Mediation Success – Strategies for Avoiding Prolonged Litigation and Getting To “Settled”

Matt Argue (left) and Gene Witkin (right)

By this article, the authors, both full-time neutrals, share some success strategies to help civil litigation practitioners, particularly in construction law.  We address helpful tips to avoid common mediation pitfalls which can occur before mediation or during mediation. We will address break-out sessions, joint caucuses, and mediator’s proposals – so that you can make the most of the mediation process.

1. RESOLUTION STARTS PRE-MEDIATION

• Pre Mediation Preparation and Call

Good mediators frequently begin mediation many days if not months before the mediation event. The mediator will convene a pre-mediation planning call (often via Zoom) with all counsel to discuss a mediation plan for the case. The mediator explores with counsel the key issues that need to be addressed prior to mediation. Often the mediator will help the parties focus on key issues in dispute and avoid spending time on minor issues that can be resolved more easily during mediation. These key issues include insurance coverage and limits, making sure all decision makers attend mediation, exchange of documents and expert reports, as well as key documents that support or rebut the claims.

• Non-Confidential Mediation Briefs

Mediation briefs that provide a thoughtful, complete, and honest assessment of the case set the stage for success - especially if they are non-confidential and exchanged with the other side.The mediation brief is a persuasive argument that can help focus the mediators and other party on the key areas in dispute.  Ideally, mediation briefs are exchanged with sufficient time in advance of mediation so the mediator can react and if necessary, follow up with all parties regarding supplemental information to exchange prior to mediation. The goal is ensuring all parties are ready for mediation and any critical information is exchanged in advance of mediation.

• Separate, Confidential Mediation Brief

Sometimes there are concerns that counsel do not want to share with the opposing party. In that case, a second confidential brief can be submitted for the mediator’s eyes only; for example, a party may want a private discussion for procedural issues that are of concern, such as a pending motion for summary judgment or a due date to join third parties. There may be concerns about funding that counsel does not want to discuss in front of his or her client. Practitioners can increase the likelihood of a successful mediation outcome by addressing these and similar big picture issues pre-mediation. For example, is this one of five similar cases, and the client is deeply concerned about precedent? Or, is it the converse, the case is the last of its kind and the client just wants to get it closed and move on? Generally, the more the mediator knows about each party’s goals and objectives, the better the mediator is able to guide all parties to a successful resolution.

• Essential Mediation Participants

One source of frustration for practitioners experienced in the settlement process is where they have their client willing to compromise and there’s good back-and-forth negotiation, but then you get the 4 p.m. surprise: one of the other counsel announces they cannot do the settlement without a contribution from a third-party or fourth-party defendant who is not present. This frequently comes in the context of insurance where the claims representative asks why a potential indemnitor is not present. Most insurance companies are typically loathe to “fund and chase,” and at this point the settlement process may need to be put “on hold.” This is the perfect example of information that can be shared during an honest and thorough pre-mediation discussion regarding the status of essential players. Armed with this information, the mediator can plan the mediation session at a time when all parties are ready and prepared to fully participate in resolution.

• Insurance Ramifications

The resolution of many construction disputes rests on the contribution by one or more insurance carriers. Effective construction mediators thus should have a deep understanding of insurance coverage. Similarly, construction practitioners should not shy away from the insurance implications in a case. Often the authors have been told by counsel for one of the litigants words to the effect of: “I don’t deal with insurance issues.” While of course counsel should not put themselves in a conflict situation, the problem with avoiding insurance altogether is that many cases will not be resolved without addressing the insurer’s perspective. Without adequate information, insurance representatives cannot set reserves or otherwise get adequate authority for settlement. Pre-mediation is thus very helpful to ascertain the identity of each of the implicated insurers, their respective policy limits, and any material policy exclusions or other driving coverage concerns that could impact settlement. This way, the mediator has the information necessary to help the insurance representative(s) timely secure the authority needed to settle. Failure to obtain insurance information is one of the primary reasons cases do not settle at mediation.

2. DURING THE MEDIATION

The number one key for successful mediation is robust negotiations between the parties.  We have never seen a case settle in mediation when a party is missing critical information about the case, whether that is amount of damages, basis for damages, insurance coverage issue or key legal argument of defense that is not addressed to the satisfaction of all participants.  While a huge benefit of mediation is avoiding the high costs of civil litigation discovery, in general, cases settle only after all parties have a threshold understanding of the strengths and weaknesses of each side. A common strategy to help bring the parties closer together on their positions is joint expert meetings (usually via Zoom). In these joint expert meetings, which we recommend the mediator be a part of, the experts are asked to find common ground on as many issues are possible. This helps focus the parties on the few issues needed to negotiate to resolve the case at mediation.  

Also, it is important for the parties and mediator to test the waters on settlement range for the case; sometimes this is called the “zone of settlement.” If both parties are outside the “zone of settlement”, the mediator can step in with a technique called “bracketing” where both parties move down or up at the same time into what both parties and the mediator believe is the “zone of settlement” for the case. This can expedite resolution by signaling to both parties demands and offers that are outside the “zone of settlement” are unlikely to result in a successful resolution. If used properly, “bracketing” can be a helpful tool to reach resolution. A mediator will only use bracketing AFTER the parties have had significant negotiations and still not moved into the “zone of settlement.”

3.     BREAK-OUT SESSIONS

An important aspect of mediation is the break-out session (when the mediator talks privately with only one or two party representatives or counsel). This is a rare opportunity in the civil litigation world for appropriate and productive ex parte communications.

Sometimes the mediator will meet with opposing counsel only and gain insights that will help move the case towards settlement. Counsel may explain why one side or the other is entrenched in their position so the mediator can focus on what is keeping the party from progressing in mediation. For example, perhaps one of the parties has focused their arguments and mediation brief primarily on damages; it may be invaluable to hear from the other counsel (subject to mediation privilege) that damages is not materially contested by his/her client, so the parties can move their focus to the actual dispute, say for example, causation. Not every case can or should be settled, but we have found that practitioners with successful settlement track records generally welcome the opportunity to make the most of these private, candid communications.

Solo break-out sessions can also be extremely productive. Counsel may have an opinion on the settlement range of the case or settlement target. Some counsel may be reluctant to candidly share information with the mediator to keep the mediator in the dark as to their final settlement authority. From the mediator’s point of view, the more information the mediator has the more likely he or she will help both parties reach a satisfactory resolution. Since mediation is a voluntary process between parties with frequently more than one participating representative, a break-out session helps the mediator “take the temperature of the room” to see what is driving the motivation of certain participants to settle the case, or perhaps the motivation of others to resist settlement.

Mediators may also use the break-out session to meet separately with insurance carrier representatives. There may be information the insurance carrier wants the mediator to know that will assist in settling the case. As previously mentioned, having insurance carrier participation and dealing with insurance limits and coverage issues often is the key to resolving the case in mediation.

Personal counsel may likewise have a separate perspective – either on the insurance picture or on the settlement dynamics in general. We have found that meeting with personal counsel can often unlock a key to settlement, such as identifying third parties with which the principal wants to maintain a good business relationship. And personal counsel often have a role to play in identifying which insurance policy(s) will most likely be at issue, or even on occasion conversely identifying a policy the insured does not want to tap due to other exposures. Overall, break-out sessions can be a short cut and help the parties reach final resolution more quickly.

4.     JOINT SESSIONS

We do not espouse use of a joint session at the beginning of the case so that counsel can essentially give an opening statement. This is generally not helpful. But a joint session during the mediation can be productive once the mediator has assessed each party’s position and identified the participants—who could be counsel, the parties, an expert witness or even coverage counsel—whom the mediator believes can be effective in speaking directly to the other party.  We have found that allowing the parties to speak directly to each other can provide powerful motivation towards achieving resolution. 

Joint sessions can be used to confirm areas of agreement, focus the parties on actual disputes, allow the parties to hear unfiltered strengths and weaknesses of the claim, result in a final risk analysis to gauge party’s willingness to continue litigation, and provide opportunity to leverage relationships and take control of negotiations.

In many construction cases, the parties have worked with each other successfully on many projects, but litigation can strain business and personal relationships. Mediation is the one place it is appropriate and generally productive during litigation to leverage relationships to settle cases and potentially restore future business opportunities. Obviously, counsel must be mindful of ethical obligations when addressing interests beyond the litigation at hand. But that said, the joint session can be the place where relationships can trump legal positions saving all parties tremendous time and resources.

In one case, where the parties were many millions of dollars apart, a joint session allowed counsel for the general contractor to acknowledge significant covered damages to a homeowner’s residence that caused the homeowner to make a more reasonable settlement demand knowing that the contractor’s attorney would make a reasonable settlement offer after the joint session. In this case, the joint session helped the parties get on the same page as to the overall value of the case and caused both parties to move several million dollars closer into the “zone of settlement”.

The success of a joint session depends on the personalities of the parties and the mediator setting proper objectives going into the joint session. But, we have found the joint session can often break an impasse and shorten the time for achieving final resolution.

5.     END OF MEDIATION

At the end of productive mediation sessions, typically one of three things happen: 

• First, and perhaps most often, with robust negotiation, and effective use of pre-mediation talks and break-out sessions, an agreement is reached. To avoid any ambiguity, the authors strongly recommend at this point that one of the parties or the mediator put all the material settlement points in writing to be affirmed by all sides. 
• Second, somewhat rarely, despite best efforts, one or more of the parties recognizes they do not have enough information and need further exchanges, at which point the mediator will work with the parties to streamline what is needed and reconvene at a more opportune date.
• Or third, an increasing common endpoint is the parties move closer to resolution, but need the mediator’s help to bridge the final gap. At this point, a mediator may employ a strategy known as “Mediator’s Proposal,” which we address below.  

6.     MEDIATORS’ PROPOSALS

A Mediator’s Proposal, as used by the authors, is an end-game proposal by the neutral to bridge the final gap and offer a compromise settlement solution that has not been articulated by the parties. It is NOT a judicial determination of the likely outcome of the case, but the mediator’s “educated guess,” informed by all the confidential discussions with the mediator, as to the settlement amount and terms that both parties will likely accept. A Mediator’s Proposal is not employed if one party is being recalcitrant and not fully participating in the mediation process; for example, one party using the mediation to gain “free discovery” but not earnestly trying to settle the case.  Similarly, a Mediator’s Proposal is not employed if there are roadblocks to settlement that require further research and/or exchange of key information between the parties.

An important question is why should the parties trust the mediator and the Mediator’s Proposal? This goes back to all the work and effort of the mediator to fully understand the case both factually and legally and convincingly convey to the parties the mediator’s evaluation. Also, the mediator has hopefully been selected based on his or her knowledge, training and experience in resolving many hundreds of similar cases and similar pending trials, so that the parties have a high degree of confidence in the mediator’s settlement recommendation.

A Mediator’s Proposal should only be used if both parties request one. The reason is that Mediator’s Proposals are extremely effective if both parties recognize the Mediator’s Proposal is the very last step in the mediation. Importantly, this only occurs AFTER the parties have employed ALL avenues for resolution discussed above in this article.  Practitioners should avoid the temptation to jump to a Mediator’s Proposal before working diligently to resolve the case using traditional mediation techniques. The primary reason is that a Mediator’s Proposal is the last move for the mediator and the parties to reach final resolution.  

Typically, the Mediator’s Proposal is “double blind”, which means the mediator tells both parties a settlement amount for the case and each party must either accept or reject the Mediator’s Proposal. A party who rejects a Mediator’s Proposal will never know if the other party accepted the Mediator’s Proposal or not. Only if both parties accept the Mediator’s Proposal will both parties be told the case is settled for the settlement amount in the Mediator’s Proposal. As part of explaining the Mediator’s Proposal, we always recommend telling the parties the Mediator’s Proposal is not a “split-the-baby” number. It is always a number the mediator arrives at independently and not a number either party has offered or rejected during mediation. With few exceptions, such as cases involving repeat litigants, a Mediator's Proposal will be conveyed in writing after the mediation ends when the parties have a thorough understanding of the strengths and weaknesses of the case. 

7.     CONCLUSION

Following these tips will greatly enhance your chances for reaching a successful resolution at mediation. This includes working closely with the mediator before the mediation begins and continuing through the break-out sessions, joint caucuses, and, if necessary, the Mediator’s Proposal. We look forward to hearing from you about how these mediation strategies work to help you avoid prolonged litigation and get your case settled.

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Co-Author Gene M. Witkin, Esq. has a career devoted to helping businesses, insurance companies and individuals resolve their disputes efficiently and out of court through mediation and ADR. Prior to becoming a full time neutral, for more than 30 years Mr. Witkin maintained an active practice in complex litigation, insurance disputes, and conflict resolution in numerous different states and venues across the country.  He is licensed in multiple states, and his practice gave him the opportunity to work on every side of civil lawsuits, including representation of building owners and HOA’s, developers and GC’s, subcontractors and design professionals, as well as insurers. As mediator and discovery referee in the area of construction, Mr. Witkin handles all aspect of resolution for both commercial and residential claims, with availability in multiple states. 

Co-Author Matthew W. Argue, Esq. has over 35 years of experience in complex construction litigation and for the past 19 years has served as a full-time Construction Mediator, Arbitrator, Special Master and Discovery Referee. He has successfully resolved over 1000 construction cases as a mediator. He focuses exclusively on construction and insurance mediation and arbitration throughout California and nationally via Zoom video conference. Mr. Argue mediates a wide variety of construction claims, public and private works, mixed use, high-rise commercial and residential developments, and high-end luxury single-family homes. He is licensed in California, Nevada, Washington, Texas and Colorado.

Choose the Right Option: How Facilitative and Evaluative Approaches Can Both Have a Role in Mediation

There are various mediation styles or philosophies that parties to litigation encounter when mediating. Generally, they can be categorized as either facilitative or evaluative approaches. Some mediators feel that they should never “evaluate” a case, such as the mediator who says, “a mediator should never express a personal opinion”. A similar approach is the mediator who only carries messages or talking points from one party to another without weighing in the validity of the issues.

On the other hand, I have also encountered mediators who appear to have decided prior to the actual mediation session, usually based on their review of the pre-mediation statements, how the case should be resolved. They then spend the mediation attempting to persuade both sides to accept their view of the outcome.

There are also mediators that will make statements like, “if you were my mother, I would tell you to accept this offer” when getting to the final offers. These types of mediators may be overstepping an “evaluative” approach to mediation.

Somewhere in between all these approaches is the mediator who uses the right amount of guidance or aggressiveness to help the parties reach a settlement without violating his or her principles or the rules of the state governing their conduct. Choosing the appropriate approach is a skill every mediator should master. Here’s a closer look at how to do so.

Adhering to Rules and Standards

Because I practice primarily in Tennessee and am a Tennessee Supreme Court Rule 31 listed mediator, I will refer to the Rules and Standards applicable in Tennessee; many states have similar requirements.

Tennessee Supreme Court Rule 31, Section 10(b)(3) provides that a neutral “must refrain from giving legal advice. However, while a Rule 31 mediator should not offer a firm opinion as to how the court in which a case has been filed will resolve the case, a Rule 31 mediator may point out possible outcomes of the case and may indicate a personal view of the persuasiveness of a particular claim or defense.”

In addition, the Standards of Professional Conduct for attorneys also apply to neutrals. Section 5 (b) states: “A neutral shall not coerce or unfairly influence a party into a settlement agreement and shall not make substantive decisions for any party to an ADR Proceeding.”

The above rules and standards make many mediators less aggressive than they might otherwise be during the mediation. However, it is reasonable to infer that the language in Section 10 also allows for more involvement by the mediator by allowing the neutral to point out possible outcomes and express personal views so long as he or she doesn’t give an opinion on how the court will ultimately rule.

Using Different Approaches at Mediation

When mediating a construction or commercial case, my approach often uses both facilitative and evaluative elements. It is important to be flexible as a mediator, especially at the beginning of every mediation. Being a “one-trick pony” will not make you an effective mediator.

At the start of the session, after the preliminaries are out of the way, you must understand where both sides are in the process and how close they are to resolving the case. This is the facilitative part of the session. Often, the participants can reach settlement using this approach alone. If so, that’s great. But if this approach isn’t working, you’ll have to use other tools or techniques to achieve settlement, including evaluative approaches.

Evaluate witness and expert testimony. One evaluative method is to ask the parties to articulate their claims and defenses and show how they plan to prove each of them. For example, if one of the parties requires an expert, has that expert been identified or disclosed? If so, what is the expert’s testimony, and how well will it hold up to rigorous cross-examination? If both sides have experts, and the mediator has this information she or he may give an opinion as to which one the mediator thinks is likely to be more credible or better received by the trier of fact.

If the liability is fact-based rather than expert-based, the mediator may thoroughly discuss the witnesses, their testimony, and their credibility, offering an opinion as to which side is more likely to be credible to the trier of fact.

Evaluate damages and defenses. Because liability and damages are usually in dispute, a separate analysis of damages is also often helpful. The mediator may ask the plaintiff to explain how he or she is proving damages as a starting point. In cases like construction cases where you usually don’t have the uncertainly of non-economic damages such as pain and suffering or emotional distress, there should be an objective starting point. Again, either expert testimony or sufficient documentation of the expenses should be available.

If documentation is lacking, the mediator can ask the plaintiff about that, and whether the plaintiff understands his or her shortcomings in this area. Is the plaintiff seeking damages that are not allowed by law or other damages, such as attorney’s fees, when there is no statutory or contractual provision for same? If so, how does the plaintiff plan to recover these?

The mediator may also discuss with the defendant how the defendant plans to defend the damages. Is the defense based on lack of documentation by the plaintiff? Does the defendant have his or her own expert to contest the damages, or are there other methods being utilized?

After reviewing all this material, an evaluative mediator can express an opinion to each side about how the mediator thinks the trier of fact is likely to resolve these issues.

Offer a mediator’s proposal. I also occasionally use a mediator’s proposal as one final method when the parties have reached impasse. While I don’t do this routinely, if I have reasonable belief that the parties still want to resolve the case and if both sides affirmatively agree that they want me to provide a mediator’s proposal, I will do so. However, if any of the parties state they do not want a mediator’s proposal, I will not offer one.

Choosing the Right Approach

While every mediation is different, mediators who know how to use both facilitative or evaluative approaches — and when to use them — are better equipped to help the parties reach resolution. Regardless of whether you’re a new mediator or a more seasoned one, understanding the nuances of these different types of strategies will enhance your skills at every mediation. 

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Author, Barry L. Howard, a full-time mediator and arbitrator at Miles Mediation & Arbitration in Nashville, Tennessee, often mediates construction cases ranging from single-family home construction cases to multi-million-dollar commercial projects. He has mediated over 2,600 cases, including ones that involve construction defects, breach of construction contracts, construction insurance coverage issues, and construction site personal injuries. 

A Tuesday With Patricia Thompson

This is not a political article. Although I must admit its theme was prompted by recent political attention devoted to dismantling diversity, equity and inclusion (DEI) initiatives in education, businesses, law firms, and government. I have spoken and written about DEI in alternative dispute resolution in the past, but this article is not going to address the issue of allegedly discriminatory DEI agendas.

Instead, allow me to share my simply stated life philosophy of how to treat others, which may well help us all foster equity and inclusion. I say this because, at times over at least the past 20 years, colleagues have graciously praised me for being inclusive and encouraging and for promoting and mentoring minorities and women within the leadership ranks of several American Bar Association (ABA) committees and other professional organizations. Indeed, I received my latest award acknowledging my DEI activities just a few months ago.  

I have never sought such recognition. Instead, I merely try to be kind to others, especially those who need kindness. The concept has been described as “doing unto others as you would have them do unto you” or “loving your neighbor as yourself.”

I prefer the latter phrase. Millennia ago, an itinerant teacher said that loving your neighbor as yourself was one of two most important commandments for virtuous living. He was then asked by a lawyer, :“Who is my neighbor?” The teacher answered with a story about a traveler who came upon a man by the side of a road who had been robbed, beaten and left half dead. Two of the injured man’s countrymen, separately, had passed him by without stopping. Now, the traveler and the injured man came from two countries with a long history of enmity. They were of different religions and racial backgrounds. Nevertheless, the traveler had compassion for the man, bound his wounds and carried him on his own donkey to an inn where the traveler paid for his care.

The teacher then asked the lawyer which of the three persons who came upon the injured man proved to be a neighbor to that man. The lawyer answered, “The one who showed him mercy.” The teacher replied, “Go and do likewise.”

With that illustration, I take the commandment to love my neighbor to mean that any person — no matter where they come from or what they may look like — whom I find in my path with a need I can meet is a person to whom I am to show kindness.

How does this apply to my professional life, and specifically my involvement with the ABA and other professional groups? Here are some real examples, which can be varied in many ways.

Patricia with the partners in her first law firm

When I walk into an ABA reception with hundreds of attendees, I look for those who are new, who may not know many people and who may find it all just a bit intimidating. I then introduce myself and ask them about themselves and why they are there. I want them to feel like they belong, because they do. Indeed, at various times in my life, I have been in their shoes — such as when I started attending huge ABA TIPS Fidelity and Surety Law Committee meetings in the 1970s and, later, Forum meetings — and I did not look like or know most of the people at those meetings. And in such gatherings, invariably, someone kindly made me feel welcome. I remember them and usually count them among my friends to this day. In similar situations now, I find it a pleasure to do unto others, as others were kind enough to have done unto me.

For years, before the ABA issued any guidelines on speaker diversity, whenever I had influence over CLE programming, I intentionally included at least one speaker who was qualified on the topic and different from the rest of the panel or a majority of the audience in some way, especially if they had not spoken to the group before or were relatively new to it. In a similar fashion, when forming committees, appointing leadership or serving on membership committees, I looked for ways to add new members who might have differing life experiences and viewpoints to offer the veterans in the group.

I have put my philosophy of being kind to use several times in my career — including in the last few months — when disagreements threatened to destroy the harmony and even the existence of communities of which I have been a member. Lawyers are very good at making arguments and taking sides; I have seen it happen in law firms, ABA committees and other professional organizations. In such cases, it is my experience that it is better to be neighborly to those with whom we disagree and express opinions respectfully, with empathy and humility. After all, until the disagreement arose, we were proud to be colleagues. And, as those who write about implicit bias counsel, it is possible the persons with whom we disagree have reasonable bases for their opinions and actions that appear as valid to them as mine do to me. Shocking as it is to admit, on occasion, I have been persuaded to concede I have misjudged those with whom I disagreed. 

Loving your neighbor is applicable to all aspects of life. So, in my current practice as a neutral with JAMS, I try to treat every advocate and party with impartial and kind consideration, respect and patience, and to ensure a level playing field for those who do not yet understand the ways in which arbitration differs from litigation.

I can attest that being supportive and kind to others has provided decades of joy. I recommend this approach to all who would like to succeed, help others do the same and make wonderful friends.

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Patricia H. Thompson, Esq., FCIArb, CollArb, is a JAMS arbitrator and mediator concentrating on construction and surety claims, employment discrimination, wage and noncompete disputes, fidelity and business insurance coverage analysis, and other complex commercial disputes. She brings nearly five decades of trial, arbitration and appellate experience to her ADR practice.

The Dispute Resolver was proud to work with Patricia in connection with this installment of the “Tuesdays With” series. This series recognizes that, whether gleaned from a lifetime of learning or a life-changing moment in time, we all have something worthwhile to teach each other. If you believe you have a perspective to share, please contact Marissa Downs for more information on how to contribute to this series.