By Sheldon J. Stark, Mediator and Arbitrator
Introduction
We are often selected as mediators because we have the skills needed to assist parties in reaching satisfactory resolution. A common tool is the mediator proposal discussed in a previous From the Field. In this column, you will find five additional closing techniques effective in closing the deal.
“Would You Take If They Would Pay/ Would You Pay If They Would Take?
One of my personal favorites, this technique is effective when negotiations continue but have slowed to small, painful increments resulting in hostility and consternation. Where to start depends on the unique dynamics of each mediation. In plaintiff’s room, the question is hypothetical: is there a number north of the last defense proposal – a number suggested by the mediator – that would be acceptable. In the defendant’s room, the question is whether a specified number south of the plaintiff’s last demand would be agreeable if plaintiff would accept it. The number the mediator suggests might require negotiation. For example, if plaintiff asked for $275,000, and defendant countered with $180,000, the mediator might ask, “if I could get them to pay $210,000 would you take it? I have no authority for this but believe they could be persuaded if it would settle the case.” The answer is often “yes;” but could be, “No. However, $225,000 would do.” Once agreement is reached on the number to communicate – and only with a confidential agreement to accept in hand – the mediator approaches the defense asking if they would pay if plaintiff would accept. If no, is there an alternative number they would pay? I don’t represent having money, only that I have a strong belief I can get it. The technique may take as many as two or three rounds. There is no downside or prejudice to the negotiators because the numbers they’re hearing come from the mediator, not the other side. If the “hypothetical number” doesn’t resolve the case, the parties are protected: In the example above, plaintiff has never gone below $275,000, defendant never above $180,000. By employing hypothetical numbers, the mediator eventually uncovers a number with which both sides can live.
The Lee Jacobson 3-Number Technique
This technique works best when parties refuse to budge but instinct suggests they are reluctant to reveal real numbers. Here’s how it works: each side is asked to submit 3 numbers to the mediator simultaneously and on a strictly confidential basis. For plaintiff, the first number is south of their last communicated offer. If paid, the number would be an “acceptable” settlement though nothing to write home about. The second number must be south of the first, but, if paid, acceptable but “disappointing” as a settlement. The third number must be south of the first two and best characterized as a “heart burn” number. Yes, it would settle the case, but plaintiff would be unhappy, experiencing severe heart burn. The defense submits 3 numbers north of their last communicated offer using the same 3 criteria: a barely acceptable resolution, a disappointing resolution, and a heart burn resolution.
The mediator then reviews the 6 numbers on a confidential basis. The technique only works with the heart burn numbers. If their heart burn numbers are the same, the dispute settles at the heartburn number. If the numbers overlap – defendant offers more than plaintiff asks – the case settles for the midpoint. If the numbers are 10% apart or less, the case settles for the midpoint. 10% is calculated by adding the two heart burn numbers together and multiplying by 0.1. For example, if plaintiff’s heart burn number is $100,000 and defendant’s heart burn number is $90,000, the difference is $10,000. $100,000 + $90,000 = $190,000. 0.1 x $190,000 = $19,000. The difference is well within 10%. Accordingly, the case settles at the midpoint, $95,000. If the numbers are 20% or less apart, we continue working: 1) return to bargaining; 2) try negotiating brackets; 3) disclose the confidential numbers and see if there is something between that would be acceptable; 4) offer a mediator proposal; etc. If the difference exceeds 20%, the mediation is over. Some mediators use 25% rather than 20. I’ve employed this technique more than 3 dozen times. Its magic has failed only twice!
The Andy Little “Value of Closure” Technique
During the introductory, ex parte get-acquainted meeting I hold with each party at the start of a mediation, I always ask for a list of party goals and objectives. “What do you hope to gain,” I ask, “from the mediation process today?” Parties usually list “a fair number”, “justice”, “an apology”, or some variation of each. If the party does not use the word, I ask if one of their goals is “closure.” “Is there value to you,” I ask, “in putting this dispute in the rear view mirror and moving on with your life in a more positive, constructive fashion?” Only rarely has a party said no.
Fast forward to the end of the mediation. If a gap exists between the last demand and counteroffer, I remind the party that when we started they said closure had value. I then say, “We are $15,000 part. I don’t believe I can get them to pay another dollar. They tell me this is the end of their authority and I have no basis to believe otherwise. I know it isn’t what you hoped. You’ve made that clear. But their last offer, if accepted, does provide closure and closure has value. No one else can tell you the value of closure. Not me. Not your lawyer. Not even your spouse or best friend. Only you know the value of closure to you. What is the value of closure? Is it $15,000? If it is, resolution at this number would bring you all the benefits of closure.” Depending on the amount in question, this approach settles cases, particularly following discussion of how closure might improve the quality of their lives. “What would it be like if this lawsuit were over, and you could get on with your business/life?”
Paying Both Halves of the Mediator Fee
Mediation can be expensive. Fees can run into the thousands of dollars even where the parties have agreed to split the cost. In mediating employment cases, the employer will sometimes agree to pay both halves of the mediator fee, often just enough to close the gap between a deal and no deal. Payment of mediator fees frequently comes out of a litigation budget, not an operations budget, so decision-makers and settlement criteria may differ. Management representatives often expect to close the case this way. It comes as no surprise when asked. In commercial litigation, there is no such expectation. A request to pay both halves is not taken well.
Charitable Contributions
Sometimes the parties get close only to dig in, unwilling to pay/accept even one more dollar. Mediator Orit Asnin in Israel, finds parties may be persuaded to close a deal by making a contribution to a charitable entity.
Conclusion
Closing techniques come in handy at the end of a long, tough day of bargaining when everyone is tired and grumpy. The more techniques available, the greater the likelihood a path can be found to an acceptable resolution.
This is my last regular column. It has been my pleasure providing these columns. Thanks for your support and interest; and thanks for your friendship and collegiality.
About the Author
Sheldon J. Stark offers mediation, arbitration case evaluation and neutral third party investigative services. He is a Distinguished Fellow of the National Academy of Distinguished Neutrals, a Distinguished Fellow with the International Academy of Mediators and an Employment Law Panelist for the American Arbitration Association. He is also a member of the Professional Resolution Experts of Michigan (PREMi). He is past Chair of the council of the Alternative Dispute Resolution Section of the State Bar and formerly chaired the Skills Action Team. Mr. Stark was a distinguished visiting professor at the University of Detroit Mercy School of Law from August 2010 through May 2012, when he stepped down to focus on his ADR practice. Previously, he was employed by ICLE. During that time, the courses department earned six of the Association for Continuing Legal Education’s Best Awards for Programs. He remains one of three trainers in ICLE’s award-winning 40-hour, hands-on civil mediation training. Before joining ICLE, Mr. Stark was a partner in the law firm of Stark and Gordon from 1977 to 1999, specializing in employment discrimination, wrongful discharge, civil rights, business litigation, and personal injury work. He is a former chairperson of numerous organizations, including the Labor and Employment Law Section of the State Bar of Michigan, the Employment Law and Intentional Tort Subcommittee of the Michigan Supreme Court Model Civil Jury Instruction Committee, the Fund for Equal Justice, and the Employment Law Section of the Association of Trial Lawyers of America, now the American Association for Justice. He is also a former co-chairperson of the Lawyers Committee of the American Civil Liberties Union of Michigan. In addition, Mr. Stark is chairperson of Attorney Discipline Panel #1 in Livingston County and a former hearing referee with the Michigan Department of Civil Rights. He was a faculty member of the Trial Advocacy Skills Workshop at Harvard Law School from 1988 to 2010 and was listed in “The Best Lawyers in America” from 1987 until he left the practice of law in 2000. Mr. Stark received the ACLU’s Bernard Gottfried Bill of Rights Day Award in 1999, the Distinguished Service Award from the Labor and Employment Law Section of the State Bar of Michigan in 2009, and the Michael Franck Award from the Representative Assembly of the State Bar of Michigan in 2010. In 2015, he received the George Bashara, Jr. Award for Exemplary Service from the ADR Section of the State Bar. He has been listed in “dbusiness Magazine” as a Top Lawyer in ADR for 2012, 2013, 2015, 2016, 2017, 2018, 2019 and 2020.