The question whether mediation should be “fair” or “just” elicited the following thoughtful response from one of our attorney readers, who, as you can tell from the context, primarily represents plaintiffs seeking to recover commercial debts allegedly owed by individuals and small businesses.
“I only think a settlement is ‘fair,’ says our reader, “when it incorporates the mathematical calculation of prospective damages multiplied by a risk factor of litigation (i.e. 80% chance of winning $100K, means an $80K settlement is fair).”
A mediated resolution that is “fair” under this definition only results, he continues,
when the other side “does the math” – most defense counsel just bluster and try to throw up “what if” roadblocks that derail a serious discussion about resolving the whole dispute. They don’t do the math, and even if they did, there is enough disagreement over the “odds” that the process is far from transparent.
“Perhaps,” says our correspondent,
we have a different interpretation of what “fairness” is. I have plenty of situations where I sue on [a] debt [where,] by the time the . . . . [contractual] interest and attorneys’ fees get worked in . . . , a $5,000 debt becomes $12,000 judgment and no [one] in the world thinks this is fair. But most eventually “settle” . . . not because they want to, or believe that the . . . settlement is “fair”, but because the option of coming up with [the funds] to hire an attorney, and then eventually lose, is less attractive than trying to pay on a monthly basis.
In this case, is the settlement fair?
From my client’s perspective, it will get paid more than 100% of its initial principal due, and this type of settlement completely negates the possibility of zero recovery for the creditor if the debtor is judgment proof. .
[Many defendants are] willing to pay to get out of the case for “peace of mind” and pay
more than what they thought was fair.
Fair resolutions only work when everyone is willing to play fairly – and because everyone (especially litigation attorneys) feels that dispute resolution is a zero sum game, the little tactics we use in litigation skew the process so ADR really becomes a big poker game. And when people hide information, and outside factors to the dispute loom larger than the dispute itself, it becomes less about fairness and more about force.
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