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!