Prepare for Mediation With Ranges Instead of Bottom Lines
By Steve Dunn
One of the most common mistakes I see in mediation is when a party comes into the process with a firm “bottom line” in mind. For plaintiffs, this is the minimum amount they are willing to accept. Defendants often arrive with a maximum amount they are willing to pay. Both sides come in thinking the other side must get to their number, or else the case will not settle.
As a mediator, I would be happy to banish the phrase “bottom line” from our vocabulary. It is much more productive to think in terms of ranges. Some settlements are great outcomes. Others and kind of crappy but you agree to them anyway. Sometimes your valuation of a case changes during mediation. Good litigators are flexible and agile, not constrained by artificial lines in the sand.
Bottom lines erect unnecessary barriers to settlement. Once a party anchors herself to a specific number, moving past it feels like losing. However, it is almost always necessary for one party or the other (usually both!) to reconsider their bottom line to settle the case. This can feel like giving up on their case or letting themselves down. I have seen countless parties walk away from perfectly good settlements simply because they were irrationally attached to an arbitrary number.
There is a better way. Forget about bottom lines. Come to mediation with ranges in mind instead.
I find it helpful to think of settlement ranges in terms of the conversations they are likely to inspire as it becomes clear what the other side’s final offer is likely to be. In advance of mediation, lawyers should prepare their clients for the likelihood that the final settlement number will be in one of the following ranges:
No-Brainer Range: This is the range in which the client will obviously and happily settle. The conversation about settling in this range will be delightful and short. The only challenge will be maintaining decorum and resisting the urge to do a victory dance until you are a respectful distance from the mediator’s office.
Satisfactory Range: The negotiation was not everything you hoped and dreamed it would be, but the benefits of settlement are clear. The conversation in this range is businesslike but upbeat, often just checking off the logistical details and non-monetary settlement terms.
Deliberation Range: In this range, the pros and cons of settling are evenly balanced. The conversation is thoughtful and thorough. At the better end of this range, you grit your teeth and make the deal. At the worse end, you reluctantly consider walking away.
Disappointment Range: Not what you hoped for. The conversation in this range is morose and difficult, like pulling teeth. You worry you might regret it later if you settle in this range. But you also worry you might second guess a decision to walk away.
Gut Check Range: Presumptively, you will not settle in this range. You will have a gut check conversation, but it might be a short one. The reasons to consider settling in this range would be if you learned something new about the case or if you have simply decided you want it to be over.
When lawyers and clients fail to prepare for a range of outcomes at mediation, they tend to show up with a bottom line close to the no-brainer range. They hope to win the mediation and walk away happy. They think their hopes and dreams might actually come true, and any other outcome will represent capitulation. When it inevitably becomes clear that their aspirational goal cannot be achieved, the mood turns dark, and everyone gets discouraged. It is at this point when negotiations often go off the rails.
To avoid this, begin by determining what you think the case is worth. Instead of thinking of that number as a bottom line, place it in the middle of your Deliberation Range. When the mediation begins, it is safe to assume the other side’s first offer will be in your Gut Check Range. You should, by all means, feel free to put out some early offers in your No-Brainer Range. This give and take is all part of the process of figuring out what actually might be possible.
The mediator’s dirty little secret is that settlement often occurs in both sides’ Gut Check Range or Disappointment Range. The key to thinking in ranges is that every range is worth talking about and seriously considering. Thinking in ranges instead of bottom lines avoids some of the common roadblocks in mediation and makes it significantly more likely you will settle your case.
ABOUT STEVE DUNN
Steve Dunn spent his entire 20-year litigation career at one firm, the Charlotte employment law boutique Van Hoy, Reutlinger, Adams & Dunn. His clients ranged from individual executives to Fortune 500 companies in virtually every industry, including banking, education, manufacturing, technology, construction, marketing, motorsports, and public sector clients throughout North Carolina. Steve has extensive experience litigating all forms of employment discrimination in the North Carolina federal courts and the Fourth Circuit Court of Appeals.