Why Mediations Fail

Ask any mediator who mediates personal injury and insurance claims his or her success rate and you will invariably get a response in the high 90% range. Yet, despite this high success rate, numerous mediations fail. Why? How can this process be made more effective?

I was invited to address these questions in a short piece for this publication that caters for the most part to the insurance industry. Great, I thought. This is my chance to finally tell those nice people on the other side of the table what I think of them. But although that might have been a very cathartic exercise, it wouldn’t be terribly instructive. Instead, I turned to my mediator friends to canvass their thoughts, with the aim of inserting my own experiences around their responses. I have decided not to name these people. Given my advancing years, I would probably forget someone, resulting in hurt feelings. You know who you are, and for your help, many thanks.

INSUFFICIENT AUTHORITY

According to the mediators to whom I talked, the unanimous Number 1 reason why mediations fail is the insurer’s failure to bring sufficient authority to settle the claim. I strongly concur. During one period, I attended 12 mediations, all with excellent mediators, yet only one-third of them settled. When I mentioned this to my friends at the insurance bar, the answer was invariably: “Of course they failed Kwinter, you want too much money.”Although that no doubt is the opinion of every insurer I face, the fact is that for most if not all of the failed mediations, the insurers provided their counsel with insufficient authority to settle the case.

Why is this happening? One veteran mediator put it this way: “The insurer falls in love with their case.” Another said: “They bring their best scenario or 80% of their best scenario to the mediation and won’t go beyond that.” All too often, the “final offer” I have received is in fact very close to the insurer’s best-case scenario. Insurers have to know that if that is going to be their position at the conclusion of the mediation, the case likely will not settle. In authorizing an amount to settle a claim, insurers must take a realistic look at the claim. I find that in some cases, defence counsel are embarrassed at how low the final offer is, letting me know (usually through the mediator) that it is out of their hands. As one mediator suggested, “insurers should spend more time listening to their lawyers.”

WHO NEEDS LUNCH?

Here I would like to insert one of my own “pet peeves.” If the insurer has clearly not brought enough money to the table and the case cannot settle, why should plaintiff’s counsel have to wait until 4:00 or 5:00 p. m. to make this disappointing discovery? Why can’t I know at 11:00 a. m., or even earlier, that there is simply not enough money there to settle the case? The mediator can be effective in shortening the proceeding if the authority issue is revealed to the mediator earlier, which it often is not. Sure, some of those lunches are great, but if the case can’t settle, who needs lunch?

LATE DELIVERY OF REPORTS

Take heart insurers, you need not take all the heat. Another main reason why cases do not settle is the plaintiff bar’s late delivery of reports. Of course, the defence also delivers late reports from time to time, however, what is contained in those reports hardly ever catches us by surprise. It is not difficult to see how this problem can result in there being insufficient authority to settle. Insurers require time to review, digest and, if necessary, respond to reports. One mediator says reports should be served 60-90 days before a mediation, and never fewer than 30 days before the mediation date. Since reports can significantly affect the final result, if those reports are served shortly before (or even at) the mediation, proceeding with the mediation will likely be a waste of everyone’s time and money. In such instances, the mediation should probably be cancelled and adjourned to a date that will give the defence sufficient time to respond to the reports. If the plaintiff has served the reports late, then plaintiff’s counsel can hardly complain if the mediation is cancelled. On the other hand, it is a waste of everyone’s time if the mediation proceeds with the defence making offers that fail to take these reports into account.

PREPARATION AND INTENTION TO SETTLE

When I attend a mediation, I prepare my client. I explain the process and warn the client about the “dance”we may well go through, lest my client storm out of the room on hearing the initial offer. If my client presents well, then I let him or her do some of the talking. I know this is likely the first time the insurer’s representative has seen or heard my client (other than perhaps on a surveillance tape) and I know my client is being assessed as to how he or she will come across before a judge or jury.

I go to mediation with the intention of settling the case. I believe most defence counsel do as well. There are, however, situations in which one of the parties uses the mediation process as a type of discovery to assess the strengths and weaknesses of the other side’s case. The idea may be to assess the best offer at that time, without having any real intention of bringing the matter to a conclusion. I particularly suspect this in situations in which the defence is simply not prepared, or when the final offer is ridiculously low. In those situations, I usually ask my defence colleague why we did not conduct the mediation by telephone, thus saving everyone time and money. This is particularly frustrating on those occasions when the defence has insisted on a particular mediator who was booked a year in advance. The mediator, feeling embarrassed, usually ends the session apologizing to my client and I, and sometimes asks the defence to cover the entire cost of the useless mediation. If you have no real intention of settling the case, just tell me. Don’t book a mediation a year from now.

Attempts to intimidate the plaintiff I do not see this as often as I did in the past, but some defence counsel, in their opening statements, have attempted to intimidate the plaintiff, warning the plaintiff what awaits him or her if the case should proceed to trial and why the plaintiff should settle the case here and now. When the plaintiff owns property, some defence counsel go as far as including the title search to the plaintiff’s property in the defence me- diation memo. I do not consider these tactics to be effective. In many cases, the plaintiff is angered by the defence’s comments. Often the plaintiff already feels terribly aggrieved, not only because of the injuries he or she has suffered but also because so much has been lost and the case has taken so long just to get to mediation. In these situations, to be attacked by an aggressive defence counsel anxious to “perform” in front of the insurer client is in my experience very counter-productive. Often this will strengthen the client’s resolve for a higher number, making settlement all the more difficult. In my experience, very few clients have been scared into a settlement.

I received a number of other helpful hints from my mediator friends on how to make mediations more effective. These include:

• When making an opening statement, keep your comments focused, logical and brief. Do not simply read from or repeat what is in your mediation memo.

• Do not include bulk hospital records in your mediation memo. Extract and highlight the most relevant and pertinent portions.

• Advise the mediator early on if there is a limits issue. • When making opening offers, stay in the ballpark. An extreme position from one side will invite an extreme position from the other. An extreme position can result in a party leaving and a lost opportunity to settle the case.

CONCLUSION

The good news is that mediation s do work. Gone (for the most part) are the days when most files were settled at the courtroom door, just before the jury was selected. The process works extremely well thanks in large part to the fact that — at least in the area in which I practice — we do have an excellent group of highly skilled and effective mediators from which to choose. And, lest I forget my colleagues on the other side of the table, we do have an outstanding defence bar, its only shortfall being that it never pays me enough money.

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“In authorizing an amount to settle a claim, insurers must take a realistic look at the claim. I find that in some cases, defence counsel are embarrassed at how low the final offer is, letting me know (usually through the mediator) that it is out of their hands.”

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“To be attacked by an aggressive defence counsel… is in my experience very counterproductive. Often this will strengthen the client’s resolve for a higher number, making settlement all the more difficult.”