By: Guy O. Kornblum* and Charles D. Cochran**
How is our civil litigation system working in inviting parties to resolve disputes short of trial? Are we as counsel for our clients doing our best to obtain a resolution of the case so that the risks of trial and appeal are avoided? Is mediation working as part of the dispute resolution process? Or is it somewhat of a failed alternative? Or is it just less effective than it once was?  Recent experiences in mediation have led us to believe that it is the latter, and that defendants, especially insurance companies, are treating mediation either as a process to a) obtain a lower settlement than would be expected and fair, or b) conduct discovery and issue identification, rather than attempting to resolve a dispute. Also, to be frank, there are many former judges out there that are not effective mediators. Just because they sat on the bench for 20 years doesn’t mean that a former judge knows people.
We have come to the conclusion that it is a rare case than it once was that cases can resolve early. Nonetheless, we need to try to avoid the high cost of litigation and obtain an acceptable settlement for our clients at an early stage, provided the opposition is a serious and really interested in doing so. That, however, is the key.
Anyone who has been involved in dispute-resolution knows how laborious and often mysterious the process can be. Mediation allows the parties involved in the dispute to sidestep the litigation process, while also getting results. But is it working well?
We believe that the process of mediation can be a bar to the successful mediation process. Here is why. The opposing party has to be properly educated about a client’s case before the mediation day. The case evaluation needs to be done by the person with the purse strings before the mediation day. The mediator needs to be engaged with all parties to the mediation before the mediation day. The evaluation of the Plaintiff’s claim needs to be done before the mediation.
During mediation, the attorney’s responsibility is both as an advocate and as a counselor to the client. When advocating an issue, the skills used by an attorney are different than the approach used in a courtroom. An attorney also counsels the client on issues during the mediation.
But serious consideration should be given to the timing of mediation. Obviously, an earlier settlement of the case is preferred since it avoids costs which only reduce a plaintiff’s share of the settlement. For the defendant, reducing litigation costs should be an obvious goal.
Consider the following points in determining when you have the best chance of a settlement at mediation:
The problem is that often a mediation works only if the parties really desire to resolve the matter. They must come with a good faith belief that the matter can and should be settled and have a rational and reasonable evaluation of the case. If the plaintiff’s expectations are not supported by the facts of the case as then known, or the defense is looking for a “fire sale”, mediation will be a waste of time and money. The first time the adjuster or the person with the purse strings learns about the case cannot be at the mediation. They need to be shown the merits of the case before the mediation happens in order to secure sufficient authority coming in to the mediation. Provide your opponent with a copy of the mediation brief and exhibits at least 3 to 4 weeks before the mediation in order to give the opposition and mediator time to digest your position and evidence. A private letter or mediation brief to the mediator pointing out confidential dynamics (e.g. the Plaintiff is frightened to go to trial) or negative and positive points to the case can be done before the mediation and pre-mediation conference.
If possible, it is important to work toward mediation as early as possible so that the client may reach his or her goals. Bear in mind that the client is not going to push early mediation. It is the attorney’s responsibility to recognize the advantages of a mediation and resolution for the client. In doing so, counsel must be mindful of when the best opportunity for doing so arises.
When compared to the expense of prolonged litigation, mediation is usually for cost effective. From a plaintiff’s perspective, the client obtains or early use of the funds, rather than the hope of financial recovery later, while also saving money on pre-trial and trial costs, as well as possible appeal. Litigation costs often surprise clients, particularly if expert testimony is needed. The fees for experts are quite high, usually involving several hundreds of dollars per hour. During the amount of time experts need to prepare, testify at deposition and appear in court, several thousands of dollars in costs may be incurred quickly. Thus, at a mediation, a major factor in considering whether to settle is the future expense of proceeding without settling. For the parties to achieve this, they must be motivated to work toward closure.
So how do you find out if the parties are at the point where settlement discussions would be productive either directly or through a neutral? One way is to have a dialogue with the opposing counsel. That is, ask counsel about his or her view of the case. While opposing counsel may not reveal all, a certain amount of candor is called for. And it does not hurt to inquire: Are you and your client at a point where we can have a meaningful discussion? Who knows, this opening to communication about settlement may lead to direct negotiations (Heaven forbid!), and perhaps even a settlement without a mediator.
If the answer is “No”, find out what is needed to get to a point where a mediation makes sense. Perhaps the parties can agree on a limited discovery plan or exchange of information that will allow each side to evaluate the case.
Research shows that a key factor in litigants’ willingness to use mediation is the recommendation and encouragement of their attorneys. For example, “a majority of parties in domestic relations cases (68 percent men and 72 percent women) who chose to use mediation said their attorneys had encouraged them to try it, whereas less than one-third (32 percent men and 18 percent women) of those who rejected mediation had been encouraged by their attorneys to use it.” (R. Wisler, When Does Familiarity Breed Content? A Study of the Role of Different Forms of ADR Education and Experience in Attorneys’ ADR Recommendations, 2 Pepp. Disp. Resol. L.J. 199, 204.)
So it is counsel’s job to assess what is needed to reach a point where negotiations – direct or at mediation – makes sense.
Mediation is a process not a day. Mediation involves an objective intermediary who negotiates with the parties to avoid or end the highly confrontational and tension-filled process of litigation. From the plaintiff’s perspective, it is a means of essentially selling the lawsuit to a defendant, who buys off the expense and exposure of ongoing litigation. It involves an exchange of offers and counteroffers made in more of an informal business environment, rather than a formal courtroom.
It makes no sense to wait until the mediation day to find out that the other side is neither prepared nor interested in settlement. It is advisable to have a pre-mediation conference at least two weeks before the mediation occurs. This is a good time to find out if the other side is really interested in settling. In some instances, ask the mediator to contact the opposition and a) find out if there is real interest in settlement, and b) if the “check writer” with authority to settle is going to be present at the mediation.
We never want a situation where a “potted plant” attends on behalf of the other side and attends with no or inadequate authority to resolve the case. Instead, the insurance representative has to talk to someone at the “home office” who is not present at the mediation and not subject to the dynamics of the process for authority to settle and no ability to evaluate the Plaintiff. The case has little chance of settlement when the person with authority is not at the mediation. This is particularly true when the “real authority” is on the East Coast or a different time zone that restricts the mediation day.
With insurance companies, it is important to remember how the insurance system works. Usually, the case is assigned to a very inexperienced adjuster that has very little authority to settle the case e.g. $3,500. Once represented by counsel the case is usually transferred to another adjuster with more authority, e.g. $7,500. The case is evaluated once the defense counsel receives the first round of discovery stating the plaintiff’s claims and again after the plaintiff’s deposition. Some carriers use evaluation software, such as Colossus, to give the adjuster a settlement range. The evaluation software can be vetoed or over-ridden by a manager. The software is based upon “value drivers” that are inputted by the insurance adjuster. Note that this valuation is only as good as the information that is put in to the software e.g. soft tissue vs. objective injury. So, it is important to give the insurance adjuster the right information or value drivers to put in to this software.
Hostility, anger, finger pointing and accusations are not part of the mediation process. Diplomacy, salesmanship and patience are the bywords. The parties and their lawyers may be firm, tough and even hard-nosed at times, but they need to do it politely and diplomatically. The parties need to be prepared for mediation by having the appropriate attitude before attending the mediation. This is where the client enters the business process of resolving disputes and essentially steps outside of the courtroom. The demeanor of all should be consistent with this “business like” approach to negotiations.
While a case may not settle at mediation, that is not the end of the road for a potential resolution. A number of cases settle in the weeks following the mediation particularly if you have an experienced mediator that follows up with the parties.
Following mediation, the parties may have gained a different perspective on the case, and reevaluated their positions. That can be a major event or “evaluation changer” which could produce more movement toward a center point.
Also, the mediator will often comment on issues and give his or her views on each side’s case. The mediator may offer the pros and cons of settlement versus proceeding further. This provides an objective, third-party view of the matter, which may be very valuable.
Third, the parties may be so far apart that settlement is not likely. While one hopes that this is a very rare occurrence, there are cases that need to be tried for reasons that are logical or illogical (e.g. personal vendettas, etc.). While we like to believe that we can control our clients and influence them regarding resolution, there may be instances when the clients simply cannot come to terms with a settlement that works for all concerned. So be it. Again, this should be a very rare occurrence. By negotiating directly and perhaps even mediating, you will find out where the parties are in their settlement efforts.
As the future unfolds, more and more courts will be creating ways for litigants to enter the mediation process even at any early stage. This is largely because of costs. The courts are underfunded and the court system does not have time to take all the filed cases to trial. Mediation offers the opportunity for the client to participate in the process, and hear the views of those involved, including that of the mediator. That is positive because the client hears what the other side has to say and can consider the points and counter-points of the case and factor those into the decision making process. Many times, the client’s perspective on settlement will change as a mediation progresses. But it will not work unless the parties and their clients have the right attitude and are genuinely interested in resolution. The timing needs to be right for participation in the process of trying to resolve the case. Thus, counsel needs to assess whether the case is ready by engaging in a preliminary inquiry as outlined above to determine if the stars are aligned for a meaningful and good faith discussion of the case and its resolution.
*Mr. Kornblum specializes in civil trials, arbitrations, mediations and appeals. He is a partner in the civil litigation firm of Kornblum, Cochran, Erickson & Harbison, LLP, with offices in San Francisco and Santa Rosa, California. Mr. Kornblum is certified in Civil Trial Advocacy and Civil Pretrial Practice Advocacy by the National Board of Trial Advocacy and is a Charter Fellow of Litigation Counsel of America Trial Lawyer Honorary. He is also a Life Member of the Multi-Million Dollar Advocates Forum and also a Premium Member of The Verdict Club, recognizing those who obtain large verdicts or settlements for their clients. He is also a “Top 100” Trial Lawyer, and is a Fellow of the American College of Board Certified Attorneys. He author of “Negotiating and Settling Tort Cases: Reaching the Settlement,” published by Thomson West and the American Association for Justice), 3d. Ed. 2015. He is a Northern California Super Lawyer since 2006. He received his J.D. Degree from the University of California, Hastings College of the Law, and his A.B. from Indiana University. In between, he was a Counterintelligence officer in the U.S. Army.
**Charles D. Cochran also specializes in Civil Litigation with an emphasis in Personal Injury and Tort Law. He is also a partner in Kornblum, Cochran, Erickson & Harbison, LLP. Mr. Cochran has been certified in Civil Trial Advocacy and Civil Pretrial Practice Advocacy by the National Board of Trial Advocacy since 1995. He has tried over seventy five jury trials, and served as Arbitrator or Mediator in over 300 cases. He has been named a “Top 100” Trial Lawyer, and a Super Lawyer for the past 10 years. He is a Life Member of the Million Dollar Advocates Forum and a Fellow of the Litigation Counsel of America. He received his J.D. degree from Western State University, College of Law in 1981 and a B.A. Degree from Fresno State University in 1977. He was the Rohnert Park Mayor and on the City Council from 1986 to 1990. He is a native of Sonoma County, California, where he has practiced since 1983. While he practices statewide, he works out of the Santa Rosa Office of his firm.
 See, “The New Law Practice of Dispute Resolution – How to Avoid Having to be a Warrior on Behalf of Your Client,” FORUM March/April 2014, p. 14; “Is Mediation the Best Court for Resolving Disputes?” The Trial Lawyer, Spring 2015, p. 12