Friday, October 25, 2013

Helping the Lawyers to Gain Client Control

One of the most valuable services a mediator can provide is to conduct the most difficult conversations between a lawyer and his own client about the value or risks and merits or defenses to the case pending.  Let's face it:  when lawyers take on a case, they are as starry-eyed as their clients about the merits of their position.  As trial approaches, discovery is completed, thorough investigation is conducted and realities of costs v risks and benefits has set in, both lawyer and client may change their evaluation. 

Without treading into the dangerous waters of creating or highlighting any conflicts of interests between lawyer and client, a good mediator will ask a lot of rhetorical questions and be a leader in this regard, based upon the claims being made by each side and her independent evaluation of what is truly needed in order to resolve the dispute.  The key is transparency so that neither side feels that you are working on their behalf, while underscoring the most likely outcomes if the matter is not settled, including the risks that one or the other side is correct in their new evaluation!

Last week, I mediated a small case in which not only did the defense lawyer think his clients should pay the Plaintiff's bill, but one of the two partners believed it would be more expedient and less expensive to pay than to continue to fight.   The other, of course, in a dramatic fashion, adamantly maintained that this was extortion and he would rather lose the case in trial than pay for a claim which he did not believe had merit.  There were lots of micro-opportunities to mediate in only the defense room! 

This kind of mediation is a great challenge.  A fearless mediator is one that dives into these micro-conflicts before they break out into nasty accusations that potentially derail the negotiation at hand.

Friday, October 18, 2013

Begin the Mediation Before the Hearing

     Call me old-fashioned, but I think it is critical to have a voice to voice conversation with every lawyer involved in a litigated case before the mediation begins.  This week, I failed to follow my own cardinal rule because after the first conversation with the defense lawyer, I knew that my hardest effort would be to get his clients on board with an earnest interest in settling the dispute. 
     Then when I arrived, the Plaintiff's lawyer informed me that her client was short on time and requested I begin the process with them.  I happily obliged and ultimately got the parties negotiating earlier than usual in the process.  The trouble was that neither had revealed to me beforehand that they had previously discussed settlement and that there had been pre-litigation offers and demands (between the principals before they engaged lawyers) that were identical to those made at the hearing, but now after many months of litigating and incurring costs and fees on both sides. 
     When I returned the "final" demand, the Defendants, understandably, were incensed by the number, since this had been communicated to them many months before.  They lost faith in the process and walked out without a settlement.  The whole debacle could easily have been avoided had either side communicated to the mediator what the history of settlement negotiations had been.
     Next time, I am going to ignore the signs and signals and ask the probing questions of both sides before I sit down with their clients to begin.  Email communication only goes so far.  Go ahead and call me old-fashioned.
     On a personal note, I am thrilled to have been named to the Top 50 Neutrals list by the Daily Journal for the State of California.  Many aspiring mediators have asked for my secret to success.  That is, I confess, old fashioned too:  hard work, many hours of trial and error and perseverance in a profession that can be more rewarding than any I could imagine, but challenging every single day!

Friday, October 11, 2013

Lessons from Improv Actors for Negotiators

     This week, I'm preparing a couple of talks on negotiation skills and conducting some research which has lead me to draw upon improvisational acting class.  One of the cardinal rules of improvisational comedy, (as in negotiation), is "offer" and "acceptance".  When one participant offers up a comment, the other accepts it and builds upon it.  Rather than disagreeing with an unwanted or unexpected idea or offer, the competent "player" simply says, "yes, and.." instead of "but, no..."  Consider the possibilities! 
     For example, where one party offers to buy a house at 10% below asking price with a 90 day escrow, instead of rejecting the offer, perhaps the seller's response would be:  "Yes, the price is very close to asking price, and if the buyers could close in 30 days, it would be a particularly attractive offer."  In response, rather than, "But we can't close that soon", the buyers could say, "Yes, 30 days would be agreeable, but we won't have the financing in place for 45 days since we need to close escrow on our own home".  "If the price was 10% lower still, we could probably get a bridge loan sooner."  Do you see how we are making progress here?
     Another lesson from Improv actors is not to ask questions, because they don't build on the story and lots of questions require the other fellow do all of the work on stage--inventing the setting, roles and action.  For example, in the image above, if one guy says, "What's for dinner?", the other has to invent a meal.  If his invention includes, "Spaghetti and meat balls", the other side cannot fairly respond with "and what's for dessert?".  Instead, it's his turn to say, "Yes, spaghetti is delicious and I can eat it all night with my hands."  In negotiation, asking questions can cede power to the other party, at least temporarily, putting both of you in the spotlight unnecessarily and risking giving away too much power and creating a negative interpersonal dynamic.  For that reason, you don't want to start a negotiation with, "what do you propose?" but rather by suggesting a proposal which can be refined as the narrative builds.
     Finally, improv actors are trained to maintain eye contact.  It's essential to send and receive physical cues and to deeply engage with one another.  In negotiation, serious listening, without distraction is critical to successful outcomes.  You don't want to lose sight of your objectives or your negotiating partner!

Friday, October 4, 2013

Reframing the Value of Settlement

    Psychologists have learned that people are generally more averse to loss than to risk of not getting a gain.  In other words, if I offer you $100,000, but you only have a 50% chance of winning it (value now $50,000), you are more likely to accept it than if I say, for example, if you lose the case you'll have to pay me $50,000.00 (making the settlement value potentially a net loss).  For this reason, a valuable offer which has no risk of cost should be carefully re-framed to shake out it's true value.
     I have found the most troubling cases lately are those of older workers who have been discharged from their jobs with little prospect for being re-hired before their retirement or pensions kick in.  After two or three years of diligently searching for work, they often have relatively high lost earnings and can justifiably claim many more years at a fairly high salary that they can anticipate being out of work.  Where an employee loses their job in their 20's or 30's, they can usually show a year or two of lost wages.  After that, the world expects them to find alternative employment.  An employee in their mid-50's can often demonstrate a loss of at least two years past lost wages and an additional 5-10 years of future lost wages, causing the "actual damages" to creep up to millions of dollars quickly.
     In these cases, it's a great opportunity for the mediator to reframe the value of the offer in conceptual ways that extend beyond money.  For example, an offer of the equivalent of a full year's salary can be described as a fair offer if it had been made at the time the termination occurred in a way that was intended to give the worker a full year paid leave of absence to re-train or find a more suitable work environment for himself, even if it is only a fraction of the actual out-of-pocket losses incurred by the time of the mediation hearing.  The same hypothetical $100,000 can also be couched as a college fund for both of the Plaintiff's children:  which is really what they were working to save in the past ten years--but now in a lump sum.  (Having put three children through college, I am keenly aware of today's costs of college--ranging from elite private to State schools).  Too, the $100,000 can be conceptualized as enough to pay their mortgage for six months and pay off their credit card debt.  In other words, we mediators cannot un-ring bells and turn back the hands of time...but a healthy offer can put an end to the lawsuit and make for a better future if a neutral can present the offer in light of it's true value, even if it is far less than the amount the Plaintiff's lawyer predicted in the uncertain outcome at trial.