The Price of Poker Just Went Down: How Smart Defendants Leverage Good Settlements in Catastrophic Cases.

This is the second part of a two-piece article. Last month, we focused on ways claimants can maximize recovery in catastrophic damage cases. This month, we focus on defense strategies for leveraging a good settlement at mediation.

Whether you are defending a business, a contractor, physician, manufacturer, retail store, or trucking company, representing at fault parties in a case involving huge damages or catastrophic injuries is a low karma but high stakes event. Only 2% of filed cases go to trial, so settlement is expected. Here we offer smart strategies and best practices for defense counsel and carriers to achieve optimal settlement outcomes in hard cases through mediation.

1. Make the Plaintiff’s attorney your friend. Why create animosity that begets verbal altercations that later yields intransigence by claimant’s counsel? I have practiced with and witnessed defense lawyers who do not see the big picture. Your job is to get the other side to take your money. If someone is angry because you have been giving them a hard time during the litigation, and you are hostile in the opening session at mediation, you won’t have an ally motivated to resolve the case on reasonable terms. You need to build equity in the relationship with the other side because you are going to mortgage that equity during mediation.
2. Solicit a position statement or letter from claimant’s counsel as we discussed in last month’s article, including a demand well in advance of mediation. A plaintiff’s attorney who cannot provide a position statement and demand may have client control issues, and you flush this out by asking for a demand. Once you get a letter or position statement including a demand from claimant’s counsel, write a letter in response for the claimant to read. Write it for the actual client not the lawyer or mediator. All of this communication can be kept confidential under the mediation privilege. Think before you write. The claimant won’t care about legal theories, affirmative defenses, summary judgment or other procedural issues. Write in lay terms not law.  The tone of the letter should demonstrate respect, introduce the notion that there can be two truths, that others might not see it the same way, and stress the time necessary for resolution including appeals absent settlement.  I have written extensively on position statements and we cannot cover that ground here. The claimant needs to first read, and then hear the same message from you and the mediator regarding alternative facts and “other” outcomes. These letters take a little time and need to be sent well in advance. Too often, I get premediation submittals a day or two before the mediation which are not shared with the other side and written for my eyes only; this is a missed opportunity.
3. Humanize the corporate client and offer an apology frequently. Apologies and pseudo-apologies cost nothing and frequently matter a whole lot in the Plaintiff’s camp. Apologies need to come from the client not the lawyer to have emotional weight.
4. Consider using settlement counsel not your lead trial lawyer during mediation. You don’t need ego, you need humility. You need to demonstrate empathy and understanding during the opening session. Historically mediation orders have always required the presence of “lead trial counsel,” and this language was included in the nascent stages of court-ordered mediation in the 1980s because the judiciary wanted mediation to be viewed by the bar as important. We have now a more evolved mediation culture. The better play is to think about who is a good deal-maker. It might not be lead counsel. Some carriers use settlement counsel distinct from trial counsel.
5. Find out all you can about the claimant’s personal finances, health, children, work, or the company bringing the claim. I always look for personal situations like children, job relocation, or eldercare issues that may make it hard for a party to be at trial. Business owners, doctors and professionals claim they want to fight until they realize the huge hassle trial creates for their family, business or practice. As a mediator, I once settled a case on the verge of impasse by reminding a party that, absent settlement, he was going to be in trial during his daughter’s graduation from college. I simply asked, “When are you going to tell your wife you can’t come to graduation up north because you impassed the case over $20,000?”
6. Go slow. Don’t make an opening offer in the first 30 minutes. Let the plaintiff stew a little, but no so long to get really annoyed. Make sure the mediator is paying attention to the time they have been left alone. All mediations really start at 4:30 p.m. Don’t be the first to leave.
7. If there are multiple defendants, schedule a “defense only” caucus within the ambit of the mediation privilege a few weeks (not one day) before mediation. You must anticipate who is likely to contribute (or not) and develop consensus. If one party defendant from whom you expect a sizeable contribution seems clueless, better to know and work the problem in advance of the mediation date.
8. An impasse is not a failed mediation. You gather more information the longer you stay. The claimant may be unable to accept reality during mediation or has other reasons to refuse a deal during mediation, but by being patient you may have set the table for a settlement in the days or weeks ahead and will learn something new about the case.
9. Be amenable to intra-defendant funding arrangements whereby the defendants agree to resolve a large exposure claim with claimant but reserve the right to argue over the proportional allocation of loss, coverage, or contribution later. In a multi-defendant case, you should be very hesitant to let the fish slip away while you are arguing over who has the smallest net.
10. Be mindful of non-economic deal terms that may have value to the claimant. Maybe there is something you can give the claimant they cannot get in court. Ask and ask again – what else besides money might they want? It is not uncommon for creative deal terms to surface for the first time in mediation.
11. If you are approaching impasse, ask for a second joint session. Have the mediator stress to all parties how long it will take to get a judicial resolution including time for appeals. Revisit the problem of awaiting a trial date. Time is the claimant’s kryptonite.

If you consistently incorporate these strategies into your premediation planning and add planning to the calendar,  you will optimize your client’s chances for resolving the claim in mediation. If readers have additional advice for defense counsel or critical commentary, please send it along and I will publish a summary of the comments and letters.