Getting Past Impasse with Mediator Settlement Recommendations

By: Mitchell Rose,* IAM Fellow Email: mrose@sgrllp.com I conduct mediations in the Province of Ontario, Canada, including employment law, commercial matters, personal injury and real estate. The majority of my mediations take place after the commencement of legal proceedings, and involve parties represented by lawyers. In many cases, examinations for discovery have taken place – but a judicial Pre-trial usually has not. Often, there is a summary judgment motion scheduled to take place in the months following mediation. It is unusual for more than one mediation session to be held in these actions, and many of them are scheduled by counsel for less than a full day. Accordingly, the stakes are high for all participants. Reaching the end of a mediation session and learning that the two sides are far apart in their settlement positions can be disappointing due to the risk and costs that will soon follow as the case heads speedily towards a hearing. Without further intervention (like a Pre-trial judge) or the threat of court feeling more “real” (because trial is close), the parties may not be prepared to bridge the gap. Thus, in the weeks following mediation, after the “dust settles,” I usually follow up with the lawyers. I want to see if hard positions have softened, or if there is another way of resolving the dispute. However, despite everyone’s best efforts, there may still be an impasse. In a final attempt to resolve the dispute – whether at the end of mediation or at some later point – one or more of the lawyers often ask me to recommend (or to propose) settlement terms to all sides in the hope of reaching a deal. In fact, I may even be asked much earlier in the process: “What do you think we should do?” As a mediator who blends interests-based and evaluative approaches, depending on the circumstances and the participants, I will often, but not always, make settlement recommendations to break an impasse. I like to refer to my personal approach to settlement recommendations as “No One Gets Hurt.” Here’s how it works:

1. It’s preferable if the parties settle their own case without a mediator recommendation. However, a mediator recommendation is useful as a last resort to break an impasse. I prefer that it take place in the weeks following the mediation when it is clear that a settlement cannot be reached without this type of mediator intervention, although I may also use this approach, in person, at the end of a mediation session.
2. It’s ideal if one or both sides request a recommendation, but if no one asks, and I think it will be helpful, I will usually offer to make a recommendation.
3. I prefer to make a written recommendation covering the terms of the proposed settlement. I normally send counsel the recommendation by email with an expiry date.
4. Both sides must agree to hear (or read) my recommendation before it is given so that I can be certain it is conveyed to the decision-maker. This is necessary where the recommendation takes place after mediation when I am normally just speaking with counsel. I ask counsel to email me their agreement to my recommendation rules prior to sending them the actual recommendation.
5. The recommendation is privileged, so it cannot be revealed to anyone, especially the Court (including the Pre-trial judge). My recommendation is an extension of the mediation, and governed by the mediation agreement (which provides for such an extension upon consent).
6. I will not provide explanations or reasons for my recommendation. I don’t want to argue with counsel, and I am not writing an arbitral award.
7. The parties are asked to respond to my recommendation privately (separately) and confidentially. Each side will know if the other side(s) accepted the recommendation only if all sides accept it. There is no settlement unless both (all) sides agree to the actual recommendation. If just one side says “yes” to the mediator privately, the “no” side(s) will not learn about it. Everyone would simply be advised that there’s “no deal.” Thus, “no one gets hurt.” (This is based on the “double blind” technique from IAM Distinguished Fellow Allan J. Stitt’s wonderful book Mediating Commercial Disputes.)
8. Most of the recommendations I make are accepted, resulting in a full settlement. Normally, my recommendation (whether accepted or not) marks the end of my role as mediator in a case. I won’t try to convince uninterested participants to accept my proposal. However, I sometimes ask, confidentially, what part(s) of my proposal a party would accept and if I can convey that information to the other side. This can still lead to a resolution. The rejected recommendation may also prove useful in future negotiations.

When making mediator recommendations, I am generally guided by the following principles:

a)      My goal is to make a recommendation that, based on everything I have seen and heard during the    mediation, has a good chance of being accepted by both (all) sides.

b)      I avoid recommending one side’s last offer to avoid appearing to take sides. Moreover, that offer didn’t work the first time. On the other hand, I avoid simply “splitting the difference” whenever possible.

c)      I get creative if it will help the cause of settlement. Once I suggested that an employer pay part of the settlement monies sought by the former employee — who sued for wrongful dismissal — as a donation to a hospital that had cared for the employee’s sick child. The employee had not suggested the donation, but during the mediation she expressed to me how stressful it was to have a sick child during events at issue in the case. She appreciated the idea of the donation and it bridged the gap, while the employer’s representative felt like a good corporate citizen, agreeing to a payment that would not be made directly to the employee for legal reasons.

d)      I avoid recommending that one side pay my entire mediator fee (assuming the parties had planned to divide it), unless during the negotiations that party had already offered to do so.

e)      I make sure to deal in some fashion with every key issue raised during the mediation, using as few terms as possible. The more terms there are, the more likely one side will say “no” to the entire proposal.

f)       In the interests of simplicity and cost-savings, I believe it’s appropriate to explicitly leave some non-contentious issues for the parties or their counsel to work out later, assuming they agree to the rest of the arrangement.

g)      Lastly, I recommend that if, after settlement, there are issues concerning interpretation and implementation, that the parties agree to mediate these issues with me prior to seeking court intervention.

Using this approach, “no one gets hurt” because it preserves party autonomy and bargaining power by ensuring that any party that says “no” to a recommendation will not learn if the other side said “yes.” Thus, agreeing will not create a starting point for future negotiations and parties have nothing or little to risk by inviting a mediator recommendation. At the same time, a mediator recommendation maximizes the chances of settlement and avoids the excess risk, cost and time of legal proceedings leading to a binding third party decision. * Chartered Mediator, Settlement Counsel and Partner with Stancer, Gossin, Rose LLP / ADR@SGR, Toronto, Ontario, Canada. A version of this article appeared in ADR Perspectives on February 22, 2018. © 2018 Mitch Rose Please note that each IAM Blog posting represents the view of its individual author, but not necessarily others associated with IAM. IAM Blog Editor-in-Chief Keith L. Seat may be contacted at kseat@keithseat.com