By: Laura A. Kaster & Michael Leech, IAM Distinguished Fellow
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Posted:  October 14, 2015

Most commercial disputes will be settled and not tried. Expert expense and internal distraction increase in direct proportion to the time spent litigating prior to settlement. Clients are asking “Why can’t the dispute be resolved earlier to reduce the process expense and business disruption?” But one party’s counsel has a limited ability to make it happen sooner.

Early dispute resolution can be best obtained by using a multi-phase mediation process called “Guided Choice.” It relies on substantial confidential pre-negotiation investigation and process design activity by a mediator trained in this approach. It differs from the single day mediation lawyers think of.

Phase I. Choosing a Guided Choice Mediator

Even if the parties have signed a pre-dispute agreement providing for early mediation or have been ordered by a judge to early mediation, this does not mean that the parties have committed to a full settlement process. They may strategically view it as an opportunity to assess the adversary’s appetite for litigation, gather some information and otherwise simply “check the box” on the way to the courthouse or arbitration service.

So step one is to agree to talk to a potential mediator whose initial assignment is to (i) convince any reluctant parties that it is in their best interest to start the process with a confidential investigation, and (ii) recommend a settlement process that begins negotiations only when the parties are actually ready. If there is resistance to this initial phase, it can be pointed out that one or more parties may be unwilling to make significant concessions until they have a better understanding of what the evidence and legal arguments will be. The Guided Choice process allows parties to advance their understanding of the merits of the dispute, so that if it does not resolve immediately, meaningful progress will still have been made. The mediator and the parties may also set a budget and schedule for the next diagnostic phase to allay cost concerns.

Phase II. Diagnostic

With everyone on board, confidential interviews by the mediator of people who understand the settlement impediments are the starting pointTelephone interviews of lawyers and any claims reps are followed by meetings with, or at least telephone interviews of, the corporate constituents affected by and charged with resolving the dispute. In-house counsel is usually central to these internal conversations. The diagnosis includes the identified legal and factual issues, business circumstances, corporate strategies and the individual interests that will impact resolution. It seeks to understand the factors that might change positions on both sides.

Phase III. Process Design

The mediator diagnoses the impediments and develops suggestions for a settlement process that can get people ready to evaluate the issues and make assessments that could change case valuations or settlement positions. Internal investigation and an efficient exchange of information may be necessary for settlement. Only information important to making settlement decisions need be exchanged, which should dramatically reduce the discovery costs. If there is distrust, the information exchange can be conducted in a way that allows for accountability if parties are not forthcoming or candid.

Process design should also include an exercise involving “What-If Scenario” planning. Very early negotiations increase the probability that some impasse will be encountered along the way. Therefore, the parties should be prepared for roadblocks and those roadblocks should not end the process. It is much easier to discuss the next process stages before the roadblock or impasse appears. A period of impasse may even be an important step towards resolution.

Phase IV. Negotiation

The negotiation may or may not include plenary or joint sessions, video/telephone discussions, and separate or caucus sessions with insurers and other third parties who are important to a settlement. A quick impasse-breaking binding arbitration of specific issues can be an element built into the process.

Phase V. Overcoming Impasse

What happens when impasse occurs? It should never be a reason to terminate the mediated settlement process. Rather, the negotiation should be suspended while impassebreaking strategies are pursued. These include seeking outside opinions from judges, arbitrators and experts. Bringing in new negotiators or stimulating an internal re-evaluation of the negotiation on one or both sides may occurThe problem may simply be time, or some impending event, or a decision by a party that is not part of the process. The point is to view a moment of impasse as only a moment, exploring the underlying causes and addressing them, rather than giving up on the process.

This post summarizes a longer article by Laura Kaster and Michael Leech published in the June-September 2015 edition of Corporate Disputes magazine. The full article may be found at: