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Mediating/Negotiating With A “Sovereign Defendant”: Six Differences

June 26, 2014

All negotiation is a challenge, even when the playing field is totally level.  Simple differences of opinions by others upon the same fact and law, and thus settlement “value” to bargain upon, make it so.

However, negotiation, and thus, mediation, with any defendant who enjoys the protections of Florida’s Sovereign Immunity Statute, presents additional negotiation, and thus mediation, issues, legal and practical, not presented by defendants who are not so-protected.

In past postings, I have questioned the very future, including in mediation, of valid claims impacted by these protections.  See, Sovereign Immunity and Mediation, May 29, 2013.

However, such claims do (and will) continue and such claims are also almost always referred to mediation.  Thus, knowing these issue-challenges-differences in how to approach such a mediation negotiation, at the least, will reduce the frustration of those with negotiation and mediation in claims involving sovereign defendants.

There at at least six major differences between mediating and negotiating claims involving sovereign defendants compared to all other defendants.

The first major difference is that the “value” of the claim (the future judgment potential)  is only marginally relevant to the negotiation.

This difference is totally contrary to the most important commandment of ANY negotiation: knowing the future verdict/judgment potential.  See, Rule One: Know Your Alternative(s) Should Mediation Be Unsuccessfull, December 19, 2010.

Under Florida’s Sovereign present Immunity law, regardless of the amount of any (presently) future verdict against such a defendant, ultimately that Sovereign Defendant will “more likely than not” never be exposed to a judgment of  (and thus payment of) over a maximum of $200,000 per person, $300,000 total per incident, inclusive of the claim-value and any applicable costs, including all claims of attorneys fees, and even interest. See, Section 768.28, Florida Statutes; effective October 1, 2011)

Because future verdict/judgment value is now only marginally relevant, similar to (most) policy limits issue matters*, representatives of the Sovereign Defendant, mentally “begin” their consideration of EVERY claim knowing is has a MAXIMUM JUDGMENT VALUE of $200,000.00!**  (*Even the “Bad Faith” tactics that aid claimants facing policy limits on claims clearly in excess of such limits, are irrelevant.  See below.)

(**Note:  I leave the arguably always-available route of seeking a Legislative Claim Bill, i.e., payment of moneys in excess of the statutory limits “voluntarily” directed by the government to itself, for another day.  Suffice it to say, such bills are extremely difficult to actually attain.)

The second difference is that no sovereign defendant is ever practically concerned with any “excess” verdict/judgment potential for the same “total protection” reasoning.

With sovereign defendants, even those who HAVE private insurance, because no judgement may be actually entered against any governmental entity for greater than the then-existing cap, again, there is not even the possible threat of such an excess “judgment”.

*Any attorney regularly negotiating with all other defendants whose protection comes from private insurance, knows well the negotiation value of the threat to any defendant of a judgment that might have to be paid from the defendant’s assets as opposed to a third-party insurance company and its effect upon policy limit demands.

For similar reasoning, most proposals for settlement ALSO do not apply!  If your judgment is so severely limited, so is your potential use of the intended benefits of a fair proposal for settlement.

In reality, however, most sovereign defendants DO carry private insurance including for claims in excess of their sovereign limits.  (Likely quite a premium bargain due to these same restrictions!)  However, rarely are they asked to pay.

Plus, any actual threat by a Claims Bill would be conveniently covered by such private coverage, assuming those policies terms were followed.

However, even worse, most Sovereign Defendants’ ultimate “decision-makers” are actually also politicians!  Translated:  Some such “decision-makers”, more concerned about their appearing “soft” often view their decision to “spend the government’s money” as much easier if it is “the will of the people; i e., only by a judge/jury verdict!

The third difference is that because of the first two differences, resolution by negotiation, and even mediation, is always approached solely by just how large a discount can be voluntarily obtained BELOW the $200,000 (or $300,000 for multiple claims) to even bother “obtaining permission” of the governmental body to permit the voluntary payment WITHOUT a trial.

Attorneys and applicable insurance representatives of these governmental decision-makers know, by history, that unless a great argument can be made that a voluntary settlement will, clearly, save a great deal of money to the sovereign entity, they are wasting their time in even asking.

i,e., In a claim that clearly should arrive at a verdict in excess of the sovereign’s limits, as a starting point, likely you are facing an initial practical cap of about 50% of the applicable legal cap on damages.  If the matter is “aggravated” or politically attention-getting, likely you will still never get much above about 75% of the legal cap, prior to trial. (And, during trial, at most you will be given the offer of the limits; often solely to prove good faith to the public!)

It should thus go without saying that if liability is at ALL an issue, even greater “final” discounts off of the caps (not the claim value) are to be expected as normal.  (And, be prepared to try your case is morality or principle is involved.)

And, if your claim is not of a “limits-type”, only the practical defense cost-plus risk-considerations will likely rule.  (Actually, these “small” cases are thankfully much more normal to those of private insurance negotiations.  But, they are also much less likely to exist!)

The fourth difference is, of course, the usual consideration of the practical cost to defend versus settle is also often politically compromised.

Although monies spent for defense of sovereign claims, i.e., costs and attorneys fees, ARE NOT CAPPED, rather than simply pay the limits on those cases clearly with value AND potential defense costs in excess of $200,000, oftentimes the decision-makers will STILL demand either a substantial discount or choose to try the matter.

Too many times, “issue two” controls “issue-four”; or, when in doubt, decision-makers often state it is  better “the people” spend their own money than the “servants of the people”.  Translated:  Spending the “people’s money” voluntarily can be seen as ‘soft”.  While aggressively defending and THEN paying the people’s money for the people’s will” is acceptable!

The fifth difference is that even if the representatives of the parties can themselves agree upon a resolution, such a mediation “agreement” is never binding upon a governmental defendant until “official action” approves the matter.

Governmental matters generally require a governing body’s approval.

Thus, even if “executive action” at mediation obtains a tentative agreement, any “Mediation Settlement Agreement” will almost always require that the agreement “be subject to (Board, etc.) approval”.

This “non-binding” nature of the usual “binding” mediation settlement agreement can become such an issue to those not knowledgeable about the issue as to even prevent some resolutions from getting started.

The sixth difference is that such matters are much more difficult to retain their ultimate confidentiality.

In Florida, almost all governmental matters are always open to public review, even by the media.

Even though negotiations and authority to resolve may be conducted in “executive session”, it must be understood by all, that ultimately, any voluntary resolution will always be subject to Florida’s Government in the Sunshine laws; i.e., public scrutiny.

In summary, six significant differences that simply must be known and considered BEFORE your next mediation with a Sovereign.

The good news is that with informed mediation participants each of these “differences” can be successfully navigated.  However, it begins with claimant’s representatives becoming knowledgeable about, at the least, these “differences”.

More importantly, it requires the full education of any claimant to these differences.  Mediation is hard enough for lay people.  Governmental claims require some advance client-preparation.

Similar to many of my other educational blog-postings, this early outline is intended to allow those who wish to mediate with more success, a quick inside look at the differences of negotiation and mediating with any Sovereign Defendant.

Before your next Sovereign mediation, take the time to review these tips.

Dan, from Clermont, Florida.

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