Mediation is all the rage in settling claims and lawsuits. What did we do before there were mediators?

There was a time, back when dinosaurs ruled the Earth, when insurance claims adjusters and their appointed counsel actually negotiated settlements with claimants and their counsel. It was far from a perfect system, but it worked most of the time because the best plaintiffs’ lawyers knew that, on average, they’d do better by settling most cases, and that they couldn’t take every case, or even a large percentage of cases, to trial. It was a more congenial time, when opposing advocates would battle fiercely, but professionally, in court, then head out afterwards and try to settle the case over a couple of drinks.

The old system can still work, but today it’s considered “safer” to discuss settlement in the context of a formal mediation. State and federal rules encourage mediation and generally cloak the process in an unbreakable “cone of silence” privilege to allow the parties and the mediator to communicate candidly, without fear of what they say being later used in evidence.

As mediation has become overutilized, myths have grown up around mediating, the foremost of which is that it’s the mediator’s job to evaluate the case for the parties. If that were true, why would claimants and insurers even bother to hire adjusters and counsel? The fact is that it is the claims professional’s job to evaluate the case, aided by the legal advice and courtroom experience of outside counsel. (Ironically, is also the plaintiff’s attorney’s job to evaluate cases.) The mediator may have many years’ experience on the bench or in practice, and any mediator worth hiring is worth listening to, but that doesn’t turn mediation into an evaluative process. The evaluation precedes the mediation.

Evaluating a case requires the use of a highly specialized tool, a telephone. Oh, it will likely involve other tools, such as independent medical examinations, depositions, and some jury verdict research, but all that paper is meaningless unless the claims professional and his/her colleagues, including outside counsel, honestly discuss the case. The dialog cannot be outcome-driven; no participant should try to sugar-coat a bad fact or play “spin doctor.” There needs to be a healthy skepticism in the dialectic—nobody should accept any important fact as a given. Long before the mediation begins, the arguments and evidence should be tested by fire.

And then it is time to mediate, or if you want to be brave, to negotiate.

There are two overused processes at many mediations: opening presentations and “mediator’s proposals.” An opening joint session can be useful to set the tone and lay out the ground rules, but lengthy, grandiloquent dissertations tend to produce more heat than light. PowerPoint slide shows are death to discussion, and chew up hours of valuable time that should be spent bargaining, rather than grandstanding for the clients and driving the parties further apart. Neither side does better by “surprising” the other. That’s why mediation briefs, including crucial exhibits and consultants’ reports, should be (gasp!) exchanged in advance of mediations. Both sides need to be ready to compromise, which requires knowing their downsides, not just their mantras.

Then there is the ultimate mediation cop out, the “mediator’s proposal.” These were once face-saving devices, in which each side would confidentially disclose its acceptable range to the mediator, who would then pronounce, with Delphic acuity, a proposed number that just happened to fit within the narrow overlap of the two ranges. Miraculous!

Maybe it’s that sense of infallibility that has given rise to the modern myth of mediator as judge, jury, and executioner, in other words, both sides moving in baby steps until 5:45 PM, then letting the mediator pick a number in last few minutes. Is that mediating or passing the buck—maybe hundreds of thousands of bucks?

A skilled mediator can aid the parties, especially those unaccustomed to litigation, by helping them see past their emotional ties to their positions, and see their case as it is, warts and all. The mediator should be more than a telegraph, simply sending messages back and forth, but less than an oracle. If the parties have impartially evaluated their positions, and each other’s, they won’t need an oracle.      

(The author of this article is Louie Castoria.  He is an attorney with Wilson Elser and a Director of the Insurance Educational Association.  Louie publishes often in trade journals and shares his sense of humor on a weekly basis in his home town newspaper.)