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Personal Injury Mediation: Relax! Not Every Case Can Be Resolved in Mediation.

February 12, 2013

Mediators hate to admit it, but there are matters which simply do not lend themselves to mediation resolution despite the very best intentions and efforts of all of the participants.  Knowing the “tells’ of such matters may allow you less stress about possible failure with those cases while re-affirming the qualities of those which should resolve.

A look at mediation in the personal injury field, for example, can be instructive on such potentially “unresolvables”.

I do not intend this article to serve as a crutch for poor preparation or effort on any other case, but knowing that some matters simply may have insurmountable roadblocks, and why, can be a part of your learning process toward more success in mediation.

In the personal injury field of dispute , as a beginning, beware of severe liability issues that simply, the majority of the time, will more-than-likely result in a defense verdict.  Most defendants, usually insured, also know that low risk of loss by verdict and are also loathe to resolve any case for which they believe they have absolutely no liability.

Another issue of concern should be in consideration of issues leading to substantial comparative negligence.  Although such cases often result in a verdict for a claimant, although reduced, the defense considers such a defense as to substantially decrease their “up-side” exposure.  The defense rarely fears a loss (particularly where they have accounted for it in their analysis), what they wish to avoid is the “upside” verdict outside of their analysis.  This up-side issue is, ultimately, what allows many personal injury cases to resolve, where liquidated damage cases could never be resolved.

A further “culprit” is the issue of fraud.  Any hint, smell, or even inference, may become a killer.  The defense already is biased against any claim.  And the less culpability they perceive, the harder they resolve to defend, even without consideration of cost.  “Over-reaching” is bad enough. But, fraud?  This is the “holy grail” for most insurance professionals.  And, of course, their counsel are not far behind.

And, yet, we know that some such cases still resolve.

Why?  Because the claimant sometimes can resolve the case for an offer from a defendant that can be made often because it is less than defense costs and risk-value to obtain a defense verdict!  This is thus deemed the “business decision” by that defendant and that claimant that is the usual basis for many such resolutions.

Notice, however, the “cans”.  The final resolution amount must be low enough for the defendant to justify the payment, BUT high enough that after attorneys fees, costs of litigation, and payment of liens, still allows “something” for the claimant to accept.

This second can, the “Plaintiff-Can”, is increasingly critical because one of the issues arising from today’s repetitive advertising of the availability of a “free” lawyer (and the contingency fee, in general) is that many claimants will opt for trial because they may believe they have nothing to lose and, in their mind, much to gain, at trial versus obtaining less than what they “want”.  And whether it is unrealistic expectations or “lottery mentality” by some claimants, few attorneys can resolve a case unless their client obtains some money. (One of the other realities of the advertising age of personal injury practice is the all-too-common fear by attorneys to fairly down-play their own clients expectations, “because the ‘other guy” won’t.”)

Accordingly, if by the time of mediation, the defense has already expended more (or, with any new offer would expend more) than their cost of obtaining that defense verdict,  you have just learned, the hard way, of one of the most common reasons for mediation failure:  cases with too much litigation time and cost expended before mediation (in a poor liability case).  In short, there is nothing left to allow the defense to make any offer to the claimant that has any chance of success.  (Except, of course, for those wise attorneys who have prepared their clients to cut their loses and quit a clearly losing case; a rare phenomena these days.)

But, realistically, the other issue regarding “unresolvables” really involve the extent and clarity of claimant’s total damages.

In short, damages are like a bell curve.  If your total damages sought by the claimant are too low, you may well have to try your case for that reason alone: there is no upside to the risk to any defense.  As your damages rise higher, the likelihood of your success in mediation and negotiation increases due to this increasing upside risk and cost to the defense.

However, strangely, at least in those cases of contested liability (or fraud). the same bell curve of damages can present formidable resolution problems as the total damages sought then rise higher and higher!

In short, in that “tough” liability case, the claimant has so little to gain from a no-recovery resolution and so much to gain by trial, that trial becomes inevitable, for all!  !  I refer to this as the ‘reverse business decision” of the Plaintiff!

It is a catch 22.  The defense “caps out” at what they believe is “more” than enough for their “business decision” because they believe they will really win and any more monies paid is too much.  However, even that final “generous” offer by the defense (meaning it usually would have been enough to consider as opposed to losing) now is no longer enough for the claimant  simply due to the math of the present versus the math of the future.  The upside to the plaintiff by verdict now becomes too much to consider any comparable resolution that simply avoids the risk of the verdict .

What math?  The math of mediation.  In other words, after fees and costs, there is simply not enough monies remaining to ALLOW the plaintiff to settle because he/she/they cannot pay their past or future medical bills!  Or, their loss of earnings, or their pain and suffering or, etc.

This is a real quandary for any mediator.  In this situation, both sides are actually right in their own positions.  More money, for the “risk” of that low-risk, low-value claim by the defense is simply unreasonable.  However, refusing the inadequate offer is equally reasonable for the Plaintiff as he/she may be no worse off by losing a trial.  Perhaps, by the way, not so for either counsel who must try a case one is sure to lose, but certainly for their clients.

And, clearly one side or the other will ultimately wish they had resolved the matter.  But, they simply “couldn’t”.  Trial was just not avoidable.

In summary, beware of the realities of what can be achieved in mediation with really tough liability cases with big damages.  These cases have a very poor prognosis for successful resolution.  They are great for your trials required for your certification, but may be tough on your wallet.  However, they are also why we have trial lawyers.

So, relax.  Not every case can be resolved by negotiation or even mediation.  Just try to know the differences between those which can and those which likely cannot.  You will be glad you did.

Dan, from Winter Park, Florida

One Comment leave one →
  1. February 13, 2013 4:11 pm

    Although I agree with your analysis, I would not consider mediation a failure in this situation. Both parties will understand their own and the other side’s business, or economic, situation at the point of “no agreement.” This will surely impact the counsels’ trial strategy and will likely lead to less costly litigation. I believe that using mediation to remove the fog of fuzzy thinking by one or more of the parties and counsel is money well spent, even if there is “no agreement.” To me, this is NOT failure.

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