Uncertainty Drives Conflict Resolution

Alec was recently selected as a Southern California SuperLawyer in the field of Alternative Dispute Resolution.

After many years of mediating litigated cases, I find that several threads continually recur. Among the most pervasive are the following:

  • Attorneys believe that their analysis of the case is superior to that of their opponent
  • Parties believe that the opposing party is insincere in his/her/its position
  • Attorneys believe that the opposing witnesses will be surprised by certain evidence when directly confronted by it at trial
  • Attorneys believe that they will be able to communicate the “gestalt” of their case to a jury far better than opposing counsel will his or hers

1. Any dispute can be settled at any time

This is a very straightforward concept. Let’s take a personal injury case in which an injured plaintiff is demanding $150,000, but in which the defendant is not willing to pay more than $25,000. Now, let’s assume that we are totally omniscient and can, with absolute certainty, know what the result will be after trial.

In Case 1, the trial court awards the plaintiff $125,000. Now, given the costs involved in getting to and through trial in order to reach that result, I would expect that, at an early mediation, armed with the knowledge of the outcome, plaintiff might be willing to accept $100,000, believing it to be a better overall result than he/she would get at trial. And, in the same vein, defendant might be willing to pay a premium, say $140,000, to avoid spending additional defense costs knowing the final outcome. As a mediator, I would know that I had a zone of about $40,000 within which the case would have to settle. Life would be good.

In case 2, the trial court defenses the case. Now, given the same analysis, plaintiff will take anything he/she can get in settlement. Similarly, defendant might be willing to pay anything less than cost of defense, looking upon that as an overall savings. Cases like this often result in a walk away, since continuation of the litigation would be as costly to one side as the other. Again, life is good.

The point is clear: If the results were known in advance, mediation would be unnecessary; the cases would settle themselves. In that scenario, the only reason that a case might not settle would be because one or both sides made their decisions on an economically irrational basis, such as anger, revenge, or other such factors. Does this happen? It does, and it happens often. But that’s another topic for a different article.

2. Dispute participants are unduly optimistic

This is an inherent and totally predictable facet of our adversarial system. When I convene a mediation, I expect all participants to be unduly optimistic. Those who are not are truly the exceptions, in my experience.

a. Attorneys

It is a rare litigator who is not in love with his or her work. I certainly fell into that category during my courtroom days. I often wonder whether or not a litigator without that trait could be the best possible advocate. But, while perhaps a necessary component of the best litigators, it has two unintended consequences. First, the litigator will give him or herself a better chance of winning than that of an “average” litigator handling the same case. Second, the inherent optimism of the litigator, even if tempered with cautious words, often, sometimes invariably, is transmitted to the client.

b. Parties

To start with, parties believe strongly in their positions. At least, that’s my hope. And, just as hopefully, they believe in their attorney(s). Prudent attorneys always temper their language in order to avoid giving their clients any false optimism about their likelihood of success. But as we all know, many clients read optimism “between the lines,” in their attorney’s demeanor, or in any other way that justifies their own need to be optimistic. And, of course, this optimism can be further buoyed at various times, such as at deposition, where the attorney will take a particularly vigorous position as advocate.

3. Settlement value

For the purpose of this article, I am using the simpletonian method that I always used in my own practice: value times percentage of success. Using this method, a $50,000 case with a 50% chance of success, for example, has a settlement value of $25,000. Similarly, a $100,000 case with a 25% chance of success also has a value of $25,000.

4. The Index of Over-Optimism

This is a tool that I developed myself that has been useful in my own evaluation of the status of the mediation. Initially, I ask each attorney to tell me, privately of course, what his or her opinion of the likelihood of success at trial is. Keep in mind that I believe that “slam dunks” win, at best, 75-80% of the time. I then take the two numbers, add them together, and have my Index of Over-Optimism.

The lowest reasonable number would be 100%. That would be when each attorney measures the likelihood of success at 50%. In that case, the only difference would be in the valuation of the case itself, a straight distributive issue that, while challenging, would certainly be simpler to address than would inflated expectations.

More typically, the Index ranges from 120% to 160%. I’ve even had a case in which both attorneys felt 90% sure of success at trial, for an index of 180%. The Index is a measure of the degree of difficulty presented in the mediation based on the evaluation as stated by the attorneys themselves. I emphasize this because too often the percentage given does not reflect the true opinion of the attorney, but rather what the attorney wants the mediator to think. As the mediation goes on, the mediator should adjust the Index as developments change the “lay of the land.”

5. The job of the mediator

Even when all of the foregoing information is absorbed and understood, the challenge of putting it into effect remains. This is where the experienced mediator will transcend the basic training and call on his or her years of experience to use the knowledge and seal the deal.

a. Getting beyond the numbers

Emphasizing the costs of litigation is something that every mediator is taught to do in the first hour or two of training. It’s a valuable tool, but as we all know, it’s a very limited one. It doesn’t work very well with parties who don’t put a value on the costs, insurance companies in particular, and it may not work at all in cases in which substantial sums are at issue. And there’s a certain amount of resistance to this pitch, since almost all litigators have heard this argument hundreds of times already and already discussed it with their client(s). When you can resolve a case based on the costs of litigation, that’s great. When you can do it on the costs and other elementary tools, that’s great, too. But what happens when you cannot?

b. Feeding the fire

The primary reason attorneys are anxious to mediate, regardless of what they say or how they act out the outset of the session, is because, when all is said and done, they’re uncertain of the result. Paradoxically, the more certainty they’ve shown up to that time, the more worried they often are about the potential of failure and how their client will react were that to occur. My own favored technique is to use personal anecdotes to relate to the latent fear of failure in a similar situation. However you do it, the goal is to reinforce the fact that nothing is certain and that good attorneys are always bullish. A bit of devil’s advocacy never hurts, either.

In a similar fashion, many parties have never had a reality check from a disinterested third party prior to the mediation. In my experience, even after a reality check performed in a gentle manner, many parties emerge shell-shocked. I’ve watched them whisper to their attorney, and the attorney whisper back, audibly, “I’ve been telling you that all along, but you wouldn’t listen. It happens all the time.

After feeding the fire, I find it best to step back and mollify a bit. Rather than press the issue, I tell the participants that, after all, they might prevail in the end, but, on the other hand, this might be an opportune time to cash out.

c. Forging the deal

All of the foregoing activity will often take place within the first hour or so of the process, and continue intermittently as the mediation moves forward. The deal will be forged against the backdrop that has been created through your exploitation of uncertainty. Yes, the costs of litigation, the emotional toll and all the other factors will still play a major role in your pitch, but the context in which it is received is, I think, the overarching factor in whether or not the case will settle.

In my experience, the more uncertain the attorneys and parties are about the outcome in court, the more amenable they will be to all the other solutions available to them in mediation. These solutions can include simple distributive negotiation, a mediator’s proposal, creative construction of terms, or anything else that works for the parties.

The point to take with you is this: A party that feels certain, that it has little to lose, will feel that it has little motivation to go that extra step that invariably makes mediation successful. Your job is to dispel that certainty!

Exhilaration and Disappointment

Alec was recently selected as a Southern California SuperLawyer in the field of Alternative Dispute Resolution.

This morning, driving toward the University of Southern California campus, a lot of memories passed through my mind. I recalled attending the High School Debate Institute at USC, in the summer of 1965, prior to my senior year, and, as an unknown, being named second speaker, behind Roy Shults. I remembered how the lessons learned their got me to the 1966 state finals in extemporaneous speaking, where I finished 3rd, behind Roy Shults. I recall going to see a professor about something during my sophomore year at UCLA, passing the debate office, and seeing the team list on the blackboard, and there, on the top team, was . . . you guessed it: Roy Shults. Thus began my odyssey into intercollegiate debate, partnered with Roy, during which we reached the highest levels of competition and multiple prestigious awards. Debate provided me with invaluable training in logic, quick thinking and communication that has served me well in every aspect of my life since then.

I bring all of this up because an old debate friend recently sent me a video of last years national championship debate. I was stunned! The debaters were dressed like slobs and spoke so quickly as to be incomprehensible, sounding rather like birds tweeting. Part of me was repelled, but part of me felt guilty. For, you see, in the late 60s, in my prime, I was considered one of the faster talkers on the debate circuit. Not that I was proud of it. I would have rather had Roy’s oratorical skills, which were amazing. But the team needed an infighter, and I was best suited for that job. Several friends from that time keep telling me and others that I was one of the innovators of “spread” debating. If I was, it’s something I deeply regret. What for me was a tactic has apparently become an end all in today’s collegiate debate world. Truth be known, my best debating was done when I raised three or four issues in a ten minute speech, explained each logically, often with no evidence, and sustained each of them.

But today was different. I was heading to SC to be a volunteer judge for the Metro Debate League, a national program designed to teach debate to students at inner city high schools. I was excited. I knew that I was going to find a lot of passion, a lot of enthusiasm. Of course there wouldn’t be a lot of skill, but the purpose of teaching debate is so much broader; debate can instill a love of learning, of discussion, of seeing two sides to an issue. Even the poorest debaters can carry these skills forward throughout their lives.

I entered the room in which I was to judge. Two teams, four typical looking high school kids, each team armed with a computer. The first speaker stood up, introduced herself, and then started reading her speech – – at a mile a minute! She stumbled over every third word, and, in general, was speaking far beyond any rate of speed that was wkthin her reasonable range. All four speakers did this. The debate itself was well done by all, entertaining for me, and a completely exhilarating experience within the vacuum of that room.

But then I went downstairs and spoke with the head of the Los Angeles program and then to the USC debate coach. I asked each of them what the point of debate was if the speakers were incomprehensible (referring to the college level). They had well thought out answers about the need to think quickly, how one of their former debaters won a case before the Supreme Court, etc. But, to use an old debate term, they begged the question. You see, in my day, rapid speaking was a way to shoehorn more “stuff” into a ten minute speech. My instinct still is that the time limit is meant to force you to think through your case, just as court briefing limits force lawyers to refine their arguments. The solution for debaters cannot be to simply jam in the information at such a rate as to lose any relationship to communication; to do so reduces debate to a mechanical activity with no value outside the debate tournament. The skills that these coaches touted can be learned with a more intelligible presentation, which, by the way, is far better training for the next phases of life.

Attorneys can’t do this kind of shoehorning. To do what these debaters do, the lawyer would have to use a 2-point font, single spaced, with margins out to the edge of the page. Imagine how that would play out in a courtroom!!

I say all of this because it reminds me of what I see far too often in mediation. I see participants who arrive with an agenda, hellbent on doing it their way, with no regard to communication skills or persuasive effectiveness. Many are more interested in persuading me so that I can act as their proxy. Like the college debaters, many think that by overwhelming the mediation with evidence, they will somehow gain an advantage. Again, this reflects a serious misunderstanding of the mediation process itself.

Similarly, many mediation participants have a lot of rocks to throw, when a single guided missile may be all that is needed for the opposing party to reevaluate its position. Too often, I have to conjure up that guided missile and present it in caucus. How much better it would be if participants in mediation would stop being advocates wedded to their own positions and, instead, were able to honestly analyze their opponents’ case and figure out what it will take to move their position.