The Settlement Drift, Part II

What has happened to cause this type of cultural lethargy in mediation?

1.     The dilution of the process by mandatory mediation programs. The institutionalization of mediation into court programs has resulted in way too many cases going to mediation that did not belong in that process in the first place. Why? The court viewed mediation as a panacea to court funding issues and a way to manage caseloads, while the mediation community viewed it as a distinct process that is client centered and empowering. The court imposed strict time guidelines on the process and the litigants, resulting in less thought given to process management and more thought given to court compliance. Another bureaucracy was born at the expense of a successful process.

2.     The failure of litigators to be fully prepared to discuss, not argue their cases. When the court put its imprimatur on the concept of mediating litigated cases, it impliedly encouraged the same type of approach that lawyers use when they are pleading a case to a judge. That approach seems to involve arguments where one side wins and the other side loses. Arguments of this nature made outside the formal structure of a courthouse are not as persuasive as discussions between counsel and parties where blame is discussed but not the focal point. To counter this dynamic, mediators and parties have gone to extremes to avoid direct dialogue. This has often reduced the role of the mediator to a “water carrier” of offers and counter offers, similar to a production worker. This automated approach reduces  what has been the main ingredient in successful mediation practice — creativity.

3.     Loss of Confidence In The Process. After years of participating in repetitive and somewhat scripted processes, some litigators have lost confidence in the process of mediation. They take extreme and unreasonable positions early on and lose patience if the case is not in the proper settlement range by the second or third move. Mediators are guilty of not shaking up the process so that the parties are actually forced to think a bit outside their comfort zones. This reality, coupled with the usual and customary gamesmanship that occurs in every negotiation, has resulted in a contamination of the process and lack of patience on the part of litigators. What was once considered a simple negotiation tactic to get a better deal has turned into an inadvertent effort to fool the mediator into actually believing negotiation tricks and tactics.  This can and often does result in the mediator calling an early impasse, or the parties folding up their tents without letting the process unfold.

4.     The Follow Up Syndrome. Some lawyers conclude that there might be more value in not settling so long as the mediator “follows up” and nudges the parties to different numbers after the session has gained momentum. One strategy that has become commonplace is for lawyers and companies to use the mediation session as a sort of “scratch and sniff” opportunity. The idea is to check out what might be below the surface, but don’t let the other side know you’re open to settlement. The latter would be accomplished by the work of the mediator after the session when s/he calls everyone to follow up at no charge to the parties. While follow up is critical to the success of some mediation, it is lately overused by some parties to gain more favorable resolution.

5.     The Concept of Managed Care. Like doctors, lawyers who are hired by insurers are to some extent following the guideposts of the treatment the insurers deem necessary and appropriate for the dispute. In order to reduce costs, insurers impose limitations on settlements. While this has been an effective way for insurers to save money, it does come at a price by sometimes paralyzing defense counsel who are sincere about resolving disputes.  A cycle can occur in which truly excellent defense lawyers are unable to be proactive and honest about risk for fear that their principal will not respect their suggestions.

6.      The Economics of ADR Providers. The proliferation of administrators of private mediation and arbitration programs has added an economic layer to the system.  While there are benefits to this business model, it creates added pressure on the neutrals to increase their billable time in order pay the costs of the administrator.  This economic reality has bled into the system so that it has become acceptable to conduct numerous hearings at a sizable cost to the parties in order to satisfy the multiple economic interests that are integrated into each case.

Read more about what can be done to fix the system (Part III).

Read more on the current approach to mediation (Part I).