Return on Investment - Mediation Style
(Reprinted with permission from the Detroit Legal News, December 27, 2013)
In the litigation environment of the second decade of the 21st Century, mediation offers an excellent return on investment. Historically, lawyers picked up the phone or went to lunch to negotiate settlement of their disputes. Today’s litigator often prefers to enlist a mediator over direct talks with opposing counsel. As a result, negotiation skills may atrophy as the litigators have come to rely too heavily on mediators to guide the negotiation process. When negotiation skills decline, the prospects for a healthy settlement process decline as well because litigators no longer appreciate the signals they send or the meaning of the signals they receive.
Meanwhile, another historical development has come into play: the vanishing American trial. An American Bar Association study revealed that the number of cases resolved by trial in federal court has fallen from 11.5% to an astonishing 1.8%. In Michigan, the State Court Administrative Office reported that in 2012, only 1.3% of all cases filed went to trial. As a result, lawyers have little or no trial experience. With little or no trial experience, a litigator’s ability to value a case and assess the risks presented is dramatically impaired. When a litigator’s valuation of the case is flawed by lack of experience in trying cases, the barriers to resolution multiply because opposing parties reach radically different judgments based on faulty criteria. In the days when trial lawyer experience was better matched, wildly divergent valuations were much less common.
Mediator fees are generally consistent with fees charged for legal services. A mediation invoice in a complex case, therefore, can range from $1,800 to $10,000. Despite the cost of mediation services, a mediator provides invaluable assistance to counsel in meeting the challenges of today’s litigation climate. What follows are 10 ways mediation offers a substantial return on investment.
- A process expert mediator skilled in building relationships and gaining the trust of litigants can assist in dealing with a difficult client without loss of counsel’s precious capital. Mediators are often asked to engage with parties to rein in unrealistic expectations which, if done by the trial lawyer, can undermine the attorney/client bond.
- An experienced subject matter expert can assist the parties in recognizing and assessing the risks presented. Too often, lawyers “fall in love” with their cases and lose sight of the challenges and weaknesses they must overcome.
- A skilled mediator, experienced in trying similar cases in the same venue, can assist the parties in a valuation of the overall claim. If counsel has little or no experience with how jurors in a given venue have responded to similar claims and defenses in the past, they cannot establish a realistic range for settlement purposes.
- Mediators can serve as a negotiation coach and sounding board for offers and counter-offers.
- Mediators are often great “translators and interpreters.” By translating and interpreting what each party is saying to the other, a good mediator can assist the parties in understanding each other without increasing acrimony.
- When litigators, their clients or litigators and their clients are not getting along, lack of trust colors every move and leads to suspicion and extreme wariness. Cases are less likely to resolve in the hot-house of distrust. Fearing the worst, litigators may be reluctant to engage in negotiations because they suspect a trap. Others avoid the negotiation process so as not to appear weak. A good mediator can have a calming effect. A good mediator can increase the level of trust and create a healthy climate within which negotiations can proceed to a positive win/win conclusion.
- Mediators can be excellent problem solvers. Sometimes the parties want to settle but cannot envision a path to do so. An experienced mediator can help the parties brainstorm fresh options or suggest creative ideas that have been tried successfully in other cases. Sometimes, by focusing on underlying interests rather than legal positions, the mediator can help the parties identify a win/win resolution that works for all sides. We’ve come a long way since Winston Churchill taught us that the best settlements were those from which both sides walk away equally unhappy.
- Mediation is an excellent platform for the exchange of information and perspective. A mediator can ensure that everyone at the table has all the information and understanding needed to engage in a meaningful resolution process.
- Mediation often provides substantial savings in court costs, legal fees, business disruption and emotional distress. An early stage mediation can force the disputants to look at their claims and defenses early and seek to reduce their risk and exposure by resolving the case quickly.
- Because mediation requires the disputants to “get their ducks in a row” in order to explain their legal positions to the mediator and each other, the process offers an excellent opportunity to take a step back and engage in a serious review of options. As cases so often settle at the mediation table, for most clients, mediation is the closest parties come to having their “day in court. Mediation can thereby serve as an effective “wake up call” in the judicial process.
The litigation world has changed dramatically in the last decades. Lawyers have less and less experience to equip them to meet the challenge of trying cases in a 21st Century courtroom. A skilled and experienced mediator adds great value by assisting the disputants in determining the value of the dispute, assessing the risks presented, appreciating the perspective of the other side, communicating information and in developing an environment conducive to reaching resolution. The cost of a mediator thus represents an extraordinary return on investment.