9 PerspectivesDecember 12, 2008
The Mediator’s Proposal: A Great Tool For Yesterday’s Disputes
It was a hot Friday afternoon in Miami, and everyone but the mediator had a flight to catch. The lawyers on the other side knew what they were doing, but we weren’t closing the gap. Sometimes impasse is a good thing, but not here — four conference rooms and a reception area full of lawyers needed to settle, but our steady path to resolution had stopped abruptly. What was the other side up to?
As our mediation closed, the mediator made a proposal — a “mediator’s proposal.” I knew immediately why we had reached an impasse. As I look back on that settlement it’s clear that, as effective as mediator’s proposals might have been back in the day, they aren’t the tool they used to be.
The “Mediator’s Proposal” Defined
Most mediators and settlement veterans know a mediator’s proposal when they see one, but the parties and their lawyers need to understand what it actually represents. First, my definition of “mediator’s proposal,” based on the those I have responded to over the years:
A mediator’s proposal is a set of settlement terms advanced by a mediator in an effort to settle a dispute when the parties have reached an impasse. The mediator’s proposal is made on a double-blind basis to all parties in separate communications; the parties are asked to accept or reject the terms as proposed, with no modification or counteroffer, within a specific time frame.
The typical mediator’s proposal leaves those involved with only two possible outcomes: settlement or continued impasse. But before you respond to the proposal, do you know what it represents?
What Does The Mediator’s Proposal Represent?
Some mediators’ proposals reflect the mediator’s belief of what would happen at a trial of the case, but the concept means something different to others. Richard Webb at the Healthcare Neutral ADR Blog tells us the mediator’s proposal represents “the mediator’s sense of a fair allocation of the remaining ground between the parties, and not an opinion of how the entire conflict would be resolved in court.” Vickie Pynchon tells us it’s a number that she believes “the Plaintiff is likely to accept and the Defendant is likely to pay.” And my mediator in a recent lawsuit gave us a handout that landed somewhere between the two:
This “Mediator’s Settlement Proposal” does not necessarily reflect my opinion of the settlement value of the case. Rather, it simply represents a proposal which may be within the “reach” of all of the parties, although slightly beyond the amount preferred by either party.
No matter how well-intentioned your mediator, this final shot at breaking the impasse may be what created the impasse in the first place.
Spy vs. Spy
Once upon a time the Mad Magazine cartoon “Spy vs. Spy” provided a humorous take on the arms race. Spy White’s efforts met Spy Black’s response, but the response was precisely what White expected, falling in perfectly with his preplanned counter-countermeasures. And so on.
The mediator’s proposal is no different — parties now know the mediator’s proposal is coming, so savvy negotiators angle for an advantageous impasse rather than a settlement. Compromise is no longer the goal of the mediation exercise; instead it becomes a play to the “neutral,” whose power to craft the mediation proposal will make her the real decisionmaker:
- In cases where the mediator’s proposal will be based on who will pay what, the parties — or worse yet, one party — will spend valuable time and effort constructing an impasse when, in the absence of a mediator’s proposal as a fallback, he might have actually achieved a compromise settlement; or
- In cases where the mediator’s proposal will be based on the value of the case, no one has an incentive to be candid with the mediator — so positions become more important than interests; or
- In cases where the parties aren’t sure what will drive the mediator’s proposal, they dig into their positions and hope for impasse — with the most likely result being a mediator’s proposal predicated on those positions.
Given the countermeasures the mediator’s proposal has generated, it seems we might not be any better off than we were when we started. But Spy vs. Spy taught us that when we were 12.
And as for my mediation in Miami, I’ll let you guess whether we were angling for that mediator’s proposal, too.
Categories: ADR,Mediation,Settlement
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I created this site to help clients and their counsel navigate the challenges that inevitably result from disputes, settlement efforts, impasse, and negotiation in general. The perspectives I bring are based on my experience, summarized in this abbreviated bio. If you have any questions or thoughts about this site, or an issue you’d like to see addressed, please email me at:
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9 Perspectives:
Vickie Pynchon — Saturday, December 13, 2008 2:26 am
Very perceptive. I only very reluctantly make mediator’s proposals for all of the reasons you state. Everyone lies to the mediator yet counsel often ask the mediator to forecast true bottom lines – which reminds me of the old Woody Allen joke about cheating on his metaphysics exam – “I looked into the soul of the girl sitting next to me.” I’ve got lots to say about all of this & will post on it soon. Thanks for starting the conversation.
Vickie Pynchon — Saturday, December 13, 2008 1:14 pm
Further thoughts (hope you don’t mind me using your blog for these instead of mine):
1. what party A believes party B’s bottom line to be is one of the strongest predictors of negotiation outcome.
2. outcomes in distributive bargaining are governed by gamesmanship, nerve and aggressiveness (see Effect of Bargainer Attributes on Negotiation Outcomes)
3. What the parties are bargaining over is who will pay the biggest percentage of the parties’ actual overlapping ranges (what percentage of the zone of possible agreement one party will pay and the other accept)
4. Whether accomplished through an AGENT — the mediator — or directly, the parties will always dissemble with one another about their bottom lines for the purpose of maximizing their “share” of the ZOPA
5. the parties ALWAYS create artificial impasses whether they ask the mediator to use a mediator’s proposal to break through them or not
6. the key for the parties is to understand that the mediator can be influenced; will be influenced, by numerous factors and though s/he arrives at the mediation “neutral,” that neutrality is steadily undermined throughout the course of the mediation session — the mediator is not an automated system; s/he is a human being with human weaknesses
7. in my experience, what the parties most want (no matter how aggressive they like to appear) is not to be taken; not to lose face; not to leave too much money “on the table,” and to feel as if the end result is sufficiently “fair” to amount to rough justice.
I’m going to post a couple of NYTimes articles over at the Negotiation Law Blog today on fairness in animals (dogs and monkeys) and in the recent national political discussion raging over who is entitled to be bailed out of financial difficulties. At the end of the day, no matter HOW agreement is reached, if it has the key attributes of fairness based on need, equity and deservingness, all parties will be sufficiently satisfied to stop fighting and return to the higher goal of getting the work of business accomplished.
Thanks for giving me so much food for thought and the main topic of conversation over breakfast with my tough-negotiator husband this morning.
John DeGroote — Saturday, December 13, 2008 8:44 pm
Vickie–
Thanks for your thoughtful responses — there’s a whole lot in your comments to talk (and think) about. Thanks for continuing the conversation–
JD
Richard J. Webb — Monday, December 15, 2008 8:05 pm
Great post, John. I just responded over at healthcareneutraladrblog.com
Best regards,
Rich
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The Mediator’s Proposal Roundtable: The Good, the Bad, The Ugly « Mediation Matters — Tuesday, January 19, 2010 9:14 am
[...] outcome. This was the subject of John DeGroote’s post in his blog, Settlement Perspectives: http://www.settlementperspectives.com/2008/12/the-mediators-proposal-a-great -tool-for-yesterdays-di… ; to which I replied in my Healthcare Neutral ADR blog at: [...]
Stephen A. Hochman, Esq. — Wednesday, February 24, 2010 1:50 pm
I believe that the mediator’s proposal is an effective endgame to break impasse. I find it works 98% of the time that I use it, and to give up without using it as a last resort is not only a missed opportunity for settlement, but, IMHO, possibly a breach of an ethical duty to do your best to meet the desires of the parties who hired you, assuming that they both hired you to help them settle, albeit on terms better than what they each perceive to be their worst case alternative to litigation. I submit that it is the job of the mediator to shoot for a number that is in the win-win range and not the mid-point between the last offers made by the parties. An example of the win-win range is, if the mediator believes P has a 50-50 likelihood of winning $1 million and the parties will each spend $100,000 to get a court to give them an all or nothing decision, the win-win range is $400k to $600k. Whether or not the parties anticipate that the mediator will use the mediator’s proposal to break impasse, in my experience they virtually always spin the mediator as to what they perceive to be their bottom line at that moment in time. Needless to say, the mediator’s number should always be based on the mediator’s objective, decision tree analysis of the win-win range and not the possible misperceptions of the parties. Ideally the mediator should propose a number in the middle of what s/he believes is the win-win range (e..g., $500k in the above example). .I would not be comfortable in the above example of proposing a number below $400k or above $600k merely because I thought it might be accepted by both parties. The issue is not what the mediator believes is fair (a totally subjective standard), but what the mediator objectively believes is better for both parties than their litigation alternative. I never believe bottom lines that are outside of the objective win-win range. Of course, even if both parties in the above example honestly believes they are 65% likely to win despite the risk analysis that they heard from the mediator in caucus, they may still accept a $500k mediator’s proposal based on the their non-monetary interests and needs. Many times a party will agree to a mediator’s proposal even though it would never have agreed to the same number if it were an ultimatum by its adversary.
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