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Mediating Litigated Disputes:  A Primer for Counsel and Parties

     Mediation is a part of the litigation landscape which is here to stay.  It is the one formal process which allows the parties involved to control from start to finish a lawsuit’s resolution.  The help of a neutral mediator allows a party to focus on negotiating in the party’s best interests, while minimizing the tendency to get side-tracked by the other party’s motivation or benefits.  A mediator further keeps the parties focused on getting beyond impasse and resolving the dispute at issue.  Many attorneys and parties attend mediation with a general concept as to what will occur there, but either skip basic steps of preparation, or in the alternative fail to fully understand certain aspects of the process. Bearing that in mind, here is a primer for attorneys and parties on many aspects of litigation mediation.

Mediation: The Evaluative Approach and The Facilitative Approach

    There are two philosophies which mediators share as to the role of the mediator.  One philosophy is that a mediator’s role is that of facilitator.  A facilitative mediator focuses on being an active listener who fosters communication between the parties, without sharing opinion or affecting the outcome of the negotiation.  The mediator merely serves to facilitate a possible voluntary agreement between all parties.  This follows the standards set forth by three primary professional ADR groups: the Section of Dispute Resolution of the American Bar Association, the American Arbitration Association, and the Association for Conflict Resolution.  The facilitation of communication between all parties discloses hidden interests and goals, and empowers the parties to self-determine a resolution between them.

    The second philosophy amongst mediation circles is that a mediator should at times be evaluative, i.e....able to offer an objective third party opinion and play an active role in assessing strengths and weaknesses for each side of the case.  An evaluative mediator uses his knowledge, experience, and training to assist the parties in making their best decisions.  This view has advantages where used appropriately in the litigation setting.  Oftentimes an evaluative mediator can serve as a ‘reality test’ for the parties, as the mediator is able to point out strengths and weaknesses in a case that an attorney is unable to voice because the attorney is worried about appearances.  An attorney advocate is worried about loss of client confidence, and appearing weak to the client.  An evaluative mediator can serve as a ‘straight shooter’ to help break ‘bad news’ to a party, as the mediator need not worry about such appearances.  Further, an evaluative mediator with no stake in the outcome will question your interests and motives and provide clarity to the choices you make, and how those choices compare and rate against each other.
   
    Many mediators will label themselves as either ‘evaluative’ or ‘facilitative’, although the truth is that each of these mediation techniques has its own strengths and time and place and is used in any given mediation.  I consider myself to lean towards the evaluative mediator, because I believe that an attorney-mediator is hired to provide something further than just ‘communication’.  However, I consider flexibility an important trait of an effective mediator and always utilize facilitative techniques at appropriate times during the mediation process.    

                   
Before Scheduling A Mediation: Is this Case Ready to Mediate?

    Whether a case is ripe for mediation is driven by two factors: 1) the goals of the parties; and 2) the amount of discovery that has been conducted which allows the parties to pinpoint their positions.  The goals of the parties are often dictated by the type of litigation involved in the dispute.  For example, if there is the possibility for a continued business relationship between the parties, then earlier mediation can work to salvage that relationship.  If the dispute is limited to a monetary settlement only, an earlier mediation may not help in that regard.  Mediating early in the first example can help bring a win-win business resolution before the parties get entrenched in adversarial positions.  However, in any case, an earlier mediation can save all parties, time and expense, while allowing them to focus on the main issues of contention early on in the case.

So You’ve Decided To Mediate

    Scheduling a mediation is done by either 1) calling or emailing the mediator’s office or 2) filling out the mediator’s Intake Form (click for a copy of mine) and faxing it in.  The Intake Form contains the basics needed for the mediator to get started and open a file.

    Counsel’s Preparation
   
    The first thing for counsel to consider in preparing for a mediation is often the most overlooked.  ‘Who will attend this mediation on our behalf?’  All mediation agreements commonly require the parties to bring someone to attend the mediation whom has settlement authority.  However, sometimes due to geographic limitations, the person with real settlement authority resides too far from the mediation center to make attendance feasible.  In such cases, it is my practice to allow a telephonic appearance as long as the opposing party agrees to such an arrangement.  Commonly that party will send its attorney only, or its attorney and another representative without settlement authority.  Counsel should remember that everyone is doing that party a favor in that instance by not requiring their settlement authority to appear.  Therefore, the settlement authority should understand that he or she needs to be available and by the telephone the entire duration of the mediation without fail.

    Counsel should remember that he or she is sending a message to the opposing side by the presence, or non-presence, of certain individuals at the mediation.  For plaintiffs, having plaintiff present may allow them to ‘have their day in court’ if they’re allowed to speak by their counsel in joint session.  Further, they may benefit from the reality checks provided by the mediator concerning their expectations and beliefs, which may or may not be reasonable at the start of the mediation.

    Counsel should consider using a visual aid such as blow-ups, photos, time lines, or charts to demonstrate important points during the joint session.  Also, counsel should remember that ex parte communications with the mediator are accepted and sometimes necessary.  Do not hesitate to call the mediator about issues prior to the mediation, and remember that is it perfectly acceptable to pull the mediator aside during the mediation and speak to him about any concerns in private.

    Above are some things for attorneys to consider prior to the actual mediation itself in order to give the mediation as good a chance of success as possible.  Ultimately, however, it is the mediator’s responsibility to guide the parties in their preparations to make the mediation day as fruitful as possible, and to make sure that the mediator is well-prepared as well.

    Mediator’s Preparation
   
    The simple truth is that the mediator knows less about the lawsuit than anyone else in the room at the onset of the mediation.  However, just as the parties need to be prepared for mediation, so does the mediator.  Therefore, if possible, the counsel for all sides need to prepare a summary brief of important legal issues, damages involved, and strengths of your case.  Focusing on the strengths, weaknesses, and unique issues in your case gives the mediator the information they need to use with the other side.  Also advise the mediator of any history of previous settlement discussions.  The reality is that attorneys are very busy people, and few actually draft this brief.  Therefore, at a minimum, you should certainly send the mediator a quick fax or email with non-confidential documents, pleadings, discovery responses, and testimony.

    Your efforts to educate the mediator about the issues involved in your case will benefit your client and improve your chances of settlement.  The mediator will be able to review pertinent documents well ahead of the actual mediation, thus reducing the time spent exploring facts and positions on the date of the mediation.  Your mediator will already have identified some issues and interests prior to the joint session, and everyone can get to the heart of the matter more quickly.  Everyone benefits when the mediator and parties are able to roll up their sleeves and get down to business right away, right?

    Ultimately, the mediator is the one professional in the room responsible for seeing both sides of the case.  A prepared mediator means a mediator able to see potential problems before they occur and prevent an impasse before it happens, and keep the parties focused on the big picture.  However, the mediator needs a few minutes of your time and a little of your effort to send him information in advance to make this happen.

     Most mediators, after reviewing the documents and the summaries sent by the parties, will schedule a ten to twenty minute pre-mediation conference with each of the attorneys prior to the mediation day to make sure that everyone is on the same page.  You should use this opportunity to clarify your position on certain issues, and assist the mediator in a thorough understanding of any matters with which the mediator is not familiar.

Mediation Day

Initial Convening

    The first stage of the formal mediation is when the parties convene in separate conference rooms and meet with the mediator.  The mediator will go over the ground rules, most of which can be found in the Mediation Agreement (click for a copy of mine).  The mediator will probably  have a few questions about different aspects of your case, and ask if you would like to conduct a joint session with the other parties, or if you’d rather skip the joint session.

Joint Session
   
    Joint session, when elected by the parties, is the second stage of the formal mediation.  Typically the mediator and parties gather together in a conference room.  After the mediator makes a short statement, each side will have the opportunity to have an opening statement which summarizes their view of the case.  I recommend that counsel give a sincere, factual opening statement that explains your position to the other side.  Be prepared to concede the obvious and inarguable, this will win you negotiation points with the other side.  Remember that you are not trying to ‘win over’ the mediator, you are addressing the other side.  The mediator is not a decision-maker in a mediation.  Also, the best practice is not to discuss dollar signs in the joint session but rather to stick with the basics: liability, your position, and who, what, when, where, why and how.

    Although oftentimes attorneys will not allow their clients to speak, attorneys should consider allowing their client to say a few words in certain cases.  The joint session provides one of the only times when both sides during a mediation are able to meet and size up one another, and make their persuasive presentation with no intermediary facilitating the communication.  I have found that many attorneys choose to skip the joint session and stay in caucus the entire time, which is fine.  However, skipping the opportunity to listen to the opposing side, and express your side of the dispute, can damper good faith efforts to reach an ultimate resolution. 

    Joint sessions are particularly valuable when there is an opportunity for the parties to restore a continuing business relationship.  For example, in a construction project dispute between a contractor and subcontractor, the project may still be ongoing and each party may be able to find interests and common grounds which will enable them to forge a business resolution and continue to work together on the project.  For example, a subcontractor may be more willing to perform a repair on the project for free than pay the contractor money so that the contractor can hire someone else.

    However, in an automobile accident case between two strangers who have no business relationship, and the only interest for each is monetary with no expectation that either will see each other again, a joint session may have less effect.  In this case, one party is going to gain a certain amount of money, and one party is going to give up that sum of money.

    Therefore most mediators do not recommend skipping the joint session, unless the various parties in certain types of cases are extremely antagonistic towards one another.  An analysis of whether to allow your client to speak or not should be done on a case by case basis, paying close attention to whether there is any business or personal relationship to save in each case. 

Caucuses

    Once joint sessions conclude, the mediator will break the parties into separate conference rooms for the caucuses.  The mediator will carefully guard the privacy of these individual meetings, and nothing that is discussed in these meetings between you and the mediator will be repeated or conveyed to the other side without a direct instruction to do so by counsel.  This comports with mediation rules of confidentiality.  Section 154.073 of the Texas mediation statutes provides for this confidentiality in communications.  Any record made at a mediation is also protected by the statute, and no court can compel the mediator to testify regarding such confidential communications or turn over such records.

    The earlier meetings tend to be information-gathering in nature, as the mediator will want to listen to you and your client tell your side of the story. The mediator will discuss some possible strengths and weaknesses and issues in the case with you.  At this time, the mediator will engage in ‘shuttle diplomacy’, which is the process of shuttling back and forth between the various parties and counsel to explore interests, positions, and potential sticking points.

    Medical and Subrogation Liens - Don’t Forget Them

    I chose to add this subsection to this article because I have seen a number of instances where the parties to a mediation settled their lawsuit, but forgot about the liens of other non-parties to the lawsuit, and brought both parties and their counsel a whole host of later problems (lawsuits in fact) by forgetting about those liens.  These liens are typically medical provider liens or insurance subrogation liens.  Failure to consider the liens of non-parties to a lawsuit quite simply will cause a problem for everyone involved in the mediation, and that is one result that no one wants.

    For example, I have experienced this most often in automobile and long-haul trucking accident lawsuits.  Any time a personal injury lawsuit is filed by someone related to such an accident, presumably the parties had insurance available to pay for the damages to the vehicle.  At the very moment that the insurance company pays off the plaintiff for the vehicle damages, the insurance company owns the exclusive right to bring a subrogation lawsuit to recover such property damages if it so chooses as it is the real party in interest as to these damages involved in the claim.  See Thoreson v. Thompson, 431 S.W.2d 341 (Tex.1985).  Yet insurance companies tend to try to handle their small property damage claim without hiring a lawyer and appearing in the lawsuit, even when the insurance company knows full well that a lawsuit regarding the accident is ongoing.  So they may not be a party to the lawsuit.  Where the parties settle their personal injury suit, they sometimes forget about this insurance claim and who will pay the insurance company’s lien if and when it is asserted.  The parties then draft up their settlement agreement, which contains language concerning the property damages, and dismiss the suit with prejudice while the insurance lien still exists.  Eventually the insurance company comes forward to assert its lien, even possibly filing a second suit over the accident against defendants whom have been released and even indemnified by plaintiff.  At this point defendant asserts that plaintiff is responsible for paying off the insurance lien, and brings a third party action against plaintiff and even plaintiff’s counsel for failing to take care of the lien.  The end result is that all parties are back in litigation a second time regarding the same auto accident property damages claim.  The same situation applies with medical care provider liens.

    Therefore, to avoid a second lawsuit against parties and their counsel, it is best to address these un-asserted liens up front, at the time of mediation, and put into writing who is responsible in the event such lien holders do come forward later down the road.

    Mediator’s Proposal

    Many counsel are unfamiliar with one tool available in a mediation, the mediator’s proposal. A mediator’s proposal is a written statement by the mediator of an amount at which the mediator thinks the case could settle for each party.  It can be very useful where discussions have stalled and the sides are at an impasse.  The proposal is presented to each party in confidence, and only the mediator knows whether any side accepted the proposal.  If each party to the proposal accepts the proposal, then a settlement occurs.  If only one party accepts the proposal, then no settlement occurs. But neither side knows whether the other accepted the proposal if that side itself did not accept.  Thus, no party is punished for making a large ‘move’ in negotiating in the end.

    The timing of a mediator’s proposal is important.  A mediator’s proposal is a “bridge the gap” means which therefore won’t be introduced by the mediator until each side has had the opportunity to communicate in joint session, negotiate in caucus, and pinpoint their litigation positions.  A mediation proposal made prior to the foregoing will have no effect whatsoever.
   
    The Memorandum of Understanding

    In the event a settlement occurs, it will be necessary to reflect that settlement in writing before the parties leave the mediation.  My practice is not to draft final settlement agreements.  I believe that the parties’ attorneys are in the best position to perform this task.  However, a mediator will draft a Memorandum of Understanding which outlines the basic terms of an agreement, and is enforceable by the parties under Rule 11 of the Texas Rules of Civil Procedure.  The common terms found in the memorandum include:

    (i)   what sum of money, if any, is to be paid by one party to another;
    (ii)  what amount of time the parties have to pay that sum;
    (iii) when settlement documents must be finished;
    (iv) when Plaintiffs must dismiss any causes of action with prejudice;
    (v)  any non-monetary relief agreed upon; and
    (vi) whom is responsible for outstanding liens.

The parties and their counsel will sign the memorandum to finalize the settlement between them. The mediator will keep the ‘blue ink’ originally signed memorandum of understanding and provide a copy to each party’s counsel, and it will remain on file in their office.  The parties have controlled their own destiny, and come to an agreement on their own terms.

Conclusion

    Many cases will settle in mediation, but some will not.  Even those that do not settle will benefit from mediation, as a great mediator will help flesh out issues and bridge the gap between the parties’ respective positions, demands, and offers. Mediation works best when cases and disputes are ripe to be mediated, and all parties and counsel involved take necessary steps to prepare for success.  Oftentimes even non-settling parties will continue their discussions and negotiations after mediation has occurred from exactly where they left off at mediation, leading to a quicker resolution down the road for everyone.  Finally, given that most Texas courts customarily mandate mediation prior to trial, the parties are merely being proactive by choosing to do so prior to court order.  For the foregoing reasons, there really is no downside to mediating a ripe case, and choosing to mediate represents the first ‘win-win’ for all parties involved.

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