MEDIATIONS ARE NOW BEING CONDUCTED
ONLINE OR IN PERSON (PER CDC GUIDELINES)

 

25 Division Ave., South, Suite 500
Grand Rapids, MI 49503
(616) 682-7000

MEDIATIONS ARE NOW BEING CONDUCTED
ONLINE OR IN PERSON (PER CDC GUIDELINES)

Breaking the First Offer Logjam in Mediation

March 15, 2015

LogjamRecently, in a mediation training, a new mediator asked me what to do when a defendant is unwilling to submit an offer because they are convinced the case will be thrown out of court. The following technique was designed for mediators, but it can also be effective for lawyers in negotiations when their own client is reluctant to make a settlement offer.

So, where the defendant is convinced the judge will throw the case out of court, I first ask questions (in joint session whenever possible) to discover the basis for this belief and to hear the plaintiff’s opposing reasoning. Once both sides have had an opportunity to explain and advocate their opposite positions, I meet privately with the defendant. In that private meeting, I accept the premise the defendant will win when their motion is heard. Then, I ask how long it will take and how much it will cost to get there? I ask them to include a range of values for the time which will be invested by the client and their employees before the motion is decided. Next, I put the range of numbers on a flipchart or whiteboard.

Then, I ask, “And when you win, is it possible the Plaintiff will take an appeal? I mean, what does she have to lose besides some costs, especially if her attorney has the case on a contingent fee? Even if it’s a long shot, she has an incentive to file an appeal, right?” Next, I return to the flipchart to add the additional costs to the other costs of “winning.” Then, I total up all of the other costs and leave a blank space for “+ Legal Fees” at the bottom with “$____” below it.

To fill in the legal fees blank, I ask the defense attorney to wait until I leave the room (either to meet with the other side or just to provide some privacy) to estimate the least and most number of hours they will spend preparing, filing, and arguing the motion and any appeal. Then, once they have a high and low, to multiply those two figures by their hourly rate(s) and to add the totals to the equation. I explain that when I return, I will only see the totals, not their hours or rates.

When I do return, I ask, “So, if your best case scenario requires you to spend between $X and $Y to get closure, but it will take three months (or whatever length of time they estimate) to get there, with no guarantee of success, wouldn’t it be worth at least that much to get closure today?” Usually this helps them set a floor for negotiation and an offer to take to the other side.

If the defendant still refuses to put an offer on the table, I ask if they are interested in seeing what the plaintiff is thinking in terms of settlement? I then explain it will take an offer from them to get an offer from the plaintiff. Next, if there is still reluctance, I ask, “How likely is an offer of $X (X = cost estimate from above) to be accepted by the plaintiff?” “Not very” is a typical response. “So, it really costs you nothing to offer $X, right? Either it will be accepted and you will have saved that amount and possibly a lot more, or it won’t be accepted so you won’t actually pay it. And it could elicit a counteroffer which would give you an insight into the other side’s valuation of the case. Would you like to know that to inform any future negotiations?”

If the defendant cracks the door with a small token offer for me to take to the other side, I next ask, “And (insert defense attorney’s name), I know you are certain your client will win, but in my years in practice, I could never guarantee a client victory, because there are too many variables I just could not control; even if it was reversible error. So if the unthinkable happens and the judge rules against you, then how much does this cost estimate go up? Why don’t you take some time with your client to discuss this while I talk with the other side about the offer you just authorized me to convey. I encourage you to use the board to lay out the costs so you can make an assessment of your worst case scenario.” Then, I ask the defendant to complete this estimate while I take their offer to the plaintiff.

This technique has helped break the logjams which sometimes occur early on in mediation — and it’s much safer than dynamite. Happy negotiating!

Author: thepeacetalks

Grand Rapids Mediator Attorney and Arbitrator

Related post:

BINDING AGREEMENTS IN MEDIATION

By Robert E. L. Wright, Mediator and Arbitrator A federal district judge in Detroit has upheld rulings by a bankruptcy...

Special Guide: Do-It-Yourself Dispute Resolution

Resolving Disputes on Your Own

Email Address *
First Name
Last Name



* Required fields

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *