My work as a commercial mediator in Ontario Canada generally involves the resolution of money disputes. The process, most days, starts with a brief joint session during which the lawyers, and sometimes the clients, advocate for their perspective on the dispute. We then break to a caucus format and I become the shuttle diplomat usually conveying proposals and counterproposals and accompanying messages back and forth until the parties can find a number they can both live with on an all things considered basis.
I had an interesting case earlier this week (the subject matter isn’t important for the points I wish to make here) and I thought you might be interested in the round by round bids. This was a capped value, win/lose case. In other words, at trial, one side or the other would win. The value of the case was a fixed amount and there would be no splitting the difference.
Round 1
Plaintiff (P): $274,000 (all numbers shown are “all inclusive”, meaning they include all claims, interest, costs, tax and disbursements)
Defendant (D): $32,000
P started with a number that was clearly more than 100% of any reasonable evaluation of the case. D chose to respond with a “tit-for-tat” strategy, sending back a clearly unreasonably low number. Generally it is my practice in the early stages of a mediation not to push back when a number is proposed that seems to me unreasonable.
Round 2
P: $243,000
D: $35,000
P’s second number, while a move of $31K, was again more than 100% of the claim value. D, sensing that P hadn’t got the message the first time again chose to respond with only a very small lift on their first number.
Round 3
P: $220,000
D: $56,000
P bid was now at the very high end of a reasonable assessment of the case. P threatened to end the mediation noting that they had moved over $50,000 and D had only moved $3,000. D responded with a move of $21K but was still at a number at the very low end of the range for a reasonable assessment of the case.
Round 4
P: $208,000
D: $79,000
P moved $12,000 while D jumped $23,000. At this point D became impatient with the process and rather that continue with the tit-for-tat strategy made a larger move than they had in Round 3.
Round 5
P: $196,000
D: $91,000
P and D each move $12,000 and express frustration that the other is not taking a realistic view of the case. We are still more than $100,000 away from settlement.
Round 6
P: $185,000
D: refused to counter
D expressed the view that this was hopeless and wanted to terminate the mediation. I suggested a “double-blind” mediator proposal process and D said it would consider my suggestion. I then met with P to explain the situation and make the same process suggestion. Both sides agreed to consider my proposal. My proposal was $138,000 – the mid-point between the parties’ final numbers.
Both sides rejected my proposal although P told me I was close to a number they would take. At the same time, when D gave their negative response I asked what they were prepared to offer to settle the case. D confided in me that they were prepared to settle the case for $110,000 if I could get the P to offer that figure. They told me they were not prepared to make that as an offer.
After further discussion I persuaded D to make an offer at $110,000. My reasoning was that it would be a shame to miss a settlement if it was there to be had and that D wouldn’t know that unless it was prepared to expose the money it had brought to the mediation.
Round 7
P: $161,500
D: $110,000
P’s further move, still $23.5K more than the number I had proposed, was responded to with the same $110,000 D had previously offered. P was very frustrated but by this time my mediator intuition told me to persevere. I encouraged P to reflect further and provide me with the lowest number they would accept.
Round 8
P: $130,000
D: $120,000
P dropped to what they called a “rock bottom” number and D responded with what they characterized as their final offer. Now I asked P to carefully reflect on the remaining gap and consider whether or not, “all things considered” that gap was worth the fight from this point forward. It was particularly important I considered to fully reflect on the value of finality, closure and certainty.
Round 9
P: $123,500
D: $120,000
P was now clearly trying to confirm that the stated final offer was really all that was available. D held firm.
Case settled at $120,000.
Both sides were somewhat unhappy with the monetary result but I always think that’s one of the hallmarks of a good settlement.
From a mediator’s perspective I think this case demonstrates the need for and benefit of persistence even when a situation seems hopeless. The somewhat ragged progression of the negotiation process was, at times, frustrating to both sides but, in the end, did allow the P to satisfy itself that the “pipes were dry” and allowed D to test the money they had to settle the case.
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