When Can We Talk About Money?
I attended “Springboard” last week, an education program jointly sponsored by the Labor and Employment Law and the ADR Sections of the State Bar of Michigan. This year, Springboard focused on effective advocacy for litigators in Mediation, Arbitration and Case Evaluation. I participated at a Mediation table.
One of the advocates suggested - to general agreement - that mediators wait too long before talking about money. Perhaps so. I appreciate such feedback. As a mediator, it’s important to understand the sources of party impatience. On reflection, however, my reaction was to ask: “If it’s so easy, why bother with the mediation process? Why not just pick up the phone and negotiate directly?” Retaining a mediator and drafting written submissions can cost thousands of dollars. Direct negotiation saves substantial transaction costs.
But direct negotiation is sometimes unproductive. Isn’t the typical reason parties retain a mediator to provide assistance in reaching resolution? There are many reasons a direct negotiation can fail, but they boil down to divergent assessment of the merits, extent of loss or both.
In my experience, litigants fall in love with their theories and claims. When they do so, they tend to focus on their strengths, sweeping their weaknesses under the carpet. They are skeptical when the other side points out their weaknesses; and lacking trust, unimpressed by the other sides listing of strengths. As a result, the parties are in different ball parks. Sometimes their ball parks are in different cities! They may not trust each other, but they typically do trust a third party neutral mediator. The mediator provides a fresh sounding board. The mediator encourages a realistic review of strengths and weaknesses, asks tough questions, helps exchange perspectives, revisits the issue of fees and costs, economic and non-economic, and engages in a risk assessment process. Until that happens, their “bottom lines” are unlikely to move closer. The process takes time.
Could mediators talk about money sooner? No doubt. Will the parties make progress in finding common ground? Yes, of course. But, in fact, resolution will rarely occur before positions have been softened up, the parties better understand each other and they have gained valuable fresh insights to consider. That said, there are many disputes where the parties and counsel do fully appreciate their risks and have properly evaluated their claims and defenses. In those cases, time spent on the mediator’s agenda will seem painfully slow. It’s not easy for mediators to distinguish between a scenario where the parties have realistic evaluations and need little softening up and one where the parties claim to know the value of their case but have turned a blind eye to important issues.
My advice: Next time you’re in a mediation and you believe your mediator isn’t talking about money soon enough, raise your concern privately. Talk it through with the mediator. Most mediators are flexible enough to make adjustments - and will do so.