Tips for in-house lawyers
Mediation is a process to resolve disputes between parties where a neutral third party helps facilitate the discussions, negotiation, and (hopefully) settlement of the dispute. Unlike arbitration, mediation is generally voluntary and non-binding. It is often your best opportunity to settle a dispute before undergoing the expensive process of all-out litigation. Unfortunately, many in-house lawyers — or their clients – treat mediation like a poor cousin to arbitration and waste the opportunity. Typically, they think you can just show up and mediate. Wrong! There are many important tips you need to know about mediation in order to have the best chance at a successful outcome:
What is mediation?
Most mediation is voluntary, i.e., the parties have agreed between themselves: a) that they are interested in trying to resolve the dispute, b) that they want a neutral third party to help them, and c) on whom they want the mediator to be. Mediation can occur at literally any point of a dispute, even before litigation has formally started. When to start the process depends on several things:
- Uncertainty of how litigation may turn out.
- The cost of litigation.
- The desire to keep documents/facts private (vs. having them come out publicly at trial or in motion practice).
- The urge to “get it over with” as quickly as possible.
- Preservation of the relationship between the parties.
A great tip is to mediate as soon as possible if there is a real chance to resolve the dispute as the litigation process is expensive, uncertain, corrosive, and wasteful.
Early mediation also allows everyone to hear (sometimes for the first time) the other side’s position unfiltered through lawyers. This can be a real eye-opener for the business client who thinks the case is a “slam dunk” for their side.
Picking a mediator (and format)
Picking the right mediator is important. Your outside counsel will be important here as they usually have experience with different mediators and mediation styles. Consider the following:
- Recommendations from multiple sources.
- Your own experience with mediators.
- Reputation and experience of the mediator.
Retired judges often make good mediators, but most alternative dispute organizations have lists of mediators you can choose from. You must also consider the “style” of the mediator: a) facilitative (guides the “process” and remains completely neutral); b) evaluative (will make recommendations and assessments about the case and each party’s position); and c) transformative (facilitates but also attempts to restructure/improve the relationship between the parties).
It is a good strategy to have an evaluative mediator because the best mediators are those that will “beat up” both sides a bit and bring their own thoughts to the table.
Who attends (and what is their authority)?
Typically, outside and in-house counsel will attend. And if the parties are serious about settlement, someone senior from the business will attend. Whoever is selected should be someone with an open mind and not so dug into the company’s position that settlement is unlikely. They should be friendly, civil, and respectful of both the mediator and the other side. They must be authorized to settle the case, i.e., they have the authority to agree to things without having to get permission. Compromise is critical as the purpose of mediation is to try to settle the case, not win the case. That is for trial. If one or both parties are unwilling to give on things, your mediation will be over quickly.
It is important that everyone understands the mediation process. Several things will happen pre-mediation. Each side will file a mediation statement setting out their view of the dispute. There is usually an opportunity for each side to give the mediator questions they should ask the other side during the mediation. Most mediators welcome discussions with either side before the mediation. This is your chance to give them the lay of the land, potential settlement structures, personality differences, etc. The more information the mediator has in advance, the better they can perform their duties. Lastly, a good tip is to make sure that your mediation is confidential and that anything said or presented cannot be used at trial. Get it in writing. On the day of the mediation, expect the following:
- Introductions/Opening statements – most mediations start with handshakes and pleasantries Then, typically, each side gives an opening statement of their position.
- Breakouts – after the opening session, each side retires to their own room and the mediator will come and talk with both sides. Each side can then fully explain their positions, tell the mediator what they are looking for/willing to do in terms of a settlement, ask questions, get information, etc. The mediator may use these sessions to discuss your case’s strengths and weaknesses. Do not be put off by this, they are doing it with the other side as well.
- Joint sessions – the mediator may bring everyone back together again at certain points to discuss issues. They may also want just the outside lawyers, just the in-house lawyers, or just the business principals to meet with them to keep the discussions going. This can be effective, especially when the mediator senses a potential settlement.
- Success/Failure – if the parties reach a settlement, there will be a session to finalize the details. If the parties reach an impasse, the mediator will bring them together for some final words and release them.
- Timing– most mediations last one day. The day may be very long, starting early and going into the evening, especially if the parties start to get close to a deal. Be flexible enough to give the mediation all the time it deserves.
Every mediation is different but here are some strategic considerations common to all:
- Only mediate in person if possible.
- Think through privilege and confidentiality issues before the mediation.
- Give up the “weak” stuff and focus on the real strengths of your case.
- Decide how much you are willing to share with the mediator - the more you give them to work with, the more effective they will be.
- Bring several key documents to the session, i.e., documents that are strong for your position, and share those with the mediator at the right time.
- Know what help you want from the mediator, e.g., do you want to ask the mediator to help you structure a settlement? Do you want to know what “they think” the case is worth in terms of settlement?
Finally, keep in mind that mediation is not binding. It’s not a trial or arbitration. There is no requirement that you settle your dispute. While that is the goal, a bad deal is a bad deal, and be prepared to walk away. Don’t be bullied into accepting a resolution that doesn’t work for your company.
Memorialize the settlement!
If your mediation happens to end with the parties reaching an agreement, don’t put on your coat yet. Write out all the key terms of your agreement and have each side sign it before anyone leaves. A resolution can quickly blow up when drafting the formal settlement agreement if one side has key terms or conditions that were not discussed or raised at the mediation. Make sure all the key matters are summarized beforehand.
Mediation is often your best opportunity to resolve a dispute before you become completely bogged down in the litigation process. Approach mediation as an important part of the litigation process and spend the proper amount of time and effort preparing for it. As in-house counsel, you have a unique role in the mediation. If you have Practical Law, you can access a host of curated resources to help you get the most out of the process.
STERLING MILLER, HILGERS GRABEN PLLC
Sterling Miller is a three-time General Counsel who spent almost 25 years in-house. He has published five books and writes the award-winning legal blog, Ten Things You Need to Know as In-House Counsel. Sterling is a regular contributor to Thomson Reuters as well as a sought-after speaker. He regularly consults with legal departments and coaches in-house lawyers. Sterling received his J.D. from Washington University in St. Louis.