By careful preparation, strategic negotiation and unfailing optimism,
most every case can be closed through mediation
It is 10:25 a.m., and your client has
just arrived (25 minutes late) for the
mediation. The mediator is already in
the other room with your opposing coun-
sel breaking the ice and getting a better
understanding of the fine points raised
in their brief. Your case involves an egre-
gious set of facts arising out of an abrupt
termination of a 17-year employee after
being diagnosed with a frozen shoulder,
which required surgery and possibly a
long recovery period.
The personnel files show that the
plaintiff had a history of tardiness, for
which she had been repeatedly admon-
ished. Mediation is your chance to
demonstrate pretext and get your client a
respectable six-figure settlement before
you have to incur considerable costs in
the case. You are (understandably) upset
and embarrassed that your client is late
for the mediation and further stressed by
the fact that you were unable to reach
her to prepare for the mediation yester-
day.
Mistake No. 1: Failing to prepare
“Never cut what you can untie.”
— Joseph Joubert
Before you suggest mediation to
your client or opposing counsel, you
should carefully analyze whether the case
is likely to be subject to a motion for
summary judgment. If so, would the tim-
ing be best before the motion is filed,
during the long period while it is pend-
ing or after it is heard? This is, of course,
a measure of your confidence in success-
fully defeating the motion. Some cases
will simply not settle for their true value
until a judge has denied a motion for
summary judgment. Others may be sig-
nificantly devalued if, for example, the
judge is likely to grant a motion for sum-
mary adjudication as to causes of action
that provide for attorneys’ fees.
Discuss the timing of the mediation
with your opposing counsel to determine
if they will come to the table earnestly
before a motion for summary judgment
is filed or heard. Your client should also
be consulted on this issue to make a
determination of her level of appetite
for the risk associated with the motion.
A mediation is most effective at that
pivotal moment in time when enough
discovery has been undertaken that all
parties are roughly aware of the evi-
dence, but before every stone has been
unturned. Plan your initial discovery
strategically to reach that point before the
date of the mediation hearing. The fail-
ure to invest in your case sufficiently to
demonstrate your commitment to it sig-
nals a willingness to accept a settlement
that is less than the case’s full value.
In preparing, bring the salient evi-
dence with you to the hearing. Although
you may not have formal declarations or
depositions, a simple recording of an
interview of a key witness done on your
smartphone (with permission) can be a
clever tool. Be at least as smart and cre-
ative as your mobile phone!
There are no rules of evidence at a
mediation hearing, so consider this your
first mini-presentation of the facts and
law to effectively persuade your opposing
party (the decision-maker and the
lawyer) that there is a real risk of a signif-
icant verdict against them if they are
unable to resolve the matter in this infor-
mal and confidential way.
Many attorneys lose sight of the fact
that there is no proscription against ex
parte communication with a mediator. If
you have a troubling issue, call your
mediator and discuss it. In your pre-
mediation call, you will want to consider
whether a joint session, or a meeting
with lawyers only or clients only is neces-
sary or advisable.
If, for example, you have deter-
mined that the only way your client will
accept any amount of money is if she has
the chance to tell her former employer
about all of the outrageous misconduct
that went on in the work place, tip off
your mediator that a brief joint session
may be welcome or even critical to a suc-
cessful mediation. If, on the other hand,
your client makes a terrible witness, or
has a language or cultural barrier which
will make communication challenging,
inform your mediator that you wish to
avoid a joint session unless absolutely
necessary.
If you have concerns about your
client’s own ability to make decisions,
problems with certain evidence or discov-
ery issues pending, explain those to the
mediator too. Engage your mediator as
your ally instead of allowing the other
side to put you on the defensive.
Before the hearing, spend the time
preparing your client in the same way
you would prepare her for a deposition.
From coaching her on her story to mak-
ing sure she knows where to park her car
and when to arrive, your client should
present herself in the best possible light
on that day. This includes the critical
concept of managing your client’s expec-
tations.
Your client should be informed that
the mediation is generally a long process,
during which there may be hours of time
before any dollars are offered and true
negotiation begins. While you should dis-
cuss the range of possible settlement, you
should also prepare your client that there
may be new facts or wrinkles that come
up which may throw your early evalua-
tion out the window. Prepare her to be
flexible and open-minded.
It is crucial that you prepare yourself
by sorting through and providing all of
the key evidence supporting your theo-
ries on both liability and damages. If you
have a critical deposition transcript,
bring it, highlight the relevant sections,
and be prepared to show the video of
those highlights to your mediator and to
the decision-makers.
If your case rests upon personnel
records, employment agreements or
handbooks, do not depend upon the
employer to have them on hand. Bring
them to the hearing and be prepared to
make copies of the relevant portions for
the mediator to use as leverage.
Finally, if you have medical bills or
other evidence of damages, make a sum-
mary, find out what liens there may be
on your case, and provide that documen-
tation to both the mediator and your
opposing counsel in advance of the
hearing.
Since so many more cases are
resolved through mediation rather than
trial, preparing for a successful media-
tion should be no less of an effort than
preparing for trial. Consider trying out
your trial theme, be prepared to present
evidence that will substantiate your
claims where they are disputed, and be
prepared to come up with some logical
evaluation of a range of damages that
might be assessed. If possible, come
armed with reports or stories of recent
verdicts or settlements on similar facts or
legal issues.
Mistake No. 2: Failing to plan your
negotiation strategy
“In business, you don’t get what you
deserve, you get what you negotiate.”
— Chester L. Karrass
Now it is 2:30 p.m. and your client
is understandably steamed at you since
you chastised her earlier for arriving
late, and you still have no offer in
response to your initial demand of
$1.25 million. While you are deter-
mined to get to a “mid-six figure settle-
ment” on this case, the defendants seem
to be bogged down in the details of a
dispute as to who bears the liability for
the termination, since the company was
sold after the plaintiff was fired. There
seem to be unresolved coverage issues
about which carrier has primary expo-
sure on liability and whether they will
need to litigate the rights of the various
carriers under a declaratory relief action
before you can get plaintiff ’s settlement
paid.
One of the ways you can best
address these detours in the negotiation
is to contact each of the opposing coun-
sel before the mediation, assure yourself
that all of the appropriate decision-
makers will be present and that they are
all aware of the opening demand and
how you arrived at it.
If there is a need, for example, to put
an excess carrier on notice, you should
ask the defense counsel whether there is
excess coverage and then make clear that
your demand will exceed the primary pol-
icy limits. If there is not, you may want to
consider making your initial demand
within policy limits in order to facilitate
breaking through what may be a difficult
conversation between insurer and insured
in the other room where there is a policy-
limits demand made, exposing the
insured to excess at the time of a verdict.
In formulating your initial demand,
you should assess liability, damages and
the likelihood of collecting damages. In
other words, with a defendant who is a
small business that is struggling finan-
cially and has no insurance, making an
initial demand at $1 million will only
serve to discourage defendant from
negotiating at all.
If there is an insurance policy of
$1 million and no excess coverage, then
making an initial demand of $4.5 million
may be equally futile. Your initial
demand should be calculated to entice
the opposing side into negotiating with
you. Without preparing yourself as to the
availability of funds, your opening offer
may have an effect of shutting down
negotiations before they begin.
Start with a reasonable initial
demand based upon your knowledge of
the claims, damages and the particular
defendants against whom you have
brought the lawsuit. The initial commu-
nication is crucial to set the tone for the
beginnings of the negotiations.
It is always a mistake to approach
the mediation hearing with arrogance
and without taking the time to develop a
rapport with your negotiating “partner”.
Though you and the opposing counsel
may be adversaries in motion practice
and at trial, do not lose sight of the fact
that negotiation is a collaborative process
that requires a willing partner. A failure
or refusal to meet with defense counsel,
extend your hand and offer some
encouragement about the process that
you are entering into is a mistake, which
cannot be easily remedied at the end of
the day when you hit an impending
impasse.
Part of any negotiating strategy must
be a determination to remain flexible
and adjust as needed. If your expectation
was that defendant would respond to
your initial demand of $1.25 million with
an offer of $100,000 and instead there is
an offer of $7,500 at 2:30 p.m., you
probably will not want to reduce your
demand by your expected $100,000 in
response. Use your mediator to translate
the basis for that low offer. Are there cov-
erage issues, which remain unresolved? Is
there some evidence that undermines the
liability or damages in your case about
which you are unaware? If, for example,
you learn that there is a $1 million policy
and no excess coverage, you may want to
go down to $1 million. If, on the other
hand, there is no insurance, you may
want to offer a bracket designed to
demonstrate your willingness to reduce
your demand more quickly once a rea-
sonable offer has been made.
There are times when the most diffi-
cult task in mediation is to summon
some humility and listen to the mediator
and opposing counsel to understand why
they are evaluating your case so differ-
ently than you are. If necessary, have
your mediator deliver the bad news to
you and then to your client, so that your
client does not see you at fault for the
way the negotiation is proceeding. Admit
to the mediator that you cannot refute all
of the defenses raised, but be fully pre-
pared to refute enough of the defenses to
persuade the mediator, your own client
and your adversary that your case has
merit and deserves a respectable settle-
ment.
Everyone has a different advocacy
style, but the most effective advocates both
give and command respect. In a media-
tion hearing, this will mean an open-
mindedness to honest misunderstandings,
cultural differences, communication
breakdowns and limitations imposed by
outside forces about which you may know
nothing at all. A critical part of your nego-
tiation strategy should be to include
patience, strive to understand that which
is unstated and to be prepared for the
occasional low points that will cause you
and your client to recalibrate your strategy
if you are to get to the finish line.
Part of the advantage of mediation is
that it allows you to learn the informa-
tion upon which your opponent is relying
in defending the claim in a confidential,
informal way. Listen to it. It will help you
to evaluate and re-evaluate your chances
of success at trial.
In terms of the negotiation itself,
there are several techniques that you can
employ to maintain some control over the
negotiations. In the hypothetical where
you made an initial demand of $1.25
million and the defense countered with
$7,500 at 2:30 in the afternoon, you may
want to be prepared with a series of
ranges or brackets which would be accept-
able to you and your client. If you had
pre-determined that you would not settle
for less than $100,000, you may want to
offer a range of $250,000 to $750,000,
but be prepared to also offer a lower
range of $100,000 to $500,000. Failing to
plan out a series of reasonable moves is a
mistake. For example, if you offer a brack-
et of $25,000 to $125,000 in a case which
you expect to bring in $100,000, you can
be almost assured that the case will settle
for something less than $75,000, based
upon your proposed mid-point. Don’t be
afraid to use a calculator, but look at the
midpoints before you articulate a range
that sells your client short.
A common mistake is to give too
much negotiating power to either the
mediator or your opposing counsel by
inviting them to offer a range first, or by
entering into too low of a range at the
outset. In this example, you could have
offered a range of $50,000 to $150,000,
signaling a mid-point of $100,000. But in
response, the defendant might well ask
for a range of $10,000 to $50,000, thus
anchoring the negotiation at a five-figure
number. Failing to have the courage of
your convictions and taking the lead on
the numbers in the proposed ranges is a
common mistake that should be avoided.
It is also a mistake to underestimate
your mediator’s listening skills and power
to “escort” the negotiation towards an out-
come that you channel would be accept-
able. Like psychologists and other profes-
sionals, mediators are trained to listen to
every word you and your clients say. If, for
example, you suggest early on that your
client would accept between $60,000 and
$80,000 in a settlement, do not expect the
mediator to push the defendant too hard
once they make an offer of $70,000. It is
okay to be honest with your mediator, with
an understanding that all negotiation is
confidential, but it is really difficult to get
your mediator to change the course of the
negotiation if the train is steering towards
an acceptable range and then you com-
municate it is no longer acceptable late in
the day. Be clear but fair to you, your
client and your mediator.
Another mistake is to leave money
on the table by failing to test that “last,
best and final” offer. Here is where it is
advisable to engage your mediator in
some testing before you accept a “final”
offer. Most mediators will not lie to you
about whether there is any more money
on the table, but they won’t offer it to
you if you don’t ask for it. It is worth the
extra half hour it can take to assure your-
self that you have gotten the highest set-
tlement you can.
Mistake No. 3: Failing to prepare to
close the deal
“My father said: ‘you must never try to
make all the money that’s in a deal. Let
the other fellow make some money too,
because if you have a reputation for
always making all the money, you won’t
— J. Paul Getty
have many deals.’”
It is now 6:30 p.m., and you are
starting to believe that you may not be
able to close the gap between your cur-
rent demand of $550,000 and the defen-
dant’s global offer of $55,000. You need
to call your wife and let her know you
will be late for dinner. You have asked
the mediator to make a mediator’s pro-
posal, but she is reluctant to do it
because she thinks any proposal over
$100,000 will be rejected by the defense.
Your client is growing impatient and has
child-care issues that will require her to
leave very soon. What do you do?
While it is awkward to initiate a joint
session after a long day in separate cau-
cus rooms, a late day counsel-only meet-
ing can be an extremely effective means
of breaking impasse. Ask your mediator
to facilitate a meeting with your oppos-
ing counsel, extend a hand, smile polite-
ly and level with him. Often times, he
will want to close this deal as much as
you do.
Be prepared to suggest some non-
monetary terms that may sweeten the
deal: a willingness to take payment over
time, an offer to extend critical deadlines
so that he can take care of the lingering
issues, the value of converting your
client’s termination to a voluntary resig-
nation, or taking the payment in the next
tax year.
Often, these creative brainstorming
meetings between counsel on non-mone-
tary issues can pave the road to an agree-
ment on the larger issue of damages.
Failing to earnestly acknowledge the hard
work the other side has done to get a
reluctant client from $7,500 to now
$55,000 is also a mistake. Thank your
opposing counsel and recognize that they
are not making the ultimate decision, but
likely are urging their clients to settle this
lawsuit just as you are.
Assuming that you get to an agree-
ment, it is a mistake to overlook the criti-
cal details involved in its documentation.
According to mediator Nikki Tolt, many
trial attorneys do not understand the way
that worker’s compensation figures into
settling an employment dispute. Is there
a lien in the civil case? Is worker’s com-
pensation the exclusive remedy for dam-
ages such as emotional distress? What is
the interplay between worker’s compen-
sation and FEHA? How does a pending
worker’s compensation claim affect dam-
ages in your civil case? What is the lan-
guage that would either extinguish the
lien or release the claim? Can it be
carved out? What is the value of an
enhancement under the worker’s com-
pensation system? Does the civil lawyer
have the right to make a global settle-
ment, which includes a pending worker’s
compensation claim?
It is a mistake not to arm yourself
with answers to all of these questions
before the mediation begins. If there is a
settlement agreement made late in the
day of the hearing, the plaintiff ’s work-
er’s compensation lawyer’s office might
be closed for the day! Contact the work-
er’s compensation lawyer before the
mediation and inform yourself on these
issues fully.
Another oft-misunderstood issue,
according to defense attorney Jeremy
Mittman of Proskauer Rose is the tax
allocation of damages in settlement of an
employment case. While insurance carri-
ers are generally not opposed to making
settlement payments in a lump sum,
employers usually have some justifiable
concerns that there must be at least some
allocation made towards wages, subject to
tax withholdings in order to avoid tax
consequences for both employee and
employer.
Failing to consider what allocation
you would deem fair and acceptable to
your client under their particular finan-
cial and tax circumstances is a mistake.
Encourage your client to discuss this with
their accountant, or inform yourself as to
the tax consequences of an employment
settlement so that you are prepared to
request a reasonable allocation be made.
You should always have an early dis-
cussion with your own client about your
attorney’s fees in the event of a settle-
ment, too. It is painful for mediators and
lawyers to be having discussions at the
literal eleventh hour about the costs and
fees.
It is a terrible mistake to have mis-
managed your client’s expectations to
such an extent that the attorney-client
relationship is deteriorated at the end of
a mediation and she is demanding for
you to reduce your already discounted
rate in order to make the deal that has
been negotiated with the defense palat-
able to her. Discuss the net to client early
on in the mediation so that your client is
not surprised or disappointed at the end
of the day.
Finally, counsel should come pre-
pared with a term sheet or template for
drafting an acceptable long-form agree-
ment, with all of the necessary terms,
including language regarding the Older
Worker’s Protection Act, carve outs for
any worker’s compensation claims, han-
dling of any liens, including a Medi-Cal
lien if applicable and all of the necessary
language involved for the indemnity of
that lien, confidentiality language and
language which will allow you to enforce
the settlement should there be a breach.
Before the mediation, you should have a
fair idea of how any outstanding liens
can be negotiated and at least be able to
set forth all liens and how they will be
paid upon settlement of the case.
Before beginning the mediation be
prepared to conclude it by either bring-
ing all necessary forms, having access to
an acceptable template electronically, or
specifically asking the mediator or your
opposing counsel to have those forms
ready. It is a mistake not to do so.
Mistake No. 4: Failing to remain open
to a later closing
“He who has learned to disagree
without being disagreeable has discovered
the most valuable secret of a diplomat.”
— Robert Estabrook
It is now 8:00 p.m. and the decision-
maker for the defendant has had to make
his flight home. You have worked out a
lot of the non-monetary terms, but
defendant has only offered you $72,000
and your client will not accept anything
under $100,000. Your last demand was
$185,000. Some frustrated attorneys will
give up, slam doors, pack up and storm
away. This is always a mistake. It is disre-
spectful to the mediator, the opposing
side and your own client. What is worse,
it makes it all the more difficult to bridge
the gap that remains following the medi-
ation session.
Instead of losing patience when it
appears you cannot get to your “bottom
line,” plan your appropriate exit strategy
in advance. Do you want to ask your
mediator to make a reasonable proposal
that will remain open for 24 hours? Do
you want to again meet with opposing
counsel and suggest that you have some
flexibility in your “bottom line” demand?
Do you want to arrange to speak through
the mediator and continue the dialogue
by phone once the claims adjuster gets
back to Connecticut? Make a plan to
exhaust every possibility, even if it
means taking a few more depositions or
getting a bit closer to trial and then
pre-arranging to revisit the discussions
30 days later.
By careful preparation, strategic
negotiation and unfailing optimism,
most every case can be closed through
mediation. Although your clients may be
constrained by the confidentiality provi-
sions of the settlement agreement from
disclosing details of the settlement, they
will nevertheless sing your praises loudly
to their friends and colleagues for repre-
senting them flawlessly and getting them
the satisfaction that they deserve without
the risk, uncertainty, expense or delay of
trial.
In this age where more clients have
real experiences in mediation than in
trial, you do not want to make the ulti-
mate mistake of failing to take that criti-
cal day to showcase what a truly experi-
enced and skilled advocate you are.
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