Whether your case is in Federal Court or State Court, Mediation will likely be a part of your lawsuit.
Mediation is a structured settlement negotiation conducted with the assistance of a neutral third party called a mediator. The mediator does not represent either side. The mediator's job is to help the parties determine whether there is a settlement that both sides are willing to accept.
Mediation is different from arbitration. An arbitrator is more like a private judge. The parties present their positions to the arbitrator, and the arbitrator makes a decision. Depending upon the type of arbitration, that decision may be binding.
A mediator doesn't decide anything. The mediator can't order the insurance company to pay you $1 and can't order you to accept $10 million. Unless both sides voluntarily agree to a settlement, the lawsuit continues.
That makes Mediation fundamentally a negotiation.
And like most negotiations, timing matters.
There is no single best answer.
If you mediate too early, the insurance company may not have had enough time or information to adequately assess the case and its potential exposure. Remember, insurance companies get sued all the time and they are all about assessing risk. They have their lawyers, their procedures and their playbook. The fact that you filed a lawsuit doesn't necessarily mean that the insurance company suddenly views your claim differently.
In our case, as time went on, it became clear that the only way we were going to receive everything we were entitled to receive under our homeowners policy was to file a lawsuit.
If your primary objective is simply to collect what you are owed under the policy, early Mediation may make sense for you. Why go through all of the time, expense, and steps of preparing your lawsuit for Trial if you can quickly obtain an acceptable resolution?
If your primary objective is simply to collect what you are owed under the policy, early Mediation may make sense for you.
In that case, you may want to seek an early Mediation and an early settlement. There is nothing wrong with using your lawsuit to only collect what you are owed, and then moving on with your life.
However, if your insurance company wrongfully delayed or withheld money that you were entitled to receive under your policy, you may be entitled to receive more than they should have paid you in the first place.
Discovery isn't simply about gathering evidence for Trial. It can also change the way the insurance company evaluates the risk of continuing the lawsuit.
Documents get produced. Witnesses get deposed. Discovery disputes are won and lost. Facts that looked important at the beginning of the lawsuit sometimes become less important. Facts nobody knew about when the lawsuit was filed can become extremely important.
And the insurance company's assessment of its exposure can change along the way.
Your Deposition can be particularly important.
In Center Stage, we discussed how the Defendant's legal team isn't just listening to the substance of your answers during your Deposition. They are also watching you.
Are you credible?
Are you likable?
Will a jury believe you?
How will you perform at Trial?
If you and your legal team believe that you are likely to make a strong impression at your Deposition, why mediate immediately before giving the insurance company information that could help your case, and hurt their case?
The better Mediation opportunity might be immediately afterward.
But your Deposition is only one example.
An important insurance company witness may be scheduled for Deposition. You may be expecting documents that could strengthen your case. An important Discovery dispute may be approaching.
All of these events can potentially affect the value of your case.
The question is: are you better off waiting for the event to occur, including the outcome, or does the anticipation of the outcome provide better leverage for you than the outcome itself?
These are strategic questions to discuss with your legal team.
For these reasons, Mediation shouldn't be something you begin thinking about only when somebody suggests that it is time to mediate.
The timing of Mediation should be a part of your Discovery strategy and your settlement strategy.
Have a Plan. Change Your Plan.
One way to approach Mediation is simply to begin the lawsuit, see how things go, and wait until your lawyer, the Defendant's lawyer, or the Court suggests Mediation.
That's not how the Professional Client would approach it.
Early in the lawsuit, sit down with your legal team. Review the Scheduling Order. Develop your Discovery strategy. Then identify several points along the way when Mediation might be particularly advantageous for you.
You aren't trying to select an exact Mediation date months in advance.
You are identifying potential opportunities.
What is missing from your case that would make Mediation more effective for you? How and when do you plan to get that information? Which Depositions could materially strengthen your case? What Discovery disputes do you anticipate? What events could give you momentum?
And, most importantly, can you sequence Discovery in a way that helps create Mediation and settlement opportunities?
If an important insurance company Deposition could significantly increase the Defendant's perception of its risk, think about what needs to happen before that Deposition.
Perhaps certain documents should be obtained first. Perhaps other witnesses should be deposed first. Perhaps a Discovery dispute needs to be resolved.
Then consider whether the period immediately before or following that key Deposition could become a good Mediation window.
Of course, lawsuits don't always unfold according to plan.
The Deposition you expected to be devastating may turn out to be uneventful. You may lose the Discovery motion you expected to win. An unexpected document may substantially strengthen your case. Your own Deposition may go better, or worse, than expected.
Trying to predict the one perfect moment for Mediation months in advance is difficult.
But you should have a plan, and be willing to change your plan along the way as events unfold.
Don't merely sit back and wait for the optimal time for Mediation to present itself. Create your own optimal Mediation opportunities, build them into your Discovery strategy, and be willing to make adjustments along the way.
The mediator is agreed upon by both parties. Usually, each side presents a list of names to the other side, they look for a match, and then they determine whether that mediator is available.
Sometimes mediators are retired judges. If you are considering a retired judge, look for one who has presided over many insurance lawsuits. Other mediators are professional mediators who have spent years mediating cases without previously serving as judges.
Whether it is better to select a retired judge or a professional mediator is less important than who the person is and what their experience and reputation is as a mediator.
There are retired judges who are excellent mediators and retired judges who aren't. The same is true of professional mediators.
Talk to your legal team about the people being considered.
Who has your legal team used before? What were their experiences? What is the mediator's reputation with both Plaintiffs' lawyers and Defense lawyers? Does the mediator understand insurance cases?
Choosing the right mediator matters.
But regardless of whom you select, Mediation provides something else that can be extremely valuable: it may be the first time you get to see how your case looks to an independent third party.
Up until Mediation, you and your legal team have been living in somewhat of a bubble.
You get excited about what your legal team is telling you. Your lawyers get excited about something uncovered in Discovery. You feed off each other playing the "what if" game.
For several months, you and your team have likely spent a lot of time focused on the positives of your case.
You have all been "drinking the same Kool-Aid."
The mediator hasn't been living with the case every day. The mediator hasn't participated in the strategy sessions. The mediator isn't emotionally invested in your case.
And an experienced mediator may have seen hundreds of lawsuits settle—or fail to settle.
Mediation provides the opportunity to hear an independent perspective on the strengths and weaknesses of your case.
Pay attention to it.
But don't expect the mediator to walk into the room, tell you what a great case you have, and predict how much money you are going to win at Trial.
That's not the mediator's job.
In fact, you should probably expect the opposite.
The mediator is likely to spend considerable time talking about the weaknesses in your case, the risks of going to Trial, and how little the Defendant is willing to pay.
That doesn't necessarily mean the mediator thinks you have a bad case.
To understand why, you need to understand how Mediation actually works.
If you have never participated in a Mediation, you may picture everyone sitting around a conference table, the Plaintiff on one side, the insurance company on the other, with the mediator sitting in the middle.
That's usually not what happens.
In many Mediations, you may barely see the people on the other side, if at all.
You and your legal team will typically be in one room, while the insurance company's representatives and lawyers are in another.
The mediator goes back and forth between the two rooms.
This is sometimes called shuttle diplomacy.
The mediator will spend time with you and your lawyers discussing your case, with particular emphasis on the weaknesses, why your case is worth less than you think, the risks and expense of taking your case to Trial, how you might lose at Trial, and the risk that even if you win, the result can be appealed.
The mediator then goes to the other room and has a separate conversation with the insurance company and its lawyers.
The mediator will likely emphasize how strong your case is, how weak their defense is, how a jury decision poses inordinate financial and precedential risk for the company, and that they are crazy to let your lawsuit proceed to Trial.
This back and forth can go on for hours.
That physical separation creates an unusual dynamic.
You aren't negotiating directly with the insurance company. You are negotiating through the mediator.
The mediator is hearing things you aren't hearing. The mediator knows what the insurance company is saying in the other room, just as the mediator knows what you and your lawyers are saying in your room.
But that doesn't mean the mediator can repeat everything.
Mediators frequently have confidential conversations with each side. Something you tell the mediator may remain in your room if the mediator agrees to keep it confidential. The same is true of what the insurance company tells the mediator.
But remember how shuttle diplomacy works.
You aren't in the other room.
Even if the mediator tells you that something will be kept confidential, you have no way of knowing exactly what is being said when the mediator leaves your room.
So the mediator may know considerably more about the negotiating positions of both sides than either side knows about the other.
That is part of what makes a good mediator valuable.
But it also creates a unique dynamic that you need to understand.
The mediator is neutral.
The mediator is not your advocate.
Your legal team represents you.
The mediator is simply trying to settle the case.
Don't confuse what the mediator thinks your case is worth with the real potential value of your lawsuit if it proceeds to Trial.
The mediator isn't the Judge.
The mediator isn't the Jury.
And the mediator isn't your lawyer.
The mediator is trying to find out whether there is a number, and a set of terms, that both sides are willing to accept to end the lawsuit.
Ever since COVID, virtual Mediations have sometimes become an option.
In a virtual Mediation, the Mediation is conducted in a similar manner as described above, with the parties participating remotely.
In many cases, the Court will require or strongly encourage the parties to participate in Mediation or another settlement process.
For the Defendant to take the Mediation seriously, you want them to have the inconvenience of attending the Mediation in person, and you want assurance that a business person with appropriate settlement authority will be attending the Mediation.
Without that investment, it is easier for the Defendant not to take the Mediation seriously, to simply check the box, and to walk away.
There is also something beneficial about being in the room with the mediator. You can observe body language. You can interact on a personal level. The mediator gets to spend time with you as a person, rather than as another face on a computer screen.
That does not happen in the same way if the parties attend virtually.
In our view, if you are going to spend the time and money to mediate your lawsuit, show up.
And make the Defendant show up too.
Nobody "wins" a Mediation.
Your lawsuit either settles, or it doesn't settle.
But as indicated above, there are other advantages to participating in Mediation besides settlement.
You can learn how your case might be perceived by an independent third party.
You can learn more about the Defendant and its current assessment of your lawsuit.
You may learn that some of the arguments you thought were particularly strong aren't as persuasive to an outsider as you expected.
You may also learn that the Defendant is more concerned about certain aspects of your case than you realized.
And, of course, you may settle the lawsuit.
Don't be disappointed if the lawsuit does not settle at the Mediation.
Some mediators will remain in contact with the parties and continue to work on settlement after the Mediation ends. A gap that could not be bridged that day may become bridgeable later as the lawsuit continues to develop.
More importantly, don't judge the success of a Mediation solely by whether you reached a settlement that day.
What did you learn?
How did an independent third party react to your case?
What did you learn about the Defendant's assessment of its risk?
Which arguments appeared to matter?
Where did the negotiations begin?
Where did they end?
Did the Mediation give you information that will help you and your legal team make better decisions going forward?
A Mediation that doesn't result in a settlement can still be valuable.
A Mediation that doesn't result in a settlement can still be valuable.
And a Mediation that does result in a settlement isn't necessarily a good Mediation simply because the lawsuit ended.
The question is whether the result is right for you.
Mediation is one of the most obvious opportunities to settle a lawsuit.
Settlement opportunities can arise before Mediation, after Mediation, during Discovery, after an important Deposition, following a court ruling, while preparing for Trial, and sometimes when you least expect them.
Recognizing those opportunities—and creating them—is an important part of being a Professional Client.
And that is where we go next.
Mediation is a negotiation, not a decision. The mediator cannot force either side to settle. Unless both sides agree, the lawsuit continues.
Timing matters. If your objective is principally to collect unpaid policy benefits, early Mediation may make sense. If you are seeking substantially more, the insurance company may first need to see evidence demonstrating why it faces greater risk.
Think about Mediation as part of your Discovery strategy. Depositions, documents, Discovery rulings, and other developments can change the Defendant's assessment of its
exposure and create better settlement opportunities.
Have a plan. Change your plan. Identify potential Mediation windows early, but adjust as the lawsuit develops. Don't merely wait for the optimal opportunity. Try to create it.
Choose the mediator, not the résumé. Whether the mediator is a retired judge or professional mediator is less important than the individual's experience, reputation, and ability to mediate your type of lawsuit.
Stop drinking your own Kool-Aid. Mediation may be your first opportunity to hear how an experienced independent third party views the strengths and weaknesses of your lawsuit. Listen.
Understand shuttle diplomacy. The mediator will likely spend considerable time emphasizing the weaknesses of your case to you—and the weaknesses of the Defendant's case to them. Don't mistake the mediator's negotiating strategy for a verdict.
The mediator is not your advocate. Your lawyer represents you. The mediator's objective is to find a settlement both sides will accept. The amount of the settlement is less important to the mediator, as long as it settles.
Be careful about what you tell the mediator. Even when the mediator agrees to keep something confidential, you aren't in the other room and cannot know exactly what is being said there.
Show up. In our view, Plaintiffs are generally better served by an in-person Mediation. If the Mediation is important enough to spend the time and money on, take it seriously—and make the Defendant take it seriously too.
A Mediation doesn't have to settle to be valuable. You can learn about your case, your weaknesses, the Defendant's concerns, and the gap between the parties even if no agreement is reached.
Settlement is bigger than Mediation. Mediation is only one settlement opportunity. A Professional Client should be looking for—and helping create— settlement opportunities throughout the lawsuit.
