WHY ISN’T THE MIDDLE IN THE MIDDLE?
This and Other Riddles of Mediation Explained
By: Joseph M. Murphey, Esq.
Why isn’t the middle in the middle
“The fellow who says he’ll meet you halfway usually thinks he’s standing on the dividing line.” (Quote by – Orlando A. Battista)
There’s a big difference, at the outset of most mediations, between the demand of the plaintiff and the offer by the defense. If I ask a plaintiff’s attorney what the difference is between offer and demand, I get this answer: “Our demand is a lot higher than their offer.” And that’s a perfectly correct response.
But, if I ask the same question to the defense attorney, or adjuster, I usually get this answer: “Our offer is real money. Their demand is just wishful thinking.” That, too, is a perfectly correct response.
The dirty little secret of mediation mid-points is this: Initial mid-points are very unreliable indicators of endpoints. But why is this so?
The answer may be found by observing the world around us. When kids on a school playground play tug-of-war, we don’t expect all of them to end up at the middle. That’s a very improbable outcome. For such to occur, there’d have to be a perfect balance of weight, strength and determination on both sides. What are the odds randomly picked tug-of-war teams would have such a precise distribution of these qualities?
Likewise, what are the odds both sides of a lawsuit are perfectly balanced? If you’re a law student participating in a Mock Trial exercise, the odds are pretty good. In a real life lawsuit, not so much.
A few years ago, during an idle hour or two, I pulled the notes of my mediated cases from the preceding two years. My quest: How many settled for the mid-point of the initial offer and demand. Across about 200 settled cases, exactly one settled for the mid-point of the original offer and demand. Thus, I concluded my test was probably too strict. I re-examined the data, asking this time the question: How often did the case settle for a number within 5% above or below the mid-point of the original offer and demand. The answer: 11 cases total, out of more than 200. About 5 to 6 percent.
So what’s going on? Why isn’t the settlement number at, or near, the middle at the beginning of a mediation? The answer may have to do with who controls the middle, versus who controls the money.
In most mediations, the plaintiff has unfettered control of the middle. Whatever number I want to be paid, I, as the plaintiff can demand double that number (with a little more added for good measure). I, as plaintiff, have complete control over the mid-point.
But alas, control of mid-point is the pyrite, the fool’s gold, of negotiation. Driving the mid-point in mediation is a lot like driving one of those racecar grocery carts you see at Publix and Kroger. Sure, the kid’s having fun behind that fake steering wheel, but Mom or Dad is really controlling the speed and direction of the cart. Like Mom and Dad, it is the adjuster usually controls what’s most important at a tort mediation – the cart full of money.
“Real” money has an edge over “demand” money for one reason: It is real. It is tangible. Demand money begins to have power and influence over offer money when it gets close to it. There is a law about numbers which, though not taught by math professors, is nonetheless true as any brute fact of life: Numbers that are like each other, like each other. Especially when they are preceded by a dollar sign. $1,000,000 and $10,000 have nothing in common. They don’t read the same books, watch the same TV shows, or listen to the same music. On the other hand, $650,000 and $400,000, when they meet at a cocktail party and begin to chat, realize they share many of the same interests. Ultimately, they determine they both are friends with Mr. $515,000.
Even after presiding over about 1,500 mediations, I’m still not sure how to change any of the mid-point dynamics outlined above. But here is a two-step poultice for relieving the symptoms of mid-point misalignment.
Step One: Plaintiff’s may liberally apply “double-up-and-add-some” tactics at the beginning of the mediation. They should taper off use of liberal mid-pointing as the mediation persists.
Step Two: Insurance adjusters and defense attorneys may administer small doses of real money movement at the outset, but good movement by plaintiffs should be met with increased offers of real money.
Why is this taking so long?
“A miser and a liar bargain quickly.” (Greek Proverb)
There are several ways to get money from a bank. The quickest way is to walk in with a gun and an empty sack. There’s no messy paperwork, and they fill your order quickly. (Just watch out later for the exploding ink bomb). Another very quick way to get money from a bank is to walk in with impeccable credit, loads of collateral, and offer to pay the highest rate of interest they charge. Very little paperwork, and you’re out of there with the bank manager’s smiles and obsequious complements trailing you as you leave.
More conventionally, you walk into the bank, ask to meet with the loan officer, fill out some forms, offer average collateral, and then you sit down and negotiate the best terms you can get. If your credit score is higher than a shortstop’s batting average and you have reasonable security, you’ll get your money on good, but not great, terms. And it takes some time.
Mediations are no different. Occasionally, one party has (metaphorically) a loaded gun pointed at the other – facts or legal issues so powerful they are coercive. And occasionally folks who have good arguments just capitulate and take what they are offered. In each case, you will be done mediating before the buffet lunch is served. But these cases are rare. If both sides have something to talk about, and neither is willing to capitulate, you will probably be digesting that lunch before you’re signing your settlement memorandum.
So how can you speed up mediation without extortionary facts or capitulation?
One way is to focus early on the “real” money. And the real money can be found in the right-hand column of the mediator’s pad under the word OFFERS. As noted above, “Real” money has an edge over “demand” money for one simple reason: It is real. It is tangible. Demand (wish) money begins to have power and influence over offer (real) money only when it gets close to it.
Want to speed up your mediations? Get to a real value number quickly. Don’t be afraid to be the first to admit the true value range of the case. There’s a general law of ground acquisition games that applies to mediation – it’s easier to defend territory you hold than it is to conquer land you don’t occupy. Go to (or near) true value. Put up a flag. Own it. Wait for the other side to arrive. Won’t take long IF you are truly at or near a real value number.
Why are they taking such a tough stance? THEY are the ones who asked for the mediation!
“You’re in a much better position to talk with people when they approach you than when you approach them.” (Quote by – Peace Pilgrim)
God bless the judges who, in their infinite wisdom, refer cases to mediation. The wisdom is in realizing: (a) there is no possible downside to mediation and (2) neither attorney wants to be the one who suggests mediation.
As to the first point, court referral to mediation is the ultimate Pascal’s Wager. The real mystery is why all judges don’t do it on that basis alone. The second point drives home the first. Even attorneys and parties who want mediation are loath to be the first to suggest it. I suppose that’s why it’s so common for both sides at mediation to, some time in the process, condemn the movement of the other on the basis, “They’re the ones who asked for this mediation.”
In the words of Dire Straits front-man Mark Knopfler, “Two men say they’re Jesus; One of them must be wrong.” SO, the answer to the riddle, “Why are they acting like this, THEY asked for the mediation” is simple. They probably think you asked for it.
I’m just lucky and blessed someone did.
Where is the insurance adjuster?
“80% of success is just showing up.” (Quote by – Woody Allen)
Where is the insurance adjuster? Good question. More often now, they are not coming to mediations, citing cost savings, or lack of authority as a reason. They may think that by showing up they will raise the expectations of the plaintiff to unhealthy levels.
This is wrongheaded thinking. The best way to explain something is often by giving an example of its opposite. To best explain why failure of a party to appear is anathema to success at mediation, here is a story of the opposite.
Some years ago, a paralyzing blizzard gripped the mid-west. Airports were closed from Colorado to St. Louis. Even the cities that pride themselves on slogging through winter weather were brought to their knees. Back in Atlanta, we were enjoying our usual rain-and-mid-40s winter blah. At Miles Mediation, we were about to crank up a mediation. Attending (presumably) by phone would be adjuster Bill, whose office was in Kansas City. Bill was the top-guy at the claims office for a self-insured trucking company. There had been talk about Bill attending the mediation in person, but no one expected that to happen now.
Then, to everyone’s surprise, in walks a beleaguered but very much in-the-flesh Bill the Adjuster. The story of his journey from KC to Atlanta was reminiscent of Trains, Planed and Automobiles. Bill, who had every reason there is NOT to be at that mediation stood before us like an apparition. The distance alone, notwithstanding the weather, would have sufficed as an excuse. And, Bill could have hired a local, Atlanta TPA like many out-of-state self-insureds do. But here was Bill, in all of his weary, fatigued glory. And, here’s the kicker — he had brought with him very little money to offer.
In caucus, as it became clear the offers would not approach the expectations of the plaintiff, I asked Bill why he traveled so far through the most arduous circumstances to deliver such disappointing news. His answer was classic: “Good news can be phoned in. Bad news should be delivered in person, face to face, eye to eye. That’s just basic respect.”
Bill gave respect, and he won the respect of the plaintiff and his attorney, notwithstanding their disappointment over the final offer. As a footnote, the case later settled when the trucking company, facing financial difficulties, gave the plaintiff a final opportunity to take the mediation offer. Because adjuster Bill had earned the trust of the plaintiff, when he related the perilous financial situation of the motor carrier, he was believed.
Adjusters: Please show up. Especially when you have little to offer.
Why won’t they at least offer our special damages?
“Your specials aren’t that special.” (Quote by – Anon. Insurance Adjuster)
Either your specials are not that special, or more likely, liability or proximate cause defenses are the culprit. Liability and proximate cause defenses, real ones, can be anathema to settlement. Particularly when you have an elephant in the room, like a big, enforceable lien. (If you think you have an 800-pound elephant in the room, you don’t. But you do need to read part (7) below.)
For plaintiff attorneys, taking your best deal at mediation and then using the defendant’s liability / proximate cause arguments when dealing with the lienholders after settlement may be the best course of action. For defendants, if you cooperate with plaintiffs with release language, or even drafting a separate writing, that sets out why the settlement was deeply discounted due to liability or proximate cause issues, this can help with lien holders.
Is it too early to do a bracket?
“No. But it is too late to do one.” (Quote by – Joe Murphey)
Brackets are the “fanny pack” of mediation techniques. Useful for carrying things, fashionable in the mid-90’s, but a little embarrassing to be seen with today. Many folks now groan when they are presented with a bracketed offer or demand at mediation. Some will flatly state, “I don’t do brackets. Period.” But before we toss brackets into the back of our closet with the neon-patchwork windbreaker and Tae Bo VHS tapes, let’s discuss some variations of brackets that are still very effective.
When brackets are used as nothing more than a bodyguard for a mid-point, they are least effective. Saying, “I’ll go to $250,000 if you go to $750,000” is just an oblique way of saying, “I think this case is worth a half-million dollars, give or take.” The recipient of your bracket will keep the mid-point and throw away the rest like a kid at a birthday party going through wrapping paper to get to his presents. And, what’s worse, your mid-point will be presumed to be something you will do, but not all you will do.
But, can brackets still be used to convey real meaning? Let’s say we have a case where plaintiff’s made demands in the 200’000s and the defense has responded with several offers below the special damages of $23,456. This could be an effective bracket by the plaintiff: “IF you will go to the special damages now, then we will go to $99,000. We’re not looking at the mid-point of this bracket, and we will not assume you are either.” The message is this: “We need for you to get into pain-and-suffering money NOW, and in trade for that move, we will admit this case can be settled for a five-digit number.”
Another way to get real, meaningful movement out of brackets is what might be called a “one off” bracket. In a true bracket, you move your number IF, and only if, the other side makes a specific move, dictated by you, in response. Because folks don’t like to be told what to do, most brackets are rejected, even if their essence is not particularly objectionable.
In a “one off” bracket, your move is NOT conditional, but you make it clear your expectation of what the other side should do next. It looks something like this: “We are going to make a big move down to $99,000. You can do anything you like in response, but until your offers exceed the special damages, we’ll be making much, much smaller moves.” The message is clear: “We can’t control what you do; but we can control what we do after you do what you do.” It’s more powerful than a conventional bracket because it (1) has moral authority deriving from your having made a big move, and (2) it’s polite and respects the autonomy of the other side. (For another example of the power of paying respect, refer to the story of Bill the Adjuster from (4) above.)
Is that self-funded ERISA lien an “800 pound elephant in the room?”
“Success is like wrestling a gorilla. You don’t quit when you’re tired you quit when the gorilla is tired” (Quote by – Robert Strauss)
OK, I admit it. The only reason I put this section in this paper is so I could vent.
For the record, there is NO SUCH ANIMAL as an “800-pound elephant in the room”. This phrase is a hodgepodge of two very effective, but distinct, metaphors – “the 800 pound gorilla” and “the elephant in the room”.
An 800-pound gorilla is something so big and powerful it does what it wants to. (The origin of the phrase is this riddle — Q: “Where does an 800-pound gorilla sit?” A: “Anywhere it wants to.”) 800-pound gorillas show up at mediations with alarming frequency. Example: Most insurance companies are 800-pound gorillas.
On the other hand, the “elephant in the room” is something no one wants to talk about, even though denying its existence is as futile as ignoring an elephant in the room. These elephants, like 800-pound gorillas, make regular appearances in mediation rooms. They are frequently Medicare, Medicaid, Tri-Care, ERISA, CHAMPUS, hospital or other so-called enforceable liens. We can ignore them at mediation, but only for a while.
To make matters more confusing, some of the elephants in the mediation room are also 800-pound gorillas. Hospitals, for instance. Their liens are the elephants in the room. Their cavalier attitude, and refusal to compromise their liens, make them the 800-pound gorilla.
Not only do hospitals and doctors want reimbursement for those medical bills, their records sometimes contain inaccurate information that damages the plaintiff’s case. Which misinformation leads many plaintiffs to complain…
How did that get comment get into my medical records? I NEVER told my doctor that!
“What are you writing in my chart? …. Doctor? (Quote by – Elaine Benes of Seinfield)
As a cynical defense attorney I always just assumed plaintiffs were lying about inaccurate histories contained in their medical records. But as mediators, we see it so often, I realize these plaintiffs – like Elaine Benes from Seinfeld – are on to something.
Plaintiffs, almost without exception, take exception to comments attributed to them in their medical histories. As Elaine realized, the contents of a patient’s medical records are often shrouded in mystery. Any attempt by the patient to discover their contents, much less change them, will be met with conspiratorial resistance.
The problem for plaintiffs is not that their medical records are flawed. The real problem is that those records will be believed by a jury over the biased and interested opinion of the plaintiff. Once you start fighting your own doctors and medical records in court, you’re losing ground. Unless the statement in the records is provably false using other, objective evidence, plaintiffs must embrace the high probability jurors will believe the medical record over the patient. The medical record is objective, and it was written contemporaneously with the statement it purports to record. The plaintiff’s recollection, on the other hand, is skewed by her interest in the case and eroded by the passage of time.
The key to success in getting these records to be properly weighted by the plaintiff at mediation is to stress that the records don’t have to be true to be damaging to plaintiff’s case. As cynical as it sounds, a well-documented lie from an objective source may be more attractive to a jury than a subtle truth coming from an interested party.
Why is it harder to settle the little cases than the big ones?
“There are times when fear is good. It must keep its watchful place at the heart’s controls.” (Quote by – Aeschylus)
Why is it harder to settle the little cases? For the same reason it is easier to negotiate with a bank for money when you are holding a gun. (See section number (2) above).
Some mediators boast they handle only “big cases”. Reality check: Getting a nice settlement on a clear-liability trucking death case has far less to do with the talents of your mediator than the facts of your case, and your skill as an attorney in getting that case ready for settlement.
On the other hand, getting your client paid $12,000 on a Cobb County whiplash with prior and subsequent injury claims is impressive. Thank your mediator for his/her hard work on that one. For small cases — that is, cases where neither side can put “fear” into the other, where no probable verdict will bankrupt defendant or plaintiff – other mediation motivators come into play, and the parties inevitably have to work harder to find reasons to settle.
Solving The Perplexing Riddles of Mediation, like most of life’s mysteries, is a case of Dorothy’s ruby red slippers. The way home is right there, if you just look. A good understanding and appreciation of basic human nature goes a long way towards de-mystifying the mediation process.
Plaintiffs are people, and what do we know about people? People like to be respected. They are reluctant to reveal their vulnerabilities without the guarantee of reciprocation. They want a little more than they deserve, but they’re afraid they’ll have to settle for a lot less than they want. They expect others will believe them; and even a liar doesn’t like to be called one. People want to take the best they are offered, but they also don’t want to leave money on the table. They want things to move quickly, but they are reluctant to take shortcuts to get there. In the end, people want closure, but letting go of something that’s occupied so much of their lives for so long is difficult. People crave conflict, but they need peace. These emotional opposites are a part of our real world, so they are naturally a part of the mediation process. Strive to understand them, embrace them, and good luck out there!
 One notable exception to this rule: When low insurance policy limits place a false ceiling on plaintiff’s demands. Demands based upon minimal available coverage, rather than pure value of the case, reverse all of the points made above.
 Disclaimer: This is a discussion of efficiency, not a discussion of ethics or morality. Do not, under any circumstances walk into a bank with a gun, unless you work there as a security guard.
 17th Century French philosopher Blaise Pascal was the first to posit that you might as well believe in God, since there’s no downside and infinite upside potential to taking this position. We’re all dying to find out if he was right.
 For a concise but enlightening analysis of mediation motivators, I recommend the book A New Day in Court, written by my boss, John Miles. Or you could just wait for the Broadway musical and/or movie version.
By: Burke B. Johnson, Esq.
Burke B. Johnson, Esq. is a member of Team Nutter at Miles Mediation
Much has been written about the extent to which candor during mediation is required. Some authors argue that deception is part of the “game” of negotiation and is fully expected to occur, whereas others argue that legitimate negotiation requires complete honesty. This article addresses the issue not from the perspective of scholarly debate, but based upon application of the Georgia Rules of Professional Conduct and the Professionalism Principles adopted by the Chief Justice’s Commission on Professionalism.
Comment 5 to Rule 2.4 provides “lawyers who represent clients in alternative dispute-resolution processes are governed by the Rules of Professional Conduct. When the dispute-resolution process takes place before a tribunal, as in binding arbitration (see Rule 1.0(r)), the lawyer’s duty of candor is governed by Rule 3.3. Otherwise, the lawyer’s duty of candor toward both the third-party neutral and other parties is governed by Rule 4.1.” Because mediation typically occurs outside the context of a “tribunal” as defined by Rule 1.0, this article will focus on Rule 4.1.
Rule 4.1 provides that “[i]n the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.”
Comment 1 to this Rule provides “[a] lawyer is required to be truthful when dealing with others on a client’s behalf, but generally has no affirmative duty to inform an opposing party of relevant facts. A misrepresentation can occur if the lawyer incorporates or affirms a statement of another person that the lawyer knows is false. Misrepresentations can also occur by failure to act.”
Comment 2 to the Rule provides “under generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact. Comments which fall under the general category of ‘puffing’ do not violate this rule. Estimates of price or value placed on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim are in this category, and so is the existence of an undisclosed principal except where nondisclosure of the principal would constitute fraud.”
Comment 3 provides that “[p]aragraph (b) recognizes that substantive law may require a lawyer to disclose certain information to avoid being deemed to have assisted the client’s crime or fraud. The requirement of disclosure created by this paragraph is, however, subject to the obligations created by Rule 1.6: Confidentiality of Information.
The penalty for violation of Rule 4.1 is severe. In re Ballard, 280 Ga. 504, 629 S.E.2d 809 (2006), the Supreme Court ordered disbarment of an attorney based upon violations of Rule 4.1.
In addition to the applicable Rules of Professional Conduct, Georgia lawyers should also be mindful of and apply the Principles of Professionalism adopted by the Chief Justice’s Commission on Professionalism when negotiating at mediation. As part of the “Lawyer’s Creed,” Georgia lawyers are encouraged to offer fairness, integrity, and civility to the opposing parties and their counsel. The “Aspirational Statement On Professionalism” further provides that Georgia lawyers should “act with complete honesty.”
The American Bar Association addressed the application of Model Rule 4.1 (upon which Georgia Rule 4.1 is based) to mediation in Formal Opinion No. 06-439. There, the ABA concluded “[u]nder Model Rule 4.1, in the context of a negotiation, including a caucused mediation, a lawyer representing a party may not make a false statement of material fact to a third person. However, statements regarding a party’s negotiating goals or its willingness to compromise, as well as statements that can be fairly characterized as negotiation puffing are ordinarily not considered false statements of material fact within the meaning of the Model Rules.”
Thus, the opinion notes, “a lawyer may downplay a client’s willingness to compromise, or present a client’s bargaining position without disclosing the client’s ‘bottom line’ position, in an effort to reach a more favorable resolution. Of the same nature are overstatements or understatements of the strengths or weaknesses of a client’s position in litigation or otherwise, or expressions of opinion as to the value or worth of the subject matter of the negotiation. Such statements generally are not considered material facts subject to Rule 4.1.”
However, a party’s actual bottom line or the settlement authority given to the lawyer is a material fact. Near the conclusion of the opinion, it is noted “care must be taken by the lawyer to ensure that communications regarding the client’s position, which otherwise would not be considered statements ‘of fact,’ are not conveyed in language that converts them, even inadvertently, into false factual representations. For example, even though a client’s Board of Directors has authorized a higher settlement figure, a lawyer may state in a negotiation that the client does not wish to settle for more than $50. However, it would not be permissible for the lawyer to state that the Board of Directors had formally disapproved any settlement in excess of $50, when authority had in fact been granted to settle for a higher sum.”
Lawyers should always remember that their colleagues will judge them by their conduct. Despite the overall number of lawyers practicing in Georgia, most actually practice in a small “community,” (whether truly geographic, as in a small town, or by practice area) and thus, are likely to encounter each other on a routine basis. A lawyer’s reputation for honesty or the lack thereof spreads quickly, and the deceitful lawyer will soon lose the trust and respect of professional colleagues.