10 Strategies to Help Avoid or Break Impasse at Mediation

1. Before the Mediation, Make Sure the Attorneys Want the Case to Settle at Mediation

If they do not want it to settle, it probably won't. Attorneys can generally convince their clients not to settle at mediation if the attorneys do not want the case to be settled.

2. Prepare Your Clients for Mediation and Explain the Mediation Process

Explain:

• How mediation works so your clients will not "walk" because they are frustrated with the mediation process.
• That "mediation" is a "dance" or a "game" that takes time.
• That there will be haggling between or among the parties and back-and-forth "shuttle diplomacy" by the mediator.
• That they cannot just "cut to the chase" with their offer, and that doing so will not produce a satisfactory result.
• That mediation has a very high rate of success, and that the process is worth the effort.
• That the parties can be much more creative in finding a resolution in mediation than would be likely in a litigation proceeding.
• That mediations are confidential, and that since the rules of evidence, discovery, and even relevance, do not apply, the parties can talk about anything they would like to discuss, and they will be heard.

3. Ensure that the Right People Are Attending the Mediation

Representatives with full, complete, and unconditional settlement authority must attend the mediation. Anyone else whose influence would be helpful to ensure that the settlement is reached, or who would increase the confidence of the representative to make the decision to resolve the matter should also attend.

4. Explain that Mediation Requires a Spirit of Compromise

Explain that your clients will rarely get what they "want", but they might get what they "need". There is no "mythical" Door #3. Litigants often want to settle, but they want the maximum possible settlement that they think they could get at trial, without the risks of going to trial to get that result. They pass up a reasonable settlement (Door #1), because they think they can get the maximum at the mediation that they would get at trial (Door # 2). However, there is no mythical Door #3. The litigants cannot expect to get their best possible recovery at mediation while avoiding the risks and costs of trial. Mediation will likely require compromise.

5. Explain that The Alternative to Mediation, Litigation, Is All About Risks, so They Should Want to Resolve the Matter at Mediation

As a colleague once said, litigation is not like any other kind of negotiation. Litigation is not about the Facts. It is about the Risks.

Negotiation about the sale of a house, a car, or a business is about the Facts. What is the square footage of the house, the year and mileage of the car, the financials of the business.

In litigation, we really don’t negotiate about the Facts. We negotiate about the Risks.

In litigation, it doesn’t matter if it is true, fair, or right. What is the Risk that the Judge or Jury will not believe your witness, will see your opponent's point of view, and that the jury will "get it wrong"?

Mediation reduces the risks inherent in litigation. And, even with excellent trial lawyers, the risks, costs, and stress on clients can be significant.

Rulings on motions (in limine and others) can dramatically change the complexion of the litigation.

6. With Your Clients, Prepare an Offer and Concession Strategy in Advance of The Mediation

Anticipate and prepare to respond to "extreme", "unreasonable", or "insulting" offers or demands, and anticipate and prepare for the perceived "impasse" which is likely to occur at mediation.

I have found that if the parties design their own offer and concession strategies, when they do receive "extreme", "unreasonable", or "insulting" offers or demands, or reach the point of perceived impasse, they will more likely shrug off these events as something they anticipated, and will more likely respond with the offer they would have made had they initially received a reasonable offer. They are less likely to react emotionally to the unreasonable offer with an unreasonable offer of their own.

Why are lawyers who have not anticipated and prepared for unreasonable offers more likely to respond with unreasonable offers of their own? I have found that, after receiving an "extreme" offer, lawyers are either mad, or are concerned that unless they respond with an "extreme" offer of their own, they will be viewed as weak, or concerned the "extreme" offer will have created a point for the parties to meet in the middle. This situation presents a good opportunity for the mediator to tell the party making the extreme offer that the mediator has encouraged the other party to make a reasonable offer and encourages the party to reciprocate by making a reasonable next offer.

Many times, the parties (and sometimes the mediator) believe the parties have reached an impasse because they think they are too far apart; They walk away, when they were not actually that far apart. They simply misinterpreted the "messages" being communicated by the offers of each party. This is easy to do because lawyers are generally very skilled and motivated to hide the true "bottom line" of their clients.

7. Consider Using Brackets in Mediation and Consider Using Them Early

Brackets help resolve impasses. Brackets create movement when the parties are "stuck" and unwilling to make significant moves. I have found that if brackets (conditional offers) are introduced early in mediation, hearing the ranges gives the parties an opportunity to begin to come to terms with the fact that they might not get the offer they'd hoped for, and they can start envisioning what life would be like, and what they could do financially, with a settlement in the range of the proposed brackets. Even though the case does not settle early, the brackets (conditional offers) prepare the litigants for eventual reasonable compromise solutions. For instance, the plaintiff is demanding $15 million. The defendant tells the plaintiff he will go to $500,000 if the plaintiff offers $1 million. Although the bracket offers will likely not settle the case, the plaintiff now understands they are not likely to leave with $ 17 million, and they can start "coming to terms" with the fact that the defendant's final offer of the day will not likely to be close to $17 million.

8. Don’t Issue Ultimatums

Don't force the other side to choose between saving face and making smart negotiation decisions. Negotiators will often feel they have to save face at all costs, even when it is not in their or their clients' interests to do so. The risk is that even smart, well-intentioned people can fall into the trap of feeling they have to "counter" the ultimatum if the only other option is to back down and look weak.

Don’t acknowledge ultimatums. It is generally best if the parties and the mediator do not focus too much on ultimatums because it highlights them, and may make it difficult to retreat from the ultimatum without making the giver of the ultimatum lose face. When hearing an ultimatum, skilled mediators can effectively reframe them into a non-ultimatum. For instance, instead of: "We will not pay X", or "Unless they pay X, we will walk", the mediator reframes: "What I hear you saying is that, at this time, given the circumstances as you know them, it would be difficult for you to pay X. Let's keep working to see if we can find a resolution that meets everyone's needs." By the mediator reframing in this way, when/if the circumstances change, or the party making the ultimatum learns new information, they can change course without losing face.

9. Understand How Cognitive Biases Can Contribute to, or Help Break, Impasse at Mediation

Researchers say there are over 150 cognitive biases. Cognitive biases can cause errors in thinking, perception, and judgment and can cause individuals to deviate from rational decision-making, often resulting from mental shortcuts (referred to as "heuristics").

The cognitive biases most often found in mediations are the norm of reciprocity, confirmation bias, anchoring bias, the overconfidence or optimism bias, reactive devaluation, regret aversion, and the sunk cost fallacy.

• Norm of Reciprocity - The norm of reciprocity is powerful and should be used as a tool by lawyers and mediators. In one study, a person sent Christmas cards to total strangers. 80% of the recipients sent a Christmas card back to the total stranger. It is difficult for a person not to reciprocate when someone gives you something. In mediation, sometimes when one person makes a major concession, shares important information, demonstrates tentativeness or humility, gives an apology, or simply acknowledges the merits of the other side's position, it can result in the recipient feeling obligated to reciprocate.
• Confirmation Bias - Favoring information that confirms existing beliefs while ignoring contradictory evidence. In the mediation context, confirmation bias can result in impasse because negotiators tend to believe their case is stronger than it might actually be, and as the negotiator searches for legal support, they interpret, favor, and recall the information that supports their view, ignoring information that would have left the negotiator with a more accurate assessment of the case. Lawyers often believe it is too early to mediate a case, saying they need to take more discovery; sometimes that is true, but research shows that more discovery rarely serves to do more than entrench the litigants in their previously held positions.
• Anchoring Bias - Relying too heavily on the first piece of information encountered when making decisions. The concept of anchoring is real. Studies have shown that high first offers generally result in better outcomes for the person making the first offer. If a party readjusts its expectations or behavior after hearing the first offer, they are said to have been " anchored". This is why many negotiators want to make the first offer.
• Overconfidence or Optimism Bias - Overestimating the likelihood of positive outcomes and underestimating the risks. Studies have shown that litigators are often overconfident in their ability to predict trial outcomes. In one study, Randall L Kiser examined the differences between trial results and rejected pretrial offers/demands. Kiser found that plaintiff's lawyers were overconfident in predicting trial outcomes more often than defendant's lawyers (61% to 24%), but that defendant"s lawyers, when they were wrong, were wrong in their predictions by a far greater margin ($43,100 to $1.14 million). So, defendant's lawyers were not wrong as often, but when they were wrong, they were very wrong!
• Reactive Devaluation - The tendency to devalue an offer or an idea in reaction to learning that the offer or idea was proposed by your opponent. One way to prevent reactive devaluation is to have your mediator suggest an idea, proposal, or offer as opposed to having those attributed to you, as the "adversary."
• Regret Aversion - The tendency to second-guess previous decisions or become fixated on what "might have been". In mediations, regret aversion sometimes causes impasse because negotiators refuse to settle for fear that they will later regret their settlement decisions.
• Sunk- Cost Fallacy - The tendency to sink more money/time/investment into an endeavor because of what one has already invested and the belief that one must "see it through" even though it may be clear that the smarter decision would be to resolve the matter and "move on".

10. Celebrate Impasse!

When you reach impasse, you should celebrate! Yes, celebrate! It just means that all the posturing is out of the way and the parties are ready to get down to the business of negotiating a settlement of the matter. Seasoned mediators know that the most difficult part of the mediation is getting the parties from their starting offers to their tentative "bottom lines". So, to seasoned mediators, reaching impasse means that the true negotiations are just getting started.

Steve Groom of Dedicated General Counsel PLLC has been involved in over 2300 mediations, either as a mediator or an advocate for clients. He has coached and taught mediation and negotiation for over 30 years. He recently served as a Mediation Judge for the American Bar Association National Finals of the Law School National Mediation Competition. Contact Steve today for more information.