When I was fresh out of Law School, my first employer shared with me this observation:
“Cases only go to trial when an important fact isn’t known or if people don’t correctly evaluate their cases.”
That’s a true statement. If one side knows a critical fact unknown to the other side then a case may not settle because the case looks different to each side. When a party knows a key fact that will come out at trial but that’s unknown to the other side, then the case is getting set up for trial by ambush. A key witness statement, a critical document or a nearly dispositive expert opinion unknown to the other side can make a big difference in how a case is valued.
But most cases aren’t like that. Few cases are tried “by ambush.” Most are worked up enough that both sides know their own case and the other side’s as well.
So if both sides know all the key facts in the case as well as the law, then why doesn’t every case settle? Was my first employer right? When a case goes to trial does that mean somebody misevaluated it?
Maybe yes. Maybe no.
Sometimes counsel have a good sense of what their case is worth – but they want to see what the other side will do. Sometimes cases become a bit of a stare down contest – where the two sides test each other’s resolve for going to trial. The side that blinks first is the “loser.” If one side is afraid of going to trial, or if they can’t afford a trial, or if they don’t think their witnesses or their client will hold up well under cross-examination, or if their client can’t bear the thought of going through trial, then counsel may put on a brave face for the other side for as long as possible so they can see whether the other side will fold first. If one side senses the other side is afraid of trial for any reason, then their settlement position may harden.
But putting aside the game aspect of litigation, do opponents sometimes value their respective cases differently? Absolutely yes. But if both sides are experienced trial counsel and everybody knows the keys facts and the applicable law, shouldn’t both sides be reasonably close in their case valuations?
Not necessarily.
It’s common for both sides to show up at a mediation having fully briefed all of the important facts and law, but with one side valuing the case very high and the other very low.
When this happens it can feel like there is a disconnect between the two sides – almost like the two sides are talking about two different cases. This disconnect can be almost mystifying. When the facts, the law and the outcomes of similar cases are very clear it can feel like the other side is negotiating in bad faith. Sometimes counsel get extremely frustrated when the other side seems completely removed from reality.
There can be several reasons why the other side values their case so differently. But here are two of them:
1. Counsel vs. Client. It makes a big difference as to who is driving the bus. At mediation – and in settlement discussions – sometimes the attorney is calling the shots. Sometimes it’s the client. Some clients look to their attorneys for guidance in settlement discussions. In these cases the attorney usually makes most (if not all) of the settlement moves and decisions. Conversely, many attorneys are highly deferential to their client’s wishes regarding settlement. In these situations the client makes the calls regarding settlement moves and how the negotiations proceed. In addition, some clients are very demanding – and can be downright unyielding. Their attorney may strongly recommend settlement moves – but the client is unwilling to budge. Either way, the client (and not the attorney) ends up making the determination as to how the negotiations proceed. During mediation and settlement discussions a client and their counsel always act as a single unit and they move together – so if the attorney strongly recommends settlement moves or concessions but the client refuses these recommendations, then the other side only sees the refusal. Sometimes a client may be interested in settling but their counsel has a very different valuation of the case and may be discouraging settlement and this may account for lack of movement by the other side. But in general, if the client has confidence in their counsel’s settlement advice and is willing to follow it then settlement discussions are more likely to be productive than if the client is dug in at a number far different than what their attorney recommends.
2. Juror vs. Party. Settlement discussions at mediation can be difficult. When counsel has worked up their case by marshalling the facts, researching the law and preparing a persuasive brief, it can be frustrating when the other side seems to disregard the weak points of their own case and completely dig in on one or two strong points. Even more frustrating are situations where it seems like the other side has no strong points and is completely unwilling to recognize the merit and value of the other side’s case.
Trial is a process of persuasion, both with respect to evidence and argument. However, at trial the person who needs to be persuaded is a judge or a set of jurors. These people have not suffered any wrong from either of the parties and they have no stake in the outcome. These decision makers come to the case with no pre-existing emotional involvement in the case. The situation, however, is entirely different with respect to a party. Each party comes to a case with a fully developed background. They may have been actually wronged, or they may believe they have been wronged by the other side. Either way, parties on both sides may come to a mediation with a strong sense of justice having run amok, or a sense of offense or a sense of principle having been violated, and these wrongs, sufferings and violations are personal: it happened to them. This level of emotional involvement is generally completely lacking in a trial before a judge or jury.
Counsel often come to mediation persuaded by the merit and correctness of their own case, and they often come with a mindset that any reasonably objective person would be persuaded of the value or correctness of their case. But the person who must be persuaded at mediation is neither a dispassionate judge nor jury but is instead the very person who believes they have been wronged. The party at mediation may very well have a huge emotional or principle-driven stake in the proceedings that would never be present to the same degree in a bench or jury trial. When objective arguments seem to fall flat in a mediation, counsel sometimes feel like the other side’s position makes no sense, but in reality the other side frequently views the entire dispute through the emotional or principle-driven lens of their own involvement and sense of violation, injury, wrong or offense. This is why in some mediations I comment that we are not dealing only with cold, legal precedent or objective rational arguments but instead are dealing with living, breathing, angry, frustrated, offended and sometimes wounded people on the other side – and that sometimes such people don’t objectively weigh and evaluate cold, hard facts or law the same way a judge or jury might. In short, the mediative process can be – and frequently is – far different from the dispassionate, objective decision-making process used at trial. Judges and jurors are people too, but none of them have been wounded, injured or wronged by either of the parties. As experienced trial counsel know, if a jury’s sense of fair play or justice is offended, then such a jury may very well return one of the very high verdicts that make legal newspaper headlines. But except for such a sense of wrongfulness or injustice in the right case, the emotions of the jury are unlikely to be nearly as volatile as those of a wronged party. Recognizing that parties at mediation frequently make decisions based on emotion or principle can help make sense of what would otherwise seem like a series of irrational responses to otherwise reasonable settlement demands.
These are two reasons why negotiations at mediation may not seem rational. There are more, but these are two key ones. An unsophisticated client who is “driving the bus” may conduct negotiations far differently than an experienced trial attorney. And a client who feels wronged may also negotiate differently than a highly experienced trial attorney.
Robert Jacobs practiced law for more than 30 years. He has mediated cases since 2016. He views himself as a facilitator, a river guide and an occasional bulldog. He finds that two of the hallmarks of successful mediation are advance preparation and tenacity. He’s affiliated with Judicate West, where he mediates Business, Real Estate, Employment, Construction, Personal Injury, Medical Malpractice and Trust Litigation cases.