Mediation Tip: Preparation for the "valuation" discussions at mediation
I do pre-mediation calls before mediations, in fact I think they are so important that I set aside a day to have a separate call with each lawyer in each of the week's mediations.
An interesting "trend" has been observed, specifically an absence of discussion about each side's valuation views, in advance of mediation. You may be thinking, "Well, isn't that something left to the day or mediation?" and you would be right. However, there are circumstances where an advance discussion would have improved the process or length of the mediation, and perhaps the outcome.
What are these circumstances?
(1) Whenever there is a very large opening demand, especially when it might not have been anticipated by the other side (for example, in a seemingly low dollar damage case).
(2) Perhaps more importantly, when a previously given demand is being increased, or a prior offer is being reduced.
(3) When it is or may be known or anticipated that a defendant is not financially strong.
(4) when a policy limits demand is being made;
(5) when there are unique circumstances to your case's valuation, for example, where you intend to give a "very realistic" opening number, and move more slowly.
Why do any of these matter?
We can start with the unexpected high valuation case. Let's say it is a personal injury involving a car accident with expected soft tissue damage, abrasions and perhaps some broken bones. Both sides are aware of the usual verdicts and settlement values for these types of injuries and claims. However, plaintiff's counsel believes that a rare condition diagnosed in the plaintiff, was caused by the accident. What might have been a low to mid 6 figure case, is being escalated to well into 7 figures. However, there has been no discussion between counsel about this "extra" claim being made.
The defense lawyer and carrier have already talked at length, evaluated the injuries, and arrived at a range of settlement authority. They are not prepared for the substantial amount Plaintiff is actually seeking. Plus, they need time to gather more information about this condition, perhaps get more discovery or depositions. It may happen that adjusters with higher authority need to be brought in--whatever the scenario, no settlement that day.
Next is the demand or offer that was already given but is being revised without advance notice. This has occurred more commonly in cases where an opening demand or offer was given before mediation, but is being revised up or down. This has happened a number of times in employment cases, particularly the "higher risk" cases such as disability and sexual harassment related claims.
Usually the altered number is justified by counsel because of additional costs and fees incurred between the giving of the number, and mediation. Sometimes a lawyer just got ticked off at the opposing lawyer for not settling earlier. In some cases, discovery, depositions, documents, have now materially supported one side's position, so they feel more bullish and change their earlier number.
Whatever the reason, if it has not been raised earlier with the opposing attorney, the outcome is pretty uniform: Either a threat to cancel mediation or it does get cancelled, or because it is too late to cancel without a fee being charged, mediation goes forward, but attitudes are soured, motivation to settle diminished, and "pisstocity" levels are high. The affected (and/or offended) side, will focus throughout the day on how long it takes to get back to the number they were prepared for. The mediation becomes about the un-disclosed sizable increase/decrease in the demand or offer, that has upset the decision-makers.
We are not here discussing the simple concept of a difference of opinion on valuations. That is to be expected in any negotiation, otherwise you would not need a mediation or settlement conference. We are here discussing any significant increase or decrease from a prior number that your opponent is relying on to be at the mediation, or the out-of-ordinary, or unanticipated, more dramatic size of a demand or offer.
In all of the above scenarios, the outcome could have been much different. Here are some suggested ways to improve the outcome: Have an earlier discussion with your opponent about the need to alter the original offer or demand. The best time for the dialogue is at the time everyone is discussing mediation. Second best would be to notify your opponent, as soon as you realize the valuation needs to be altered in order to serve your client's interests better. I always ask lawyers if they have discussed their "high 7 figure", or "nuisance value" valuations, with the other side. Many have not done so. Some say they have, but the other side denies it. I recommend not only having the dialogue but also notate it for yourself, or otherwise memorialize it.
You can also contact and engage your mediator to help in providing this advance information. I have done so many times, and labeled it within the purview of mediation privilege. Even in the event of angering the other side, at least they have more time to process and act on the change, including getting their client or carrier better prepared.
Another suggestion to improve the mediation experience is to give a demand or offer, solicited or not, before the mediation. If you are on the defense side, ask for a demand. If you are on the plaintiff side, look at the positive effect of giving an opening number ahead of mediation. It inspires good relationships with your opposing side, and positive feelings despite the difference in perspectives.
In a recent case, the lawyers went up several hundred thousand dollars, from the number they had given their opposing counsel only three (3) weeks earlier. They did not let me know until we were at mediation. These lawyers were totally perplexed when I told them the impact it would have on the other side, and said that the other side should be prepared for this new number. However, when I notified the other side, they were beyond angry. It nearly blew up the mediation. In addition, it completely soured their view of the trustworthiness and reputation of the other lawyers.
An example of a different situation with a positive outcome, involved a plaintiff lawyer in an employment case, who had given an opening number well in advance of the mediation. After meeting in their room, I excused myself to go to the defendant's room. She said I first needed her opening number to be prepared. I said "but you already gave your opening number." She said this was her revised demand. She said she lacked patience for the usual two hours of "bull" at the start of mediation, so she gave me a number representative of two moves down. She requested Defendant to do the same. Defendant was surprised, but complied. We made quick progress, and were then able to focus on the "real" disparity and resolve the case.
To sum up:
No one likes change. People like to be prepared. Everyone wants to look good to their clients and superiors. When someone else pulls the rug out from under someone else, it upends them. Everyone wants to do their best for their client. Think about how you would like the mediation to proceed, and how you would like to be treated, and proceed accordingly.