Don’t Waste Your Time—Settlement and Mediation Techniques You Can Use Now

By Kristin Casler, featuring Richard Epstein, Sills Cummis & Gross P.C.; David Osterman, Goldberg Segalla; Bruce Nagel, Nagel Rice LLP; Honorable Thomas Olivieri, Chasan Leyner & Lamparello, PC; Honorable Garrett E. Brown, Jr., (Ret), JAMS; and Lynn Neuner, Simpson Thacher & Bartlett LLP

Most litigation attorneys will agree that a settlement often is the best outcome for just about everyone involved in a case. So, when is the optimal time to settle? Is early settlement right for every case? How can you make the most of mediation? How do you talk to your client about mediation, and who needs to be in on the conversation? What do you do if opposing counsel or the client is an obstructionist? There’s a lot to consider, and the points of view are diverse.

In this article, we provide some of the insights shared by three litigators and two former judges during this year’s Northeast Corporate Counsel Forum produced by HB Litigation Conferences. The panel was moderated by Richard Epstein, a partner with Sills Cummis & Gross P.C.

Timing
According to the Hon. Garrett E. Brown, Jr., (Ret), of JAMS, the best time to settle a case is now. There are distinct advantages to a pre-suit settlement, including the fact that you’ve not sunk much money or time into the matter. Post pleadings, you’ll have a little more information, say a statement of position by both sides. That’s also a good time, Judge Brown said. The more time passes, the more is invested. You have pre-discovery, discovery, dispositive motions and experts. “Sometimes you ask people, ‘Why hasn’t this case settled?’ The answer is, we were waiting for the mediation,” he said.

Sometimes overconfidence gets in the way. Attorneys and litigants may think their chances of winning are high or they overvalue their case. The American Judicature Society says the mean confidence level of parties going into trial is 65 to 70 percent. Those numbers cannot square with actual outcomes, of course. Such overconfidence needs to be tempered with a reality check, something mediation can provide. Otherwise, the judge said, “You wind up with linear thinking, mistrust of the other side, and sooner rather than later, you wind up with over-investment, the sunk costs, all these reasons that, of course, are the big enemy of resolution.”

The Hon. Thomas Olivieri of Chasan Leyner agreed—no matter what type of case you have, it can be mediated pre-litigation. It gives you the freedom to step back before litigation gets into full swing. You may not settle, but the mediation may lay the foundation that will lead to settlement once the case is filed.

In fact, Judge Brown said, many cases won’t be settled that early. But some can be, and attorneys are using creative strategies to identify the right cases. Some clients hire a separate counsel with a 60-day resolution window. Early settlement is this attorney’s only role in the case. The attorney facilitates the exchange of information to put a value on the case—information that would eventually become available anyway. No one is prejudiced if it just doesn’t work out.

A pilot program in the commercial division of New York courts sends one in every five cases to mandatory mediation, said Lynn Neuner of Simpson Thacher, who serves on the commercial division advisory council. Between 30 and 40 percent of those referred have settled immediately. “We have received reports from litigants that it allowed them to have a mediation without being the party who asked for it. It avoids either party signaling weakness,” she said.

Pre-Mediation Conversations
So, as in-house or outside counsel, what conversations do you need to ensure take place? Neuner said first up are the business people. “The last thing you want to do is reach an agreement in principle on numbers, and then have the terms drag you down into a potential rift.”

The second constituency is the mediator. Get to know your mediator in advance; have a dialogue about the case and come to an understanding about the format—whether there will be opening statements, how far the mediator will go, etc.

“Third, it is incredibly important to make sure the insurers are on board before you walk into your mediation,” Neuner said. “If they’re expected to fund, they need to be part of the financial conversation.”

Judge Olivieri said it needs to be even more basic. Tell them what mediation is. Oftentimes clients, and even lawyers, confuse mediation with arbitration. Tell them what mediation is supposed to accomplish—a resolution.

Changing The Defense Mindset
Bruce Nagel of Nagel Rice suggested there needs to be a stark reassessment of what defense counsel want to accomplish. “I think the only way that the defense bar is going to agree to start mediating early is if the in-house counsel and/or the business people give them the direction to do it.”

The defense has a huge advantage in mediating early, and they are squandering this opportunity, Nagel said. They have the money; the plaintiffs don’t. They have the time; the plaintiffs don’t. “You also have the ability to say to your outside counsel, ‘So, what if we settle the case early? What if we can get out now? We’re going to save 75 percent of the defense costs or more.’ You’ve got to get over this idea that if we mediate early, it’s a showing of weakness. Throw that in the garbage. It’s smart, good business.”

David Osterman of Goldberg Segalla agreed. Every case should be evaluated early on for potential mediation. “The mentality is, ‘We will not talk until we look behind every door, we turn over every rock, and we look under every set of sheets.’ I say that’s an enormous waste of time, very expensive, and I believe that you’re giving up, from the defense point of view, the huge advantage. The plaintiff’s bar will settle with you for far less early on.”

Sometimes, the defense is ready to talk, but the plaintiffs are not. They may be waiting for medicals. Neuner said that the key at that point is to agree to talk again in 40 days. Take advantage of that window.

When You Hit A Brick Wall
Sometimes, Judge Brown said, he knows after the first introductory call whether an attorney will be an obstructionist and whether they are ready for mediation or whether they are just going through the motions. When Neuner encounters that roadblock, she employs one of two strategies. If the adversary counsel is blocking the message from getting to the client, and the mediator agrees, she calls for an all-hands-on deck meeting and tries to take the adversary counsel out of the picture. She looks directly at the client in a non-threatening way and says, “I understand you’re seeing it from this way.” She mentions one or two of their business points. “Now, they think you are hearing them and you can continue to dialogue about your business points.”

Second, you can ask the mediator to allow your principal to speak to the adversary principal. “My God, it is so effective,” Neuner said. “If you trust your client, they can be the golden touch that breaks through the log jam.”

Sometimes, after hours or discussions, there’s just too big of a gap. Sometimes, Osterman said, it is necessary to stop the process. “We’re just seeing it differently. We’re not prepared to go where you expect us to go, and at this point, if you’re on the defense side, we’re prepared to try it against the point spread that you’ve just built into it. Until the other side recognizes that you are prepared, willing, and able to try the case against that point spread, there’s no point in a further conversation.”

Occasionally, though, a short, non-dramatic halt can have the parties re-set their expectations and perhaps resume conversations. Judge Brown said he tries to surmount a stalemate by talking to the parties about what is bothering them.

In the end, the critical strategy is building relationships. The experts agreed that there is no better way to bring early resolution to a case.

This article is based on panel presentation moderated by Richard Epstein of Sills Cummis & Gross P.C. at HB Litigation Conference’s 2016 Northeast Corporate Counsel Forum in Atlantic City.