Commercial Mediation

Pre-Mediation Contact

Does it occur in practice?

• Exchange of position papers.
• When that occurs.

Attendees at Mediation

• “The Computer Says No”
• The importance of decision makers being present at mediations.
• Problems encountered with insurers and large corporations represented by in-house counsel at mediations.

To Joint Session or To Not Joint Session

• The hybrid private session/joint session approach.
• Highlighting that mediation is consensual.
• The importance of recognising emotions and using that as a step towards settlement.

Planting the Seed

• Counterclaims.
• Legal fees as a minimum starting point in terms of expectation.
• Previous offers.
• Continuing to plant seeds during the course of a mediation.
• The mediator’s role in formulating offers.

Worse Case / Best Case Scenario

• The four step process:  

– What a plaintiff will ultimately receive if it wins in particular taking into account non-recoverable fees;

– What it will usually cost a defendant i.e. non-recoverable fees (even if it wins);

– What it will cost a plaintiff if it loses; and

– What it will cost a defendant if it loses.

Managing Expectations

• The four questions:

– What do you want out of this mediation by way of settlement?

– What do you think the other party wants by way of settlement?

– What do you realistically think will settle the dispute?

– What do you realistically think the other party thinks will settle the dispute?

• Focusing on what will settle the dispute rather than what a party wants or needs.

No Blood in the Stone

• Discussing with parties in private session their capacity to meet their own legal fees and the financial consequences of a loss.

• The defendant who claims to be of no or very little worth and how to deal with it.

Deadlock and Deadlock Breakers

1. Discuss the possibility of payment on terms. This will often involve discussion of appropriate security and default provisions.
2. Discuss if appropriate possible settlement involving something other than payment of money or only the payment of money.
3. Speak to each of the parties, separately without their solicitors. This is adopted rarely.
4. A hybrid of (3) where you ask each of the parties and their legal advisors to inform you privately of their top line/bottom line. This of course remains confidential with the idea that if the parties are closer than they realise you can keep the mediation going.
5. A meeting between the parties together with the mediator but not solicitors. Solicitors are often amenable to this idea. It often breaks a deadlock in that the parties take the matter into their own hands are empowered by doing so and the last step towards settlement which was not occurring when the parties were with their respective solicitors then occurs.
6. A meeting between the parties’ legal representatives with the mediator. This often leads to less “posturing” and frank exchanges.
7. A private meeting between the parties without the mediator. This often works. It gives the parties “ownership” of the process.
8. The mediator’s offer. The best way to explain this is by reference to some figures. Imagine the plaintiffs final offer as being $1 million, the defendants $800,000 and they have each told you that they will not budge from their respective positions. You inform each of the parties in private that you as the mediator accept the fact that each has drawn a line in the sand and that the matter is only going to settle if they each move to a figure nominated by you. Normally that figure will be a splitting of the difference but not always. So in this scenario the mediator will nominate the figure of $900,000. Normally you will set a time limit by which each of the parties is to inform you if they are prepared to move to that figure. You wait outside the rooms until you are told by each of the parties whether they are prepared to move to that offer. You make it plain to the parties that if one party is not prepared to move the matter will not settle. You also make it plain to the parties that if one party is prepared to move and the other party isn’t, the other party will never know that. Hence if the mediation fails it will have failed with the parties at the position of $1 million versus $800,000.
9. Sometimes where there are multiple parties you can explore the option of settlement between some of them only. This can be very difficult as it often involves requests for indemnities.
10. Another option is to suggest that even though an offer has been rejected it should nevertheless remain open — say for a period of 5 days to enable the other party to re-consider the rejection of it.
11. Finally, if settlement is not possible there are the options of:

• an adjournment if the parties have ascertained that the mediation is premature which can be the case for many reasons. In this eventuality it is useful to attempt to agree further steps and a timetable for these steps; or
• agreeing further steps and a timetable for those steps in the proceedings.

Notes on Mediation

1. Preliminary contact with mediator

• Face-to-face/telephone conference?

• Joint/separately with each party?
• What to raise at this time:
  • Who will be attending;
  • If telephone contact from down south — awareness of difficulties caused by Queensland not adopting daylight saving — importance of those on other end of the phone being available at appropriate times.
  • If insurer involved are there any indemnity issues;
  • Offers already made by each side;
  •  The mediation agreement;
  • Documents to be exchanged/provided to mediator.

2. Pre-mediation conferences with client

• How close to the mediation.

• Explanation of mediation agreement and execution of it.
• Explanation of process.
• Decision as to whether client will engage directly in joint discussions at mediation if invited.
• Preparation of client in respect of personalities of mediator and those who will be attending on other side.
• Discussion and analysis of earlier offers (if any).
• Discussion of what client “wants” compared to what client might reasonably expect from the mediation.
• Discussion of how much the matter has cost the client so far (Mediator will usually ask about this).
• Reach internal agreement as to how much of those costs would be recoverable on the standard basis.
• Has a formal offer been made by either side which would leave open an argument at mediation that solicitor/own-client costs should be recoverable.
• Best estimate of how much more work to be done until trial, length of trial and further costs. (Mediator will usually ask about this.)
• A mathematical calculation of worst-case / best-case scenarios factoring in costs to the conclusion of the mediation and future costs.
• Discussion of views on liability — a percentage estimate of success if possible.
• Reality of worth of client — ability to fund the litigation.
• Knowledge of worth of opposing party.
• If a defendant (your client) of little or no worth, discussion of how this should be used at the mediation: 
  • prior to mediation, at commencement of mediation or later;
  • in joint discussion or communicated through mediator; 
  • proving that of little or no worth. Importance of client giving frank and accurate instructions;
  • statutory declaration of assets/liabilities (take to mediation?) (Often asked for by plaintiff)
  • condition of settlement that statutory declaration true and relied upon by other side in settling. (Often asked for by plaintiff)
• Discussion of ways of settling other than by payment of money.
• If your client is to be paying money how soon can it be paid — will payment on terms be necessary and if so can any security be offered?
• Finally, discuss the approach to be adopted at the mediation — aggressive or conciliatory; minimalist or detailed; detailed reference to the law or not. Explain why a particular approach is to be adopted — for example, preparing a client for a conciliatory approach when the client might have wanted an aggressive approach.
• Prepare the client for the mediator’s dead-lock breakers — e.g:

(a) a suggestion that the clients meeting with the mediator but without legal representatives;

(b) the “mediator’s offer”.

Is the client prepared to go along with (a)? Discussion as to how to approach such a meeting and what might be discussed.

3. Multiple Parties

• Discuss the problems faced when multiple defendant/third parties/insurers.

• A decision needs to be made: a united front with combined offers or a divided defence with separate offers.
• Such parties should (if possible) meet to discuss tactics before the commencement of the mediation.
• A divided defence (i.e. release my client but not others) might be a fall-back if a united front approach does not work.

4. Offers

• Have a plan as to the offers you intend making. At least work out what your first offer is going to be.

• The planned approach means that you will be on the front foot rather than simply re-acting to offers made by the other side.
• Your offers do not need to be dictated by the approach to settlement disclosed by the other side’s offers — e.g. you might discuss prior to the mediation not just your first offer but perhaps 2 or 3 offers which are to be made irrespective of what the other side is offering.

5. Written Position Papers/Schedules of Loss

• Should this be done?
• If so, raise with mediator to perhaps suggest an exchange before the mediation.
• How should these outlines differ (if at all) from an outline that would be prepared for court.

6. Settlement

• Discuss and explain the usual terms with the client at your pre-mediation conference.

• Confidentiality?
• If possible, take a draft(s) to the mediation with electronic access to enable changes to the draft.
• If tax/stamp duty/GST issues are likely to arise try and deal with these in advance — not for the first time when terms of settlement are being discussed with the other side.

7. A failed mediation

• Have (if possible) a strategy to obtain something from the mediation if it fails;

• Agreement to limit issues;
• Agreement as to further steps in the litigation; 
• The need for expert reports;
• The possibility of adjourning the mediation — if so, should the proceedings remain stayed?

Andrew Crowe S.C.