Continuing the Conversation about Mediation and Settlements!
I was glad to see the conversation continue about settlement and process and the view from the perspective of the client. I have my own view point and I find myself agreeing with points made by both Max Kennerly at Litigation and Trial, and Victoria Pynchon at Settle It Now Negotiation Blog.
Why Do Cases Take so Long to Settle?
Max tells an all to accurate tale of a case where everyone knows there is liability, but they play around (another word for discovery) for a year without ever resolving anything until the trial is near. After the year the parties settle in a range the attorneys on both sides could have predicted at the very beginning.
Do the Clients Know what is Going On? Whose Money is it Anyway?
So why do parties allow their attorneys to go through the "dance" and keep a case going? My first theory is that the clients (except perhaps insurance company clients) don't know what is going on. The plaintiff usually doesn't. In a business dispute parties spend vast sums of money on discovery, finding and reviewing thousands of documents. Yet in the end there are usually fewer than 10 documents that matter and usually (not always) these are found relatively early.
My second theory is that it is easy to allow inefficient and non-productive litigation to continue if your using OPM (Other Peoples Money.) It could be the shareholders money, the insurance companies money or anyone's money except the decision maker. When parties are using their own money - the dynamics can change once they receive their first billing. This is just simple economics: Will the cost of continuing exceed the cost of the possible benefit?
When there is litigation between a couple small businesses, their attention to the matter increases with the cost. When the parties have vastly different economic resources there is usually the problem with one party trying to force the other, smaller, party to settle at unfavorable terms. When I am in this situation, the larger client always hires a large, very expensive firm to handle the matter. The larger firm puts a herd of lawyers on it, researches the simplest issues of law, and files several motions to try to get the case to go away. Sometimes it works; usually it does not. The client should realize that this was a bad strategy when the cost of defending or prosecution a case approaches or exceeds the amount at issue.
Should the Parties Meet During Mediation?
Victoria likes the idea of getting people in the same room. I have earlier expressed my skepticism of this approach, not because I don't think it would be helpful, but because the client many times refuses to meet with the other side. In every case there is an element of emotion, and when your dealing with smaller businesses or disenfranchised shareholders, there is a lot of emotion. By the time you're ready to try to get the matter resolved, the parties do not want to see the other side! They hate each other!
Will All Cases Settle?
In a word "No!" And sometimes cases just need to be tried because the parties have such vastly different understandings of the facts of the value of the case.
When a party is defending a case because of "principle," everyone loses. These are bad cases for everyone. In the end "principle" usually gives way to reality of the cost of continuing.
The Unicorn Settlement.
Both Max and Victoria discuss what they call the Unicorn Settlement, where - using the definition presented by Max - the parties have a dispute, meet, discuss and settle the dispute without resorting to litigation. For most business and commercial disputes this sounds like a good deal. However, in the real world in which we live, people don't think this way, and people are usually quick to launch a lawsuit and then try to force a settlement than just try to settle. As an attorney, it is hard for me to take anyone seriously unless they actually file a case. We have all seen many threats to sue, but no real action. I think clients view the matter the same way. As the lady said, "Where's the beef."
If you know where a case should settle (a range) start talking with the other attorney. I do not subscribe to the theory that the first party to bring up the possibility of a settlement is somehow in a weaker position. There earlier you start the process the better for everyone - even if you don't settle. Sometimes it takes awhile after the initial discussions.
You can't force parties to meet if they don't want to meet. If they do, great; but if not, forcing the issues does not work.
I am a fan of mediation for one very simple reason. When Party agree to settle a matter, they make their own decisions. For better or worst, they control the result. Asking a third, uninterested person or jury to make a decision for the parties that could not make their own decision, does not always turn out for the best.