Category Archives: Negotiation

Learn To Negotiate Like A Transactional Lawyer

negotiationI recently had lunch with  Mark Fingerman, a Los Angeles lawyer who has successfully transitioned from being a litigator to a full-time mediator. As I often do, when I get an opportunity to talk shop with mediators, I asked Mark some of his tips for successful negotiation. To my surprise, although Mark had been a litigator his entire career, his advice was to go a different direction entirely. “Litigators can increase the likelihood of success at mediation,” he said, “by acting more like transactional lawyers.”

This notion immediately made a lot of sense. After all, while it’s the mission of a transactional lawyer to get the best possible deal and terms for his client, their negotiations should very rarely result, as it so frequently does in the litigation context, in a stalemate. While a party to a lawsuit will sometimes view proceeding to trial as the best alternative to a negotiated agreement (aka “BATNA”), the job of transactional lawyer is generally to reach agreement and get the deal done.

While Mark’s advice made a lot of sense to me in the abstract, I started thinking what does this mean? What does it mean to negotiate less like a litigator and more like a transactional lawyer?

I followed up with Mark after our lunch, and suggested this might be fertile ground for a blog post. He was pleased for the opportunity to explain his statement in more detail, and also suggested that this very topic is one that he covers extensively in a CLE program he offers to law firms and bar associations called Mediation: Prepare to Succeed.† Here’s what Mark said:

“This involves, among other things: preparing for the mediation as a negotiation, including identifying the interests of the parties, settlement ballpark and necessary deal points; focusing at the mediation on reality and problem solving instead of advocacy and pressure; using the mediator to gain and communicate information useful to making a deal rather than trying to turn the mediator into a super advocate.” 

A major difference I see in Mark’s approach from the approach we typically take is his shunning of our common tendency to try to leverage the mediator to apply pressure on our opponent that we cannot otherwise apply. This is indeed a departure.

After all, we often draft extensive mediation briefs, with cites to specific exhibits, that are little different from the brief we might submit if the neutral were sitting as an arbitrator who would issue an award, and not a mediator engaged to facilitate settlement. In an earlier era, it was common to do a mini-presentation of the arguments and evidence we expect to present at trial. In sum, we attempt to persuade the mediator of the merits of our case, with the hope she will step into the next room, caucus with our opponent, and, acting as our “super advocate,” pound them into submission.

So, if there’s no pounding, what should go on? Just as Mark points out, the mediation becomes less about applying pressure and more about “focusing . . . on reality and problem solving.”

This is all good. But I still found myself wondering more about how transactional lawyers approach negotiations. So I consulted a book about lawyering from the perspective of a career transactional lawyer. In Lawyering: A Realistic Approach to Legal Practice, M&A specialist James C. Freund says this in his introduction to the discussion of negotiating a deal:

“Most of what takes place in the course of negotiations can be characterized as either attempting to get a leg up on your adversary or striking a compromise between your respective positions. I firmly believe that the key to effective negotiating lies in achieving a functional balance between these two seemingly inconsistent aspects. If all your efforts are directed toward gaining advantages over your adversary, you will undoubtedly come on too strong; and where the parties possess relatively equal bargaining power, with freedom to consummate the transaction or not, you may cause your client irreparable harm–such as losing the deal.” (Id. at 188 (emphasis added).)

Again, from a transactional lawyer’s perspective, the goal is not to pound the other side into submission or walk away with no deal. Instead, in the interest of getting the deal done, Freund counsels that we strive to achieve a balance between getting a leg up on our opponent and striking a compromise. Makes sense, doesn’t it?

†Mark Fingerman encourages anyone interested in this presentation to reach him by email at: mfingerman@adrservices.org.


When All You Hear Is “No”

gtreHave you ever found yourself negotiating with a brick wall? Maybe not a wall, but an opponent, coworker, spouse or five-year old so entrenched in her position that it seems to take a herculean effort to procure even the slightest movement?

I’ve previously quoted from the slim but powerful text about negotiation strategy, Getting To Yes. One of the authors of that landmark, William Ury, subsequently wrote Getting Past No: Negotiating With Difficult People. I don’t know about you, but anyone who doesn’t go along with my program is clearly difficult.

Ury developed a five-step strategy for making progress with these . . . er . . . difficult people. The first step is to take your own emotions out of the equation; this will help prevent you from reacting without thinking, which can immediately stall or even end productive negotiations. Ury calls this Going to the Balcony. He describes it thusly:

“When you find yourself facing a difficult negotiation, you need to step back, collect your wits, and see the situation objectively. Imagine you are negotiating on a stage and then imagine yourself climbing onto a balcony overlooking the stage. The ‘balcony’ is a metaphor for a mental attitude made of detachment. From the balcony you can calmly evaluate the conflict, almost as if you were a third-party. You can think constructively for both sides and look for a mutually satisfactory way to resolve the problem.” (Getting Past No (Bantam 1991), p.17.)

Step two is to Disarm Your Opponent. Here, I picture Jason Bourne using some slick Krav Maga move to take and use his opponent’s own weapon against him. Sadly, Ury’s tactic is not so sexy. But it’s easier. The goal is to step to your opponent’s side. This requires active listening, which gives your opponent an opportunity to articulate her position, then paraphrasing it back to her. Ury writes, “It is not enough for you to listen . . . [h]e needs to know that you’ve heard what he has said.” (Id. at 39.) Once you both agree that you understand your opponent’s position, the second part of this step is to create a favorable climate for negotiation. This can result from one or a combination of efforts, which can include  acknowledging our opponent’s feelings and agreeing wherever you can, which can help you “accumulate yeses.” Ury summarizes this step as follows:

“[T]he hurdles you face are your opponent’s suspicion and hostility, his closed ears, and his lack of respect. Your best strategy is to step to his side. It is harder to be hostile toward someone who hears you out and acknowledges what you say and how you feel. It is easier to listen to someone who has listened to you. And respect breeds respect.” (Id. at 54.)

Ury’s third step is to reframe the dispute. “Reframing means recasting what your opponent says in a form that directs attention back to the problem of satisfying both sides’ interests. . . You act as he were trying to solve the problem, and thus draw him into the new game.” (Id. at 61.) This is tough to explain without an example; fortunately Ury provides one. He cites the 1979 SALT II arms talks with Soviet leadership. The US sent a very junior senator, Joe Biden, Jr., to Moscow to negotiate with (read: against) Soviet Foreign Minister Andrei Gromyko. Regardless how you feel about Joe Biden today, he certainly held his own on this early mission.

Gromyko quickly articulated the Soviet’s unequivocal nyet (no) to the US proposal. When it came time for Biden’s turn, here’s what happened:

“Instead of arguing with Gromyko and taking a counterposition, he slowly and gravely said, ‘Mr. Gromyko, you make a very persuasive case. I agree with much of what you’ve said. When I go back to my colleagues in the Senate, however, and report what you’ve just told me, some of them–like Senator Goldwater or Senator Helms–will not be persuaded, and I’m afraid their concerns will carry weight with others.’ Biden went on to explain their worries. ‘You have more experience in these arms-control matters than anyone else alive. How would you advise me to respond to my colleagues’ concerns?’

Gromyko could not resist the temptation to offer advice to the inexperienced young American. He started coaching him on what he should tell the skeptical senators. One by one, Biden raised the arguments that would need to be dealt with, and Gromyko grappled with each of them. In the end, appreciating perhaps for the first time how the amendment would help win wavering votes, Gromyko reversed himself and gave his consent.” (Id. at 61-62.)

See what Biden did? “He reframed the conversation as a constructive discussion about how to meet the senators’ concerns and win ratification of the treaty.” (Id. at 62.) When trying to reframe, Ury suggests posing questions to your opponent. Ask why, why not, what if, and, as Biden demonstrates, how would you do it. This turns your opponent into a collaborator.

Step 4 of Ury’s strategy is to make it easy for your opponent to say yes. He calls this building them “a golden bridge.”  This strikes me as connected in a fundamental way with Ury’s third step, reframing the issue. When Biden solicited Gromyko’s advice, he was, in effect, building him a golden bridge to see the issue from Biden’s (and, therefore, the US) perspective and cross the golden bridge by reversing his entrenched position.

According to Ury, what’s important is to resist the temptation to tell your opponent anything. Telling, aka “pushing may actually make it more difficult for your counterpart to agree. It underscores the fact that the proposal is your idea, not his.” (Id. at 90.) If you can persuade your opponent–overtly or covertly–that your proposal or goal is actually her idea, this builds a golden bridge making it very easy for her to adopt your position. Ury makes several suggestions, including helping your opponent save face, offering her choices and help writing her victory speech back to her superiors or contingent.

Step 5 is when you crush your opponent–bring her to her knees, right? Actually, no. In the final step of Ury’s strategy, while you make it hard for them to say no, this is done by bringing them to their senses, not their knees. Unlike the “power game” which we might instinctively resort to, which involves making threats if your opponent doesn’t agree to your terms, Ury urges instead that we think in terms of educating your opponent of what the alternative is if an agreement is not reached. Again, the better way to educate is not by telling your opponent what you’re going to do, or telling her what will happen, but instead to ask reality-testing questions. Here are three reality-testing questions Ury likes:

  1. “What do you think will happen if we don’t agree?”
  2. “What do you think I will do?”
  3. “What will you do?”

Ury acknowledges that this won’t always work. He reminds us of one of the most important concepts from Getting To Yes, formulating your own Best Alternative To A Negotiated Agreement (BATNA). Before you resort to actually implementing your BATNA, Ury suggests “you should let your opponent know what you intend to do. You want to give him a chance to reconsider his refusal to negotiate.” (Id. at 117.)

The book obviously covers these strategies better and in greater detail. I recommend Getting Past No to anyone who spends a good part of her career–or life–negotiating with difficult people. Then again, don’t we all?


One Lawyer’s Secret Weapon

yrtA lawyer I know, he has a Secret Weapon. When I get around to revealing it, you’re going to be surprised, because it’s so obvious. But it totally works.

First, a pop quiz:

Question One: What do you do when you’re trying to negotiate with an opposing lawyer over something small, but important–say an extension to respond to discovery–which, among professionals–people who wear white collars and silk ties to work, who attended years and years of expensive schooling, passed excruciatingly difficult examinations, swore an ethical oath–would seem to be an easy thing to agree upon–what do you do when this opposing lawyer unreasonably refuses, without any explanation, this simple, routine request?

Question Two: What do you do when you’re sitting across from that same lawyer in a cramped conference room, taking his client’s deposition and, over the course of several hours, he repeatedly insults and demeans you, challenges you to justify every third question, asks no less than five times “how much longer” you’re going to be, persistently interrupts you mid-question to interject the start of what will surely be a long, inappropriate speaking objection, and instructs his client not to answer at least seventeen times?

These questions are not directed to what you do the next day, or whenever you ultimately resort to serving objections, or moving the court to compel answers to the deposition questions and seeking sanctions, or asking the court to appoint a discovery referee.  I’m asking what do you do in the heat of the moment, while your heart rate is still elevated.

If you’re me–and believe me I’m not bragging here–you take everything personally, get pissed off, turn beet red and start talking with the snappy sarcasm of a desperate salesman in a Mamet play. You see: I haven’t mastered the Secret Weapon. I can talk a good game. I’ve written over and over about the wisdom of maintaining a professional, cooperative demeanor in litigation. But when the rubber meets the road I struggle to avoid stooping to an unprofessional opponent’s level, or (gasp) worse. No, I haven’t yet mastered the Secret Weapon.

But you can. The good news is that YOU CAN master the Secret Weapon. When the lawyer I’m thinking of is faced with the above, or worse, he pulls out his Secret Weapon and does this: he simply acts nice. He meets rudeness, lack of professionalism–you name it–with an oversized bucketful of fluffy pink kindness.

It’s impressive to see. Picture Roger Federer being pelted with a barrage of ugly, aggressive cross-court winners and absorbing and converting the energy, speed and spin of each angry ball, only to gracefully return it with nothing more than an easy, gentle lob. In fact, like CIA assassin Jason Bourne, whose manner of calm resolve seems actually to increase in a disturbing direct proportion to any rising threat of imminent capture or death, this lawyer’s attitude of kind, gracious, solicitude seems to actually grow in direct proportion to the lack of professionalism of an opponent.

He invariably takes the high road. He literally kills them with kindness. Is it always easy for him? I doubt it. Is he sincere in his “attitude of kind, gracious, solicitude”? Who cares. He’s getting the job done. In most encounters, his weapon immediately deflates a situation that in my fat, clumsy hands would become a runaway train wreck. It works. It really does. Try it next time you’re dealing with a total asshole less than professional member of our profession, you’ll see.


When You’re Negotiating Against A More Powerful Opponent

683bb0e0a142476de0c3bb165379550cOne of my favorite books about negotiation is Getting To Yes by Roger Fisher and William Ury. As the book jacket suggests, it really is “for everyone who has ever worried about what to do in a disagreement or dispute.”

Since I suspect that the majority–if not the vast majority–of negotiations are between parties of unequal bargaining power, I thought it might be interesting to dip into the book and see what Fisher and Ury recommend one do when he/she/it is negotiating against a more powerful opponent. One of the tools the authors advocate in this situation is for a negotiating party to formulate a Best Alternative To A Negotiated Agreement (BATNA). Just by knowing their BATNA a party becomes empowered in any negotiation.

The easiest way to get a feel for what the authors are talking about is by using their example:

“Consider a wealthy tourist who wants to buy a small brass pot for a modest price from a vendor at the Bombay railroad station. The vendor may be poor, but he is likely to know the market. If he does not sell the pot to this tourist, he can sell it to another. From his experience he can estimate when and for how much he could sell it to someone else. The tourist may be wealthy and ‘powerful,’ but in this negotiation he will be weak indeed unless he knows approximately how much it would cost and how difficult it would be to find a comparable pot elsewhere. He is almost certain either to miss his chance to buy such a pot or to pay too high a price. The tourist’s wealth in no way strengthens his negotiating power. If apparent, it weakens his ability to buy the pot at a low price. In order to convert that wealth into negotiating power, the tourist would have to apply it to learn about the price at which he could buy an equally or more attractive brass pot somewhere else.” (Id. at 107.)

Since I’ve visited the Bombay railroad station–it’s actually called the Victoria Terminus–this was an easy bargaining situation to picture. The authors just left out the part about the cows wandering along the platform. In any event, as they point out, “the relative negotiating power of two parties depends primarily upon how attractive to each is the option of not reaching agreement.” (Id. at 106.) If you can have a very attractive BATNA, your chips have greater value.

How do you strengthen your BATNA? The authors suggest this “requires three distinct operations: (1) inventing a list of actions you might conceivably take if no agreement is reached; (2) improving some of the more promising ideas and converting them into practical options; and (3) selecting, tentatively, the one option that seems best.” (Id. at 108.)

If we transition this discussion into a familiar setting, the pre-suit mediation of a hypothetical employment dispute, it may become easier to see how the whole BATNA thing might play an important role. Consider, for example, a single plaintiff who has a claim against her employer for gender discrimination. The parties engage in a mediation to see if the case can be resolved before she actually files a lawsuit. The individual employee might be anxious going into the mediation, since her employer is a large corporation with sophisticated lawyers at its disposal (at least they look sophisticated) and both she and her lawyer know it will cost a lot and be an uphill battle to pursue the case if the corporation is not inclined to settle. This sounds like an unequal bargaining position, doesn’t it? If they go in “cold” as it were, hinging their hopes on the corporation’s generosity, they’re likely to get steamrolled into agreeing to a settlement far below full value.

What can they do to enhance their BATNA and take away some of the corporate defendant’s power? Let’s apply the 3 step approach from Getting To Yes. First, the plaintiff and her lawyer “invent a list of actions” they might take if the dispute doesn’t resolve at mediation.  Here are some I invented for them:

  • Go ahead and file a lawsuit and serve aggressive discovery. (True, it’s not very original.)
  • Explore pursuing a class action instead of a single plaintiff case.
  • Aggressively investigate whether there are quality witnesses who will support plaintiff’s case.
  • Propose a second mediation session after the plaintiff has completed some (hopefully damaging) discovery.
  • Associate additional reputable counsel to help level the playing field.
  • Explore forum shopping options. Perhaps the corporation expects a lawsuit would be subject to mandatory arbitration, but the facts or current state of the law weakens the assumption that arbitration will be a suitable forum?

Step 2: “improving some of the more promising ideas and converting them into practical options.” I like the idea of a class action as a practical alternative option to a single plaintiff case. This is bound to put pressure on the corporation, as a class action carries both greater risk and greater expense. How to “improve” this idea? Do some investigation. Talk to plaintiff’s female colleagues. Even if their cases would not be particularly strong if pursued individually, they might have a chance in a class action situation.

Step 3: selecting which option seems best. Let’s assume there is some chance the plaintiff and her lawyer could organize and successfully pursue a class action (but would still prefer to settle her single plaintiff case at mediation), the question becomes whether to share your option with the opponent during the bargaining process. The authors say this:

“The desirability of disclosing your BATNA to the other side depends upon your assessment of the other side’s thinking. If your BATNA is extremely attractive–if you have another customer waiting in the next room–it is in your interest to let the other side know. . . However if your best alternative to a negotiated agreement is worse for you than they think, disclosing it will weaken rather than strengthen your hand.” (Id. at 109.)

Here you will need to make an honest assessment. Is the notion of converting the plaintiff’s case into a class action really just pie-in-the-sky? The corporation’s lawyers are naturally going to wonder, if the plaintiff reveals her class action alternative, why her lawyer isn’t pursuing that in the first place if there’s really a viable class. The corporation, knowing class certification can be a challenge which, if lost, tends to shake out meritless individual claims, might not be particularly cowed by the prospective of a weak class action.

On balance, I would probably not reveal this BATNA to the opposition, even if the plaintiff and her lawyer believe a class action is a viable alternative. What’s important is the actual balance of power, not just the corporation’s perception of the balance of power. Going into the mediation with the knowledge that she has a decent BATNA should give the plaintiff and her lawyer the resolve not to cave too easily.


Settlement Negotiations: Anchors Aweigh!

jhgfdsBuyers snatched up a weathered house on my street late last year, and I soon learned they intended to remodel and “flip” it for a profit. A couple of weeks ago, the house, completely remodeled with the addition of a swimming pool, went on the market for a price that frankly stunned many of us in the neighborhood. Naturally, everyone likes to make a profit, particularly if the whole point of buying the house was to fix it up, turn around and sell it. But, these “flippers” had set the asking price at a fantastic 3½ times the home’s original sale price, well outside what any of us thought was reasonable.

This was running through my mind when I came across an article in last Friday’s Wall Street Journal about the wisdom of pricing real estate too high or too low. The article cited a recent study in the Journal of Economic Behavior & Organization addressing the notion of “anchoring.” Discussing this study, the WSJ article said:

“The research explores a behavioral trait called ‘anchoring.’ That is a common tendency to rely on the first piece of information offered (the ‘anchor’) when making decisions. Once buyers have an anchor, they typically interpret other information involved in the sale around it.”

It struck me that this “anchoring” phenomenon must have some application in other corners of the negotiation world, including what I do, settlement negotiations. We toss around terms like “low ball” and “inflated demand,” but I’ve never given too much thought to the deeper psychological implications of the launching point for negotiations.

I decided to solicit some thoughts on this point from experts, so I asked two prominent Los Angeles neutrals, Mark Loeterman (mlmediation.com) and Jeff Kichaven (jeffkichaven.com), for their view on the notion of “anchoring.” First, though, I reflected how I receive an extremely high asking price when shopping to purchase a piece of property or commencing a settlement negotiation. I’ve never had the experience of shopping for real estate without some kind of budget. If a house is priced outside that budget, even factoring in some cushion for negotiations, I won’t even look at it.

In the context of settlement negotiations, a ridiculously high demand can have a similar effect. While I don’t usually have the luxury of passing or ignoring a settlement demand, an outrageously high demand can have the effect of “anchoring” in my mind the notion that the case probably won’t settle, at least until something drastic happens to force my opponent to be reasonable.

Both neutrals I spoke with echoed this as a legitimate concern when dropping anchor. Jeff Kichaven pointed out that, “Sometimes opening numbers are so high, or so low, that they seem untethered to the realities of the negotiation, and are dismissed out of hand.”

What to do? If anchoring works because it sets the stage for all negotiations that follow, but must not be so overreaching that it “alienates” (my term) the parties, then it makes sense to push the envelope, but not too far. As Mark Loeterman remarked, “For anchoring to work, set initial offers and demands at the far edge of the credible zone so they can be rationally defended and invite further bargaining.”

Otherwise, it is not clear whether an overly aggressive opening demand or offer can be forgotten or cloud the entire negotiation. As Jeff Kichaven pointed out, “The interesting question to which I do not know the answer is whether “absurd” numbers also influence the later negotiations, or whether they are truly forgotten, and forgiven, as the negotiation goes on.”

So, when commencing negotiations, drop anchor, but do it with care, lest you do more harm than good.


Lawyers: Channel Your Inner Spock

$T2eC16dHJHwE9n8ii-6,BQ0WzPYm(w~~60_35The media, film, and TV have long fueled a belief that the most important quality any lawyer can possess is the ability to conduct a withering cross-examination of a pivotal witness. As practitioners, we know better. The ability to think, argue and write clearly and persuasively is vastly more useful to the careers of most lawyers, at least in the real world.

One quality that does not receive much attention, but that is unquestionably something our clients pay for and (should) expect, is the ability of lawyers to approach, apprise and navigate through any situation using logical, intelligent analysis, with a minimum of ego or emotion.

I recently came across an article, in the May, 2013 issue of For the Defense magazine, in which a seasoned Georgia mediator, Christopher Ziegler, suggests, in the context of mediation negotiations, that we emulate Mr. Spock from an obscure and little known TV show called Star Trek.

I’ll confess up front that I never watched much Star Trek. This isn’t to suggest that I was doing anything better with my time. I wasn’t, unless Wild Wild West or Gumby could somehow be considered higher quality programming.

My point is that I never really paid much attention to the show or to Mr. Spock’s qualities. But in reading Mr. Ziegler’s article, “Two Emotion-Based Enemies Of The Good Deal,” I’m convinced he is onto something. Ziegler writes that attorneys and their clients mediating cases “should never act out of emotion . . . [but should adhere to a] plan, which is presumably based on analysis, logic, and reason.” Id. at 37.

Ziegler suggests that Mr. Spock, being half human and half Vulcan, “was extremely intelligent, pragmatic, and well-reasoned, never allowing his emotions to foil the best and most ‘logical’ decisions.” Id. at 38.

I cannot think that Ziegler is suggesting we should be Vulcans who are altogether devoid of emotion. After all, compassion and empathy are vitally important traits for any professional. We are not machines or computers. Rather, his point is that, when participating in a mediation, our clients should be able to look to us to advocate and negotiate in a cool, objective, non-emotional way. Discussing Spock, Ziegler writes:

“Whenever a tough decision had to be made, Spock’s decision, or his advice, was always based on the most logical, intelligent analysis, not on ego or emotion. Thus, if the most logical, best way to save the entire crew from some dilemma meant that Spock had to die, Spock would announce without emotion or drama that the necessary decision would be the course of action that would result in his death. Spock had no ego, felt no anger, and shed no tears. With an analysis free from emotion, Spock could matter of factly make a cool-headed, rational decision even if emotion would have frozen others.” Id.

While Mr. Ziegler writes about striving to quell ego and emotion during mediation, I would argue that the best lawyers are those who try to maximize cool, logical analysis and minimize ego and emotion in every aspect of their practice, not just during mediation. Certainly, a Spock-like lawyer does not storm out of a mediation early just because his opponent is not making rapid or satisfactory movement (Ziegler’s point). But he also refrains from ego-driven, ad hominem attacks during depositions or in law and motion papers. He does not allow his ego to escalate a conflict where his client’s interests are better served by seeking a compromise or otherwise de-escalating the conflict. The point is that the best lawyers are not just monkey-scribes, ghost writers or hired guns. The best lawyers bring sanity to situations that can otherwise be less than sane.

And I expect some of the very best lawyers may also have pointed ears.


Demystifying The Notion Of A “Mediator’s Proposal”

hhyygEvery lawyer whose practice includes mediating civil cases is bound at some point to come face to face with the concept of a “mediator’s Proposal,” also called a “mediator’s number.”

Here’s what happens: the parties have been mediating several hours or all day and they’ve reached a stalemate. For sake of example, let’s say that the plaintiff in an employment dispute has reduced her demand to $250,000, but signaled she does not intend to negotiate further without some radical movement by the defendant. At the same time, the defendant employer’s counsel has told the mediator they do not intend to come above $150,000.

At this juncture, the mediator could adjourn the mediation, particularly if she feels the parties have been negotiating in good faith and there are legitimate, insurmountable obstacles to settlement. However, if the mediator believes both sides genuinely would like to resolve the dispute, but just can’t reach a consensus, even after considerable arm-twisting, she may offer to give a “mediator’s number” as a theoretical last-ditch attempt to reach a settlement. (I say theoretical here because most hard-working mediators will continue the process even after the mediation session has adjourned through telephone calls to the lawyers and/or corporate representatives for both sides.)

The mediator meets together with all counsel, but not the parties or corporate representatives. She gives the parties a number at which she thinks the case should settle, recognizing it is going to be less than the plaintiff demands, but more than the defendant is presently willing to offer. In the hypothetical above, the mediator might give $210,000 as her “mediator’s number.” The attorneys consider the number and either recommend to their client that they take or reject the number. Any party that is willing to accept the number advises the mediator confidentially. In this way, if only one side is willing to accept the offer, the other side is not made aware of this fact, which would surely jeopardize the willing party’s ability to credibly negotiate for a more favorable number at some later time. However, if both (all) parties confidentially accept the “mediator’s number,” she advises counsel and a settlement is reached.

I’ve heard of another version of this, in which each party confidentially tells the mediator his/her/its “bottom line” number. If the parties are within a previously agreed upon percentage or dollar amount, the mediator then discloses this spread as a “bracket” and urges the parties to find a meeting place.

I’ve never had a dispute in which the mediator gave a “mediator’s proposal” and the case did not ultimately settle at or near that number. But that doesn’t mean a “mediator’s number” is a good idea in every case. First, if you get a clear impression that the mediator is not completely impartial, then you might get a number that is skewed in favor of your opponent. It’s not always easy to tell if the mediator is biased, since part of her job is to “sit on” both sides in order to get them to come to the table. What you might interpret as evidence of bias might actually be a mediator doing a damn good job.

Second, if you and/or your client are truly entrenched in your position, and you really do not want to pay much more than you’ve offered, a “mediator’s number” could have the adverse effect of giving your opposition some undeserved false hope that her case is worth more than it reasonably should be. Until proven otherwise, I generally expect neutrals, both mediators and arbitrators, to “split the baby” in every instance. Thus, in my example above, I think it is much more likely that the mediator will conjure a number somewhere in the middle between the parties’ respective positions, than that she would give a number that is especially favorable to the defense–even if she thinks the plaintiff’s case stinks. Remember, the mediator’s job is to get the case settled, not make sure the settlement is appropriate to the facts of the case.

Finally, the possibility of a “mediator’s proposal” illustrates a larger point concerning mediation. Just as attorneys come in varying sizes, shapes and skill sets, so do mediators. It pays to be picky when selecting your mediator. Do your homework. This does not mean holding out for a mediator that is bound to be on your side. On the contrary, it can be much more important to have a mediator whose opinions your opponent (and her client) are likely to credit. But you should hold out for someone you reasonably expect will work hard to settle the case.


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