PGP Mediation Blog by Phyllis G. Pollack
I had an interesting mediation the other day. I say “interesting” as I am not sure what other adjective to use.
Like most of my mediations, it involved an automobile. The plaintiff claimed that the defendant, a used car dealer, misrepresented several important details in the financing of the used automobile that she was purchasing. As a result, she was suing.
After an initial discussion of the facts of the case with plaintiff and her attorney, I asked them how they would like to see the case resolved. The plaintiff’s attorney stated simply that she would like to see her client “made whole” and also have her attorneys fees paid. I took this to mean to reimburse plaintiff everything she paid out so that she would be in the same position that she was on the day before she purchased the automobile and confirmed my assumption with plaintiff and counsel. I inquired about the amount of the attorneys’ fees to have the complete picture and then excused myself.
During the mediation, defense counsel advised that her client was willing to unwind the transaction as a matter of economics. That is, while the dealer disagreed with plaintiff on the merits, wise business practices indicated it made sense to unwind the transaction and move on.
So, in my conversations with defense counsel and the dealer, we discussed the amount of the down payment, the estimated amount of the monthly payments made by plaintiff to date, the amount sought in attorneys’ fees, and the very minimal amount remaining on the loan. As an initial offer, the dealer was willing to offer plaintiff approximately 88 % of the total amount of these sums.
I walked into the other conference room to speak with plaintiff and her counsel and advised that the dealer was willing to pay $—. Immediately, plaintiff started shaking her head, apparently greatly disturbed at such a “low” amount of money. She insisted that she wanted “all of her money” back. When I explained that this sum represented almost all ( i.e., 88%) of her down payment, an estimate of the total monthly payments she made plus attorney’s fee (that is, “all of her money”), she was still not willing to accept this. I asked her if she knew how much she made in monthly payments. She did not know. I asked her if she had contacted the finance company to find out; she responded that she did; it was sending her the paperwork in the mail which she had not received. Thus, she had no idea how much money she had paid towards the vehicle between the down payment and her monthly payments!
Her attorney also had no idea of the amount needed to “make her whole”. It soon became obvious that plaintiff’s counsel had not had any detailed discussions with plaintiff about the amounts of money at issue or what she could expect in settlement or at trial. While plaintiff wanted a sum that would “make her whole”, neither she nor her counsel had absolutely any idea what this sum would be.
It also became clear that somewhere along the line, plaintiff had spoken to third parties (perhaps even other attorneys) who told her to the effect that she had a “million dollar” case, i.e. worth much much more than what reality dictated. And, her counsel was unable to disabuse her of this notion.
Seeing plaintiff’s reaction to the dealer’s offer, I asked her for a counter proposal. Sadly, she was unable to come up with one. Even after speaking with her counsel for several minutes, plaintiff refused to make a counter demand. I suggested she call the finance company to find out how much she had paid. She declined to do so.
The mediation ended abruptly; even though the defendant was there to settle and had made a “good faith” opening offer towards this end, plaintiff and her counsel had no clue what it would take to settle the case and/or were quite unwilling to settle, holding out for some unknown, unstated, unrealistic amount!
The lesson is obvious; before negotiating anything, know what it is that you want. Do not start negotiating with only the vaguest of notions of what it will take to “make you whole”!
… Just something to think about.