There are two eternal truths about litigated cases: 1) There is a tremendous likelihood the case will be settled without trial; 2) The settlement could occur any time from the moment the case is filed until the eve of trial. That vacuum of time provides many favorable and unfavorable opportunities to negotiate a resolution to a case that is satisfactory to your client. It's how you use the time that counts.
Picture a Continuum of Conflict in which we start at one end with the filing of a litigated case. At the other end of the continuum is trial. In between are various opportunities available to come to the table and negotiate a deal. Determining when to come to the table depends on your confidence in the case and overcoming the fear that the other side will misinterpret a suggestion of negotiation or mediation as a sign of weakness. Figuring out how to inquire about settlement, either through direct negotiation or mediation, also requires strategic choices.
In order to understand the current options available to a litigator who wants to settle a case, let's first go back in history and look at the context in which cases have traditionally resolved.
What is the context in which all of this is going to happen?
Assume for a moment that you were retained to process a typical tort dispute in the 1950s. What were the obvious dispute resolution choices available to the typical litigator at that time? One option would be to contact general counsel for the defendant and offer the idea of trial or propose some kind of negotiated settlement. Generally there were not many choices in between.
Another possibility was to advise the client that the easiest approach is to make a telephone call to the other side to see if the matter can be worked out. If that was unsuccessful, the client would have been to be informed that trial was the only other alternative. The client would be reminded that our civil justice system has been successfully resolving disputes for hundreds of years, and that the courthouse is a nice place to spend some time. After all, it has beautiful cement columns on the outside, large rooms with plenty of spectator seats and of course, each room proudly displays the American flag. Most importantly, though, it is free to use almost any time. So, if the telephone call did not work, the client would be informed that s/he could go over to the courthouse with some sense of confidence that lawyers would be able to do their work, that there would be a judge there ready to hear the case, and that it could happen in a relatively timely fashion. In 1950, the system of resolving disputes would have been perceived as relatively efficient.
The Early Years of Dispute Resolution
The first generation of dispute resolution that evolved over 150 or 160 years in this country was one that said, "Look, we try to settle things, and if we can't, we file these papers in court, and we have a forum that will take care of it."
Connection between Negotiation and Litigation
In the early years of this continuum of conflict, litigators knew that there was some connection between the process of negotiation and litigation. Whenever a litigated case was filed, like a rubber band, we would snap back and try to negotiate the case. In so doing, we would send a message that required the other side to take us seriously. After receiving the summons and complaint, the other party would realize that s/he must appear in court. This inconvenience made it a little bit easier to talk. As a result, the parties would then get on the phone and settle a huge number of cases simply by negotiating directly with the other side. One commentator has indicated that often times we file papers in court for the primary purpose of getting the attention of the other side so we can negotiate. This has been cleverly referred to as "litigotiation."
Litigators in the 1970s and 1980s faced an increasingly over burdened court system. At one point in our history, the court system in Los Angeles took over 60 months to get a civil case to trial. Attorneys realized that juries, when we finally get them, are unpredictable. Moreover, the cost to prove even the most simple case made some trials economically prohibitive.
Options Borrowed from the Labor Field
Litigators began to observe that perhaps there were other choices available that managed costs, were more efficient and clearly more timely than trial. We looked at other cultures, borrowed ideas from the labor field, and realized that some clients would be better served if their cases were resolved in something other than a court room. We then started using arbitration for smaller civil disputes since that process worked for years in labor contracts, was more informal, less costly and seemed to be successful.
While mediation was also used in the labor field, it didn't catch on as quickly in the 1970s while arbitration was making its way up the ladder. Yet litigators were still looking for a way to negotiate, but possibly with the help of a third party, similar to an arbitrator, but who could not make a decision on the case.
Early mediation programs grew out of the family law courts that observed which there might be a more humane way to solve these problems than to present them in a public forum. Family law litigators started to move in the direction of mediation since the issues they had, like child visitation and custody, probably didn't make sense to put in a courtroom environment. Indeed the early mediation programs in family law courts envisioned using neutral third parties who were not necessarily members of the bar to serve as mediators. As the process began to emerge, some felt that working through a negotiation of a family dispute was something a therapist could do better than a lawyer. That process continued to evolve and now we have applications of the mediation process all over the map.
The Next Generation of Dispute Resolution
Following the lead of the family law arena, civil litigators began to see the value of bringing in a neutral third party to assist or facilitate in the negotiation process. While it took about 15-20 years to institutionalize the mediation system into our civil justice system, it appears that it is here to stay as a viable option for litigators who want to settle their cases without going to court.
Following this second generation of dispute resolution options available to litigators, we move forward until about ten years ago, when another generation of options became available to settle cases out of court. This third generation resulted from people wanting to tailor their mediation or arbitration process to match the particular dispute. Now we have at least 25 other hybrid processes available, ranging from baseball arbitration to mini-maxi arbitration, with various things in between, including summary jury trials, med-arb and much more.
The current Continuum of Conflict takes on a dimension that is far broader than we saw 40-50 years ago. The world has changed. We are now beginning to reframe our choices so that the strategies we select to intervene in a dispute give us the best possible chance of achieving resolution at the least possible emotional and financial cost to our clients.
Negotiation is at the heart of the many choices we have to resolve cases. Whether we use negotiation to actually settle a case or parlay a matter into another procedure which is less intrusive than court, litigators must fundamentally rely on the negotiation process for everything they do.
Negotiation is generally defined as "a communication process we use to put deals together or resolve conflict." In negotiation, litigators have control over both the outcome and the process of a dispute. Procedurally, the parties in negotiation are responsible for designing the process. Similarly, by definition, the parties have control over the outcome.
This is in sharp contrast to arbitration or trial where power is clearly delegated. In traditional litigated cases, a litigator relinquishes the power over the outcome because decision making process is given to someone else. All procedural decisions are taken from parties. Like a cafeteria, litigated cases require you put down a tray and select things from a menu such as which discovery processes or motions you might utilize to get an advantage over the other side.
Since it is a communication process, like most things which require communication, sometimes problems occur that end up causing the dispute to reach an impasse. This is where civil litigators and even the court system have chosen to introduce Mediation as a preferred option for resolving disputes.
The reason that mediation has worked so well for litigators is that it is basically a facilitated negotiation. While we have evolved beyond the years when family law practitioners preferred non-lawyers to mediate their cases, the current crop of litigators can choose from well respected retired judges and established trial lawyers to serve as mediators. This gives the litigators a sense of comfort because the neutral has more than likely been in their shoes before and can speak the same language. The neutral knows that the goal of the facilitated negotiation is to get the case closed, which is something the litigator was unable to accomplish.
Top Ten Factors For Getting The Other Side To The Table
The key to a successful facilitated negotiation is getting the other side to agree to mediate in the first place. In order to set yourself up for success, there are several factors to consider when convening a mediation:
1. Never request mediation within two weeks after you've lost any motion, no matter how insignificant.
2. The most profitable mediation on a great case generally occurs before expert discovery, although it can happen closer to the trial date.
3. The most profitable mediation on a so-so case occurs close to the trial date, assuming your experts have not betrayed you.
4. The most profitable mediation on a bad case occurs before you file the lawsuit, or as soon thereafter as you can manage with a straight face.
5. Ask for mediation in a letter which accompanies a motion to compel discovery. Offer to postpone the motion if the other party agrees to mediation.
6. Where you have a belief in the merits of your case, send out a letter demanding mediation, and specify your good faith estimate of the value of the case. Indicate that you will only agree to mediation if the other party fully understands and acknowledges your approximated value. If you then show up at the mediation and the other party comes in substantially below that approximated value, leave promptly.
7. Allow the judge to propose mediation at the initial status conference.
8. Mediation often works best for a defendant after a summary judgment motion has been filed, but before the hearing and before plaintiff's opposition is due. Mediations often work best for plaintiffs just after the summary judgment motion has been denied. Schedule accordingly.
9. Consider a cost basis analysis. This means that for every month you have the case open, the time you have committed to the case increases, yet there is no guarantee that the value of the case goes up.
10. Many provider organizations will take on the responsibility of contacting the other side about the prospect of mediating. This can be effective since these organizations usually have people trained to sell the process in a way that doesn't make you look vulnerable.
Now That You're Coming To The Table, What's Next?
Negotiating a litigated case depends upon the style of the mediator and the approach of the advocate. Before beginning the mediation session, ask the mediator to define his/her style. Some mediators choose an approach much like a messenger, where they exchange numbers back and forth and actively make recommendations on the number. Others might use a more facilitated evaluation which tends to encourage the parties to come up with their own understanding of risk that might also be more interest based. Whatever the approach, a litigator must be aware of the direction the mediation might go before it begins.
Dealing With The Competitive Negotiator
Many litigators approach mediation in a competitive manner. They view the session as an extension of the litigation battlefield and make negotiations difficult. On the other hand, the cooperative litigator is hopeful that the negotiation will achieve their ultimate goal -- to settle the case -- and assume that the other side is at the bargaining table for the same purpose. Because of these aspirations, it is not unusual for cooperative litigators to put all their cards face up on the table and hope toward a cooperative solution. Unfortunately, the competitive litigator might view this willingness to cooperate as a sign of weakness and attempt to take advantage of the negotiation.
Studies have been conducted demonstrating that cooperation as an affirmative strategy will more likely than not achieve the objectives of mutual gains for all parties.(1) However, litigators in a mediation sometimes must be mindful of the possibility of losing opportunities for the client by maintaining a cooperative attitude throughout a negotiation with a competitive player.
Under these conditions, an advocate in a mediation must be aware of strategic options that can be used in order to avoid becoming exploited in the negotiation. Fortunately, those options have been studied extensively by educators through such game theories as the well known "Prisoner's Dilemma."(2)
Following extensive computer testing of the Prisoner's Dilemma, Professor Robert Axelrod came to the conclusion that the best strategy for achieving goals through cooperation is a simple process he calls "tit for tat." This strategy proposes that during a negotiation, a party must match the opponent's move either competitively or cooperatively. If your opponent chooses to whack you over the head, you must hit back. If your opponent offers an olive branch, you must offer one back, and so on. Axelrod developed five basic rules to follow in achieving cooperative solutions:
(1) begin cooperatively
(2) retaliate if the other side is competitive
(3) forgive if the other side becomes cooperative
(4) be clear and consistent in the approach
(5) be flexible
Those litigators who come to the negotiating table assuming they are still at war sometimes create an imbalance in power with the advocate who choose to be cooperative.
One approach to disarming a competitive negotiator is to use the mediators to get your adversary to commit to the principle that they might have more liability and/or damage exposure than they originally thought. Once that occurs, be prepared with additional information demonstrating that you are capable of continued retaliation. At the same time, have the mediator extend a signal that you are prepared toforgive, i.e., work cooperatively, provided they acknowledge that exposure exists.
This must be done slowly and strategically, without giving away too much information until you have verified with the mediator that your adversary is beginning to be a believer in your position. This will require a delicate balance by the mediator and, of course, your full and complete trust in the mediator's representations.
The goal of this technique is to lull your adversary into a state of vulnerability. After considering possible downside scenarios, the mediator can provide your adversary with a face saving pretext to either pay out more or take less than they brought to the table.
A Case Example
Suppose you represent a person who has undergone a hip replacement due to a slip and fall at a department store. During your investigation, you learn through inside information that the store has had other similar falls in the same area, and that the company was well aware of the need to correct the condition that caused the falls. In fact, you have actually talked to several people who have sustained injury in the same area and they are prepared to testify if necessary. The company doesn't know that you have this information, and they take the position that there was no "notice" of the problem and therefore no liability.
During the mediation, you begin cooperatively by offering to openly discuss the issues. In response you receive a lecture in front of your client by your opponent's counsel about what a bad case you have. You ask the mediator to check with the store's lawyer to see whether there have been any other falls in the area where people sustained injury. Immediately that sparks some interest from the other side, wondering what you are fishing for. They initially resist, but it gets them talking about potential mine fields which they don't want unearthed. The mediator tells you she hasn't learned anything new so you send her back in to force the issue. You also float the name of another claimant who sustained injuries and ask the store's lawyer if they would like to discuss the situation further. In essence, you are using the power of the mediator to make statements about the strength of your case without throwing it in the other side's face.
After several rounds of private meetings, you finally tell the mediator to ask the company if they feel there might be some exposure in this case. You ask the question because you know there really have been similar incidents, and you suspect the company doesn't want it to get out in the public. You are prepared to negotiate a confidentiality agreement in exchange for a reasonable settlement. When you get a positive signal from the mediator, you start asking for money, while at the same time being "flexible" with your response so that they know the retaliation has worn off.
The time to negotiate a litigated case can occur anywhere from filing the case until trial. Selecting the most strategic time to engage the other side is the key to a successful outcome. The menu of dispute resolution options available to litigators has expanded over the last 50 years such that settlement opportunities are available to the creative practitioner at almost every stage of a litigation.
1. Robert Axelrod, "The Evolution of Cooperation."
2. In the Prisoner's Dilemma game, there are two players. Each has two choices, namely cooperate or defect. Each must make the choice without knowing what the other will do. It is a dilemma because if both defect, both do worse than if both had cooperated.