Vol. 76, No. 12, December 2003

Think Like a Negotiator:
Effectively mediating client disputes

by Mark A. Frankel & John Mitby

Although alternative dispute resolution (ADR) has relatively recent roots in our litigation system, mediation and arbitration have become so prevalent that today it is more accurate to view the jury trial as an "alternative form" of dispute resolution. Lawyers need to give the same degree of thought and attention to their preparation for mediation as they do their preparation for trial. This article focuses on what lawyers can do to enhance their effectiveness in the mediation process. The authors firmly believe that effective mediation skills can positively affect the outcome of the mediation process on behalf of clients.

Attitude

Even though a lawyer may have reached the point of mediation through the adversarial process of litigation or the threat of litigation, a lawyer must, foremost, view the mediation process from a negotiator's perspective. For any dispute to be successfully resolved in mediation, there must be flexibility on all sides. Anyone entering mediation with a view that anticipates a "winner take all" outcome is almost certain to come away from the process disappointed. Mediation, at its best, consists of realistic case evaluation and creative deal making. Lawyers for each side can play a large role in shaping the contours of any successful outcome. Of course, each party wants to maximize the beneficial aspects of a settlement. That goal, however, is not inconsistent with a view of mediation as a collaborative rather than a competitive process. The object is to make it easy for the other side to see things "your way." Not only must lawyers for all sides appreciate the unique context in which mediation takes place, but clients also must be educated to ensure they do not bring unrealistic and counterproductive views to the table.

Timing - When to Mediate

There is no fixed rule as to the best time to initiate the mediation process. This subjective determination involves a balance between the need for adequate discovery and the cost of additional litigation, together with a feel for the receptivity of the various parties to mediation. Clearly, counsel needs enough information from which to make an educated approximation of the potential value of the client's case. Additionally, information must be provided to the other side so that both sides have in mind the value of the case. An approaching summary judgment motion is a juncture at which mediation ought to be considered. By then, both sides are well aware of their respective positions on the facts and law.

Waiting too long may have the unfortunate consequence of reducing the flexibility of some parties, as a result of the perceived "sunk cost" of litigation. Even if an initial mediation effort proves unsuccessful, cases may yet resolve prior to trial, based on settlement progress made in mediation. As important, future discovery frequently becomes more focused and efficient.

Initiating the Process

There are no formal procedures or agreements necessary to initiate private mediation. Court-ordered mediation programs may have local rules that must be followed to assure compliance.¹ Perhaps the biggest hurdle to overcome in initiating mediation is the concern that the party seeking mediation may be perceived as operating from a position of weakness. There are numerous innocuous explanations that can be offered to the other side as a rationale for suggesting mediation. These explanations for initiating mediation may range from an attempt to anticipate court-ordered mediation, to an initiative based on a company policy of exploring ADR, to an opportunity for all sides to potentially save significant litigation expense by exploring mediation. Once mediation is undertaken, the reality is that it makes no difference which side first suggested mediation.

Selecting a Mediator

The selection of the mediator will influence the likelihood that a given dispute will conclude in a successful resolution. It is important to understand the prospective mediator's approach to mediation. The two principal schools of mediation are known as the facilitative approach and the evaluative approach. The distinction lies primarily in the willingness of an evaluative mediator to share his or her opinions on the merits of the issues in dispute. When in doubt, do not hesitate to ask a prospective mediator to describe his or her approach to mediation. There are several other theories of mediation, and mediators may borrow from several different disciplines. Ex parte communications with prospective mediators at the selection stage are rarely a problem.

The best referral sources for locating potential mediators are other lawyers familiar with the mediation process. After gathering the names of prospective mediators, counsel can either mutually decide on the best-qualified candidate or employ a process of alternately striking names. It is helpful to have a mediator who has some knowledge of the type of case to be mediated. If in doubt, find out about the mediator's experience. Lastly, determine the mediator's hourly rate and how the fee will be shared.

Understanding What a Mediator Does

The essential role of a mediator is that of a neutral facilitator. Once the mediation process starts, it frequently takes on a life of its own. A thoughtful mediator will assist all parties in exploring the strengths and weaknesses of their respective positions and analyzing their settlement options.

Most mediations start in joint session with the mediator reviewing the ground rules for the mediation. Attorneys frequently resist allowing the initial joint session to become anything more than a perfunctory introduction. Many cases can benefit from an initial discussion of issues with all parties present. Counsel should not worry about the minutiae of process, that is, what the mediator is doing or how much time he or she is spending with one or the other side. Frequently, the mediator is just trying to level with the attorneys about the problems in their cases. In the end, what counts is the result, not the process.

It is the mediator's job to get a grasp of the dispute's dynamics as quickly as possible. The next step is generally to frame the issues in neutral terms. All sides will be expected to share their views of the underlying dispute as well as their goals and expectations for a settlement. Each side should be prepared to critically evaluate its own as well as the other side's position. It is up to the mediator to make the strategic decision of which issue or issues to tackle first.

The ultimate yardstick by which any proposed settlement is measured is a comparison of a given settlement option with the costs, risks, and benefits of seeking resolution outside the mediation context. While the mediator may or may not offer suggestions for potential settlement at various points in the process, counsel should be prepared to offer creative suggestions for resolution based on a thorough understanding of their clients' real interests in the dispute.

Preparing the Client for Mediation

Most mediators expect the clients to actively participate in the mediation process. The client should be prepared for mediation in much the same way that a client is prepared to testify. The client should be given an overview of the mediation process and may assist counsel in formulating a settlement strategy. That, of course, depends on the type of client. The client should be asked to review potential dispute settlement from both a short-term and a "big picture" point of view. Ideally, the client will help formulate the range of acceptable settlement outcomes. Be careful that counsel's values for settlement are in sync with the client's values and expectations.

Clients should be counseled to project both confidence and an attitude of cooperation. If the client has an abrasive or intemperate personality, it may be advisable to explore switching client representatives, if possible. The client needs to understand the limitations on the mediator's ability to bring about a settlement and the value of being able to project empathy for the other side. The ultimate target audience counsel is looking to communicate with is the other side, not the mediator.

The strengths and weaknesses of each side's case must be thoroughly evaluated. Counsel should help the client to understand the dispute from the vantage point of the other side. In assessing both the direct and indirect costs of litigation, be sure the client is aware of not only the attorney fees and costs, but also the time, distraction, emotional costs, publicity, and lost opportunities. The client needs to understand that he or she is the ultimate decision-maker in mediation.

Lawyer Preparation

In preparation for mediation, a lawyer should start with the client's realistic goals for settlement in mind. For example, one of those goals may be to preserve or enhance the client's relationship with the other side after the dispute is over. Counsel can then formulate an approach to educate and hopefully persuade the other side(s) with the mediator's assistance.

Mediators frequently request premediation submissions from counsel. This submission is an important opportunity to educate and inform the mediator about the essential facts and law, the relative strengths of the case, counsel's goals for settlement, and any creative suggestions counsel may have to assist the mediator in getting the parties closer to the client's desired goals. The submission should normally be no more than five pages long with key exhibits or medical reports attached. The mediator is neither the fact finder nor judge of the law, but rather needs to know and understand the key issues. If there is some issue that is not negotiable, counsel should be very clear on this point.

Counsel needs to either obtain settlement authority in advance or secure the attendance of those with the authority to settle. It may be important to have crucial documents and exhibits, including accurate summaries of evidence, available to share with the mediator and the other side.

Each lawyer should formulate an initial settlement offer that allows room for movement to an acceptable final resolution. Parties come to mediation with an expectation that each side will engage in a process of compromise to reach an ultimate settlement. Counsel should resist the temptation to make the initial offer the final offer. There is also a danger that an initial offer that is patently unreasonable will either damage credibility or make meaningful negotiations difficult to establish. Concessions on certain points can also be planned or anticipated in advance.

The stance adopted in mediation should be a flexible one. The mediator should be seen as an ally - someone who can be helpful with creative settlement ideas or feedback about the dynamics of settlement. Counsel will likely be asked to review positions and perspectives that have not previously been considered. That is part of the added value of mediation. Leave adequate time for the process to reach a natural conclusion. Remember, attorneys are preparing for negotiation and not litigation.

Mediation Dynamics

Counsel's task is initially to condense and distill the client's position as persuasively as possible. Part of the position adopted should include creative options for resolution of the dispute. The mediation process tends to work from the general toward the specific. Think in terms of working collaboratively with the mediator to find creative solutions. Listen carefully to what the mediator says. Try to discern what the other side is saying about its needs and desires in the mediation process. Communication takes place on both an explicit and a subtle level.

The process of mediation is fluid and sometimes takes unanticipated turns. It is critical that counsel knows the client and his or her interests. To the extent the client can tell his or her own story effectively, nothing conveys the client's message as well. While the client may wish to dwell on past grievances, the focus ultimately should be on the future and life after the case is resolved.

Each lawyer must attempt to gauge the process of making offers as part of the "dance" that leads to resolution. As an offer is extended to the other side, it is often helpful if a rationale or justification accompanies the offer. "Objective standards of reasonableness" can add persuasive force to any offer that is made.² Research has shown that potential losses may be more persuasive with the opposition than potential gains.

If the other side engages in clearly competitive behavior, it makes sense to respond accordingly until that behavior ceases. Likeability is a trait that is effective with both mediators and the opposition. An ability to demonstrate empathy with the other side is also helpful. The rule of reciprocal concessions, an established psychological principle, suggests that when one side makes a concession, the other side will feel compelled to respond in kind.

It is perfectly appropriate to suggest solutions that are contingent on the other side's acceptance of a certain proposition; for example, "if you get the other side to agree to X, we can agree to Y." If counsel become stuck, a "mediator's proposal"³ can be used to bridge a final gap between the two sides. The mediation process tends to reward creativity in the aid of dispute resolution. There are many unique resolutions possible in mediation that are simply unavailable in litigation.

Settlement Dynamics

One of the keys to finding a successful resolution lies in thinking creatively and empathetically about what your client might offer the other side that would be of particular value to the opposition in bringing about a settlement. Frequently, trades can be negotiated that will allow both sides to maximize the value of a negotiated settlement. By way of illustration, some items that might have particular interest to the party sitting across the table include:

• Frankel	Mitby

  Mark A. Frankel, U.W. 1973, is a shareholder at LaFollette Godfrey & Kahn, the Madison office of Godfrey & Kahn S.C.

  John Mitby, U.W. 1971, is a partner with Axley Brynelson LLP, Madison. The authors thank Attorney Marie Stanton of Madison for her contributions to this article.

  to the vendor in a commercial dispute - additional business
• to the payee in a limited-term maintenance case - additional cash paid sooner with gradual reductions in payments over time
• to an employee/labor union -
• an apology or acknowledgement of responsibility for a contentious
• development
• to a minor tort plaintiff - the possibility of a structured settlement to ensure payments over the plaintiff's lifetime
• to businesses involved in an ongoing relationship - an objective mechanism by which future disputes may be anticipated or resolved
• to a purchaser of an allegedly defective product - an extended future warranty
• to parties dividing an entity - devising a formula to offer to the other side, such as "I cut, you choose"
• to a product liability defendant - a confidentiality agreement

What is called for has been described as good old-fashioned "brainstorming." Counsel should understand the difference between listening in order to understand and listening in order to respond. The range of creative problem-solving solutions is vast. Once the other party perceives an earnestly sought good-faith solution to the dispute, the most frequent response is likely to be a reciprocal gesture of accommodation.

If settlement is reached, it is a good idea to reduce the agreement to writing.⁴ In a business dispute, it might be helpful to have a draft of a stipulated resolution prepared in advance. It may be practical to recite only the agreement's essential terms. A more formal settlement document can always be drafted later. The parties may wish to consider whether to authorize the mediator to arbitrate any future disputes over the precise wording of the final settlement agreement.

Reasons Cases Do Not Settle

There may be any number of reasons why a given case does not settle in mediation. Some of the most common reasons are:

1) A failure by either party to objectively evaluate the case, including the selection of an improper baseline for analysis, or a failure of a party to realistically examine his or her underlying interests.

2) A failure to communicate with the mediator or the other side. This may include engaging in "reactive devaluation" - a process of making regressive offers in response to disappointment or frustration.

3) A failure of communication between lawyer and client.

4) Emotional barriers to settlement.

5) An undue focus on winning.

6) Difficulty in getting past impasse.

7) Inadequate time set aside to complete mediation.

Conclusion

Thoughtful and creative participation by counsel in the mediation process can significantly advance a client's interest in achieving a beneficial settlement. A major component of mediation advocacy involves an in-depth understanding of the client's interests and how those interests can be effectively communicated in the mediation process. Counsel's skill as a lawyer in mediation should be measured, not by the size of the settlement, but by counsel's ability to provide the client with the best possible opportunity to resolve the dispute on mutually agreeable terms.

Endnotes

¹Wis. Stat. section 802.12(2) provides trial judges with an array of options for initiating alternative dispute resolution, with or without a motion being filed by a party.

²Appraisals, market values, undisputed facts, and so on.

³A "mediator's proposal" can take a number of forms. It can be a specific settlement recommendation, it can be a range of possible settlement values, or it can take the form of a double blind offer. A double blind offer means that a proposal is suggested by the mediator and each side responds confidentially. Only if both sides agree to accept the proposal does the mediator reveal anyone's preference.

⁴Once an action or special proceeding has been commenced, oral stipulations are not enforceable. See Wis. Stat. § 807.05; Laska v. Laska, 2002 WI App 132, ¶ 9, 255 Wis. 2d 823, 646 N.W.2d 393.

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