Once upon a time (about two weeks ago at Loyola Law School) three simulated mediations were conducted simultaneously based on identical facts.
Facts: A trucking company claimed that its long time supplier had provided a defective product that damaged the engines of numerous trucks (overhauls out-of-pocket cost $210,000), and would likely continue to cause injury to others (estimated future damages $245,000, plus $110,000 interest). The supplier claimed that it tested the product and its expert concluded there was no way its product could’ve caused the damage.
First year students played the roles of plaintiff, defendant, and their counsel while practicing mediators mediated in separate rooms. After an hour and a half, all three cases were settled and everyone met to compare results:
Mediation #1 result: $115,000, +50% discount on future supplies, plus public apology for disparaging defendant
Mediation #2 result: $155,000, plus non-disparagement clause
Mediation #3 result: $200,000
What made the difference? Were some students more effective negotiators than others? Or were the mediators influencing the outcomes? The answer is clearly both.
In Mediation #1, defendant took a hard line on liability and opened with only $10,000, claiming no interest in further ongoing business. After the mediation, we learned that it had set $125,000 as the most it would pay. The mediator challenged plaintiff to assess the likelihood of proving its case. Plaintiff eventually agreed to $115,000 and a future discount because the hope of recouping its losses through future discounts was better than the risk of losing at trial.
In Mediation #2, both sides presented confidently but the mediator told the defendant that it had a strong defense, garnering the defendant’s trust, allowing her to lead the parties to a settlement that was 25% less than the out-of-pocket damages. They also agreed to a non disparagement clause.
In Mediation #3, the mediator was evaluative from the outset. Both sides acceded to his valuation, almost 100% of plaintiff's out-of-pocket costs. (This mediator later commented that he saw the Mediation #1 agreement on the 50% discount to be an invitation for further litigation.)
Here are some surprising takeaways:
- The highest opening plaintiff’s demand, $700,000 (#1), ended with the lowest cash payment;
- All the students were satisfied with their outcomes, until they saw the results from other mediations;
- The most judicial approach ended with the highest cash settlement.
This simulation offered a rare inside glimpse of how varied the outcomes will be depending on: 1) the argument and skills of the advocates; 2) the mediator's approach; and 3) how much influence the advocates allow their mediator to exert.
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