fisher and Ury’s Getting to Yes, I started reading Dick Francis’ mysteries. For those not familiar with his books, Francis, formerly a steeplechase jockey, develops his novels around British horse racing. His protagonists, rather than being super sleuths, are usually fairly normal, civilized people who are forced to deal with extraordinarily uncivilized situations; his villains are some of the most evil and malevolent specimens in literature. What struck me when I first started reading his books, was that their focus was primarily on how situations could be resolved to best serve the interests of the protagonists — even if the solutions did not always result in all the villains getting satisfactorily crunched.*

With this background, when I was first exposed to Getting to Yes, it was relatively easy for me to understand what the authors were getting at when they discussed the superiority of focusing on interests rather than positions.

When a person is injured due to another’s fault, often the first reaction is a desire to punish the offender. If I have been hurt because someone else was careless, I want the other guy to suffer as much as, or more than, I have. It is difficult for the lizard part of my brain to accept that the aim of the civil justice system is not punishment. Sometimes this initial reaction will fade with the passage of time, but not always and usually not completely. A plaintiff’s lawyer who expects a case to settle must work with his or her client to overcome this natural reaction.

"Revenge," the proverb says, "is a dish best served cold." But, in truth, it isn’t a dish at all. Revenge doesn’t put food on the table, replace lost income, or pay medical bills. Revenge doesn’t put your kids through college or provide for your retirement. And, largely because of liability insurance, the defendant will never feel the financial pain he or she has inflicted on you.

The sooner a plaintiff accepts the reality of the situation and is ready to make decisions based on what is best for him or her, as opposed to what is bad for the other guy — to accept the Dick Francis solution, in other words — the sooner a case is likely to settle and the plaintiff can move on with his or her life.


* Some examples are Risk (1978), Reflex (1981), Straight (1989) and To the Hilt (1996).

Deus ex Machina Mediation

Deus ex machina literally means "God from a machine," and refers to the practice in ancient Greek drama* of bringing in a god (lowered to the stage toward the end of the last act by a crane or on a piece of scaffolding) to magically solve all the problems created during the course of the play. Merriam-Webster Online defines the term in context as "a person or thing (as in fiction or drama) that appears or is introduced suddenly and unexpectedly and provides a contrived solution to an apparently insoluble difficulty."†

Some litigants approach mediation with little or no preparation, no clear vision of the result they want to achieve, and no plan as to how to proceed. The idea on each side seems to be that it is the mediator’s job to somehow convince the others to accept their position, without having to present a clear reason for them to do so beyond saying something like: "We are confident that a jury in this county will go along with us." The mediator is then expected, by means indiscernible to mere mortals, to get everyone to agree to a solution somewhere in between the parties’ positions. In reality, the mediator is reduced to shuttling back and forth like Henry Kissinger, unable to say anything more illuminating than "[d]o you realize you might lose this case?" Although such mediations do sometimes lead to settlement, I suspect that the same results could have been achieved by exchanging a series of e-mails, without the need for a mediator.

For a mediator to help parties settle a case, the parties and their lawyers normally have to work as hard as, or harder than, the mediator. They must: (a) know their cases thoroughly; (b) be imaginative and flexible; (c) know roughly where they want to go; (d) have a plan as to how to get there; and (e) be prepared to give plausible reasons for each step taken. If the participants have done their homework, then mediators have many tools to smooth the process and help the parties arrive at a mutually satisfying solution.

As is the case with most human endeavors, hard work, sweat and preparation are necessary to get the job done. Sorry, but as Vernon Dursley put it: "There’s no such thing as magic!"‡


* I have no idea why it’s a Latin phrase, rather than Greek.

† Merriam Webster’s Online Dictionary (10th ed).

‡ Harry Potter and the Sorcerer’s Stone, Chris Columbus, Director (Warner Bros. 2001).

Little Blank Spaces

When a liability insurance claims office gets a report that one of its insureds has been in an accident, it immediately sets up a file, gives it a claim number, and assigns it to a claims representative. Typically, the company’s guidelines require that certain information about the claim be obtained before it will consider making a substantial offer. The required information includes basic documents about the accident (police report, witness statements, e.g.), plaintiff’s lost time and earnings from work, medical bills, medical records, whether the plaintiff has reached a medical end point, etc. I tell plaintiffs that the claims rep has lots of little blank spaces on his or her computer screen and, until those spaces are filled in, the money faucet will remain closed.

It follows that if you represent an injured plaintiff, you will want to find out what those blank spaces are and help the claims rep fill them in as soon as possible. If you don’t know what they are, ask. By thus accommodating the company’s protocol, you won’t turn a doggy case into a winner, but you should enhance your credibility with the insurance company in meritorious cases and help set the stage for a successful mediation.

For more on the same subject, see my article entitled, "Dealing with Insurance Company Claims Representatives," written in 2006.

Mediation as Anti-Social Behavior, II

I first posted on this subject last year (See "Mediation as Anti-Social Behavior," May 16, 2008) following a post by Geoff Sharp, in which he discussed Prof. Owen Fiss’s 1984 article, Against Settlement, 93 Yale L.J. 1073. Others have continued the discussion, which centers on whether justice is ill-served by people who settle their legal disputes without considering whether society as a whole would be better off if they fought things out in the courts. See, e.g., Michael L. Moffitt’s article, "Three Things to Be Against (‘Settlement’ Not Included) - A Response to Owen Fiss,"

In my earlier post, I deliberately put off discussing "whether individual litigants should be asked to spend their own money to carry society’s banners into battle (presumably for the honor of the thing)." This aspect of the issue appears to have been given little attention by those participating in the debate, but I believe it to be the nub of the matter. The idea that people who have a chance to quickly and efficiently resolve their grievances by settlement should nonetheless be encouraged to forgo that option for a protracted and expensive court battle seems foreign to any concept of justice with which I am familiar. To me, it is basic that the litigants’ interests are paramount, and if society wants a different benefit, society should bear the burden of getting it.

To help clarify the issue as I see it, let’s return to the Supreme Court’s decision in Brown v. Board of Education, a case that is often cited to suggest that settlement would not always be the ideal. To some, the proper question apparently is: "Would the country have been better off if the Browns and Topeka’s Board of Education had settled?" Perhaps not. But to me, as a practicing attorney and mediator, the proper question is: "Would the Browns and the Board and all the other litigants in the cases consolidated in Brown by the Supreme Court — the clients, i.e. — have been better off?" Would Linda Brown have been better off if, instead of litigating, her family had been able to resolve matters early on with the Topeka Board of Education?

This is not to suggest that litigants should be discouraged from fighting for a principle if they want to, and are able to garner the necessary support for their battle. I have never felt that litigants should be forced or coerced into settlement negotiations of any kind. See, e.g., my post of May 17, 2008, "Should Mediation be Mandatory?" There is certainly nothing wrong with individuals or groups choosing to fight passionately for a worthy cause. We need to remember, though, that while the creation of omelets may benefit society, the eggs are seldom better off afterward.

It is beyond the scope of this blog to do complete justice to this topic, but I think it would be beneficial if we started focusing at least some of the debate on it.

That’s My Money We’re Talking About!

This post is mostly for defense attorneys in tort litigation. Hopefully, however, plaintiffs’ attorneys will also gain some insight from it. It has to do with a twist on the so-called "endowment effect" described by Barry Goldman in The Science of Settlement: Ideas for Negotiators, ALI-ABA (2008), § 2.01(e). In a nutshell, the endowment effect is a quirk of human nature that causes people to dislike losing something they already have more than they like gaining something they don’t have. I.e., all else being equal, folks would rather not lose than win. It has been posited that the effect causes plaintiffs to make larger concessions in negotiation than defendants. See James A. Wall, Jr., & Suzanne Chan-Serafin, "Processes in Civil Case Mediations," 26 Conflict Resolution Quarterly 261, 266 (2009). The idea is that it is easier for plaintiffs to "give up" something they never had than for defendants to pay out something they do have.

Conversely, if plaintiffs have an "ownership interest" in an off-the-wall settlement amount fueled by unreasonable notions of value, they are more reluctant to accept less than otherwise. Smart plaintiff attorneys are aware of this effect and resist the temptation to over sell a case’s value to their clients.

Defense attorneys can take advantage of the endowment effect by making a reasonable offer in advance of mediation. By "reasonable," I mean something at the lower end of the range of values,* but still within the ballpark. See my discussion of so-called "reverse demand letters" in "Preparing (Your Opponent) for Mediation" (May 12, 2008). This offer should be made far enough in advance of mediation that plaintiff’s counsel has the opportunity to communicate some optimism to the client (e.g., "I’m encouraged by this offer; they’re not there yet, but I think mediation is likely to be productive"). Bolstered by the attorney’s qualified optimism, the plaintiff is more likely to start taking ownership of the offer. Given some time, the plaintiff will be inclined to start thinking about what he or she can do with that money. It stops being the insurance company’s money and starts becoming the plaintiff’s new pickup, remodeled kitchen, down payment on a vacation home, or — in some cases — the ability to take early retirement.

Given most people’s preference for not losing over winning, such a mind set is likely to lead to a greater reluctance to walk away from a settlement, even if the amount offered is "not quite there."


* See my post entitled "Ask Not for Whom the Bell Curve Tolls . . .."

Goodbye, Geoff

I want to add my voice to others who have expressed regret over Geoff Sharp’s decision to discontinue his very popular and always pithy web log (mediator blah . . . blah . . .). Geoff was one of the first to welcome me to the world of online posting last year. I will miss his insight.

Other Stakeholders

Mediators constantly exhort their clients to make sure that the proper decision makers attend mediation sessions — with good reason. It’s true that the presence of appropriate decision makers is probably the most important factor in successful negotiation — and, conversely, lack of participation by such folks is probably the biggest culprit in failed negotiation. However, attorneys and their clients should not assume that just because their party-affiliated decision makers are lined up their side is completely ready to participate meaningfully. In the mediation of personal injury cases, there are often outside stakeholders whose interests will also have to be considered. Health insurers and medical care providers with subrogation interests or liens, family members (or even banks) who may have loaned money to the plaintiff while he or she was out of work, and former spouses, are just a few whose unaddressed interests could have an adverse impact on the success of negotiations. And don’t forget that recent developments in the way the government views Medicare liens often make Uncle Sam the 800 pound gorilla in the room. See, e.g., Steve Mehta's post of April 22, 2009, entitled "Six Things That You Must Know (But Are Afraid to Know) About Medicare Reimbursement Rights: The Medicare Super Lien."

In my standard engagement correspondence I not only address the need for attendance by party-affiliated decision makers, but also include the following:

I urge you to also make arrangements with non-party stakeholders, such as lienholders, family members, etc., to bring them into the loop as much as possible prior to the mediation session. You should encourage such people to either attend or to be available by telephone during the session, if their decisions are likely to impact the success of the negotiations.

I like to explore this issue further with counsel when meeting with them separately in pre-mediation conferences. I’ve seen (too) many mediations falter in their final stages when the interests of outside stakeholders have not been adequately considered. E.g., time and again, dealing with liens by health insurance providers seems to be an afterthought. Consider the following fairly typical exchange in caucus between the mediator and the plaintiff’s team:

Mediator: "The defense says the bills they have amount to only $2,952.16, and they can’t understand where you get your claim that your client has incurred over $10,000. What does Anthem claim as its lien?"

Plaintiffs’ Lawyer: "Um, er, let me make a phone call."

Mediator (later): "So, what’s the verdict?"

Plaintiffs’ Lawyer: "My Anthem guy’s on vacation this week. We’ll certainly get that info, but we’re confident that our list is accurate and related to the accident."

At this point, it becomes obvious to the mediator (and probably to the lawyer’s client!) that not only has the lawyer dropped the ball on firming up special damages, but also will not be able to negotiate a compromise of the lien — at least not until later.

Lest anyone think I am singling out plaintiffs’ attorneys for criticism, defense attorneys are also obligated, in my view, to make sure that outside stakeholders are brought into the picture before a mediation. By the time of mediation all such stakeholders should have been identified, either through formal discovery or informal discussions with plaintiffs’ counsel. Defense counsel should not wait until the day of mediation to broach the subject of their participation with his or her counterpart on the plaintiffs’ side.

Bottom Line: All parties need to make an effort to see that the ducks are in a row before the mediation — assuming, of course, that they want to settle at some level.

Limitations of Common Sense

The concept of "common sense" is regarded in our culture as the most practical application of intelligence. Webster’s defines the term as "sound and prudent judgment based on a simple perception of the situation or facts."* Juries are exhorted by both judges and lawyers to use it when weighing evidence; parents tell their children to use it when they first learn to drive or start to date; and politicians urge citizens to follow it when going to the polls.

Unfortunately, common sense, like beauty, is very much in the eye of the beholder. Too often it’s used as a short cut to avoid analysis. Human nature being what it is, most people tend to rationalize that the result they want is the only "common sense" solution. Barry Goldman, in The Science of Settlement: Ideas for Negotiators, refers to this phenomenon as the "self-serving bias."† Until each side to a mediation understands why its opponents think the way they do, settlement will be difficult to achieve, regardless how much effort and skill a mediator may bring to bear.

At the risk of sounding platitudinous, don’t mediate until you’re ready. To be ready, you have to understand the other side’s "common sense" arguments almost as well as your own. And you have to make sure that the other folks are equally well prepared. Do the depositions; disclose the medical records; have frank discussions over lunch (or whatever) with opposing counsel. You don’t have to give away the store or disclose all your hole cards, but you need to make sure you know where your opponents are coming from and vice versa. Your chances of settlement improve when you are ready for mediation, but improve even more when all are ready. Why do you need to make sure your opponent is ready? Because a lawyer who is caught unprepared at mediation loses client control — and that’s not good for either side.

* Merriam Webster’s Online Dictionary (10th ed).

† ALI-ABA (2008), § 2.01(d).

We Got ‘Em Cornered!

If your defense team is so proud of its case that you truly don’t plan to offer more than nuisance value, you shouldn’t bother to mediate. Instead, you should courteously and frankly communicate that fact to the plaintiff’s attorney before a lot of time is wasted preparing for, paying for and attending a mediation. If the plaintiff secretly agrees with your assessment, you might quickly get the job done over the telephone. If not, well, that’s what trials are for.

Hiding your intention to play hard ball until the day of mediation is a sure-fire way to crater any negotiations. There are usually enough emotions bouncing off the walls in the plaintiff’s room during the mediation of a tough personal injury case; a defense team that wants to settle shouldn’t add desperation to the mix.

Unless you're determined to try the case, don’t put the plaintiff between a rock and a hard place. Always give them a reasonable way out. In over thirty years of practice, I have seen only one plaintiff just give up and walk away from a no-offer case, and only a very few simply fold and accept a nuisance offer. People who have their backs against a wall usually fight, even if it’s irrational to do so. And if they fight, sometimes they win. Remember Doug Flutie’s long bomb against Miami in 1984?

The Mediator as Dutch Uncle

I am always uncomfortable when asked to play the role of Dutch uncle by an attorney for a party involved in one of my mediations. The request is usually (but not always) made by the attorney for the plaintiff and goes something like this: "My client just doesn’t understand that a jury will never give her the kind of money she is looking for! I need you to bring her down to earth." I become even less comfortable if it appears that the attorney has been too chicken to discuss the matter frankly with the client and simply wants me to get him or her off the hook.

A cardinal principle of mediation is that it allows the parties themselves to decide their case, rather than having the decision turned over to 12 strangers. Nobody should either be coerced or manipulated into settling a case — even for their own good (as perceived by others). Having said that, I will sometimes — reluctantly — agree to "help talk sense" to the client, but only when I conclude that: (a) the client truly does not understand the risks; (b) I have the active support of the client’s own attorney, who has come to the same conclusion; (c) I believe that the other side’s offer is both fair and will not be improved; and (d) I believe it would do no good for the parties to adjourn and, after reflection, try again later.

Even with all of these factors in place, I personally prefer the wise grandfather approach, using reality-testing questions, over the more abrasive Dutch uncle lecture. The process of mediation will be respected only if the parties are persuaded instead of pushed.

TR as Mediator

Mention Theodore Roosevelt and most people conjure visions of action and energy, often with a strong militaristic streak. The charge up San Juan Hill, "Perdicaris alive, or Raisuli dead" and (perhaps most famously) "speak softly and carry a big stick" are some that come to mind. For some of us who are more familiar with a facilitative approach to dispute resolution, this hardly seems the stuff of which mediators are made.

Yet, despite his tough, no-nonsense image, TR was awarded the Nobel Peace Prize in 1906 for mediating the Russo-Japanese War the previous year. For an excellent discussion of this accomplishment, see James E. Fender, Roosevelt, the Mikado and the Czar: Theodore Roosevelt’s Mediation of the 1905 Treaty of Portsmouth, N.H.B.J., Vol. 46, No. 2, Summer 2005, p. 68.

Global Mediation of Tort and Insurance Coverage Cases

The so-called "tripartite relationship" arises when a liability insurance company retains an attorney to defend its insured in tort litigation. For the most part, the three members of the relationship (insurance company, defendant and defense attorney) are able to present a united front against the plaintiff or plaintiffs who brought suit. In such cases the defense attorney has no conflict representing both insurer and insured simultaneously; whatever differences there may be between the insurer and insured are not likely to complicate settlement discussions. The risks associated with not settling are limited to the traditional ones revolving around tort liability and damages.

A new set of risks is thrown into the mix when a tort lawsuit raises questions of coverage; e.g., do the facts of the case give rise to a duty under the insurance contract to indemnify and/or defend the insured? Unless the facts are fairly straightforward and clearly show that the policy does not afford coverage, most companies will not deny coverage unconditionally, but will instead pay for a defense, thereby keeping some control over the litigation, while reserving all rights to deny coverage later on.

While defending a tort action, a company will often retain separate counsel and bring another lawsuit (usually a declaratory judgment action) against its own insured to determine coverage issues. The plaintiff in the underlying tort case may be joined as a party in that action and will thus be bound by the court’s decision.

In such cases, the question arises: "Do we mediate before or after a decision on coverage?" The answer usually is: "It depends." Of course, if mediation comes before coverage issues are decided, the insurer(s), with separate coverage counsel, would have to participate for the process to have any chance of success.

I have heard some involved in such cases say: "There is no point in mediating the tort case until the coverage case is decided." But settlement of tort cases is almost always driven by uncertainty and risk. People and companies settle to avoid risk and uncertainty; therefore, the more uncertainty and risk, one can argue, the more mediation is likely to be successful.

Settlement usually happens when the parties come to grips with reality. If one of the realities is that there might not be any money available to the plaintiff, even if victorious, that is just another risk to be analyzed. Waiting until the coverage issue is decided might make the plaintiff’s case more valuable — or it might not. The effect is similar to that posed by a pending motion for summary judgment in the underlying tort case. Mediation often has a better chance of resulting in settlement if all parties in both cases come to the table before any of the coverage unknowns are decided.

On the other hand, in some cases the coverage questions are so complex — multiple companies, extended periods of exposure, different policy language, choice of law questions, etc. — that settlement is impossible (or extremely unlikely) until some or all of these issues are sorted out. For example, if because of all the unknowns the insurance company (or companies) will commit to paying so little money that the plaintiff feels that there is little to lose by not settling, it is probably best to structure the mediation to allow for advance clarification of some of the coverage issues.

Passing the Torch

In an article I wrote a couple of years ago ("Dealing with Insurance Company Claims Representatives"), I urged plaintiffs’ lawyers in personal injury cases to communicate early and often with the claims rep assigned by the defendant’s insurance company. I suggested they take a leaf from Willie Sutton’s book and "persuade, cajole, and negotiate with insurance companies 'because that’s where the money is.'"

There are other reasons why it’s a good idea to open lines of communication with the company as soon as the case walks in your door. One that is often overlooked is that, by doing so, an alert attorney is more likely to learn useful information as to how the company views his or her case. Company claims reps have varying levels of authority based on their experience, training and time with the organization. Typically, the newer claims people are assigned the cases regarded as routine; the people further up the ladder handle more serious cases, and have authority commensurate with how the exposure is viewed.

If you have been working a case for a couple of months, diligently sending medical bills, records and other documents to your opposite number at the insurance company, and learn that the matter has been reassigned to a more experienced claims rep, that is not an occasion for alarm, but a sign that you have their attention! Don’t sulk because you think you have to start all over again and educate a new person. Believe me, these people are usually quick studies who likely know a lot about your case already. When you learn that such a reassignment has been made, jump on it quickly and establish contact with the new person. Offer to answer any questions he or she may have. Such cooperation is likely to pay dividends when the time comes for serious negotiations.

No Excuse!

It is said in the Army that, when responding to questions put by superiors, there are only three correct answers possible: "Yes Sir,"* "No Sir,"* and "No excuse, Sir!"*

Rather than defend this blog’s AWOL status since last August by telling you how busy I have been, or how traumatized I was when the economy tanked, I will only say: "No excuse!" I’ll try to do better.

* or Ma’am, as the case may be.