The use of mediation has become an almost universal practice in litigation. More cases are resolved by mediation than are resolved by jury trials. Because of this, it is very important that insurance professionals understand the mediation process and learn how to make it effective.
William Moye, a Houston insurance defense attorney and a partner in the Houston office of Thompson Coe Cousins & Irons LLP, recently gathered together several of the most respected mediators in Houston to discuss their thoughts and suggestions for successful mediation. The following are their tips for a successful mediation.
1. Don’t Ignore Pre-Suit Mediation
Pre-suit mediation is often overlooked because the case facts are not fully developed and the parties’ positions have not yet been clarified. However, an early attempt to settle is often worthwhile as it may greatly limit the costs of handling the claim.
To be effective, pre-suit mediation requires a sophisticated decision-maker on the front-end of the claim to fully evaluate the dispute. The claims analyst needs to be fully involved from the outset to determine the potential liability based on the alleged facts. And you should not fear that requesting a mediation pre-suit signals your financial surrender. If anything, it shows the opposing party that “we mean business” and we have an interest in offering a quick resolution to what is surely a weighty problem for them.
Further, if a case is worth “X” the day it was filed and will be worth “X” after 9 months of discovery and considerable professional fees, then consideration should be made to resolving the case for “X” at the outset. Also, a party may want to consider pre-suit mediation in this instance when favorable liability facts do not exist but are then currently unknown to the opponent. If discovery will reveal these facts, and these facts may increase the settlement value of the case, then a pre-suit mediation (or pre-discovery) mediation should be considered.
2. Preparing for Mediation
You get what you pay for. The cost of mediation can play a role in whether the parties opt for a half day or full day mediation. The incentive to cut costs while defending a lawsuit is always present. However, an attitude of always taking the cheaper route can have unintended consequences. While the half day is cheaper, it is not always the best route.
A party must analyze the facts of their case to determine what amount of time is needed to reach a settlement. This decision should be based more on the complexity of the law and facts rather than merely looking at how much the suit is worth. A simple case consisting of straightforward facts and legal standards likely warrants only a half day of mediation. A full day is necessary if the case has complex facts, complex law, and multiple disputed issues.
A problem arises when a party attempts to fit a complex case into a half day mediation. There may simply be insufficient time for the mediator, along with the parties, to parse out the disputes and come to an agreement. So instead of paying extra for a full day session, the parties walk away without an agreement and continue to accumulate fees as the litigation proceeds. It would be more beneficial to fully exhaust the mediation process to see if settlement is a viable option.
Another common issue arises when both parties attend the mediation to “feel out” where the other side is on the case and do not actually pursue settlement. Approaching mediation with this attitude is a waste of time that will have little or no benefit. Therefore, make sure you are familiar with the necessary facts before mediating. This knowledge applies to adjusters as well as the attorneys attending the mediation.
Also, it is common for parties entering mediation to forego writing a memorandum or statement of the issues for the mediator. That is a mistake. A mediation memo can help speed up the mediation by providing a background of the case as well as the applicable law that applies to the dispute. The memo should be concise and get to the heart of the dispute. Mediators prefer this so they can feel knowledgeable about the case and mediate the dispute more efficiently.
3. Attending the Mediation
A common request from the mediators is that the claims handler should physically attend the mediation in person. It is extremely helpful to have the person with the actual authority to settle the case physically at the mediation to make quick decisions. Additionally, the adjuster’s attendance shows the opposing side that the mediation is important and you are truly seeking a settlement. While there are certainly reasons that may prevent attendance, the adjuster’s physical presence can pay dividends for more significant matters.
If attendance is by phone, then try to make sure the entire session is attended, including the opening session. A lapse in availability slows the entire process and could be the difference in whether a settlement is reached.
If the claims professional cannot attend the mediation, or even if attendance is by phone, have the person in attendance for the carrier (e.g., attorney, TPA) explain directly to the claimant why their attendance was not possible or necessary. This reinforces to the claimant that the carrier finds their case important.
The mediators agreed that opening statements matter. Many times, the parties become so entrenched in their positions, or have such disdain for the opposing attorney, that a request is made at mediation to forgo an opening session. Also, some attorneys/carriers feel that an opening statement is too adversarial and will disrupt settlement negotiations before the mediation even starts. However, this is usually untrue and, as expressed by the panel of mediators, skipping the opening statement is a crucial mistake.
The statement provides background and context to the dispute for the mediator. Skipping it can serve to destroy the mediator’s appearance of impartiality if he or she is the first person to deliver your argument to the opposing side. Under most circumstances, the opening statement is not too adversarial to affect negotiations. In fact, it is a way to explain your side of the case in a less adversarial forum than in the courtroom. With that said, firmness and candor is acceptable, but it is not beneficial to go “scorched earth” in a response to plaintiff’s opening position. This may be the one and only chance that the carrier/defendant has an opportunity to speak to the party bringing the claim directly. A properly managed opening session can actually be the difference in settling a case. Another repeated comment was a suggestion that it is allowable to simply say: “We are sorry for what happened.”
The mediators also suggested that many attorneys/carriers report a wish to skip the opening statement so they can move right to the negotiations and save time. This is often mistaken as the mediator will then use additional time getting up to speed on the issues as he moves from room to room. The opening statement allows all of the issues to go in front of the mediator at the outset.
4. Don’t Fear the “Bracket.”
What can you do when the other side is way too high in their demands and inching up from your position is not having any success? Offer a bracket. A bracket can be used to quickly “get the ball rolling” in negotiation by taking away large chunks of the difference between demand and offer. The mediators simply asked that if the midpoint in any bracket offer exceeds the authority to settle the case, let them know that so that they can properly communicate the offer to the opposing side.
5. Let the Professional Help the Negotiation.
Again, keep in mind that you are paying for the assistance for someone to settle your case. The mediation fee is far too expensive to simply have the neutral ferry offers and demands between the caucus rooms without offering their professional advice along the way. If a mediator has a suggestion, listen to it and try to understand why it is being offered. You do not have to agree with or follow the advice given, but more likely than not there is a reason why a suggestion is made.
6. An Assigned Room does not Mean Every Communication Must Go Through the Mediator
There is a benefit for either the opposing attorneys or adjusters to speak among themselves during a mediation. This is especially true if the two individuals have a good relationship with each other. Having a one-on-one discussion can speed up settlement by cutting through certain issues that are no longer in debate. This process is much slower if that communication has to pass through the mediator. This will allow the mediator to focus on the more complex or disputed issues.
Martin is a partner in the Insurance Litigation and Coverage Practice of the law firm of Thompson Coe Cousins & Irons LLP.
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