Mental Preparation I - Pre-mediation Analysis and Mediation Strategy
| Author | Stephen Walker/David Smith |
| Pages | 101-119 |
7.1 Introduction
The physical preparation for mediation is discussed in Chapter 6. In this chapter and Chapter 8, we discuss the mental preparation, and examine what representatives and their clients must think about as they prepare for and attend a mediation. Most representatives will attend several mediations in their professional life; most clients will go to only one. Representatives must prepare both themselves and, just as importantly, their clients. This means making sure that clients know what to expect from the process and that they are able to participate fully and not be taken by surprise.
7.2 Rebalancing
As discussed in Chapter 1, para 1.2.4, parties need to rebalance their preparation. Parties spend too much time and effort polishing up their case instead of working out:
• what settlement they can live with;
• how doable it is;
• what one side can give the other side to help the other side, in turn, give the first side what they want.
We concentrate on three areas:
1. Specific topics which must be considered with the clients, so that they do not cause problems at the mediation, such as authority, insurers and funders.
2. Settlement strategy, including a pre-mediation analysis, so that representatives and their clients know where the clients are now and where they want to get to.
3. Negotiation plan, i.e. working out how to get to where the clients wants to be.
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7.3 Purpose and preparation
Mediation is both a process and a forum for making peace not war. This influences preparation for representatives and their clients. Representatives must prepare their clients for the mediation process and the settlement decision making that they will have to undertake on the mediation day. It might be surprising to some lawyers to think that they must prepare a client for mediation, which almost sounds like doing the mediators’ work for them. However, lawyers would think nothing of preparing their clients for court in terms of how to give evidence effectively and deal with cross-examination, and there are even training courses on this very subject.
Clients need to know what to expect from mediation and what mediation will expect from them. If the representatives do not ensure that their clients are properly prepared, the clients will have a much harder job at the mediation. The representatives will also have an unhappy client and may even end up with a complaint and a claim against them, even if a settlement is achieved on the day. There is therefore a degree of self-protection in the preparation process.
7.4 Do lawyers really want to settle?
As we said in Chapter 1, para 1.1.2, it is an unpalatable truth that many clients who are engaged in litigation wonder whether their lawyers actually want their case to settle sooner rather than later because early settlement means loss of income. Unfortunately, their clients are sometimes right. It must be recognised that there can be an inherent tension between clients and their lawyers when considering the idea of settlement. This is only heightened when the lawyers are acting on a conditional or contingency fee arrangement. It is much better all round if the implications of this dynamic are worked through before, not during, the mediation. Representatives should not be coy about costs.
7.5 What mediation expects from the client
Mediators expect that clients will bring a willingness to participate actively in the process in both the public and private sessions. This is the clients’ equivalent of a day in court and their chance to participate in working out their own settlement.
This means that clients must be able to make decisions, think flexibly and constructively around the dispute and give the mediator and their own representative accurate information.
7.6 Four topics that must be considered
7.6.1 Authority
If a settlement is to be reached on the day, people with the authority to actually settle on the day need to be there or at least easily available. Most mediators will ask in the joint opening session whether or not the parties have authority to settle. In the case of individual or owner-managed businesses, this can be quite straightforward – it is down to them and they can decide on the day.
Often, however, it is more complicated. In disputes involving companies or partnerships, there must be approval by the board or the other partners. In the first place, they may only give a limited authority. It is essential that they can be contacted if need be during the course of the mediation to either confirm or extend the authority.
Limited authority
Parties often confirm in the joint opening session that they have authority to settle, only to reveal later in the day that their authority is limited and that they are now at their limit. This irritates both the mediator and the other side. If it happens to you there is no point in getting annoyed. Momentum is lost but it is rare for a lack of authority to actually prevent a settlement being reached at least later if not on the day itself; sometimes it does, however, and that is sad because it is avoidable.
Apart from causing delay on the day, it can sometimes mean that a settlement that is agreed in principle cannot become legally binding until it has been sanctioned later. If this happens the mediator should be encouraged to:
• seek an undertaking from the party without authority that their representatives, both legal and commercial, will in good faith forcefully recommend settlement on the terms agreed in principle;
• seek agreement from the parties on a realistic time limit for obtaining sanction, during which time both parties agree that the offers made and incorporated into the in principle settlement will not be withdrawn. It sometimes happens that the sanction is never given or there is an attempt to renegotiate the terms. In practice, this is not common and more often than not the sanction to the in principle settlement comes through in good time. However, this situation is best avoided and it is essential that there is a clear understanding, well in advance, of the parameters of settlement and that any limit is factored into the entire process.
104 Advising and Representing Clients at Mediation
It is better practice to tell the other side and the mediator that there are limits on a client’s authority without, of course, disclosing what the limits are. Sometimes, a party will try to use the limited authority point as a negotiating tool. Whether or not there are genuine limits on authority can always be tested during the course of negotiation. For example, a paying party may say that they cannot go beyond £100,000, which is the limit of their authority, and they will not be able to obtain an increase in it. The receiving party can test that by responding along the lines of £100,000 will not do it but £120,000 will. It is surprising how often a little extra authority is found in these circumstances.
Authority in practice
The following practical points often arise:
• If a party is a corporate body, make sure that the person attending on its behalf has their authority confirmed in writing by the board of directors. The potential problems that can arise in relation to the enforceability of mediated settlements are discussed in more detail in Chapter 11, para 11.3.4. It is sensible to try to make sure that one party cannot later claim that their representative did not have authority to make the agreement.
• With non-corporate parties problems can arise where, for example, a couple is being sued. It is not unusual for only one person to turn up saying that they have authority to settle on behalf of the other person. It is essential that proper authority is given in writing and can be shown both to the mediator and to the other side.
• Where ancillary documents other than the settlement agreement need to be signed as part of the settlement, prior authority will usually be required. This might include, for example, a guarantee, a release of land or a legal charge. Where this is the case, the authority of any cosignatories, owners or chargees who are not present must be given in advance with due formality, i.e. under seal or a power of attorney.
Insurers and funders
If insurers or funders are involved for any of the parties their consent is usually required to agree any settlement. Sometimes, they send a representative to the mediation; often they do not. Legal expenses insurers rarely turn up, whereas professional indemnity insurers do. It is essential that the claims handler can be contacted during the mediation, even if this is out of hours. Representatives must make sure that they have the case handler’s mobile number so that they can be contacted at any time during the mediation.
Representatives must:
• Discuss with insurers in advance what they will require and have an idea of how flexible they are able to be in order to achieve a settlement. They can update insurers during the day, and tell them as settlement approaches so that the insurers can prepare...
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