Monday, December 23, 2024

Toolbox Talk Series Recap - The Mediator's Proposal

In our final edition of the year of Division 1's Toolbox Talk Series on December 19, 2024, Matthew Argue and Gene Witkin discussed the use of the Mediator’s Proposal to bridge any final gaps to settlement between parties to a mediation.  For those unfamiliar, a Mediator’s Proposal is a settlement proposal that the mediator makes to all parties to the dispute simultaneously.  Each party then advises the mediators in confidence whether they accept or reject the proposal.  The Mediator will communicate to all the parties that the Mediator’s Proposal is accepted only if all parties accept.

Argue and Witkin emphasized that the Mediator’s Proposal is not a shortcut and should not be used simply to split the difference.  Instead, it is a tool available to the mediator to push the parties to resolution after they have had robust negotiations, understand the strengths and weaknesses of the positions of each side, and have made progress towards at least getting within range of one another.  A successful Mediator’s Proposal depends on the mediator (and the parties) having sufficient information to make a credible recommendation and creating an environment where all parties will consider the Mediator’s Proposal in good faith.

According to Argue and Witkin, the groundwork for a Mediator’s Proposal must be laid during the mediation, or even before. Mediators should make use of private caucuses with each party to gather information about their private concerns (e.g. timing of payment, funding the litigation, avoiding diverting resources from ongoing projects), driving objectives (e.g. setting a precedent, establishing a reputation), and the impact of third parties (e.g. “empty chairs”, insurance coverage issues).

Then, if there is an impasse, it may still be worth exploring options other than a Mediator’s Proposal.  For example, Argue discussed how, depending on the parties’ personalities, joint sessions can allow parties to leverage relationships and take control of negotiations.  These joint sessions can be especially effective when there is potential for future contracts between the parties on other construction projects.

If the negotiations remain stalled after the above, then a mediator should consider stepping in with a proposal.  However, all sides must express interest in a Mediator’s Proposal beforehand and they must be willing to consider a number from a neutral that is beyond what they have offered.  If the parties are receptive, then it is up to the mediator to come up with the proposal.  Witkin believes that an effective Mediator’s Proposal should be a well-prepared written document, and he often will require a day or two to prepare the proposal to address the most important issues directly. When drafting the proposal, Argue recommends that mediators should remember that the number in the proposal is the mediator’s opinion on a number that is likely to be accepted by both parties rather than an opinion as to what is most likely to happen at arbitration or litigation.

Thank you to Argue and Witkin for their insight into when and how a Mediator’s Proposal should be used to help parties reach a settlement.


Author Douglas J. Mackin is a construction attorney with Cozen O’Connor in Boston, Massachusetts. Doug counsels owners, developers, contractors, and subcontractors in all phases of a construction project, from contract negotiation through to completion, including disputes, litigation, and arbitration. Doug can be contacted at dmackin@cozen.com.

No comments:

Post a Comment