Negotiating With the King

By Steven N. Joseph

(Please note that the views expressed in this article are written as my own views to provide guidance for defense counsel, and do not in any way, reflect those views of Western World Insurance Company, Validus Specialty, or AIG.)

Most of the time, mediation is a choice between controlling your destiny with a compromised resolution, or the uncertainty of having your day in court. However, in certain case situations, if you walk into mediation, and take the position that the choice is between a mediated settlement or a resolution through trial, it just won’t fly. A trial is the last thing your client wants, and it’s the last thing you should ever say. This commonly occurs in two situations: (1) when your client wants to preserve a business relationship; (2) and when your client has such a bad case that is very apparent to the other side that you simply can’t take it to trial. The other side has the greater power in the negotiation, and I call these situations “negotiating with the king.”

You may find yourself negotiating with a different kind of king…someone who has unlimited resources, and can take unreasonable positions. They see themselves as “the king” regardless of the viability of their position. This may be the king, but the king without any clothes.

There are particular strategies that can be implemented in each of these situations so that your client will not feel that the mediation process turned out to be a legalized “stick-up.”

A. Preserving the Business Relationship

In many instances where the client wants to preserve a business relationship, a claim can be resolved without the need for mediation. A wrong is acknowledged, and monetary and other steps are taken by the client to avoid any bad feelings and allow the relationship to continue. Attorneys are never retained. Lawsuits are never filed.

However, real life situations are generally much more complicated. The client may believe that no wrongs were committed. There may be a big dispute on what the damages may be. The business relationship may be held over your client’s head as a threat; “If you want the relationship to continue, you’ll meet our demand.” The loss may be one that is covered by insurance, and the client’s carrier may have a big question on either liability or damages. 

All these scenarios can lead to each side retaining its own counsel, and the business relationship then becomes threatened. Mediation is an effective way of attempting to preserve the relationship. However, the message your client wants to send to the other side is that we are looking to avoid a trial instead of we are ready, willing, and able to go to trial.   While many of the strategies may and should be implemented, there are additional strategies that should be given serious thought going into the mediation.

1.     Opening Presentations

ü Indicate the goal, not the choice.

Since your client’s private goal is to preserve the business relationship, it makes little sense to make any comment in your opening that implies, settle now, or three years from now after a bitter fight in a courtroom.

This is not a good choice for your client, and should not be made a choice for the other side. Instead, provide what your goal is. “We are here today to be fair, and to do the right thing.” By stating this goal, you are making an appeal to the mediator to seek out fairness. In your comments, you are also attempting to set a standard for the other side to follow.

ü Questions of fact and law are “honest” differences of opinion.

As stated previously, always show respect for the other side. The other side should be referred to in your remarks as “good people.” Give validity to the claim being made. “In view of the long relationship between the two parties here today, we are certain that the other side did not bring this claim without a lot of thought, and would not have brought this claim unless they were convinced that they were damaged by my client.” 

However, this does not mean that your client is prepared to roll over. The differences that your client has are honest differences of opinion. By referring to your defenses as honest differences, you are avoiding the other side from developing bad feelings based on a sense that your client is avoiding responsibility. There is now a greater chance that the opposing party will try to listen to what you believe these honest differences actually are.

ü State the agenda for the mediator.

At the end of your opening remarks, you can express what you hope to accomplish. Since your goal is to avoid paying a premium for a settlement just to preserve the business relationship, it is likely that you want the mediator to take on a more evaluative role. Thus, you can, in a very subtle way, suggest this in your opening: “We thank you for your assistance and hope that you can help us resolve this honest difference of opinion.” By using the word “resolve,” you are indicating to the mediator that you want him or her to decide.

2.      Private Caucus Sessions/Negotiating the Number

ü Stick to the merits. Identify the weaknesses of the other side for which further information may provide additional movement.

Since you want the mediator to be evaluative, your discussion should focus on the merits of the case. Indicate that you want to go out of your way to be reasonable, and even to give a benefit of the doubt here and there.

You have stated to the mediator in private your client’s intention to be reasonable, that your side is “willing to listen and learn” and “do the right thing.” You are now free to present through the mediator what you perceive the other side’s weaknesses to be. Since you are presenting your side as taking on the evaluative role, you do not have to rely on the mediator as devil’s advocate to be the sole presenter of the weaknesses of the other side. Your side is there in good faith, and if the other side proves clarification for what your client believes is a weakness, your client will provide movement off of its position.

ü Have the mediator present the risk of “complexity.”

You are not there to talk about the risk that the other side faces if it rejects your offer. You’re there to avoid litigation, and it is clear that your client wants a resolution to the dispute.

While the mediator recognizes this and can’t focus the discussion on a possible trial, the mediator can have a discussion with the other side on how complex their case is. Thus, the mediator can be the advocate who presents risk. “This is a real mess. If you don’t settle today, you put yourself in the hands of these lawyers who will spend a whole lot of time and money sorting out some very complex issues!”

ü Focus the “numbers” discussion on “hard and soft.” Avoid talking “baseball.”

You have proclaimed that you want to do the right thing. The opposing party, with whom your client wants to preserve a business relationship, might not take too kindly to your perception of the “right thing” if you’re talking about settling for an infield single.

Identify what damages you believe are the “hard” damages. Since you are there to be reasonable, you are willing to resolve the case for whatever substantiation has been given. Any damages that may be somewhat “mushy”, the other side may need to provide you with additional information before you make an additional move in your negotiation position.

ü If the case is close to an impasse, offer alternative solutions.

This is a case your client very much wants to resolve. Because of this, if the mediation is not moving towards a resolution, offer to the other side the option of an alternative solution, such as last offer arbitration.

B. The Bad Case

1.     How do we define it?

For the purpose of this discussion, I must first comment that there are a lot of bad cases that would not fit in as part of this discussion. In fact, there are many cases where one side goes into the mediation thinking that because they have a great case, you wouldn’t possibly allow the case to go to trial. They then proceed to negotiate from this assumption, and make few, if any concessions. However, in a majority of such bad cases, there are a lot of good issues that could be picked out and discussed at mediation using the strategies identified in the previous section.

The bad cases that are referred to here are the plane crashes, the plant explosions, and the oil spills. The client is concerned about negative publicity that may result from the embarrassing facts that would be publicized in a trial. The facts of such cases would likely inflame a jury, and may lead to a punitive damages award. Also, in such cases, the main point of the opposition’s opening presentation will be how disastrous a trial will be for your client.

2.     Opening Presentations

ü Sympathize, but indicate that you have strong differences of opinion.

As always, be respectful. State your sympathy for the damages the other side may have suffered, but send a message right away that you do not intend to simply go to the mediation to raise a white flag. Indicate at the outset why you’re at the mediation. There are strong differences of opinion. If you and your client agreed with the positions that the other side has taken, the case would have already been resolved.

ü Goal = Choice.

Because your client and the other side have strong differences of opinion, it should be indicated that there is no expectation that all of these differences will be resolved. However, you can indicate a hope that the mediation process will produce a rational discussion of the issues and an amicable resolution as opposed to what both sides would have to do if the mediation results in failure.

ü State the agenda for the mediator.

The bad case is the kind of case that you would least want the mediator to take on an evaluative role. In this kind of case, you want the mediator to be purely facilitative. Your remarks at the outset should suggest just that. “While we do not expect that we will be able to resolve our strong differences of opinion, we do hope that an amicable resolution can be facilitated between the parties.”

3.     Private Caucus Sessions/Negotiate the Number

ü Discourage threats and personal attacks.

Express to the mediator the importance of keeping the negotiations on a civilized level. The more civilized the discussions will be, the more likely that the negotiations will stay focused on attempts at persuasion, and the less likely there will be threats and attempts at coercion.

If personal attacks and threats of what will happen at trial are conveyed to you by the other side, indicate to the mediator that such tactics make it very unlikely that the mediation process can continue.

ü Advocate the weaknesses of the other side’s position. Have the mediator advocate the risks of “time” and “wasted assets.”

In these cases, the other side will likely attempt to beat you into submission. You have also indicated at the outset that there are strong differences of opinion. Because of this, it is acceptable to counter punch, pointing out the problems that the other side may have with their case.

In many of these cases, it may take years to get to trial. The case may involve an insurance policy that gets reduced with any legal fees incurred and as a result, is a wasting asset. These are facts of life in many of these cases. However, if the other side hears this coming from you, it comes across as bad faith and coercive negotiating. “We are aware that your case is worth x, but since I have the power to keep the money away from you by litigating for three years, we only should pay you y. “

If the point is made by the mediator, it is more likely that this can be a valued point for the other side to take into consideration.

ü Discuss the issue of “expectations” with the mediator.

Find out what the other side’s expectations are for the mediation process. If its expectations are that the mediator will be evaluative (or in other words, agree that the other side is right), direct the mediator to try to adjust the other side’s expectations to allow for a facilitative process. If the other side can accept the idea that the mediation is truly facilitative, its expectations will be lowered to accept a compromised result. Often this is, or should have been, addressed when the parties first agree to mediate or, even if ordered to mediate, select a mediator.

C. Negotiating with the King Wearing No Clothes

This is probably the most difficult type of case to deal with because the ultimate resolution can have the largest settlement range differential from the very low to the very high.

My mother used to tell me; “Don’t be a Moyshe Groyce with tsrissenah gatkas!”

It means; “Don’t be the great Moses with torn underwear!!”

ü Who is the king with no clothes?

The king with no clothes has had a lot of success in the past. The success was based on using every intimidation weapon available. After all, he is the king. The king has made the current litigation more complicated than it should be. Unnecessary motions have been filed. An extraordinary number of depositions have been taken. A lot of smoke and mirrors fill up the room.

But, you get through all the smoke and mirrors. The position bears no real sense of reality. The king, though, pushes and pushes the position, and you hear it so often, you start to believe it. You ask yourself; “Am I crazy or is he crazy?”  What makes this even worse is that while you see the king wearing no clothes, there are others who cannot stop raving about the beautiful garment his position represents.  

However, you are not crazy. The king is about as naked as a newborn baby. There are strategies that can be employed at mediation to ensure you don’t pay the king’s ransom so he can then go out and buy a really fancy wardrobe.

ü Recognize the king for what he is.

The first step for dealing with the king is to recognize him for what he is: a bully. Plain and simple. Throughout the course of the litigation, the bully will try to bait you and get under your skin. The bully will try to make the case personal. When the bully succeeds in doing that, you can’t see the case in the clear way that you need to.

 So, you have to start the process by not letting the bully succeed in any tactics that will take you off your game plan. If the bully takes action expecting a certain reaction, think about how you can react differently.

ü Retain a mediator experienced with dealing with bullies.

The choice of a mediator is particularly important when your opposing side is deemed a bully. You worked hard not to get pushed around so you do not want to retain a mediator that will be pushed around.

There are times when I have wanted the mediator that can settle the unsettleable case, and of course, that mediator is booked solid for three months. Do I settle for the second best? Not necessarily. I have contacted the mediator and inquired if that date can be bought out. The parties for that date get rescheduled and get 50% off and that may be worthwhile for them to do so. I now get my mediator who will know how to deal with the king.

ü Present Yourself As King.

Face it. The king does not show any respect for you. You are a mere serf, a peon. He looks at you and he thinks he will squash you like a bug.

However, there are many kingdoms out there so he does not have to be the only king. There also happen to be openings for king positions. Your adversary took up the role of evil and mean king. Make sure you take on the role of just, wise and noble king.

ü Come Prepared To Do Battle.

If there was ever a mediation for which you really need to come prepared, the mediation with the king is that mediation. You need a power point presentation? Get it. Want to come in and show the mediator that you did a focus group, or mock mediation that got great results? Do it. You have cases? Bring them.

Expect smoke and mirrors from the king? Have a plan to deal with them. Have some smoke and mirrors of your own? Get them all packed up and ready to go.

The king will be prepared to put on a show. You have to be prepared to match it.

The best way of explaining this point is to watch some professional wrestling on television. Some wrestlers come out from the curtains, and they have their music. They have their fireworks, and they are wearing some fancy tights.

Sometimes, these kings of wrestling go to the ring, and some poor schlub with a regular guy name, boring tights, and a hundred pounds lighter is standing and waiting in the ring. You know what he is waiting for? He is waiting for a nasty and quick beating.

I can go to the bathroom for that match. But then there is the match where the opponent has even better music, more fireworks, and the crowd erupts into a pandemonium. The king has your respect, and he knows he will get a serious battle.

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I was preparing for a mediation of an architect liability case with defense counsel and I requested that defense counsel prepare a PowerPoint presentation as part of his opening statement. This was because the plaintiff had unreasonable expectations from the first day the claim was made. Defense counsel said, “Steve, no matter how fancy a PowerPoint presentation I show the plaintiff, we will be unable to convince them of our position.” I responded that I do not expect that you will convince them of our position, but I do expect that you will convince them that I am convinced of our position!”        

ü Be Prepared to Respond to the Smoke and Mirrors of Cost

If you are doing battle with someone who presents himself as the king, you have to expect that the king will present the case as one that he will employ all the resources of the kingdom in any battle. In other words, it will cost a lot of money to fight this battle, so just surrender.

But, stay focused. Remember that if the king truly wears no clothes, ultimately it makes no sense for the king to do battle naked. The point is that he can walk out today, and still be king. Or, he can do battle and lose the entire kingdom.

In other words, the king with no clothes has a lot more to lose than you do.

ü Consider Bypassing the Opening Presentation.

The king loves any kind of royal ceremony. So, it comes as no surprise that the king will use the opening presentation as a coronation of the wonderful case he has and any doubt that existed before the opening presentation will immediately be erased. You sit through this, and you think that the verdict already came in. They are already lining up afterwards to kiss the king’s ring and throw him flowers.

Your presentation is short and simple. You simply disagree. Even worse, your opening statement starts out with the words “I don’t need to rehash all the facts of the case”..or “I don’t want to take any more of the mediator’s time getting into the case…” (after opposing counsel had no problem doing both!) Thank you very much.

If that is the presentation, forget it. You can come in with a sign on your back that says “beat me”, and that would be more effective.

Avoid this situation at all costs. Think back to the professional wrestling example.

ü Use Pessimism as an Effective Negotiation Tool.

The mediator wants to settle the case because that is how the mediator feels successful. The king may not want to battle at trial, and the whole intimidation and bullying game is not because the king is a bully. It is because the king does not want to do battle at trial. The king is genuinely a big scairdy cat!!

So, we have to test this guy. Is he really as tough and rough as he makes himself out to be? There are many ways to test the king here. One way is just keep saying how pessimistic you are about the likelihood of settling the case because, quite frankly, you just see the case very differently so while you are here, participating in the mediation, you are also busy getting ready for trial.

The mediator comes back and brings back the growls from the other side, and you don’t get excited. You yawn. It’s getting more boring by the minute. You want to know when you can leave already.

ü Keep the Debate Focused on Your Winning Issue.

The reason that the king has no clothes in a particular case has to do with a certain weakness, a certain issue. Have the mediator go back and forth about that issue.

The reason that you stay on the same issue is because you really want to present a sense of confidence in that one issue. Imagine if you have a great issue. You threw it out in the beginning of the mediation, got a small move from the other side, and you don’t bring it back because you think that you played that card.

That is a mistake. If it is a strong point, beat it into the ground. Imagine if you never came back to that issue after the first small movement. It may show a lack of confidence in your strongest point.

ü Identify for the Mediator All the Areas Where the King Is Overreaching.

One thing that the king will be very good at is overreaching. The king sees an inch and wants to take a foot. At trial, overreaching can work if you try it once, but if a lawyer keeps going back to the overreaching well too often, that will begin to grate on the jury, and the king starts undressing himself by all the overreaching.

At mediation, the more I hear positions that overreach, the stronger my position gets. That should be made very clear to the mediator.

The Other Side Just Doesn’t Care…..or This is Just a Game to Them

I have had numerous cases in mediation where I have been faced with the situation that the other side will not move off of their position because of their position as “king”, they can afford whatever consequences a “non-settlement” or trial may bring.

One case in particular strikes me here. The plaintiff was left in the room with us and was dropping names and events. He just got back from the Masters. He is off to go sailing in the Hamptons. He had dinner with Bill Clinton.

This “king” had a rather weak case. In fact, the Complaint itself would open himself up to a searing cross examination. The case was tangled up in complex issues that would guarantee an appeal and a second trial. When all was said and done, because of cost and complexity, this “king” who just doesn’t care would face a month of sitting in a court room, and millions more in fees. That is lots of time and money for someone who is sailing in the Hamptons, and having lunch with the Clintons.

The ones who say they just don’t care are very successful people who know how to make good decisions. These are the people who care the most.

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If you do not change your position, we will just simply roll the dice.

We have all heard that line. “I’ll just roll the dice.” Think about this statement. If all the opposition has to do is to roll two dies, the odds of hitting a number is 11-1. You may not feel that comfortable with even 11-1 odds. But, how about 50-1, or 100-1?  My experience is that whenever I hear that line, the odds are much greater than that.11-1. The value of a case is much different if there is a 11-1 chance of succeeding or if there is a 50-1 chance of success.

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ü Be Prepared to Not Settle at the First Mediation.

The king will be testing you in every way possible. So, it is very important that you hold your ground. This may include allowing the mediation, or the first mediation session to fail. Once you have established that you are holding ground, the king may find a way to get you back to the table. Once you get back to the table, you will be in a much stronger position.

ü Offer Alternative Means to Resolving the Case

The king talks a good game, and he’s not backing down. Consider alternative “put up or shut up” offers of settlement: a binding arbitration, a high-low, a take it or leave it, or a mediator’s proposal. Throw in a deadline. 

D. When the Mediator is King! (Or The Mediator in the King’s Lair)

Those of us who show up at a mediation on a regular basis expects that the mediator will play devils advocate and point out the weaknesses in our position. Sometimes, the client will panic, and those in the room who are experienced at the game gives assurances that the mediator is doing the exact same thing with the other side.

But, once in a while, the line is somewhat crossed. The mediator pays no attention to your arguments, or quickly dismisses them as having no value. The mediator shuttles back in to your room with the same message, essentially that opposing counsel is right and you are wrong, and you should try to resolve the case at whatever is being offered or demanded.

Something is wrong here. The mediator is no longer being a devil’s advocate, but rather, the advocate for your opposition.

This is a dangerous situation. If you allow the negotiation to go on and on by the mediator’s views, they can slowly solidify, and take over the entire dynamic in the negotiation. This can quickly happen if you just follow the mediator’s requests for movement which will likely be substantial moves on your end with little movement from your opposition in return.

You have two options here. The first is to declare an impasse on your own. Now, there’s a way to do this if you want to continue the negotiation. You state that the parties are too far apart, and we see the case very differently, and while we were prepared to make a substantial movement, we do not feel that the negotiation will bear any fruit.

The mediator may then moderate downward or upward the negotiation, and see if the mediation can continue with sights set a bit lower or higher than what was previously thought. I literally get the feeling here that the mediator was trying to hit a homerun for the other side, and once I said we would walk away, the mediator thought about it, and decided he would try to get a “double: instead.

A second strategy may be employed if you have a particular specialty, and see the same kind of case over and over again. For example, I have handled dozens of cases involving bad loans made by banks who then sue the appraiser, blaming an inflated appraisal as the reason for the bad loan.

When you handle the same case over and over again, you can expect a particular result or range where the case will be resolved. If a mediator devalued an argument that always gets traction, I will not allow the mediator to get away with that. I have a particular expertise in these kind of cases, and I will not let the mediator devalue that expertise.

Just remember that this can happen. Mediators are human. They have biases. They may get a lot of cases from opposing counsel. If we look back to your opposition who may act like a king, the mediator may simply be a loyal subject of the king. Be prepared if this happens.

Conclusion:

Every mediation is different. Each one will have its own unique dynamic. However, if it is a really just a “run of the mill” type case with strengths and warts on both sides, and a generally agreed upon settlement range, it will not be one of those cases in which you are on “high alert.” These cases are. You are negotiating with the king and be prepared to be on top of your game.