Strategies for Analyzing the Likelihood of Success in Mediation of Contested Real Estate Cases
Strategies for Analyzing the Likelihood of Success in Mediation of Contested Real Estate and Business Damages Cases discusses the utilization of the bracket method to settle cases in mediation of complex real estate and business disputes. The LA Real Estate Law Group handles complex mediation cases.
WHAT IS PROCESS OF MEDIATION ?Mediation is the process where opposing parties and their attorneys sit down with a professional mediator to try to settle the entire case or perhaps part of a case in a quiet office setting. The trial judge may set a deadline to complete mediation. Mediation can last 2 hours or it can last as long as 2 days or longer- it all depends on whether the parties are making process in coming to a resolution. The end product of a successful mediation is a written settlement agreement that is signed by the parties. Mediation is important because it provides a focused opportunity for all parties to reduce and stop their litigation costs if the case can settle. "Stopping the bleeding " is an important incentive to participating in mediation. Being a party in a litigation case can also be a huge investment of time- so saving time is another important factor in trying to settle case through mediation. If the case cannot settle in the mediation process, the parties may at least move toward eventual settlement, and perhaps, narrow the issues, and start a meaningful dialogue. In my view, effective mediators can provide their opinion on the risks of going to trial, merits of the claim, and strength of defenses- and this can be done in a discrete private manner away from the scrutiny of an opponent- this approach can influence parties to settle the case in mediation. A retired judge who has presided over 10 real estate trials is well qualified to look at a real estate case, and say to one party- that this case needs to settled today because of X, Y, Z risk attributes. Mediators are not paid directly to provide legal opinions to any one side, but hearing a mediator's viewpoint in the caucus sessions is undoubtedly valuable to a party and the parties' counsel. Generally speaking, mediators are licensed attorneys or retired judges who have some meaningful experience with the type of case that is being mediated- if they don't have meaningful experience in the area of law- the parties have perhaps not chosen the right mediator. In the mediation process, parties and their attorneys come to a central office location, and usually sit in in separate waiting room offices or "caucus camps." Sometimes at the beginning of a mediation session- but not always the case, the mediator will start the session by bringing all parties and their attorneys into one room to break the ice, discuss the protocols, the rules, and to sign some forms. The mediator shuttles between the camps to try to work out a basic agreement in principal. Settlement agreements take different shapes and forms. A settlement can be "global"- resolving all claims and all parties. A settlement can be "partial-" only certain parties will settle and or only certain claims or issues can settle. I have participated in more than 100 mediations in my career as an advocate representing one of the parties, or multiple parties on the same side the "v" where there is no conflict of interest. These cases range from real estate title disputes, business and commercial litigation, contract disputes, employment litigation, RICO cases, and bankruptcy litigation. Some mediations have been completed with professional mediators, retired judges, and other sessions with volunteer mediators who are usually experienced attorneys that volunteer the first few hours for free. The parties split the hourly cost for professional mediators, and the cost is generally significant. I don't recommend using mediators who are not licensed and experienced attorney- it is my view that non- attorneys tend to miss important issues, don't know all of the rules of civil procedure or the substantive law,- and you want all your bases covered in settlement agreement when you participate in mediation.
MEDIATION CHALLENGES, TACTICS, AND STRATEGIESMy vast experience with mediation begs the question- what is the key factor that makes formal mediation successful in contested business or real estate damages cases ? When is mediation a good use of time and money ? There are lots of factors that go into the question of whether the mediation will be successful at the end of the day. The factors include- how effective is the mediator to understand the issues in the case, and to persuade parties to step up to the plate to settle the case ? Can the settlement agreement be put in writing promptly ? Will the parties voluntarily sign a written settlement agreement with all terms ? Will the settlement require complex performance obligations over time - who will monitor compliance with these obligations ? Will compliance with the settlement agreement require enforcement under Cal. C.C.P. Section 664.6 if one party fails to comply with the terms- so the Court can retain jurisdiction to enforce the terms of the settlement after the case is dismissed ? Who will bear costs of litigation- or does each party bear their own costs ? Do the opposing parties have personal animosity or hatred and emotional barriers that is blocking the lines of communication ? Is there an attorney with an ego who is getting in the way of the settlement by wanting to drag out the litigation or by not communicating well with opposing counsel ? Is the mediator unethical, and wanting to drag out the mediation to earn a larger fee ? Is the mediator conducting the mediation in an inefficient manner, and trying to rack up fees by talking endlessly with the attorneys and the parties in their respective camps. Are the parties completing mediation in good faith to settle the case, or is the mediation process a bluff and just a means to learn certain facts outside of formal discovery ? Are the parties fed up with the case, and want to reach a settlement and stop the litigation costs ? Has one party filed a Motion for Summary Judgment ? Has a summary judgment motion been denied ? Has one party noticed depositions as a hammer in the case ? Is the trial date approaching ? These are all important legal considerations that are thrown into the murky stew of the mediation recipe, and can impact the process and determine whether the mediation will be successful, or will be a starting point, or whether it will be a waste of time and money.
THE MOST IMPORTANT FACTOR- THE PRE MEDIATION MONEY "BRACKET" ANALYSIS.Aside from all of the ancillary and political issues, and the strategical and tactical posturing that goes into mediation of a damage case, probably the most important factor in my view of whether mediation will be successful is a simple math calculation issue- are the parties relatively close or far apart on agreeing to dollar figure that will settle case prior to the mediation ? This issue seems obvious- but it is the most important factor that goes into settling a damages case in the mediation session. The parties and their attorneys may not know the answer to the simple math money question until the day of the mediation. The question and analysis is one of using simple math. This important factor is what I call the "settlement bracket factor." What is the range of money in a defined bracket that plaintiff will take to "call it a day ?" What is the range of money in a bracket that defendant will pay to "call it a day ?" And- how will this settlement payment be funded- in one payment, in two payments, or more payments- or by an insurance carrier that has an obligation to indemnify its insured ? If the parties are in a close parallel settlement bracket range prior to the commencement of the mediation- it is likely that a good mediator can pull the parties together in the bracket, agree on a number, and settle the case in principal. An effective strategy for mediation- is for parties and the mediator to push toward a bracket that is within a close percentage differential. That bracket may be within a 20 to 25 % range differential, but if parties are close enough in the financial bracket prior to the mediation, there is a good chance the case will settle in the mediation. For example, a plaintiff party may demand $ 100,000.00, and the opposing party may be willing to pay as much as $ 75,000.00 at the end of the mediation to settle the case (although the $ 75,000.00 figure has not been communicated to the demanding party prior to or at the beginning of the mediation- the defendant may have that amount of authority coming into the mediation) - since there is a differential of 25 % prior to the mediation- there is good chance for settlement because the parties are only $ 25,000.00 apart. There is no guaranty of course in this numbers game. But if the range differential was as high as 50 % - the parties will not be in that close parallel bracket for success and the case will most likely not settle in mediation. In a mediation session that is being conducted in good faith by parties that are motivated to settle the case that day in the mediation- both sides will "get some benefit" and will "give up some benefit." Both sides will shoulder some burden. Simply put, there is give and take- and benefits and burdens to be assumed to get into the settlement bracket to reach agreement. Of course, there are other important considerations that go into settling a case in mediation. These include whether there is insurance money that can pay for the settlement. Obviously, it is advantageous to all parties if there is an insurance policy that could pay a settlement, and the carrier is willing to accept coverage for the total loss or the majority of the loss. Another moving part is whether the parties are willing to sign the settlement agreement quickly after the attorneys have drafted the settlement agreement. This is a very important factor that is often overlooked. It sometimes happens that there is a verbal agreement in principal at the mediation, and after the mediation- one party refuses to sign the final written settlement agreement. Or there may be a disagreement as to minor terms. This can be quite frustrating. For example, I once had a settlement, where there was a settlement payment to be paid over a long period of time with interest- and there was a disagreement over how the interest was to be calculated- simple interest, compound interest, etc.. This turned into a big obstacle, and it became obvious that one side was using this interest calculation issue as an excuse not to finally settle the case. One solution to this problem is to have the parties sign the settlement agreement promptly at the mediation session- this can be very effective in getting the deal done right away in the presence of the mediator, the parties, and their attorneys. So, it is important for attorneys to bring a lap top to the session, and to have access to a laser printer. In sum, the mindset of preparing for mediation is that if the parties are relatively close on the money bracket issue before the mediation- the mediation will likely be successful. I would use a bracketing analysis and approach to determine where parties are positioned at the beginning of the mediation, and keep bracketing and caucusing for the entire session. The parties' positions may change toward the end of the session. Sometimes, a case may require 2 sessions to achieve success. Mediation is a very important tool to stop the suffering, uncertainty, and sleepless nights that goes with litigation, and I hope this presentation will help foster some insights for settlements to be achieved in complex cases.