Every civil case will eventually require a decision as to whether to accept a certain result through settlement versus marching on to an unknown result at trial. Both sides in a civil case need to independently make this analysis.
The Known versus The Unknown
Our built in human bias favors accepting the known versus the unknown. However, when a demand is too high or an offer is too low, the decision is much easier to make in choosing the unknown. However, there may be legitimate reasons for demands that are too high or an offer that is too low. If those reasons were discussed and evaluated, then even those cases with high demands or low offers could be settled.
Using Mediation to Evaluate the Known
The challenge at mediation is to get the parties to the point where they legitimately feel they now have a choice between a known settlement versus the unknown result at trial. When mediation breaks down, it is often because a party still feels there is too much uncertainty and they do not have a choice between the known versus the unknown at trial. Mediation results in a settlement when there is an overlap of interests for both parties to resolve the case with certainty. The question is what can the parties do at mediation so they can truly evaluate and decide whether to resolve their case?
The Three Requirements for Evaluation
There are three primary factors that influence how a monetary offer is evaluated, namely information, trust, and finality. These factors are related and influence each other. Any party considering a settlement will need information, trust, and finality in order to accept a monetary offer.
Sharing Information
The first step of the evaluation process will require that information is shared as to why the monetary offer was made and how it was calculated. This information normally includes factors impacting liability and the calculation of damages. It is here that the disputes as to the proof of liability and damages are crystalized and debated. This leads to an honest discussion of the issues where the parties can then evaluate each side's arguments. Arbitrary offers or those that are take it or leave it, without any discussion do not satisfy the need of the other party to understand and to be able to evaluate the offer.
Establishing Trust
The second step of the evaluation process requires trust in that the information being shared is accurate. If a party does not trust that the information is accurate or complete, the evaluation process is short-circuited. When there is a lack of trust, a party will feel that more information is needed. This prevents an analysis between the certain versus the unknown since the party is unable to evaluate the offer. In all instances, honesty and frank discussions are needed. Any type of deception, holding back, or incomplete disclosures will only derail settlement discussions. The great thing about mediation is that it is a confidential process so these type of honest discussions can take place without repercussions.
Conveying Finality
The third step of the evaluation process requires finality. Finality in this context means the best offers have been conveyed and there is nothing more to do than to evaluate. Every party at mediation needs to feel that either the highest offer or lowest acceptable demand has been made. Without finality, there is no compelling reason to make a decision as one can always think that there is a better deal to be had. At some point, mediation must result in best offers that are conveyed as final and best.
The Takeaway
In order to enhance mediation outcomes, the parties must be able to evaluate best offers so they can decide between a known settlement outcome versus the unknown result at trial. A known settlement outcome can be evaluated only when information as to why and how the offer was calculated, there is rapport and trust between the parties, and there is finality behind the offers as being best and final. It is only at this point that a party can truly evaluate an offer in terms of making a decision between the known and unknown. Prior to and during mediation, lawyers can enhance mediation outcomes by sharing information honestly, having candid discussion as to their views of liability and damages, and ultimately bringing finality to the process by conveying a best and final offer.
Less conflict. More resolution.
Patrick Russell
Miami Florida Mediator
Meaningful Mediation is Ethical, Mindful, and Strategic
