We Don’t Know What We Don’t Know

Amy Lieberman

By Amy L Lieberman

Plaintiff opens negotiations in mediation with a demand for $250K. Defendant opens with an offer of $5K. Said the defense counsel: “This case will never settle. We just aren’t in that range.”

Does the plaintiff really intend on sticking in that range? Defense counsel ultimately increases to $10K and says he can’t possibly get any more. That’s it. “Last, best and final.” Does “last, best and final” really mean last, best and final?

The case ultimately settled for $15K. What can we learn from the dynamics?

Here’s what is important to remember: We don’t know what we don’t know. If the mediation is early – i.e., prediscovery – the lawyers know, of course, that they have not yet found out all the facts and pinned them down. But, there are more unknowns than just facts that might emerge in discovery. Making assumptions about positions, drawing conclusions based on those assumptions, and acting on those – by giving up on settlement, and plowing full speed ahead in court – can be a costly mistake.

HERE IS A LIST OF FACTORS WHICH MAY INFLUENCE OUTCOME.

Actual and Obtainable Authority. Is there a person to call with more authority? Is that person available during the mediation or are they on the east coast in a different time zone?

Financial Resources. For a plaintiff on a contingent fee basis, money may not be an issue. For the plaintiff paying hourly, this could be a significant factor. Is the plaintiff employed, or is there a reasonable likelihood of employment? Does the plaintiff have huge outstanding debt? And, while defendants often factor in costs of defense, for some, these costs are a non-issue because they are routinely budgeted for. In other cases, costs of defense maybe a non-issue due to significant financial resources.

Emotional Stability. Litigation is draining. It takes longer than most parties anticipate. How long has the case been going on? How exhausting has it been? Are the parties at peace in other areas of their lives? Is the litigation giving them a purpose or is it a constant distraction? What is their support system? Has needed counseling been obtained?

Health. In one mediation, the plaintiff told me: “I really cared about this case when I filed it. We’ve asked for $500,000, but I want to tell you, last summer, I fell off a horse and was hospitalized for six weeks. It took me forever to recover … it changed my outlook. I truly don’t care what I settle for, it’s not important to me anymore.” This shift was never communicated to the other side, but it certainly made the case easier to resolve.

Concern about Precedent. Are there similar claims that I have been asserted or threatened against the defendant? This can raise a concern that the outcome will potentially influence settlement of other claims, notwithstanding any confidentiality agreement.

Relationship between Attorney and Client. Does the client trust counsel’s advice, or are counsel and client not on the same page – resulting in what are affectionately known as client control issues? Is this a new corporate or insurance client for an attorney, so there is no history of a trust relationship?

Internal Acknowledgement. Has the defendant internally acknowledged a mistake has been made, even though all the while steadfastly maintaining that there is only a very small risk of liability?

Risk Aversion. Faced with the same risk analysis, different clients may very well approach resolution differently. One with a high-risk tolerance might be delighted to charge forward with a 50/50 chance of success, whereas another with a lower tolerance might not want to take the chance.

MINING FOR GOLD

Mediators talk about what goes into making up each person’s perspective. We emphasize that a party tends to tell their story as if it is fact – when, in reality, it is a blend of fact, recall, feelings, what we heard, and what our friends, families, colleagues or lawyers have told us. Perspective is even broader – it includes the factors listed above, and perhaps others.

The point is that these factors are not raised in pre-mediation memos, and often not shared in initial caucuses.

And so, the mediator’s job is (1) to mine for gold, continually asking questions to determine what is important to each party; and (2) to assume a likelihood that all influencing factors are not being shared, and thus (3) to deploy all available tools, such as evaluation of legal positions, risk analysis, and costs of moving forward, both financial and emotional; establishment of rapport; use of empathy and compassion; and provision of information on what others have done to settle similar cases.


AMY L LIEBERMAN IS A FULL-TIME PROFESSIONAL MEDIATOR OF EMPLOYMENT AND BUSINESS CONFLICT. SHE HAS REPEATEDLY BEEN LISTED IN THE BEST LAWYERS IN AMERICA, SOUTHWEST SUPER LAWYERS, AND ARIZONA’S FINEST LAWYERS IN ALTERNATIVE DISPUTE RESOLUTION, AND IS THE AUTHOR OF THE BOOK, “MEDIATION SUCCESS: GET IT OUT, GET IT OVER, GET BACK TO BUSINESS’ VISIT WWW.INSIGHTMEDIATION.COM OR CALL AMY AT (480) 248-3366 FOR MORE INFORMATION.