Saturday, July 25, 2009

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.

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