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.

Anger Management in Mediation

The best way to control anger in mediation is not to get mad in the first place. And the best way to accomplish that is to come to the table with no preconceived notions or expectations about what the other side is going to do or how long the session is going to take. If you don’t expect anything, you won’t be upset when you don’t get it.

This admonition should not suggest a lack of preparation. As I have indicated in the past (e.g., "To Every Thing There Is a Season"), thoroughly knowing one’s case is crucial to success. But knowing one’s case is not the same as knowing what the other side is going to do.

Some people come to mediation with expectations that are based more on hope than reality. Such folks regard unreasonably high demands or low offers right out of the box as evidence that the other side sees the case so differently that settlement is unlikely. This can be frustrating and often prompts angry reactions — particularly if the parties have allowed only a couple of hours to get the job done. Typical comments are: "They’re obviously not bargaining in good faith!" or "This is a complete waste of time!" or "We might as well end it right now and go home!" or (perhaps worst of all) "I’ll show those cowboys/cheapskates," followed by an equally unreasonable counteroffer.

But unreasonable positions do not always indicate unreasonable expectations. Often the other side is simply trying to find out in what ballpark you think the game ought to be played. Just testing the waters, so to speak. After all, until things shake down a bit, your opponents need to know whether you are more worried about your case than they are about theirs. Most plaintiffs' attorneys, for example, know that if they don’t ask for a lot of money they will never get it.

I generally regard the early stages of a mediation session as a time for testing. Sometimes this phase has a lot of posturing, can resemble a game of "Chicken," and can last for hours before the parties move into settlement territory. For this reason, I have found it best when scheduling mediations to allow plenty of time. Open-ended scheduling is best. When people start looking at their watches, the chances for resolution go down.

When you feel the other side is making unreasonable demands or offers, don’t get mad at them. They have a perfect right to ask for as much or offer as little as they want. If it turns out that they have just been testing you, the case will probably settle. On the other hand, if they really believe in their position and you don’t, the case won’t settle, but nobody will be any worse off for having made the effort. See my earlier post, "The Goal of Mediation Is Not (Necessarily) Settlement," and Chris Annunziata’s on the same subject.

Don’t Pitch to the Mediator

Remember Milo O’Shea’s character in The Verdict? He played the partisan judge with the Irish brogue who urged Paul Newman to take the offer on the table by saying: "I meself would take it and run like a thief!"

Unfortunately, this is how many — both in and out of the legal profession — still think mediation works. See, e.g., Geoff Sharp’s recent post on mediator blah ... blah . . .. These folks pitch their arguments toward the mediator, rather than the other side. For some reason, they think that the opinion of someone who has only recently been exposed to a brief snapshot of the facts will carry a lot of weight with the opposition.

Such a ham-handed approach often makes the other side respond with its own attempts to sway the mediator, causing the session to become a point-counterpoint debate refereed by the person who knows the least about the case!

The prize that people need to keep their eyes on is making believers out of the opposition. Therefore, it is far more productive for the parties and their advocates to direct their arguments and efforts toward them, rather than to the mediator.

Lawyers as Peacemakers

Say the word "lawyer," and far more people think of "Whiplash Willie" — the unscrupulous ambulance-chaser portrayed by Walter Matthau in The Fortune Cookie — than of Atticus Finch. Google™ the term "lawyer jokes," and you are rewarded(?) with almost 600,000 hits.

Against this backdrop of popular culture, it may be helpful to remember Abraham Lincoln’s admonition to a group of law students more than 150 years ago:

Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser — in fees, expenses, and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough.*

I was gratified to hear one of my colleagues, Rob Howard of Henniker, NH, demonstrate the other day at a meeting of our local Bar Association’s ADR Section that Lincoln’s advice is still followed. The topic for discussion was how to foster a mediation mind set in the public. He stated that he has been counseling his clients to make peace since he started his practice more than thirty years ago. When he said this, he seemed surprised that the concept would be regarded as anything but obvious. As far as he was concerned, this is what lawyers do.

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