A Winning Formula For Mediation


by Jeffrey Krivis

April 1999

Jeffrey Krivis

Most people approach mediation with the best of intentions. They are 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 parties to put all their cards face up on the table and work toward a cooperative solution.

The idea of cooperation is a basic principle in mediation and the focus of its universal appeal. 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. However, litigators in a mediation sometimes encounter adversaries who don't quite see things their way, and approach the process in a much more competitive and sometimes hostile manner.

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."

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 hit 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.
As a professional mediator, I have found the cooperative approach to be the primary reason cases settle successfully. I have also found that many litigators come to the table assuming they are still at war, and are willing to do anything to win, sometimes creating an imbalance in power with the cooperative advocate. It is with this in mind that I would like to offer some ideas on approaches which have worked in cases I have mediated where one side refuses to cooperate.

Like fishing, the best thing to do if you are an attorney representing a client in a competitive mediation, is to throw out your rod and start reeling them in. Now, what do I mean by "start reeling them in"? The idea is to get one side 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 to forgive, 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 core of this competitive approach is to allow your adversary to take the bait and run with it with confidence. Once they have chewed on the bait for a period of time, then you yank the line in toward the boat. At that point, you have provided your adversary with an excuse to either pay out more or take less than they brought to the table.

Suppose you represent an investor in a securities churning case. The broker has played hardball throughout the dispute, though they are willing to mediate. You are aware of certain information including a voicemail left on your client's machine in which the broker says something completely different than the trades represent. You have not disclosed this information yet to the broker. You are also aware of the fact that the broker has been subject to several other claims of similar nature in the past few years. In fact, you have been in contact with other lawyers who have provided you information concerning certain practices of the broker that you are sure the other side wouldn't want to come out.

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 broker's lawyer to see what the claims history is of the broker. 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 he hasn't learned anything new so you send him back in to force the issue. You also float the name of another case in which the broker has been sued and you ask the mediator to see if the broker would like to discuss that case with the mediator. 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 broker if he feels he might have some exposure in this case. 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.

To put a framework around this approach, consider the following formula when analyzing your approach to responding to a competitive opponent:

1. Opening Statements: Be Firm But Kind

This is your one and only chance to speak directly to the other side without fear of reproach. Some lawyers choose to waive this opportunity, mainly because they are not confident with their communication skills or haven't prepared their case. Never waive your opening statement. This is a time for you as an advocate to frame what the issues are, how you view them, and what you expect from the other side. Open emphatically to the other side and show off your preparedness with exhibits. Instead of discussing money, have a summary of the damages available on one page that you leave with the other side and the mediator upon conclusion of your opening statement.

2. Use Your Client To Tell The Story If The Client Will Sell

Invariably the first comment out of the mouth of a competitive opponent will be to size up the credibility of your client. If the client is believable, that theme will run through the entire negotiation, and can be used by the mediator as a closing point to achieve your goals. What makes a client believable? Usually it's a natural ability to communicate pain. If the client seems to be exaggerating in order to fit a square peg in a round hole, don't permit him to speak. If the client comes across in a natural, easily understood manner, have him tell his story. If you choose to have the client speak, make sure he is well prepared in advance of the mediation for questions from both the mediator and counsel for the broker. The more open you allow your client to be to this opportunity to tell his story, the more believable he becomes to the other side. At the same time, discuss with the mediator in advance of the opening session how far he will allow the parties to go with these discussions, and that you request that the mediator monitor the amount of time your client speaks. The fact that you allow him to speak shouldn't give the impression that this is a carte blanche opportunity to be used as a discovery device, but rather a way to signal that you are prepared to begin cooperatively.

3. Collaborate With The Mediator In The Initial Caucus

Generally the mediator will use this time to talk to you about the strengths and weaknesses of your case. While you probably know them by now, oftentimes the mediator can give you a snapshot of your opponent's position in an impartial way that actually allows you to become more objective and therefore more effective as an advocate. Rather than sit back and simply answer questions from the mediator, work together with the mediator by asking what he thinks is the best approach to achieve your goals. Ask the mediator what has worked in other cases where parties were looking to get lots of money from the other side. Get specific examples of techniques the mediator has used. Decide together what might be the most effective technique in your case, realizing that you need to be flexible in the approach. You can't always put a nice neat bow around every case and seal it shut. You need to allow the mediator some ability to size up the other side and determine whether the competitive strategy you discussed would work or whether you should revisit that decision.

4. Consider the Advantages and Disadvantages of Having the Mediator Evaluate The Case

Sometimes the mediator might want to give you advice about the liability of your case, how much you should pay or demand, and so on. This may be useful to you depending on where you are at in the negotiation. Before this happens, consider the upside and downside of moving into an evaluation or advisory opinion.

There are different styles you will find with mediators. One style is facilitative: asking open ended questions, encouraging you to do the talking, drawing out strengths and weaknesses from you, and focusing on underlying interests that might be driving the dispute. The other style is evaluative: giving an advisory opinion about the potential outcome of the case, urging you to follow his advice, twisting arms and pushing and pulling you into submission. One legal commentator referred to this approach as, "thrashing, bashing and hashing it out." Both styles work. However, the evaluative approach in a competitive negotiation has the added risk of the mediator predicting an outcome that contradicts and discredits what you have told your client about the case. It could, and often does, cause one side or the other to become anchored in the mediator's evaluation and unwilling to negotiate.

Consequently, it is critical to your success that you find out in advance of the session what style or approach the mediator tends to follow. If the mediator leans toward an evaluative approach, the issue becomes timing - when is the most effective time for the mediator to become evaluative. In my experience, an effective strategy is to encourage the mediator to use this strategy toward the end of the negotiation, particularly when you need to get the other side to move off their position.

5. Recognize The Intermediate Step Between Identifying The Issues In the Case And The Final Settlement

So you've made it through the opening session and you are in the first caucus. Your instinct is to cut to the chase and not waste any time. Wrong. Timing is everything in a competitive mediation and your adversary knows it. They will not give you their best dollar early on in the mediation. They feel that the mediator needs to fully understand them so that the mediator will work to achieve the best outcome possible. You probably feel the same. Resist the temptation to force the mediator to show you the money too early in the process. Being flexible and willing to cooperate requires that you allow for some open-minded "communication" of positions and interests. You never know, your client might just feel that he had his day in court.

At the same time, this is the step in the process where you have a chance to send informational messages into the other room through the mediator. Think about the consequences of what you want the mediator to relay to the other side, recognizing that you don't want to lose their attention with unreasonable and outrageous demands.

6. Look For Clues In What The Mediator Tells You

Sherlock Holmes you're not. Columbo maybe. Realize that the mediator is sworn to secrecy. He will not divulge information from the other side without their permission. On the other hand, the mediator uses other communication means in order to encourage you to think about and consider information he just learned from the other side. Listen for the clues and examine their meaning, while respecting the confidentiality of the process.

7. Plan The Exchange of Information

Be strategic about the pace of the process. The mediation is generally broken down into two component parts: (1) the receipt of information; and (2) providing information. You need both to work concurrently in a competitive mediation to achieve your objectives. The method by which you permit information to be disseminated will make the difference between success and failure. One strategy I have seen work is to question the mediator before he leaves the room about what he intends to share with the other side. At the same time, you are sensitive to the importance of assuring that what is shared is what you want shared, and handled in a way that puts the correct spin on your side of the case. That way you will be in a stronger position to anticipate the response and prepare your next move.

8. Committing The Other Side To Your Principles

Assume for discussion that in the churning case above you feel that the conduct of the broker was wilful and subject to punitive damages. By simply asking for punitive damages in the mediation you are likely to experience resistance from the other side. Instead of asking, another effective approach is to ask the mediator to explore the conduct with the other side with an eye toward obtaining their verbal acknowledgment that they might have exposure to punitive if the case goes to arbitration. I have seen numerous cases where the value of settlement increases substantially upon achieving that modest commitment.

9. Control The Use Of Confidential Information

Back to the fishing illustration, the "tit for tat" approach got them hooked at the end of our line, but the problem is, you are still far apart from settlement. You are still aware of additional information about the conduct of the broker which you might be willing to share. Assuming the other side has begun to cooperate, it's time for you to forgive by providing the information along with a request for additional money.

10. Learn How To "Dance"

Each negotiation is a series of steps or concessions. The early portions of the mediation are over, your client did well in the opening session, and you have finished framing the issues with the mediator. You have started cooperatively, retaliated when your opponent competed by insisting on a high settlement number well out of their reach, you forgave once they acknowledged there was more exposure, and now you are ready to negotiate the real deal.

Sometimes known as distributive bargaining, this is where the pie is divided up. Remember, each time one side gives up something, the other gets something. That means you need to give yourself plenty of room to come down from your initial demand or you will give up too much. Each step in the negotiation requires some form of concession, and is like a "move" in dancing. The first step is usually the biggest---usually you or the other side will offer the most money and it will happen fast. From that point forward you can expect each additional move to take longer and involve a lot less money.

Don't short circuit the dance. Many people at this point get anxious. They start looking at their watches and are hoping the case will be over quickly because they are uncomfortable with the concept of negotiation. They are tempted to tell the other side what their bottom line is and be done with it. This is a mistake. By short circuiting the dance, you will allow your adversary to try to take more from you in the negotiation. For example, if you tell the other side that your bottom line is $50,000, and they were inclined to pay it before you told them, they will likely offer something like $40,000 with the expectation that the mediator will come to the rescue and suggest you split the difference. Short circuiting the dance just cost you $5,000 because you will, in all probability, agree with a split the difference proposal. Don't respond too quickly to proposals.

11. Anticipate Internal Bargaining Disputes Within The Defense

During the negotiation, it is safe to anticipate that there will be an internal bargaining dispute between the defense attorney and his client, the client and the home office of the company, the broker and the company, and so on. Have confidence that the mediator will check this out. This is your chance to do a little divide and conquer through the use of the mediator.

12. Consider The "Mediator's Proposal" As A Tool To Close The Gap

Don't ever be afraid of an impasse in the negotiations. A good mediator will not let the parties simply walk away without trying to come up with some alternatives. At this point, you might suggest that the mediator make a proposal to settle the case. The proposal would be presented confidentially to each side and only the mediator would know whether it has been accepted by all parties. That way, you don't get punished for making a big move at the end. The other side will only know you made the move if the case settles, which is your goal in the first place. This will also result in the other side moving upward toward your goal because the mediator's proposal is usually a type of compromise that leaves both sides equally unhappy.

Formulas like this are educational models to consider. In the final analysis, you should feel free to utilize the style and approach that has succeeded for you in the past, knowing that you now have some additional tools and insight to draw from in the future. "Tit for Tat" allows you the flexibility to compete in order to avoid being vulnerable, yet cooperate in order to achieve a mutually beneficial and lasting outcome.



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Biography




Jeffrey Krivis is the author of two books: Improvisational Negotiation: A Mediator’s Stories of Conflict about Love, Money, Anger—and the Strategies that Resolved Them, and How To Make Money As A Mediator And Provide Value To Everyone (Wiley/Jossey Bass publisher). He has been a successful mediator and a pioneer in the field for eighteen years. Krivis is on the board of visitors of Pepperdine Law School and serves as an adjunct professor of law at the Straus Institute for Dispute Resolution. Contact him at his website, www.firstmediation.com.



Website: www.firstmediation.com

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