Colorado Probate Blog - Wade Ash Woods Hill & Farley, P.C.

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Suggestions For A Successful Mediation

Prior to mediation, attorneys should meet with their clients and discuss a realistic settlement result. If the client has an unrealistic outcome that cannot be achieved or the client is not prepared to compromise then mediation will not be successful. The Confidential Settlement Memorandum should discuss various settlement scenarios. Coming to mediation with several creative ideas to settle the case will foster more meaningful negotiations by the mediator with the parties.  Below are a few suggestions regarding mediation: 

1. Timing: If you mediate the case too early, you have no leverage because you may not have a clear understanding of the relative strengths and weaknesses of your opponent’s case, let alone your own case. If you mediate too late, after exhaustive discovery, the parties may have invested so much money in the case that a settlement may be impossible.

2. Conflicts Among Multiple Clients: Sometimes there may be an unequal division of assets either in kind or amount. A lawyer must address any potential conflicts between his or her clients prior to representation, as well as at mediation. A conflict letter is almost always a necessity.

3. Confidential Settlement Statement: Often attorneys are reluctant to share the weaknesses of their case with the mediator for fear that it will sabotage their client’s expectations and diminish settlement. However, a candid acknowledgment of the weaknesses of the case, in confidence with the mediator, may help facilitate his or her ability to communicate to your client the risk of trial.

4. Smoking Gun Evidence: Some attorneys feel it is better not to disclose “smoking gun” evidence and save it for possible trial. However, because your client may only get one opportunity to mediate, holding back “smoking gun” evidence is not always a wise decision. Particularly, if that evidence will get your client a settlement in his or her range.

5. Settlement Scenarios: Prior to mediation, attorneys should meet with their clients and discuss a realistic settlement result. If the client has an unrealistic outcome that cannot be achieved or the client is not prepared to compromise then mediation will not be successful. The Confidential Settlement Memorandum should discuss various settlement scenarios. Coming to mediation with several creative ideas to settle the case will foster more meaningful negotiations by the mediator with the parties. For example, tax efficiencies may be critical in settling the case with little or no cost to either party.

6. Trial Budget: Lawyers should prepare a trial budget prior to mediation so that they have a good understanding of the anticipated expenses if the matter were to proceed to trial, including appeal. You should also explain to the mediator what your client’s best day and worst day looks like.

7. Valuation of Assets: Nothing is more frustrating for a mediator than an incomplete inventory of Estate assets. If the dispute involves real estate, the lawyer should obtain real estate appraisals, comparables, or market analyses prior to mediation so that there is no dispute at mediation as to the true value of the assets. The same is true if the settlement agreement contemplates a buyout of a family business entity, in which case the parties may want to stipulate to a neutral CPA appraising the business assets prior to mediation.

8. Selection of Mediator: Your selection of mediator is as important as your selection of an expert witness. Lawyers should be familiar with the reputation of each of the nominee mediators. You must trust your mediator. Do not be afraid to ask your mediator how many mediations he or she has done regarding will and trust contests. Also ask what their success rate is. Most mediators charge by the hour in the range of $280 - $500. Typically, the mediation fees are split, but counsel should reach an agreement prior to mediation regarding payment of the mediator’s fees.

9. Ex parte Communications With Your Mediator: While in court proceedings lawyers are prohibited from contacting judges without opposing counsel being present, ex parte communications with your mediator are encouraged. A pre-mediation meeting or telephone call with the mediator is often beneficial in affording him or her the opportunity to ask specific questions regarding the case. In addition, you may have sensitive information, not contained in your Confidential Settlement Memorandum, that you want to share with the mediator. You may want to alert the mediator as to any potential problems that may occur at mediation. For example, a spouse of a party who insists on attending the mediation may be a lightning rod who will sabotage the mediation. Also, some matters such as certain real or personal property may be so important (the “sacred cow”) that they need to be disclosed so the mediator knows where potential areas of extreme conflict might exist. There are frequently certain critical reasons why a case might need to settle which might include a serious illness, impending death or significant change in circumstance that makes settlement more urgent. You may wish the mediator to be aware of this.

10. Preparing for Mediation: The mediation process is often a grueling all-day event which may go late into the evening. Lawyers should insist that their clients personally attend mediation. Flight arrangements should not interfere with the scheduled full day mediation. Lawyers should counsel their clients to be respectful to the mediator, opposing counsel, as well as opposing parties. Clients should be advised to avoid overreacting to disappointing offers of settlement, as well as making derogatory comments about the opposing party and his or her lawyer. Lawyers should counsel their clients just because the mediator may spend more time in the opposing parties’ room, that does not necessarily mean that the mediator believes the other side has the more compelling case.

11. Offer/Counteroffer: Some mediators spend hours going back and forth with offers and counteroffers. Other mediators are able to settle the matter in one or two moves. The methodology does not really matter so long as the parties reach an amicable agreement.

12. Bottom Line: Most attorneys are reluctant to give the mediator their client’s bottom line, however, a possible settlement range is always helpful to the mediator. Do not be afraid to ask your mediator for advice regarding an offer or counteroffer. Do not be afraid to ask the mediator whether your offer or counteroffer may be perceived as so insulting that it may cause the other side to walk out of mediation. Do not be afraid to kick your mediator out of the room while you discuss settlement offers or other matters with your client.

13. Meetings with the Mediator and Counsel: Frequently, mediators will ask to see the attorneys outside the presence of their clients. Many times these meetings are helpful to get clarification of the nature and value of the assets. Often these meetings may also help to reach a consensus on disputed facts and issues of law. The mediator’s meeting with the attorneys often significantly reduces posturing between the lawyers.

14. Virtual Representation: Parties should always address whether all interested persons are represented at mediation. Parents of minors can sign on behalf of their unborn or minor children so long as they do not have a conflict of interest. If all interested persons are unable to attend mediation, arrangements should be made ahead of time to obtain signatures or special powers of attorney granting participating parties with authority to bind those who cannot attend.

15. Memorandum of Understanding v. Formal Settlement Agreement: A memorandum of understanding (“MOU”) signed by the parties is sufficient to create a binding settlement agreement. MOUs are generally short summaries of the material terms of the settlement. The parties may contemplate reducing the MOU to a formal settlement agreement, to be submitted to the court for approval. While a formal settlement agreement may be preferable to an MOU, it may not always be practicable to spend hours after a full day of mediation preparing a formal settlement agreement. The package is less important than reaching a settlement when all parties are ready to sign off. The MOU, however, should contain boilerplate provisions, including a provision for binding arbitration if a dispute arises regarding enforcement of the terms of the settlement agreement. The arbitration clause should also include a fee shifting provision which requires the losing party to pay the winner’s fees and costs.

16. Patience Is a Virtue: Attorneys should advise their clients not to get discouraged if the case does not settle on the day of mediation. Chances are both sides will have learned valuable information about each other’s case. Good mediators are relentless and will pursue negotiations even after a failed mediation session. In the event of a failed mediation session, it is not unreasonable to ask the mediator to make his or her own proposal for settlement. A mediator’s proposal for settlement will offer the mediator’s recommendations as to the terms and conditions of the settlement and invite both parties to either accept or reject the proposed settlement at a fixed deadline. If both parties accept the mediator’s proposal and execute it, there is a binding settlement.

17. Emotional Toll of Trial: Too often lawyers underestimate the emotional toll of litigation on their clients and their families. Getting rid of the emotional baggage of litigation can often times be as rewarding as the monetary benefit provided by the settlement agreement.

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