As a final summary post on this year’s California International Arbitration Week, today we’ll be covering mediation and how to make most of the mediation process.
Mediation and settlement was a big focus of the conference. One speaker notably stated he believed every dispute, no matter the industry or dollar value, should settle before going to a trial or arbitration hearing. Why? Litigating for an extended period of time is mentally and financially draining, and litigation involves inherent risks – there is no guarantee a judge or jury will agree with your version of the facts and, in the international context, there’s no guarantee the future judgment will be enforceable or 100% collectible. Conversely, settlement and mediation can provide relatively fast results and finality to a dispute.
What is Mediation?
Mediation is essentially a conference in which disputing parties sit down together, generally with a neutral third party, to see if they can resolve their dispute outside of a court. When reasonable minds prevail, an effective mediator (who is often a seasoned attorney or a retired judge) can work with the parties to see the strengths and weaknesses of their cases, the cost vs. benefit analysis of filing or continuing a lawsuit, and what settlement options are available. Importantly, a mediator cannot make the parties settle – it is truly up to the parties to put their best case forward and to participate in their mediation in good faith.
The timing of mediation is crucial. If mediation is scheduled too early in a case – before the parties have had a good chance to digest the other side’s arguments and best facts, it’s less likely to to succeed. If mediation is scheduled at an appropriate time, which is usually after some discovery has been completed (but perhaps before the parties have drained a ton of resources into the litigation process), the parties are typically better equipped to understand the inherent risks and be in the right state of mind to negotiate what they believe to be an acceptable settlement.
Tips for a Meaningful Mediation
Mediations often take all day (sometimes, even multiple days) and my law firm’s dispute resolution team has witnessed the gambit of model and no-no behaviors over the years. Here are some general tips for how clients can best prepare for and conduct themselves at a mediation:
1. Be Prepared. Most mediations begin before the actual day of – briefs breaking down the facts, legal arguments, and posture of the case are typically required to be submitted to the mediator to help the mediator become familiar with what’s going on, and attorneys often engage in settlement negotiations beforehand as well. It’s important for clients to review and have knowledge of these things because they are just as much a participant in the mediation as their attorneys. It is also important for clients to make sure they and their attorneys are on the same page in terms of what they expect to happen and what their goals are – pretty much every lawyer has had the situation where the client comes in the morning of the mediation and decides they want to take a “hard stance” and start by demanding millions of dollars more than what was discussed, or conversely, wanting to insist that they didn’t do anything wrong and shouldn’t have to pay a dime. The more a client is in tune with their team, the more efficient and effective a mediation typically will be.
2. Tell the Truth. This is a general rule in litigation, but there is a fine line between “puffing” and lying. Of course, focusing on the strengths of a case is important and necessary – mediations are negotiations, after all! But lying or stretching the truth too far will likely be counterproductive and cause the mediator to become skeptical of a client’s position. At the end of the day, mediators are humans and their ability to push one side or both sides of a dispute to a settlement is absolutely affected by how they perceive the case themselves.
Be receptive. It’s guaranteed that clients will hear things they don’t want to hear at mediations. Why? Because the mediator’s goal is to get both sides to compromise – and they can’t do that unless they bring light to bad facts or weak arguments. This is not to say that clients should run away from any fight. Clients should not let themselves be bullied and question what they’re hearing, but it’s not helpful to anyone for a client to dig in their heels and stop listening to what they’re being told just because they don’t like that the mediator isn’t 100% on their side.
3. Don’t Give Up Too Early. As I mentioned earlier, effective mediations often take all day or multiple days, and there can be several impasses during that time. Feelings of “this will never work” or “we will never reach a middle ground” will inevitably come up. It’s important to remember that negotiations take time and require mental breaks. Again, this is not to say that everyone who goes to mediation must settle – we’ve all attended mediations where everyone is making their best efforts to settle and it just can’t happen. It’s more to say that mediation is a process (and sometimes, an uncomfortable process), and it’s important to remember that lulls and steps backward are pretty normal.
4. If You Succeed in Settling Your Case at Mediation, Get a Settlement Document Signed Before Everyone Leaves. This is critical because everyone involved is usually fatigued by the time settlement happens. I’ve personally had to stay up until 3:00 a.m. to ensure a settlement document was signed before everyone left. But, this is something that cannot be skipped – especially, when the settlement terms are numerous or complex. Hashing out terms for another day, or leaving questions unanswered, can bring the parties right back to where they started (in a contentious position) and settlements can unravel because of it. Work with the mediator to hash out and write as much of the settlement as possible so the parties can walk away with closure and a sense of true resolution.
