By Charles W. Ross
Many litigation-based mediations are purely “distributive” in nature. Settlement is achieved through negotiations that lead one party to pay money to another in order to end a lawsuit. Personal injury cases, construction litigation, employment claims, and business disputes often fall within this distributive arena, where position-based bargaining over money is the task at hand.
If the objective of such negotiations is to reach a “number,” should trial counsel inform the mediator of a party’s “bottom-line” figure? If the “best number” is disclosed to the mediator early in the mediation process, will that expedite settlement? It is my view that the answer to these questions is “no.”
In almost every mediation, the parties begin their negotiations with a final number in mind, and they usually expect that the other side must reach their figure if the case is to settle. However, the real truth is that these targeted numbers almost never work at mediation – the plaintiff’s “lowest number” is always higher than the settlement limits formulated by the defendant or its insurance carrier. If both sides simply hold their initial positions, impasse is almost guaranteed.
Since each side’s “walk-away” numbers do not overlap, focusing on these numbers as a strategy for settlement is unproductive. By revealing such information to the mediator, and by discussing the targeted outcome during mediation, the bottom-line number becomes fixed, positions harden, and the figure is given an unwarranted importance.
The real magic in mediation happens after the parties reach their original targeted numbers and then elect to continue negotiating to close the settlement gap. This occurs when lawyers and their clients use mediation to explore and re-evaluate their positions in the litigation. Discussions among the mediator, counsel, and the client about the strengths and weaknesses of the case; the risks of an unfavorable result at trial; costs of continuing the lawsuit; the challenges of collecting a judgment; and the time and emotional demands of litigation are all useful topics. The parties are encouraged to compare their settlement opportunities with the trial option and select the path that works best for them. Although the party’s right to self-determination is paramount in Florida mediations, a conversation about such issues helps the client make informed and rational decisions about settlement.
When these re-evaluations occur in an honest and open fashion at mediation, new bottom-line numbers should emerge, and they are more likely to result in settlement. Stated differently, a party’s walk-away number at the beginning of the mediation will change over time, and that figure transforms into a better figure at the end of the day if settlement is that party’s objective.
