The Top 10 Horrible, Terrible, No Good Mistakes Lawyers Make in Mediations
In my 35 years of practicing law, I have been on the “lawyer side” of mediations more often than acting as a Mediator. However, I have conducted approximately 150 mediations in Tennessee over the years. While my Mediator success rate matches some reported statistics (70%), all too often even successful mediations happen not because of the lawyers but in spite of the lawyers. Effective representation of clients in mediations takes more than throwing together a mediation statement at the last second and showing up at the mediation. Doing it right requires the same kind of due diligence and work that goes into preparing for a key deposition or even a trial. Great “mediation” lawyering is essential and is one of the Mediator’s greatest tools in the mediation “tool box” to get the party representatives to an acceptable deal. Over the years I have compiled a list of every horrible, terrible, no good, “bang your head against the door” mistakes that lawyers (names are withheld to protect the innocent) have made both before, during and after mediation sessions in which I have been the Mediator. To help both old and young litigators alike, this article presents my personal “Top Ten” list.
#10: Mediating Too Early or Too Late
Every dispute is different. There are no hard and fast rules as to when mediation should be considered. If the parties have a history; are in an ongoing relationship; will deal with each other in the future; and the legal fees/expenses will be substantial, it may make sense to try to set up an “early” mediation, even prior to the filing of a lawsuit. Sometimes the contract’s ADR clause requires mediation prior to litigation/arbitration. While those clauses can be waived, the issue is always whether the parties/counsel have enough information about the dispute to make good business decisions about settlement. Many times, I have heard counsel say, “I will be able to get an expert to support our claim,” which is not very persuasive to the other side when it is an expert driven dispute. Sometimes there is a real concern that “final” offers1made in an early mediation become sticking points for future settlement discussions. Early mediations can sometimes cause more problems, and make the parties madder at each other, especially with ego-driven clients (and yes, lawyers!). I have found that the only way an early mediation can work is if there is a good working relationship between the lawyers who, working with an experienced Mediator, can help manage the entire process (and their clients) to try to get an acceptable settlement at this early stage of a dispute.
What about “late” mediations, defined as just prior to trial? Can there be an agreement (the Judge also must approve) to postpone a trial and stop the preparation process for a late mediation? There are practical issues involved, such as finding a great Mediator at the last second and setting aside a full day for mediation with trial counsel who are furiously prepping for trial and who probably believe that the request is a stalling tactic. My general experience is that since both sides know every inch of the other side’s case prior to trial, if there is to be a last-minute settlement, including during a trial, that can better accomplish between the parties/counsel without a Mediator.
#9: Not having a Pre-Mediation Call with the Other Lawyer and the Mediator
So, you have done your research and feel comfortable about the jointly-selected Mediator2 and you have an agreed date, all done normally via email. Do you then just send in the mediation statement and show up on the date? NO. Set up a call with the Mediator (many good mediators insist) and opposing counsel and talk through the many issues that can derail a mediation. Do you need information/documents from the other side? It is infuriating for a Mediator when, in the middle of a mediation, she hears one side use an excuse that it does not have some information (or document) necessary to make a decision and the other side does not have immediate access to such documents. Do you agree to exchange all or some parts of the mediation statement?3 It is also crucial to try to find out who are proposed to be the party representatives. If they hate each other’s guts, or you know that the other representative is NOT the decision maker and may be covering himself because he screwed up the deal, a pre-call can be essential. If insurance is involved, will the insurance adjuster (where the money will be coming from) be present? It is a bad way to start off a Mediation when the lawyer shows up by himself without the insured (who may not care because he’s not paying for the defense) or without the adjuster (who has 235 other cases) but who the lawyer promises will be “available by phone” on the West Coast (but then disappears late in the afternoon when that side needs some additional authority to get the deal done)?
#8: Failing to Prepare the Client—and Not Having a Plan
How experienced is your client representative? If it’s an in-house counsel who has attended scores of mediations, there may not be a need for much preparation, other than to make sure the in-house counsel has the authority to settle and that she understands the dispute and the issues. But if the client has limited experience, and this is a “bet the business” case, counsel MUST spend time (and that means in person, not via email or calls) to explain the process and to try to manage the client’s expectations. I have had clients think that mediation was a trial and were furious at their counsel. The definition of “settlement” is: no one is happy. The real world applies. I have yet to have this happen: walk into the room of a party after a few sessions and the client say: “I now realize I was wrong; here’s a check; you are the greatest Mediator in the world.” The goal of any Mediation is to not “win” but to resolve the dispute. What can your client “live with/can live with?” Talk with the client before the Mediation about all possible outcomes which can includes losing at trial even though you are of course the best lawyer in the world. Have a plan going into a Mediation, but there needs to be some flexibility in case something new is revealed by the client, such as telling the lawyer at the mediation (happened more than once): “by the way, I forgot to tell you that I fired our primary fact witness last week for theft and she hates our guts.” Be realistic about the consequences of not getting a deal, especially for future legal fees, expenses and the impact on your client’s business (including how much time the client’s key employees are going to have to spend on the case). It is amazing to me how many times I ask a party/counsel what’s their “best” and “worse” case scenarios, including estimated legal fees/expenses and I get a blank look. I then must estimate legal fees and expenses through trial, and no matter a counsel’s hourly rate, the final number can put a client on the floor.
#7: Not Doing Your Homework
You must know your case in and out to properly represent a client in a mediation. How else can you effectively manage your client and argue/discuss the issues with the Mediator who you are counting on to make sure the other side in their room understands and appreciates your positions? You may not be able to look under every single rock or even know how many rocks that are out there, but you better know what are THE rocks that will impact and possibly derail settlement. Use your draft mediation statement as a guide even if you carve off some parts before you send to the Mediator. Send it to your client. If you get something from the other side, send that to your client. That homework can include calling the Mediator on your own (perfectly allowable) and letting him know confidentially about the issues, the other side’s lawyers; even issue with your own client representative. True story: recently a lawyer called me and warned me that their client was on a mission from God and believed that the other side was the devil (but the case did settle, and Armageddon did not occur). These non-legal factors (that may not need to be put in writing) may be key to getting to a deal done. And a good Mediator craves that kind of pre-Mediation information.
#6: Failing to be Intellectually Honest with the Mediator
Let’s get real. All Mediators know that there is a game to be played and understand that there are clients present in the room who are paying good money and expect their lawyer to be a tough hard-nosed hard bulldog. Mediators understand it is a fine line. Mediator expect good, tough zealous representation, but don’t insult the Mediator’s intelligence and her knowledge about the subject matter of the dispute and the law (which is why you chose her). Mediators want frank and candid discussion of the strengths and weaknesses of the case. That sometimes means pulling the lawyers out of the rooms to have those discussions. Good lawyers want that from the Mediator, even in front of their client, because no matter how many times a lawyer may have told a client about the weaknesses in a case, there is something about having an experienced Mediator telling the client, face to face, the same thing and that all of the great lawyering in the world (of course) cannot change a set of facts or the law. Your job as counsel is not to show the Mediator how smart you are and how you are going to kick the other side’s backside in court, but to see if there is a way to reach your client’s goal of getting the case resolved as efficiently as possible. Rare is the client who willingly will spend unlimited legal fees and allow the company’s key workers to spend hundreds of hours in discovery, depositions, and put his business into the hands of a third party, whether a Judge, Arbitrator or jury. Sometimes it is not just about the money—but most of the time it is about the money.
#5: Not Letting the Client and Mediator Talk
Most Mediators want to hear and talk directly with the client since he is ultimately going to make the business decision at the end of day. Counsel, submerge your ego. Don’t cutoff this vital communication. Your client may need to get something off her chest and finally have someone other than his lawyer to yell at. Mediators can take it. Remember these are settlement discussions and “what happens in mediation…stays in mediation.” The Mediator needs to know the temperatures in both rooms and many times the “non-legal” factors that are not even available in court determine if a deal can be done. Many years ago, I resolved an age discrimination claim by realizing by talking to the client just wanted to move to another city to be near grandchildren but had no money. The deal included a year’s prepaid rent and a used car. The lawyers were not happy, but they are not a Mediator’s client: the client is the Deal. A Mediator must establish a position of trust and confidence (and frankly likability) with the client so that, when it is time to fish or cut bait, the client will listen to what the Mediator has to say. That cannot happen when the lawyer does all the talking and the client just sits there mute.
#4: Not Listening to the Mediator
Yes, you must present your case to the Mediator and impress your client. In Mediation, however, lawyers frequently fail to listen to what the Mediator has to say and more importantly, what the Mediator is saying about what’s going on in the other room. What’s the temperature in the other room? Is the other lawyer being helpful? Is the client in that room listening to her lawyer and the Mediator? Is it really all about money? What are the key issues. Are there non-monetary points that may be crucial to the other side, but your client could care less about? Those may help get over an impasse about money. Be confident that the Mediator is doing his best to convey your points and arguments and is being just as hard on the other side. By listening and asking questions you can learn a lot more about the strength and weaknesses of not just your case, but the other side’s case as well. You are paying the Mediator: take advantage of his knowledge and expertise.
#3: Not Identifying Key Issues in Advance
A long day of Mediation can be derailed with last minute issues which should have been identified early in the day. If money will change hands, when? Many times, the parties have agonized over the amount, only to have the paying party say “by the way, I don’t have that money now, I have to pay it over time.” The other side then explodes, cries “bad faith”4 and starts thinking about piercing the corporate veil. Emotions then get into the way of a deal that appeared to be done. Tax returns or financial statements to establish financial issues or poverty cannot magically appear at 7:00pm, and when there may be a need for a covenant not to execute and discussion of collateral. How important is a non-disparagement clause and/or limitation on social media (or withdrawal of a social media post)? What about indemnification? Exactly what claims are going to be released, which can be a real issue especially in commercial disputes like construction cases. Allowing such seminal issues to fester until late in the game can be a real deal breaker, and it also really upsets the Mediator who has worked hard to get the parties to agree to the basic deal terms.
#2: Don’t Make It an All or Nothing Mediation if the Mediation Fails
Of course, all disputes that are submitted to mediation do not reach a “global” settlement, even for very valid reasons. But you and your client have just spent an entire day reviewing/discussing the pros and cons of your case and complaining about the other side (and probably the Mediator). While certainly you can leave the mediation with some additional knowledge about the other side’s case, you should think, before you walk out the door, about whether or not the Mediator can help both sides reach agreements on non-global issues which will save money and perhaps push the parties closer to a global deal down the line. Can discovery disputes be resolved? Perhaps settle some but not all the disputed issues. How many depositions are really needed? What about shifting the case from litigation to binding arbitration? If a major factor is a pending summary judgment motion, maybe schedule another mediation. Put on your litigator thinking hat before you walk out the mediation door.
#1: Not Nailing Down the Deal at the Mediation
Let’s assume the Mediator sticks his head into your room with a grin at 8 pm after an exhaustive day when your client is mad that he made the eighth counteroffer and says: “great news, counter-offer accepted, we have a deal!” Wonderful, even though your client got pushed way past what he came ready to do that day. So, what do you do to confirm the deal? I have had parties and lawyers pack up and walk out with a comment that “we will work out a settlement agreement with the other side this week.” NO. Most Mediators will not allow the parties to get away without in some way reducing the deal to writing and having the representatives sign off. Clients can change their mind especially after reporting back to their bosses (“you agreed to what?”). The issue is whether to start working on a fully executed settlement agreement at that time or draft up a limited “Term Sheet” that lays out the basic parameters of the deal; is signed by the party representatives; and is conditioned on counsel to work together in good faith on a more formal settlement agreement with all of the bells and whistles. The answer is—it simply depends. If it is very simple deal, money is paid and full and complete releases, there is no reason (with laptops/printers) that a full settlement agreement cannot be drafted and signed at the Mediation and the matter is over. Many good counsels come to the Mediation with a draft settlement agreement with blank terms. The problem with “term sheets” is that at best, there can be later good faith disagreements about language, and at worse, bad faith roadblocks to try to derail the basic deal. I have found it is worth every dollar and hours spent to keep everyone in the rooms working, even on the most complicated of deals, to…get…it…done. One suggestion with a term sheet is for the parties to appoint the Mediator to be an Arbitrator and have the authority to render a binding decision on any irreconcilable differences in the final contract language.
Bonus #11: Don’t Give Up Even with a Failed Mediation
If you get close but no deal, don’t just throw your mediation folder off to side and curse the other side and lawyer (and the Mediator) for not being reasonable and acting in bad faith. Many Mediators, especially if the parties got close to a deal, will ask if they can make a few calls and see if a deal is still possible. Yes, it costs money, but remember you are splitting the Mediator’s fee with the other side. One suggestion is to provide a written email or summary for your client representative (include estimates or budgets for future legal fees), and which may also go to other’s in your representative’s organization who have a say so in the dispute but were not present at the Mediation.
To be clear, great Mediation advocacy is not THE most important element in getting a deal done, but it can be a major factor. Be careful out there.
1 I am talking about final offers that have been described as being in the “vomit zone,” meaning after the client agrees to make a settlement offer he wants to go visit the nearest trash can.
2 There are many articles out there about picking a mediator, simply google. What I can tell you is that many lawyers miss the opportunity to pick up the phone and call the proposed mediator. What’s the mediator’s history with the other lawyer? What’s the mediator’s philosophy? Is he a basher, thrasher, or hasher? If you need a hard-nosed, ex-judge “evaluative” mediator to push the other side, a mediator who will not do so may not be an effective mediator for that case. Most good mediators will answer this question by saying: “I will do whatever it takes to get a deal done.”
3 This can be an effective way to communicate your client’s positions to the other party representative, especially in situations where you think the other lawyer is not fully communicating with the client. You of course cannot force a lawyer to send that statement to his client, but in many instances, that will happen. You can also delete out any confidential information meant just for the Mediator.
4 A fascinating issue is whether or not there is such an animal as “bad faith” mediation and what can be done about it. Not showing up at a court ordered mediation? Sure. Refusing to make an offer? Maybe. It’s not bad faith for a client to want his day in court.
The original article, "The Top 10 Horrible, Terrible, No Good Mistakes Lawyers Make in Mediations," first appeared in the NBA Journal in May 2019.