Litigating Claims: Mediation, Part 2: Confessions of a Mediator

It seems like a century ago when I first decided to become a mediator. In fact it was 1982, shortly after I was admitted to the Ontario legal bar.

Back in the ’80s, litigation lawyers pursued an aggressive style of practice best described as rams banging heads in rutting season.

As a result, clients grew frustrated with the often discourteous and intimidating experiences associated with the trial system, as well as with the ever-increasing legal costs. They began insisting on a gentler and friendlier approach to resolving insurance claims and other conflicts.

When I first began practicing law, it became very apparent that far too many disputes were ending up in court. The legal system’s adversarial processes were only making matters worse.

Back in the early ’80s, mediation was still very much under-used and often summarily dismissed by many litigators. So it should come as no surprise that some of its most effective advocates – those who succeeded in breaking down the litigation community’s resistance to using mediation – were not lawyers. They included nurses, social workers, teachers, clergy-persons, psychiatrists, psychologists and other laypersons.

I was in fact the first member of the Ontario Bar to complete a one-year clinical internship program in mediation with the Family Mediation Service of Ontario – a division within the Supreme Court of Ontario that was later disbanded due to budget cuts. My mentor was trained as a social worker-family counselor; my other trainer was a forensic psychiatrist.

I was fortunate to be part of a trend to implement alternative dispute resolution in such places as the Better Business Bureaus, Immigration and Refugee Hearings Board of Canada and the Ontario Insurance Commission [later to be reconstituted as part of the Financial Services Commission of Ontario (FSCO)].

I was an original mediator with the Dispute Resolution Unit at FSCO and mediated well over 3,500 no-fault benefit disputes before returning to the business world.

Today’s mediation system at FSCO is certainly not perfect. But it has helped in the over-all effort to implement alternative dispute resolution practice as an essential element of insurance claims settlements. Also, it has provided me with insights I use today as a private mediator, trainer and risk manager.

MEDIATION INSIGHTS

I have learned it is always a good idea to explain to insurance claimants how to approach mediation with realistic expectations. I ask them to try to be aware of how their emotional attachment to the issues at hand may interfere with their ability to remain reasonable.

I also discourage insured claimants from viewing themselves as helpless victims. Instead, I encourage them to take an active role in both their own healing process and the mediation process.

One needs only to read a standard psychology report to see how quickly we label injured persons as “victims.” In this way, we foster a cycle of dependency between claimants and their psychologists, medication or other treatment modalities.

I think it is fair to say that some plaintiff lawyers encourage claimants to prolong their recovery. Some might suggest that claimants keep their no-fault accident benefit claims going so that they do not prejudice their position when negotiating a tort settlement.

Nothing reduces an anticipated future income benefit claim like a quick, healthy recovery and a return to work.

The fact is, our legal system still has a lot of loopholes and financial incentives. Together, they encourage an insured to stay injured and/or positively reinforce self-defeating behaviors. As a result, privately I have been very frank and candid with some insured claimants – particularly in unremarkable soft-tissue injury cases. In these cases, some claimants may be expecting a get-rich-quick lottery win for their efforts.

On the other hand, I remain cognizant of how the same system often fails claimants with serious, permanent injuries. For a claimant faced with a catastrophic injury or permanent disfigurement, no amount of money is truly going to help; reducing the claimant to a claim or litigation docket number isn’t going to help either.

DETACHING EMOTIONALLY

Just like the parties, mediators must also learn to detach emotionally from the issues they mediate. They need to remain objective and neutral no matter what degree of injury is involved.

It’s always a challenge to focus communications away from accusations and name-calling and towards interests each side has in common, or to get parties to switch to using present and future tenses rather then dwelling on past mistakes. But that is exactly what we mediators are expected to do in order to set the stage for compromise and meaningful negotiation.

Many lawyers have learned to embrace a far more collaborative style of communication, both within and outside the mediation process, to take full advantage of the mediation process as an opportunity to obtain fair settlements.

I have learned from the good lawyers and adjusters that when communicating, less is often more. An effective negotiator learns to say as much as possible with as few words as possible. I have also learned it is far more effective to be candid and acknowledge the weaknesses in your case, rather than try bluff your way through a ridiculously weak argument.

There will always be a certain degree of posturing and face-saving during insurance mediation negotiations, but you can never go wrong being precise and to-the-point.

THE ROLE OF ADJUSTERS

As a mediator and insurer representative at mediations, I have found insurance adjusters can be a very valuable reference tool at mediation. But mediators will often ignore adjusters because they fear that, like claimants, adjusters will be too emotionally attached to the claim.

This is nonsense. A competent mediator understands that all parties have a direct and vested interest in the proper functioning of the settlement process.

Just because an adjuster may be emotionally biased, that doesn’t mean you ignore them. A good mediator will help adjusters detach their emotions from the issues the same way that mediators will work with claimants. If parties in a mediation are not active participants, then necessarily they are potential obstacles or barriers to reaching settlement until they are allowed to participate. Far too many mediators forget this.

Also, many mediators fail to understand that when an adjuster comes to mediation, he or she may have been given very little room to negotiate. It’s possible, for example, that his or her management has set unrealistically low reserve rates.

A mediator who has never had experience as an adjuster may not understand this. As result, a mediator may perceive an adjuster as being intransigent when it may very well be the case that the adjuster is simply saving face – the adjuster knows he or she will have to go back to a reluctant manager and ask the reserves to be increased.

There is no point demonizing the adjuster. The fact is, most – if not all – adjusters come to mediation under-reserved and over-worked. A good mediator understands this and works within a broad set of variables when considering a settlement. Mediators have to be insightful. They understand that sometimes, in order to get a deal done, they must allow adjusters to save face and work with their defense counsel to get upper management to loosen the purse strings.

The most important thing I have learned in insurance mediations is that by nature, and regardless of their role or situation, people have the same basic needs. They have a need to be respected, understood, and acknowledged. Also, they share a need to be given a sense of hope or feel positive, no matter how negative a situation may be.

There is absolutely no doubt in my mind the insurance community has embraced, and is continuing to embrace, alternative dispute resolution. I am confident that as it becomes even more widely practised, the remaining kinks will be ironed out and hopefully financial savings from otherwise-costly litigation will filter its way back to consumers in the form of premium discounts.