Mediation is Not Just a Game. Proceed with Care.
Victoria Pynchon has an interesting post on her Commercial ADR Blog. It is a fact pattern that many attorneys will recognize. It is a very real scenario. However, I don't understand why experienced attorneys would resort to the game playing. Attorneys should avoid tit-for-tat responses. They are juvenile responses to serious negotiations, and accomplish nothing for your client.
I agree that you can usually tell in a negotiation (but not always) where the other party is headed after awhile. I always assumed that the other side could tell where I was headed. The mediator in the case study did not seem very effective, or the parties were not listening to the mediator. Mediators, in my experience, do not want to convey useless and counter-productive offers back and forth.
In a recent case, the offer we received was so out of line that it almost stopped the negotiations. We had no meaningful way to respond to the offer. There was no place to go even with a meaningful counteroffer. Even the mediator told me that he told the other side that the offer was a big mistake.
Unfortunately the absurdly high or low offers do nothing to move the parties toward a settlement, and they can defeat the very purpose of the negotiations. Although we finally got to a place we thought was fair, my experience was a good example of the initial offer (or counter offer) being in the stratosphere and almost killing the effort. Many times the very high initial demand offer will be followed with major downward moves. That is at least an admission by the claimant that the initial offer was not a real offer.
Sometimes what seems like a ridicules demand or counter offer is made in earnest. In other words, the parties are truly very far apart on their assessment of the case. I hope we will see more of these case studies on Victoria's site. They are fun to consider.
But, attorneys in serious negotiation or mediation should be cautious about starting in a place that is unrealistic. That does not mean starting with your bottom line, but it does mean that the parties will do themselves a big favor by realistically assessing the case, and the merits of both their position and the position of the other side. Starting outside of at least shouting distance from a realistic range can kill what would otherwise be a good result, and it really avoids the necessary hard bargaining. Trials can be a real crap shoot, depending on the court. Negotiate with care and with a purpose.
Gavin Craig
In my experience, especially in a situation like this with an insured and insurer, there are two dynamics that make this type of posturing common: the insured feels disrespected, lied to, cheated, [you fill in the blanks] by the insurance company to whom s/he has, after all, been paying premiums; the insurer has a bottom line to meet and settlement guidelines to which s/he must adhere, and often comes with the mindset that insureds (who after all make their business lives misery) are cheating the system to get more than they are entitled to. So, while it is not "bottom-line" productive to start with demands such as those in the case study, it is not unexpected and I find that exploring this sort of posturing can be helpful in determining the real dynamic at play and how to help guide it to maximize the parties' respective positions and to achieve a satisfactory settlement. Sometimes this sort of posturing even opens the door to learning that an apology, or the other side agreeing not to do something in the future, might be worth real $$ and move the matter toward a durable settlement.