One of my favorite bloggers, Victoria Pynchon, is publishing a new book, Titled "A is for Assholes, The ABC's of Conflict resolution." Those of us that litigate cases understand the title - perfectly.
I haven't read it, but I read Victoria's blog, and I recommend this book if it is anything like her blog - and it is sure to be that. Watch for it!
Gavin Craig
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
Clearly, parties can elect to negotiate through the litigation process. It happens everyday. But why would any reasonable person elect to use litigation as a negotiation method? Litigation is clearly much more expensive than just sitting across the table and negotiating. The reason parties are litigating is usually because they are already in a relationship. There is either a contract existing between the parties, or some other business relationship that makes one party feel that it has lost something of value by the actions of another party.
I think it is simplistic to just take the position that litigation is just another form of negotiation. I agree that it is, but it is also much more than that. There is an excellent post on the, "Settle It Now Negotiations Blog" that discusses this very point. In negotiations, each party can control the results. Each party can agree or not agree with any proposal. Each party can control whether there is an agreement or not. But once a case is filed in a court, the rules change: the parties lose control of the schedule, and to some extent the cost of the negotiations. If the parties fail to negotiate a settlement, they also lose control of the result.
I recommend the article in the Settle It Now Blog. The suggestion is an excellent one if the parties otherwise trust each other (which is unlikely) and have a desire to continue a business relationship. But, as the old saying goes, "It never hurts to ask!" Sometimes there are surprising results.
There are some recent blog posts about mediation, and those posts started me thinking about this common process. One post discusses a mediator’s authority to excuse parties from participating. This is a topic of great interest to any litigation attorney.
I’ve had clients that were only in a case because their name was listed on property to which they no longer had an interest. These clients were without any risk of a judgment against them, but a nominal party in the case notwithstanding. I call the mediator and say, we don’t need to be here, my client does not need to incur the attorney fees, or the client does not have any interest in the outcome. The mediator will almost always excuse the party because the party can’t affect the outcome or help move the process along. In fact, a party like this can stall the process and prevent a settlement.
However, the court has ordered the mediation. Can the mediator excuse a party when the court has ordered mediation? If the court cannot trust a mediator to make good judgments in the mediation process, then what good is the mediator? Otherwise, the courts don’t need to supervise this closely. After all, mediation is a contract negotiation, and it can get very complicated. But in the end it is a contract like any other – with the added overlay of court involvement.
Probably the only real difference is that once a mediated settlement is reached, and the parties dismiss their respective cases, usually with prejudice, the pressure of the original case is over. However, the parties can still litigate a new cause of action – breach of the settlement agreement.
The courts decision in the Perry case is something that should be considered. Does the fact that the mediator excused a party give another party with second thoughts about the settlement, a reason to challenge the settlement? In most cases it should not – the parties can always waive their rights, so this practice should not interfere with an otherwise valid settlement. The settlement agreement can also address this issue if necessary.
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.
More Recommendations!
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."
Conclusion:
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.
I confess that I am a big fan of the mediation process. Many times mediation represents the last chance the parties have to make their own decision, and resolve the case. A third party, unrelated to the case or the parties, helps the parties move toward a resolution.
Most Minnesota state courts require the parties in a civil case to participate in some sort of alternative dispute resolution (ADR) process. The "alternative" in ADR mean that the parties try to resolve their dispute (the case) without going through a full trial. The parties agree to one of a variety of ADR methods. While the most common ADR methods are Mediation and Arbitration, there exists many variations of these two basic methods. Mediation can best be described as assisted negotiations.
The bottom line for me is that it is far better for parties to make their own decisions than let a third party (judge, jury or arbitrator) who knows nothing about the parties, and cares nothing about the results, to make the decision for the parties. If the parties can not agree on their own, then mediation is a good alternative. For in the end, the parties get to make the decisions to settle or not to settle.
In a trial a client can have truth and justice on their side, and still end up with a bad result. That is the nature of litigation. You've got a 50-50 chance to win ("It's a crap shoot,") I tell clients. Max Kennerly has an excellent post on this subject. But in life, when others are allowed to make important decisions for you, sometimes you don't like the result. Does this mean a party should settle every claim against them no matter what? NO! Some cases need to be tried, and the system needs to be trusted.
I think if attorneys were clear with their client's about the litigation process, even more cases would be settled. When a client is "right," and the facts support the client, it is sometimes difficult to negotiate a settlement where the client does not receive everything they think they are entitled to. But being "right" that does not make settlement to wrong business decision.
Victoria Pynchon's excellent blog, Settle It Now has a very thoughtful article about opponents in a case meeting and negotiating eye-to-eye. In other words, the suggestion is that in a mediation the opposing parties should not be separated. In my experience it is not the lawyers that don't want to meet face to face; it is the clients. I am often asked, "I wont have to see the other side will I?" So, I agree with the thesis of the post, but clients do not alway see the wisdom of this approach.
I will discuss arbitration in a later post.
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