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Published in Published in Alternative Dispute Resolution (Ill. Inst. For CLE, 2001)
©Michael L. Shakman, Diane F. Klotnia and Edward W. Feldman
Mediation of Business Disputes
By Michael L. Shakman, Diane F. Klotnia and Edward W. Feldman
I. Introduction
A. Scope of the Chapter
B. What Are "Business Disputes"?
C. Mediation Distinguished from Arbitration
II. Advantages and Disadvantages of Mediation
A. Which Business Disputes Are Suitable for Mediation?
B. What Are the Costs and Benefits of Mediation?
1. Economic Considerations
a. Lawyers' Fees
b. Witnesses' and Experts' Time and Fees
c. Client's Time
d. Mediators' Fees
e. Carryover Benefits
f. Time: Relative Speed of Mediation and the Time Value of Money
2. Noneconomic Considerations
a. Psychological Benefit of Telling the Story
b. Neutral Evaluation of Claims and Defenses
c. The Risk of Being Perceived as Weak
d. Generating "Free" Discovery for Your Opponent
e. Opportunity To Evaluate Counsel and the Parties
III. When To Mediate
A. Mediation Prior to Initiating Lawsuit or Other Formal Adversary Proceeding
B. Mediation Prior to Entry of Verdict or Judgment
C. Mediation After Entry of Verdict or on Appeal
IV. How To Commence a Mediation and Select a Mediator
A. Approaching the Opposing Party To Suggest Mediation
1. Contractual Provision
2. Absence of Contractual Provision
B. Selecting a Mediator
1. Impartiality
2. Lawyers vs. Nonlawyers
3. Experience with Dispute Resolution
4. Tenacity and Commitment
5. Interpersonal Skills
6. Organization and Preparation
7. Substantive Experience
8. Philosophy and Reputation
9. Retired Judges as Mediators
10. Active Judges as Mediators
11. References
V. Ground Rules for Conduct of the Mediation
A. The Mediation Agreement
B. What Should a Mediation Agreement Cover?
C. Sample Mediation Agreement
VI. Representing a Client in Mediation
A. Persuading the Opposing Party of Its Burdens and Exposure
B. Advising the Mediator of the Strengths of the Client's Position
C. Preparing for the Mediation
1. Facts
a. Liability
b. Damages
c. Litigation Costs
d. Litigation Time and Burdens
2. Law
D. Presenting Your Client's Position at the Mediation
1. Format for Presentation: Who Speaks About What for How Long
2. Use of Documents and Summary Exhibits
3. Use of Witnesses, Including Your Client
E. Meeting Ex Parte with the Mediator
1. When and Why Ex Parte Meetings Occur
2. The Goal of Ex Parte Meetings with the Mediator
F. Use of Downtime During Mediation Session
VII. Documenting the Settlement
VIII. Reviving the Mediation Process
A. Important Developments in the Litigation
B. Other Future Events
I. Introduction
A. [24.1] Scope of the Chapter
This chapter deals with mediation of business disputes by a third-party neutral mediator. It discusses whether mediation makes sense, when to mediate, how to initiate a mediation, what sort of procedures should be considered, what formal documents are needed in connection with the mediation, how to represent a party effectively, and, in general, how to get the most out of the mediation process.
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B. [24.2] What Are “Business Disputes”?
As used in this chapter, “business disputes” refer to disputes in which at least one of the parties is a business enterprise, whether operated as a sole proprietorship, professional practice, corporation, partnership, or in some other form, and in which the primary focus of the dispute is economic damage or rights and duties that can be quantified in dollars. "Business disputes" include, for example, contract disputes, intra-corporate or partnership disputes, sales disputes, construction disputes, brokerage disputes, manufacturer-supplier disputes, and disputes over the rendering of professional or other services. This chapter does not, however, discuss mediation of disputes that are primarily personal, as opposed to commercial, in nature, such as employment or personal injury claims even though one of the parties to the dispute is a business enterprise.
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C. [24.3] Mediation Distinguished from Arbitration
Even with the growth of the mediation field, many clients and some attorneys are unfamiliar with mediation and how it differs from arbitration. Arbitration is an adjudicative process. One or more arbitrators are typically hired to hear evidence and decide the merits of a dispute. The decision, or “award,” is usually binding and enforceable in court. Mediation is a settlement process. A mediator is hired to help the parties reach a negotiated agreement. The mediator renders no decision, although he or she may sometimes give an informal, nonbinding evaluation of the strengths and weaknesses of each side’s litigation position. The process is voluntary and nonbinding unless an agreement is reached, which is then enforceable like any contract.
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II. [24.4] ADVANTAGES AND DISADVANTAGES OF MEDIATION
This chapter discusses mediation, not arbitration.
Should your client’s business dispute be mediated? What are the costs and benefits of mediation versus other means of proceeding? The following sections are intended to help answer these questions.
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A. [24.5] Which Business Disputes Are Suitable for Mediation?
Not every business dispute is suitable for or requires mediation. Many get worked out by the owners or managers of businesses directly. Others may be resolved by lawyers through informal negotiations, either before or after litigation has begun. Some involve small claims that simply do not justify the expense of a formal mediation process.
However, some disputes don’t get resolved through informal means and may, therefore, turn into formal adversary proceedings, either in court, in arbitration, or in another more traditional dispute resolution forum. In deciding whether it makes sense to use a formal mediation process to attempt to settle this subset of business disputes, it is important to identify the reason that the dispute has not been resolved by negotiation. If, for example, your client has had the misfortune to have entered into a business transaction with a well-known deadbeat who has a practice of not paying bills, always requires opponents to sue to collect, and settles only on the eve of trial, there may be little likelihood that mediation will be helpful. Likewise, if the dispute is one that is typical of a way of doing business and depends on an unresolved issue of law and all parties recognize the need for a definitive judicial resolution to guide future transactions, mediation may not be suitable. But apart from such relatively unusual controversies, mediation is likely to make sense for most business disputes if enough is at stake to warrant hiring a lawyer and considering filing suit or defending against such a claim.
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B. [24.6] What Are the Costs and Benefits of Mediation?
Mediation, while usually far less costly than litigation, is not cost-free. As in all representation of clients, it is important to make sure your client understands the costs and noneconomic burdens of mediation, as well as its benefits. It is also critical to ensure that your client understands what mediation is. Many clients confuse mediation with arbitration, as discussed in §24.3 above.
No formula exists to balance the benefits and detriments of mediation in individual cases. You may wish to review each of the factors listed below with your client in determining whether mediation is an appropriate course of action.
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1. Economic Considerations
a. [24.7] Lawyers' Fees
Lawyers’ fees will be incurred in any mediation in which counsel represents the parties. A formal mediation session typically lasts only one or two days, even when large amounts are in dispute, but the cost to prepare properly and advance a persuasive presentation that makes settlement likely can be significant.
If the dispute involves any level of factual or legal complexity, it is fair to assume that for each hour of presentation in the mediation, several hours of preparation will be required. If pre-mediation statements are to be prepared outlining positions and if legal research and factual preparation are required -- and they are likely to be required in most business disputes allowance must be made for the cost of proper preparation.
Before committing to mediation, it is important that both lawyer and client understand the degree to which preparation will be required and the amount of legal fees likely to be incurred. Against that cost, the lawyer and client should balance the potential savings of lawyers’ fees in the event the parties are able to reach an early settlement through mediation.
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b. [24.8] Witnesses’ and Experts’ Time and Fees
In many business disputes the primary participants -- other than the lawyers -- are employees, officers, or owners of the business. This does not make their attendance at preparatory sessions or the mediation cost-free, however. The client should consider which employees or other personnel will have to be diverted from normal work activities for the mediation and for how long.
If expert analysis or presentations are likely to be a part of the mediation, account should be taken of the costs of such efforts.
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c. [24.9] Client’s Time
The client, whether the owner or manager of a business, will also value his or her own time, will have other uses for it, and will forego otherwise productive use of that time in order to participate in the mediation process. This also must be factored into the evaluation of whether to mediate. However, an owner or manager should be cautioned against overvaluing the “cost” of his or her time in determining whether to proceed with mediation. The time an owner or manager will be required to devote to resolve the dispute through formal adversary proceedings will be no less than, and likely much greater than, the time that would be required to resolve the dispute through mediation.
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d. [24.10] Mediators’ Fees
In business mediation, most mediators charge for their time at hourly or daily rates. Their fees will generally include not only time spent at the mediation but also time spent to prepare for the mediation. Accomplished mediators’ rates are generally comparable to the higher range of hourly rates for partners or principals in law firms. In addition, some dispute resolution firms charge to administer the mediation, to provide a meeting place, and to provide ancillary services, such as food and beverages.
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e. [24.11] Carryover Benefits
Some parties may be reluctant to pursue mediation because of the associated costs. However, with the exception of the mediators’ fees, a party would likely incur most of the other costs discussed above in order to proceed with litigation. In addition, the time and effort the parties and lawyers spend to analyze claims and defenses in preparation for the mediation will be useful in shaping the litigation if the mediation is not successful. This factor argues for the early use of mediation to attempt to settle business disputes.
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f. [24.12] Time: Relative Speed of Mediation and the Time Value of Money
If a dispute can be settled instead of litigated, both parties will normally save considerable amounts that would otherwise have to be expended to pay lawyers’ fees and the out-of-pocket costs of litigation while carrying the litigation through a court process that may take years. Also, time that would have been spent on litigation can be devoted to productive business or personal endeavors. If funds are owed and paid sooner, the recipient is benefitted and the party paying suffers a detriment. Clients and their lawyers can readily quantify these benefits and detriments. They normally factor into the analysis of the economic value of a settlement.
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2. [24.13] Noneconomic Considerations
There are a number of noneconomic costs and benefits of mediation that should also be factored into the decision whether to mediate a particular dispute.
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a. [24.14] Psychological Benefit of Telling the Story
Many times a business decision-maker feels that if only he or she had an opportunity to tell his or her version of the dispute to a reasonable neutral, the dispute would be resolved. The cathartic desire to “have one’s day in court” is surprisingly strong and often accounts for a willingness to carry litigation further than sometimes makes economic sense. Mediation, while lacking the decisive win-or-lose character of litigation, often fills the party’s psychological need to tell his or her version of the story. However, the benefit of telling one’s story, particularly in the context of an opening mediation statement, is not without some potential pitfalls. An opening statement, if used only to vent grievances, may serve to inflame the opposition, thereby reducing the potential for settlement. One way to avoid that problem is to have substantial pre-mediation discussions between counsel and the mediator so that everyone is aware of the “hot buttons” before the mediation begins.
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b. [24.15] Neutral Evaluation of Claims and Defenses
Mediation also affords the parties the opportunity for a neutral evaluation of the strengths and weaknesses of their positions. This can be a valuable reality check for clients and lawyers whose objectivity is necessarily taxed by the adversarial nature of their role in the dispute. A thorough and articulate evaluation of each party’s position by a knowledgeable neutral is one of the most valuable features of mediation.
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c. [24.16] The Risk of Being Perceived as Weak
Proposing mediation, like any effort to settle a dispute, can generate the perception that the proponent's position is weak or that the proponent has little confidence in his or her position. Most lawyers and virtually all judges view such a suggestion as unwarranted since settlement resolves the vast majority of litigated disputes and is therefore always a proper subject of discussion. Accelerating the process of settlement should not result in the perception that the proponent's position is weak. But if that is a concern, one can always begin the process by pointing out that the fees and costs of an adversary dispute are great and reasonable people should discuss settlement before incurring those costs. This issue is rendered moot by many judges, whose regular practice is to ask the parties about settlement and, in some cases, to direct the parties to engage in settlement discussions.
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d. [24.17] Generating “Free” Discovery for Your Opponent
A more legitimate concern about mediation is that it may involve the disclosure of much of the factual and legal basis for each party’s position in the dispute and focus the other side on precisely how a party intends to marshal factual and legal arguments. Normally, this disclosure will happen to a considerable extent anyway if discovery is taken, motions to dismiss or for summary judgment are filed, or other proceedings occur requiring each party to describe its factual and legal position. And just as your opponent will have a preview of your facts and arguments, you will have a preview of your opponent’s.
But if the parties are of unequal resources so that one may not be able to afford much discovery, or if the dispute is to be resolved in a proceeding in which discovery is not allowed or is limited (as in most arbitrations), then the concern about providing the opponent valuable information he or she might not otherwise learn before trial has more weight.
In most cases the concern can be somewhat reduced by limiting the factual and legal information a party chooses to disclose to its opponent in the mediation. A shortcoming with this approach, however, is that it reduces the likelihood of settlement because the opposing party is not told about facts or legal positions that may well influence it to settle. Of course, the flip side is true as well: mediation could serve to educate your side of the case and prove useful if the case does not settle.
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e. [24.18] Opportunity To Evaluate Counsel and the Parties
Mediation also provides an excellent opportunity to see the players in action and for a client to evaluate its own attorney’s abilities. Often, a client does not see its counsel in action until a deposition or even the trial itself. A mediation provides a unique opportunity for the client to observe its counsel’s advocacy skills, test his or her knowledge of the case, and generally assess his or her judgment. A client may decide to change counsel as a result of a poor mediation performance or may decide to proceed to trial because of increased confidence in counsel resulting from a good performance at the mediation. Counsel and client will also have an opportunity, however limited, to judge whether the opposing party will be a credible witness and to evaluate the opposing lawyer's advocacy skills. Mediation can be an invaluable opportunity to learn, regardless of the prospects for settlement.
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III. [24.19] WHEN TO MEDIATE
If lawyer and client conclude that mediation makes sense, they need to decide when to initiate it. This decision may depend on whether there is a pending proceeding to resolve the dispute.
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A. [24.20] Mediation Prior to Initiating Lawsuit or Other Formal Adversary Proceeding
Even if the dispute is not yet the subject of a formal adversary proceeding in court, arbitration, or elsewhere, it may be mediated. There are pluses and minuses to pre-suit mediation. The advantages include the fact that attorneys’ fees and litigation costs will not have been incurred to file suit or to defend against one. In addition, the parties may be somewhat less antagonistic because no suit has been filed. Also, there is no pressure of court-imposed deadlines or schedules resulting from a pending lawsuit.
The disadvantages of pre-suit mediation relate largely to whether there are sufficiently well-developed legal or factual presentations to permit mediation to be effective in moving the parties toward settlement. While a party may have researched and articulated to its opponent its claims or defenses before a lawsuit is filed, the issues will likely have been more fully researched and fleshed out after the answer or a motion has been filed in response to the complaint and some discovery has been taken. In many cases, some discovery may be needed for the parties to evaluate their positions intelligently. In others, some judicial guidance, such as a ruling on a motion to dismiss, may be a logical precursor to mediation.
Even so, that does not mean that pre-suit mediation should not be undertaken. It means only that the parties may have to spend some extra effort to prepare for mediation. Well-reasoned legal and factual presentations are a major reason why mediation is often effective in resolving disputes. If the parties have not prepared such a presentation in their settlement efforts, they should do so in preparing for mediation in order to maximize the likelihood that the mediation will lead to a settlement.
The statute of limitations may also pose an obstacle to pre-suit mediation. The potential plaintiff may be in a position of having to file a lawsuit in order to preserve the claims. One way to remove that obstacle is to enter into a standstill agreement tolling the statute of limitations pending mediation.
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B. [24.21] Mediation Prior to Entry of Verdict or Judgment
The largest subset of disputes that are mediated seems to be those that are already the subject of pending lawsuits or arbitrations. Whether it is desirable to press for mediation immediately or to wait until a later point in the litigation must be decided. In some cases, the judge may adopt a strong pro-mediation attitude, encourage mediation, and refer the parties who are willing to participate to another judge or (in the federal courts) a magistrate judge or bankruptcy judge for settlement discussions. Some jurisdictions mandate mediation of certain cases, either by statute or by court rule.
Like pre-suit mediation, early mediation of pending suits can save fees and costs of litigation or make amounts that would be expended on litigation costs available to fund a settlement. But like pre-suit mediation, early mediation of pending suits may have the disadvantage of inadequate preparation to maximize the likelihood of settlement. If discovery has been taken or affidavits on major factual issues filed, and if major legal issues have been briefed or researched, an effective mediation presentation is more likely.
It may be in the interest of a party who has filed a dispositive motion, such as a motion to dismiss or for summary judgment, to offer the opposing party the opportunity to mediate the dispute before the motion is ruled on. Normally, the court will defer briefing and argument of a pending motion for a reasonable time if the parties seek to stay proceedings to pursue mediation. Offering mediation at such a time affords the proponent the benefit of the arguments and analysis set forth in the motion and affords the adverse party the opportunity to explore settlement before having to expend funds to respond to the motion. The stronger the motion appears, of course, the more likely the adverse party will wish to explore settlement.
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C. [24.22] Mediation After Entry of Verdict or on Appeal
Some appellate courts now routinely require mediation of pending civil appeals to attempt to winnow out a subset of cases that can be settled by this process. In some circuits, a court employee or retired judge is made available to the parties for this purpose.
Whether a case can be successfully mediated at this point will likely depend on the nature of the proceedings that led to the entry of judgment for one of the parties. If judgment followed a full trial of disputed issues of fact to a fact-finder, there is very little likelihood that an appellate court would re-weigh the evidence and come to a different conclusion. In this circumstance, mediation would not appear to hold out much hope of settlement.
In contrast, if judgment had been entered based on the trial court’s resolution of a pivotal legal issue on which there is conflicting or no precedent, mediation may be more likely to be worth undertaking -- for example, whether a particular type of damages is recoverable as a matter of law. Between these two scenarios a range of possible variants exists. Mediation after judgment is sometimes successful in resolving difficult cases that promise to generate complex appeals without an assurance of victory for the party that prevailed in the trial court.
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IV. [24.23] HOW TO COMMENCE A MEDIATION AND SELECT A MEDIATOR
Deciding to mediate is only half the battle. To paraphrase Yogi Berra, the other 70 percent is to persuade the other party to mediate and to reach agreement on the mediator. The other party or parties must be persuaded to participate since mediation is usually a consensual process. Even in those instances in which mediation is effectively directed by the court or by a preexisting contractual agreement, neither party is required to settle if it chooses not to do so.
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A. Approaching the Opposing Party To Suggest Mediation
1. [24.24] Contractual Provision
In some cases the formal agreements between the parties may expressly call for pre-suit dispute resolution procedures, typically including a period for principal-to-principal negotiation, followed by mediation and, if the matter is not resolved, by binding arbitration. These avenues, if contractually required, can generally be judicially enforced. See, e.g., AMF Inc. v. Brunswick Corp., 621 F.Supp. 456 (S.D.N.Y. 1985); Westinghouse Electric Corp. v. New York City Transit Authority, 82 N.Y.2d 47, 623 N.E.2d 531, 603 N.Y.S.2d 404 (1993); Board of Education of Central School District No. 1, Town of Clarkstown v. Cracovia, 36 A.D.2d 851, 321 N.Y.S.2d 496 (1971).
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2. [24.25] Absence of Contractual Provision
Although the number of contracts requiring mediation may be on the rise, the more common situation remains that the parties agree, after a dispute arises, to submit their claims and defenses to the mediation process.
In many cases it will be obvious to both parties or their lawyers that it makes sense to attempt to mediate their dispute through the use of a neutral mediator. In the absence of a contractual requirement, convincing the other side to submit the matter to mediation will be the first of many critical negotiations on the way to settlement. Deciding who would have the most success in getting the other side to agree to mediate can be an important decision. A guiding principle is to consider who has the better relationship -- the clients or the lawyers.
If the lawyers have a good relationship, it is likely that one of them will raise the issue with the other, the clients will be consulted, and an agreement to mediate will result.
There may be cases, however, in which opposing counsel have a poor professional relationship, often characterized by the principle that if one wants something, the other is against it. In that instance, the request to mediate should be made directly by the clients. This is particularly true when, as in many business disputes, the clients have had a productive business relationship before the dispute arose and therefore may have a better relationship than their lawyers. In that case, the lawyer may wish to encourage his or her client to talk to an adverse party about mediation. The client should, of course, be advised of the basic principles of nonbinding, neutral mediation so that he or she can communicate them clearly to the opposing party. However, advising a client to have direct contact with the opposing party concerning mediation should not be lightly undertaken as there are significant potential negative consequences. A simple request to consider mediation may lead to substantive discussions about the case or cause the parties to start talking money and make inappropriate offers that provide a floor (or ceiling) for future negotiations.
In those instances in which both the lawyers and the clients have contentious, noncooperative relationships with their opposing number, a neutral party respected by both clients and their lawyers could be asked to attempt to begin a discussion about initiating mediation.
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B. [24.26] Selecting a Mediator
If the court or a contractual provision does not provide a mechanism to select a neutral mediator, the parties are free to use any selection method they wish, including selection by the clients or their lawyers or nomination by a dispute-resolution organization or trade organization.
What, then, are the characteristics and background of a good mediator for business disputes?
Most practitioners with substantial experience representing parties in mediation believe that an effective mediation requires special skills on the part of the mediator in addition to intelligence, articulateness, and neutrality. Those additional skills are not simple to quantify but include those discussed in the following sections.
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1. [24.27] Impartiality
A mediator should be impartial both in fact and in appearance. Before selection, the mediator should disclose any conflicts of interest or other ties he or she may have -- financial, social, or otherwise -- to the parties or their counsel. The parties can, of course, agree to waive a conflict. However, if there are any doubts about the mediator’s ability to be impartial, another mediator should be selected. There are likely to be so many individuals willing to serve as mediator that you should be able to find one without any conflicts of interest or ties to the parties.
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2. [24.28] Lawyers vs. Nonlawyers
While the mediator need not be a lawyer, many of the issues that will arise are likely to be legal. As a result, a mediator who is a lawyer may be a step ahead of one who is not. However, whether to use a lawyer or nonlawyer as a mediator is not an either-or proposition. Depending on the matter to be mediated, you may consider using two mediators -- a lawyer and a technical person. Alternatively, if the parties wish to use a nonlawyer as a mediator, they may wish to authorize him or her to obtain legal opinions on key issues from a lawyer of his or her choice. The cost of obtaining such legal opinions would likely be shared by the parties. Similarly, if the parties use a lawyer as a mediator, they may consider authorizing the mediator to consult with a technical person, again at the parties’ expense.
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3. [24.29] Experience with Dispute Resolution
A mediator should have experience dealing with disputes, whether from personal experiences in business, from participation in training programs for mediators, or from representing parties in litigation. A mediator who knows what it costs in time, effort, and money to carry a dispute through the litigation process will more likely be effective in persuading parties to find a way to settle. A mediator who has participated in a formal mediation training program conducted by a recognized tribunal, such as the American Arbitration Association or other dispute resolution organization, is likely to have gained valuable information from the training.
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4. [24.30] Tenacity and Commitment
Tenacity and commitment to the goal of settlement are critical characteristics of good mediators. These characteristics are expressed in a determination to find a way to resolve a dispute, a willingness to develop novel or unconventional approaches, and a strong reluctance to let the parties leave the process without a settlement.
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5. [24.31] Interpersonal Skills
While training in psychology and interpersonal relations is not essential, practical skills in these areas are very important. Many disputes turn on personal conflicts, disappointments, or frustrations, not primarily on legal or economic issues. Effective mediators recognize the underlying human dynamics and address them in trying to resolve disputes.
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6. [24.32] Organization and Preparation
Organization and preparation skills are important in mediation. Effective mediators will ask to be briefed on the issues and to meet, or at least talk, with the parties or their lawyers in advance of the mediation to develop a sense of the disputes and the personalities involved.
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7. [24.33] Substantive Experience
Technical skills in the area in dispute may be helpful but are usually not essential. Some practitioners in specialized fields believe that mediation is more likely to be successful if conducted by someone who is an acknowledged expert in the field. The mediator’s expertise may be a plus if it induces parties who are reluctant to mediate to participate because of the confidence reposed in the technical knowledge of the mediator. There are, however, few disputes that fall outside the capacity of a reasonably intelligent mediator to understand and resolve. If one arises, it may be possible to bring technical expertise to the mediation via expert witnesses or an independent consultant selected by the mediator. Many disputes require diplomacy in resolving personal relationships or frictions that have little or nothing to do with the technical intricacies of the dispute between the parties. Other disputes are best addressed to someone who is not technically sophisticated because such a mediator may better reflect the view that will be taken by a lay jury or by a judge lacking any technical background. The lay mediator may give a better reality check to the parties than the technically skilled mediator.
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8. [24.34] Philosophy and Reputation
An important consideration in selecting a mediator is the potential mediator’s reputation or philosophy with respect to mediation. There is a fundamental difference between a mediator who becomes a numbers-carrier, or a messenger, and one who gets involved in the substance of the case and offers the parties an independent view of the dispute. Not all disputes ought to settle, and certainly not all cases ought to settle halfway between the parties’ initial positions. A mediator who takes the time to understand the issues and is able to offer the parties a realistic view of the value of the case will have a better chance of helping the parties to reach a settlement. Moreover, even if the parties don’t settle, they will benefit from the views of the mediator in structuring future trial and settlement strategy.
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9. [24.35] Retired Judges as Mediators
Former judges are often considered as mediators. Certainly, the fact that an individual has been a judge can provide a significant advantage in terms of familiarity with the litigation process, settlement experience, and the respect generally enjoyed by judges. However, if the retired judge does not also understand the unique aspects of mediation and confuses his or her role with the role played by an active judge in promoting settlement, the former judge's contribution may be much reduced. Active judges presiding over cases to be tried wield more influence on settlement than retired judges who act as mediators and thus do not control the ultimate disposition of the case. Retired judges whose model for settlement conferences was relatively passive -- polling the parties on their economic positions and doing little to close the gap other than suggesting a middle figure -- are not as likely to be as successful as mediators who recognize the need for tenacity and active involvement in the legal and psychological dimensions of the dispute. Some experienced litigators as a practice will not select retired judges as mediators. In sum, many retired judges are excellent mediators, while others are not, so one should not automatically assume that a retired judge will be an effective mediator. However, as with any potential mediator, an individual evaluation is important.
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10. [24.36] Active Judges as Mediators
Active judges and, in the United States district court, magistrate or bankruptcy judges, may be available to help mediate disputes. However, a judge who acts as a mediator often is not the same judge who will try the case if it is not settled.
Use of an active judge has advantages. There are no mediators’ or administrative fees. Also, the parties know that the judge who tries the case may receive information from the judge or magistrate judge who conducted the mediation. The opinion of an active judge about a party's likelihood of success may also hold greater sway with the client.
While confidentiality of discussions with the parties is normally preserved by the settlement magistrate or judge, participants in mediations conducted by judicial officers may believe that some information may get back to the judge who will try the case. This risk can affect the mediation because some parties may give greater weight to the mediator’s comments than might otherwise be the case.
The disadvantages stem principally from the fact that most active judges already have a full docket. Presiding over mediation for a case on another judge's docket adds to the mediating judge’s already full workload but does not reduce his or her docket if the mediation is successful. Disadvantages, therefore, may include lack of adequate time on the part of the mediating judge to pursue mediation effectively and lack of tenacity and commitment by the mediating judge to reach settlement. In addition, the parties are not likely to have a choice as to which judge mediates the dispute. It is important to emphasize, however, that there are experienced and effective mediators who have become magistrate or bankruptcy judges in the United States district courts, and such individuals may be among the most qualified mediators available anywhere.
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11. [24.37] References
Checking a mediator’s references is extremely important. Most mediators will readily provide the names of lawyers or others for whom they have mediated. Calling several references is time well spent. Those who have employed a mediator can best evaluate the mediator’s overall effectiveness, skill, commitment, tenacity, intelligence, organization, and disposition. They can provide useful information that will be very valuable in selecting among possible mediators. As part of the reference check, try to find out the mediator's batting average: what percentage of his or her mediations have resulted in settlement? That information may provide insight into the mediator’s tenacity and powers of persuasion.
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V. [24.38] GROUND RULES FOR CONDUCT OF THE MEDIATION
What procedures and rules should be part of the agreement to mediate, and how should they be documented? The following sections provide some guidance.
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A. [24.39] The Mediation Agreement
Most mediators and mediation tribunals require the parties to execute a formal agreement to mediate. Whether or not required, having such an agreement is important and desirable. The typical standard mediation agreement covers most of the topics that need to be addressed. It may be appropriate, however, to request that additional matters be covered if the standard agreement does not adequately deal with them.
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B. [24.40] What Should a Mediation Agreement Cover?
Any agreement to mediate a dispute should
1. identify the parties to the agreement;
2. describe the subject matter of the mediation;
3. state the time and place for mediation;
4. state the time and place for pre-mediation meetings with the mediator;
5. schedule pre-mediation statements and service thereof;
6. identify participants in the mediation and pre-mediation meetings;
7. require the presence of decision-makers at the meetings and mediation;
8. define the method and length of presentation at the mediation;
9. discuss procedures for meetings with the mediator at the mediation;
10. require confidentiality of ex parte communications to the mediator;
11. define compensation of the mediator, including for rescheduling;
12. define the formality required to document a settlement;
13. define the limits on use of information and documents provided at the mediation;
14. provide for deferral of action in any pending suit while mediating and rescheduling any court-imposed deadline; and
15. provide for immunity of the mediator from suit.
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C. [24.41] Sample Mediation Agreement
A mediation agreement does not have to be very complex. Some mediators have form agreements that can be modified as needed. Others do not. A sample mediation agreement is set forth below:
AGREEMENT FOR MEDIATION
This Agreement is entered into this _____ day of __________, 20__, between First Venture (Venture), Acme Seller of Supplies (Supplier), and _________________________ as mediator (Mediator).
Whereas Venture and Supplier entered into an agreement dated __________, 20__, for the sale by Supplier to Venture of products, and disputes have arisen between them with respect to their respective performance thereunder; and
Whereas Venture and Supplier wish to set forth a procedure and certain agreements for nonbinding mediation (the Mediation) of their disputes;
Therefore, for good and valuable consideration, the receipt and adequacy of which are acknowledged by all parties, the parties agree as follows:
1. Venture and Supplier shall submit all disputes between them to nonbinding mediation before the Mediator. The Mediation shall take place at the offices of _______________________ on January 31, 20__. The Mediation shall begin at 10:00 a.m. and conclude by 6:00 p.m. If the parties and the Mediator agree, the Mediation may be continued to a further session or sessions. On January 24, 20__, Venture’s client representative and counsel will meet separately with the Mediator at 2:00 p.m. and Supplier’s client representative and counsel will meet separately with the Mediator at 3:30 p.m.
2. Venture and Supplier shall share equally in paying the Mediator’s fee. The Mediator's fee shall be $__________ per hour. The Mediator’s fee shall include preparation time and time spent conducting the Mediation itself. The Mediator will advise the parties of any requirements for advance deposit of fees, minimum daily rates, or payment for any date set aside for mediation that is canceled without sufficient advance notice. In connection with the Mediation, each party shall pay its own attorneys’ fees. The Mediator shall be required to execute this Agreement before commencement of the procedures provided herein.
3. Not later than January 17, 20__, Venture and Supplier shall each separately provide to the Mediator a written statement of its factual and legal positions and shall simultaneously serve copies on the other party’s attorney. [The parties may also submit a brief separate statement of additional points for the Mediator’s eyes only. The statement of additional points shall not be shared with the opposing party or its counsel without the prior consent of the submitting party.]
4. At the Mediation, John Jones, managing partner of Venture, will be present in person and represented by Venture’s attorney, Able Lawyer. Supplier will be present through Daniel Doe and will be represented by its attorney, Effective Advocate. The client representatives present shall be decision-makers with full settlement authority. However, no settlement shall become effective unless and until reduced to writing and signed by the parties.
5. The Mediation process will be conducted over a period of one day unless the parties and the Mediator agree to extend the Mediation for one or more sessions. All sessions shall be subject to the terms of this Agreement and to the terms set forth in [any separate agreement of the mediation tribunal], a copy of which is attached hereto as Exhibit A. (In the event of any conflict or inconsistency between Exhibit A and the terms of this Agreement, this Agreement shall govern.) At the initial session, each side shall be afforded as much time as is required, up to one and one-half hours per side, to describe informally its factual and legal contentions in the presence of the other side and counsel. Neither direct nor cross-examination will take place, but each side will be permitted to ask clarifying questions concerning points in the other side’s presentations. The objective is to present, in condensed fashion, each side’s point of view, largely without interruption and in whatever way that party believes to be most effective, subject to the other terms of this Agreement. If the Mediator determines after the initial presentation that further exchange of positions is warranted, [he] [she] may request it.
6. After the initial presentation, the Mediator will determine the most effective way to proceed, which may (in the Mediator’s discretion and subject to the agreement of both sides) include (a) direct and separate meetings with Venture and its attorney and with Supplier and its attorney, (b) meetings with all participants present, (c) meetings with counsel only (separately or together), and (d) meetings with the parties’ representatives only (separately or together).
7. The Mediation will be confidential in the following respects: (a) nothing said in the course of the Mediation shall be admissible in evidence for any purpose, nor shall any participant in the Mediation be questioned about such statement in any other place, including in discovery proceedings in any lawsuit or arbitration; (b) no document prepared for the purpose of the Mediation shall be admissible in evidence in a lawsuit or the arbitration (except if offered by the party preparing it, and then only if independently admissible apart from its preparation for or use in the Mediation); (c) no party shall inform the judge or jury in any lawsuit or the arbitrators in any arbitration of any matter precluded from use under clauses (a) or (b) of this paragraph, but parties may inform the judge or arbitrators (but not the jury) of the fact that an effort to mediate the disputes took place; (d) disclosures made by or for any party to the Mediator during the course of the Mediation in discussions with the Mediator at which the other side is not present shall not be disclosed by the Mediator without the prior consent of the disclosing party; (e) the Mediator shall maintain in confidence all information provided to [him] [her] in the course of the Mediation, except when disclosure is authorized by both sides.
8. The restrictions on the use of information and documents set forth in paragraph 7 shall not apply to the extent that (a) a settlement agreement is executed by the parties as a result of the Mediation, (b) a dispute thereafter arises, with respect to which such information or documents constitute relevant evidence, and (c) the court or arbitrator having jurisdiction over such dispute rules that such information or documents may be introduced into evidence. To the extent the Mediator is called on to testify, the party calling [him] [her] shall pay [his] [her] normal hourly fees for time spent.
9. The Mediation is a consensual process, and the Mediator has no authority to bind the parties without their agreement. The objective, however, is to reach a binding agreement to resolve the disputes between the parties. No court reporter or other means of transcribing what is said will be employed during the Mediation.
10. If a settlement in principle is reached at the Mediation, both sides will set forth the terms in writing immediately or as promptly as possible. No settlement agreement reached at the Mediation shall be binding until fully reduced to writing and executed by the parties.
11. From the date of execution of this Agreement through the conclusion of the Mediation pursuant to this Agreement, neither party shall take any steps to file or pursue any claim against the other relating to the subject matter of this Mediation. Each party shall cooperate with the other to extend without prejudice to either party any judicially imposed schedules for proceeding in any lawsuit between them related to the subject matter of the Mediation, including, without limitation, any statutes of limitation or statutes of repose.
12. Apart from compliance with the specific provisions of this Agreement, no duties binding on the parties shall be implied from the execution of this Agreement. Without limitation, no duty to negotiate in good faith or otherwise shall be implied.
13. The Mediator shall enjoy the same immunity from suit or liability in carrying out [his] [her] duties hereunder as would a judge in a court proceeding. Each party hereto shall indemnify the Mediator against any costs incurred by [him] [her] in defense of any suit or claim brought against [him] [her] as a result of [his] [her] services as mediator hereunder, unless [he] [she] shall be found liable after applying the standard set forth in the first sentence of this paragraph.
14. The Mediator executes this Agreement to confirm [his] [her] agreement to the compensation arrangements and other procedures set forth herein, to the confidentiality undertakings provided, and to [his] [her] immunity from suit and liability as provided herein.
15. This Agreement and any exhibits state the entire agreement of the parties with respect to any mediation between them and shall be binding on the parties, the attorneys, and their successors and assigns.
16. This Agreement is made in Illinois and shall be construed under Illinois law.
AGREED:
First Venture Seller of Supplies
By: ________________________________ By: ___________________________________
General Partner Its duly authorized representative
___________________________________
Mediator
VI. [24.42] REPRESENTING A CLIENT IN MEDIATION
This portion of the chapter explores how to represent a client to make the mediation as productive as possible and to promote a favorable settlement.
In some important respects, the lawyer representing a party in the mediation of a business dispute must act differently than he or she might if trying the dispute to a judge, jury, or arbitrator. In other respects, the preparation and presentation are very similar.
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A. [24.43] Persuading the Opposing Party of Its Burdens and Exposure
The most important task of a lawyer in a mediation is to persuade the opponent that its risks of continuing to pursue the dispute are greater than its costs to settle now. Presentations should focus on the costs of litigation, the risks, the evidence of liability (or in the case of the presentation for the defense, the strengths of the defenses), potential damages, and the benefits of settlement.
The most important difference between a lawyer’s presentation at trial and in a mediation is that at the mediation the lawyer must persuade the opposing party and its lawyer that they are better served to settle than to litigate. This means that direct attacks on the credibility, honesty, good judgment, or business practices of the opposing party or its principals must be carefully phrased and explained. If the opposing party gets angry and walks away, the mediation has failed. Avoidance of rancor and any impoliteness is important.
This does not mean that a lawyer should withhold mention of damaging evidence against the opposing party. But discretion and judgment must be employed in how the material is presented. For example, consider the following two different formulations of a claim for misrepresentation of the quality of a product. The first might be used in an opening statement at trial:
The evidence will show that when Daniel Doe of Supplier met with John Jones of Venture, Doe lied about the ability of his product and services to meet the needs of Venture. Doe promised that his product would remove all the masonry staining on the building and the building would stay clean. Doe made these promises to talk Jones into buying his product and masonry cleaning services. But he knew his promise was false. He knew from prior experience that the masonry would not remain stain-free for more than a few days. Doe had previously made the same promise to four other building owners and knew that his product was not capable of doing what he promised.
Doe will tell you that the four other buildings were constructed of a different type of surface material than Venture’s building and that he had no reason to believe that the same problems would occur. But our expert, Mr. Green, will testify that this is not true. Anyone with Doe’s experience would have known it was not true at the time he induced Mr. Jones to contract with him based on his fraudulent lies.
Here is how the same facts might be presented in an opening statement at a mediation:
In this mediation it is my job as the lawyer for Venture to explain how we would present this case to a jury at trial if it is not settled. In describing the evidence, I don't mean to be insulting or disrespectful to anyone on the other side. But I would not be doing my job if I didn't lay out for you the facts as we understand them and the arguments that can responsibly be made from those facts.
For example, we know that when Mr. Doe met with my client, John Jones, he told Jones that Mr. Doe’s masonry cleaning product and service would remove all the staining on Venture's building and that the masonry would stay clean. But we can produce evidence of Mr. Doe’s prior experience with four other buildings about which he had said the same thing. In each case the building did not remain stain-free for more than a few days. We can show that Mr. Doe was aware of the problems encountered at the other buildings when he sold his product and services to Mr. Jones but made no mention of them.
From this evidence we would argue, and we think a jury would have little difficulty finding, that Mr. Doe knew that his statements were untrue when he made them but made them nonetheless to induce Mr. Jones to enter into the agreement. This meets the legal requirements that apply to our claim for breach of contract and for intentionally fraudulent conduct.
We recognize that Mr. Doe has argued that the masonry surfaces of the other buildings were different from ours. But we have retained an expert in masonry cleaning who will testify that those buildings were not different in any material way and that anyone with Mr. Doe’s experience would have known that fact.
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B. [24.44] Advising the Mediator of the Strengths of the Client’s Position
In addition to persuading the opposing party of the risk of losing, it is important to advise the mediator of the evidence supportive of the client’s position that he or she can use in discussions with the opposing party and its lawyer. Part of the mediator’s job is to make each side aware of the costs, risks, and uncertainties of its position and of the strengths of the opponent’s. The mediator will likely apply this approach in separate discussions with each party. The more the mediator is given to work with, the more likely it is that he or she will be able to persuade the opposing party that its risks are significant if it does not settle.
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C. [24.45] Preparing for the Mediation
As in any adversary proceeding, the quality of preparation is directly related to the impact of the presentation. The better prepared and documented the presentation, the greater its impact.
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1. [24.46] Facts
A legal argument is usually no better than the facts on which it rests. It is, therefore, very important to master the major facts of the dispute and to be in a position to present them in a well-organized, concise, and persuasive manner.
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a. [24.47] Liability
Facts establishing or disproving liability should be identified and assembled for use in the mediation presentation. This means that principal witnesses who are available should be interviewed and major documents reviewed. If there are a few particularly important documents that support your client’s position, be sure to make copies and get them to the mediator either in advance of or during your presentation. Be equally sure to give copies to your opponent during your presentation and to point out what the documents say and what arguments they support.
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b. [24.48] Damages
Damages are facts that have to be proved. If you represent the claimant, you should reduce to a single piece of paper your calculation of the damage claim. Likewise, if you represent the defendant, you should reduce to a single piece of paper your own analysis of damages, even if liability is assumed. The damage analyses should be shared with the opposing party and the mediator. This exercise can often be very enlightening when damages are speculative, uncertain, or incorrectly computed. Further, in order to value the claims in a realistic manner, the parties will be forced to examine and quantify the hurdles of law and fact that each side must overcome in order to prevail.
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c. [24.49] Litigation Costs
Anticipated litigation costs also affect each party similarly since they are generally going to be about the same for each party and usually are not shifted to the losing party (although if the plaintiff’s counsel is working on a contingency fee basis, this analysis is different). You should, therefore, detail the likely costs for each side of carrying the dispute through trial and (if it is likely) appeal. The costs may be greater than the opposing party has been informed by its attorney. You should have prepared a sufficiently detailed analysis of the steps required to prepare and to try the case so that your estimate is sustainable if questions are raised about it.
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d. [24.50] Litigation Time and Burdens
The time requirements and burdens of litigation are also facts that should be analyzed. To the extent that the time of principals or senior officers on the other side will be required, it should be emphasized.
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2. [24.51] Law
Mediations are not appellate arguments in which points of law are to be debated and resolved, but neither should the law be ignored. If you represent the plaintiff, there will be rules of law that you allege have been breached. You should be able to list them simply and concisely and explain in your opening statement or letter to the mediator the facts that support the conclusion that the opponent's conduct breached these rules.
If you represent the defendant, there is likely to be a series of points that the plaintiff must prove to prevail. Many times the individual items are cumulative; that is, the plaintiff must prove each one in a chain. Failure to prove even one will cause the plaintiff to lose. You should list the points and consider giving a copy of the listing to your opponent at the mediation. If any of the points will be difficult to establish, you should emphasize those points.
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D. [24.52] Presenting Your Client's Position at the Mediation
Once you have done the necessary legal and factual preparation, you are ready for the mediation session. The mediation process involves several fairly distinct steps. The parties generally begin with opening statements before the mediator and all parties. Following the opening statements, the parties separate into different rooms and the “back channel” discussions and “shuttle diplomacy” begin. The following sections discuss each of the aspects of the mediation process.
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1. [24.53] Format for Presentation: Who Speaks About What for How Long
It is unusual for the opening presentation or statement by the parties at a mediation to last longer than one to one and one-half hours per side. Presentations should be concise, be focused, and have a message to convey. Factual and legal issues should be developed based on the discussion above. In most cases, the attorneys should make most or even all of the presentations. To the extent there are hard feelings between principals, having the principals present their claims may be counterproductive. But if good relations exist, or if there is something uniquely important for the
principal to say and he or she will say it well, then an exception to the general rule may be in order. Generally, it is better to err on the side of caution in presenting a party as a witness or proponent of its position.
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2. [24.54] Use of Documents and Summary Exhibits
Important documents and summary exhibits are very valuable if well prepared and presented. If the documents are evidence in the case and they help your side, they should be copied, highlighted, and distributed with a brief discussion of their importance.
If you have prepared exhibits that summarize important facts or legal propositions that help you, give them to the opposing party and the mediator. They will be retained, read, and considered while the mediation proceeds. If they are persuasive, they may be important in assisting in settlement.
Summaries of damage claims, obstacles to damage recoveries, and estimations of litigation costs all can be put on paper and will thereby have a greater impact and apparent reliability than the same information merely spoken at the mediation. They are ammunition that the mediator can later use in his or her one-on-one discussions with the adverse party.
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3. [24.55] Use of Witnesses, Including Your Client
In most instances you will not call witnesses but will summarize what they could testify to at a hearing. Your presentation is likely to be more concise and focused than the witnesses' would be. The compressed format of most mediation doesn't allow for witness presentation. If there was a key meeting or event and your witness is persuasive, however, you may want to have him or her describe the event very briefly. Any exposition of more than two or three minutes is probably better handled by counsel.
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E. Meeting Ex Parte with the Mediator
1. [24.56] When and Why Ex Parte Meetings Occur
Ex parte meetings with the mediator tend to be when real progress is made in a mediation and should be encouraged to the greatest extent possible. (They can, of course, occur only when and as permitted by the agreement to mediate or another agreement by both parties. However, agreement on this procedure is virtually universal.) The parties will speak more candidly at ex parte meetings than in the presence of an opponent. The mediator will have the opportunity to discuss the strengths and, even more important, the weaknesses of your client's position. The client will have the opportunity to explain to the mediator what he or she is really looking for or what is most bothersome about the position or action of the opposing party. Little or none of this will come out unless there are one-on-one meetings with the mediator. Ex parte contacts can even start in the days or weeks before the actual mediation session begins.
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2. [24.57] The Goal of Ex Parte Meetings with the Mediator
There are several goals to have in mind when you meet ex parte with the mediator. One is to hear what’s wrong with your case or your analysis. Every case has a problem that even the most skilled litigator overlooks. The mediator is an important reality check for you and your client. His or her views should be solicited if not provided and should be carefully considered.
Second, sometimes your client will have unrealistic goals or views of the strength of his or her position or the weaknesses of the opponent’s. The mediator is a respected neutral. The client may take more seriously what he or he says about the risks of litigation than what you say.
Third, the ex parte meeting is an opportunity for you and the mediator to explore novel methods of settling the dispute that you may not wish to advance directly. These can include further business deals between the parties, alternative dispute resolution procedures such as mini-trials or high-low (or baseball arbitrations), or other approaches. It may be useful to explore them with the mediator to see if it makes sense to suggest them.
Fourth, the mediator will likely know something about your opponent’s positions and thinking that has not been made public and that he or she won’t tell you. By seeing whether the mediator believes that your suggestions for settlement will work, you may get an idea of where the opposing party has drawn its lines in its discussions with the mediator.
Fifth, the ex parte meeting can provide additional information to the mediator that you are not willing to share with the other party. Sometimes there are points you just don’t want to use in the settlement process but that would be important at trial. You can tell the mediator about these points after you expressly state (and the mediator acknowledges) that these are points that cannot be shared with the opposing party. Perhaps they relate to a key witness or document that you don’t think the other side appreciates, and you want to leave it that way in case you have to try the case. If the fact or document is really as important as you think, the mediator will likely ask you to permit him or her to disclose it to the other party to promote settlement. If you think it may make the difference between settling or not, you will have a hard choice to make.
Finally, even if you can’t work out a settlement at the mediation, most mediators will provide you with some insight or evaluation of the prospects for settlement later that may turn out to be very valuable. You should ask for such information if it is not volunteered.
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F. [24.58] Use of Downtime During Mediation Session
Depending on the complexity of the issues and the willingness of the parties to compromise, mediation sessions may take only a matter of a few hours or may take place over more than one day. Most mediation sessions, however, require at least eight hours of time. It is good practice to get the parties to commit to continuing with the mediation until a settlement is reached or the mediator declares an impasse.
Whether the mediation takes hours or days, there is going to be a substantial amount of “downtime” when the mediator is meeting with the other side. That downtime should be put to better use than simply reading the newspaper. The attorney and client should use the time to get to know each other better so that they can better present a common front to the opposition, to revise settlement strategy, if appropriate, based on facts learned during the other side’s opening statement, to draft portions of a potential settlement agreement, or to learn additional facts about the case.
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VII. [24.59] DOCUMENTING THE SETTLEMENT
Many mediations lead to settlements. They are usually an effective and efficient way to end disputes. But it is very important that the ending of one dispute not be the beginning of another -- over what was agreed on. For this reason, most mediators press very hard, if settlement has been reached, for some sort of writing signed by the parties on the day of the mediation that spells out the key terms of the settlement agreement. This is a very good idea since remorse or second-guessing of decisions to settle often occurs.
If you have included a provision in your mediation agreement that no agreement is final until reduced to writing and signed by the parties, you will avoid the risk that the opposing party may argue that an oral settlement agreement was reached and should be enforced. Such claims are sometimes made following mediation when there is no document describing the agreements reached or when such a document exists but is incomplete. Mediators often have form agreements that are legally binding until they are replaced by more formal agreements between the parties. Good mediators will not let the process end, even at 2:00 a.m., until they have such initial documentation signed by all parties.
Several points are important in considering whether to sign an agreement produced at the mediation.
First, take advantage of the time when you are alone with your client while the mediator is conferring with the other side to draft the key provisions you would need to include in a settlement agreement. Having a few key paragraphs available when the mediator returns to the room and says that the opponent will agree to your request will make it likely that your language gets into the agreement and will avoid misunderstandings. Also, often putting a settlement concept on paper reveals several related points that had not been fully analyzed that also should be included.
Second, if the document prepared by the mediator or the opposing party doesn’t cover all the material points necessary to create a binding and enforceable agreement, signing it is risky. You may find that a key point that you thought was understood is not. You may not have an enforceable agreement, or worse, you may have an enforceable agreement, but not the one you thought you had. The opposing party may seek to enforce only the agreement that was signed, not your oral understanding. If something is important, put it in the agreement to be signed.
Third, if the transaction is too complex to be documented in a relatively short time at the end of a long day of mediation, come back the next day with the mediator and the opposing lawyer to work out the details immediately. Don’t let it drag on.
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VIII. [24.60] REVIVING THE MEDIATION PROCESS
The fact that a mediation ends without a settlement does not mean that the mediation process is necessarily concluded. A good mediator will try to revive the process in one or several ways.
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A. [24.61] Important Developments in the Litigation
Sometimes it will become apparent at the mediation that an important issue of law or fact must be decided in order for the parties to be able to settle the case. If this conclusion is reached and the dispute is already in litigation or arbitration, there may be some way in which to obtain a ruling on the isolated point from the court or arbitrator. The parties may reach an agreement at the mediation to seek such a ruling and then return to mediation after it is received.
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B. [24.62] Other Future Events
Some other future event may change the atmosphere for settlement, such as, for example, a defendant losing a motion to dismiss or for summary judgment. After such a decision, the risks may have shifted and a party who wasn’t willing to settle may have greater reason to do so. Similarly, rulings may limit or eliminate the plaintiff’s theories, reducing its potential recovery. A good mediator may ask the parties to return for further mediation when such an event occurs. Because mediation is a consensual process, a party can always say no. But if convinced of the value of an attempt to settle a costly or risky lawsuit, most rational people will agree to another attempt at settlement.
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