Skip to content

Proposal For Settlement and Mediation: Part IV: Mediating with an Expired Proposal for Settlement

July 24, 2015

Successful negotiation, including where to begin your mediation negotiation, always requires advance planning, including close consideration for the history, if any, of all prior negotiation* (see below).

However, negotiating with a known special circumstance requires special advance planning on how to begin.  One example of such a special circumstance:  Policy limits in  insurance litigation.  See, “Negotiating ‘Policy Limits’ Matters in Personal Injury Mediation”, June 4, 2015.

Another very similar example of a special circumstance for which to also consider and pre-plan for where (and why) to begin your initial round of negotiation:  An expired Proposal for Settlement.

You know my fondness of the value of the proposal for settlement tool (also referred to in Florida, previously, and in other jurisdictions as an offer of judgment) for litigators and negotiators, of both sides, and particularly in the context of mediation success.  See, “Proposal for Settlement and Mediation: Part I: Negotiation and Timing Goals”, February 20, 2012; “Part II: More Tactical Suggestions”, February 28, 2012; “Part III:  Mediating with an Unexpired Proposal For Settlement”, March 5, 2012.

The reality of your prior tactical use of this tool, and then its expiration, before mediation, is that you, practically, now have only three options of how to begin at mediation:

Begin your negotiations at the lowest of:  1)  your true likely net-verdict outcome if your mediation fails, or  2) at 125% of your last monetary proposal, assuming substantial time and some tangible and excusable monetary change since the proposal or, 3) at your last monetary proposal, if it only recently expired.

Here is why.  Unless you honestly believe your opposition is not paying as much attention as you, your worthy opponent will have every right to “know” that before you sent your client’s lowest proposal of settlement to them, you clearly had your client’s permission, that if accepted, that proposal would have totally resolved the dispute at that time.

Therefore, why would anyone pay more/accept less than an amount previously “proven” would totally resolve the case?

Only if a significant, economic change has occurred since the proposal!

Examples of potentially valid reasons for change, “since that time”, can include substantial additional out-of-pocket costs, significant additional attorneys fees (if that kind of case), additional damage, i.e., additional medical care (if that kind of case), substantial change in admissible evidence, a critical and unexpected legal ruling by the Court, or even the unexpected collapse of an opponent’s key expert.

But, then again, how many were already considered in your expired proposal for settlement?

Notice we are talking PRACTICAL here.

Accordingly, unless you can clearly objectively prove a valid reason, since that time, to increase (or decrease) your opening position at mediation from your lowest proposal for settlement, you are simply wasting time.

Feel free to begin your own negotiations any place you wish.  After all it is your case, your client and your mediator is being paid by the hour.

But here are the facts.

Probably 90% of most proposals for settlement are relatively late in the litigation process (even post-mediation) for any number of valid reasons.  Accordingly,  since most “valid change” must be significant and over time, such late proposals will almost always require beginning additional negotiations at choice “number 3”.

And, when in doubt, choice “number three” will almost always be a safe start for any number of complex reasons, including this discussion.

However, if ANY prior proposal for settlement did not first involve a fair evaluation of the ultimate verdict obtainable, than “choice 1” will always be your best choice of beginning any negotiation.  Every attorney must assume that their opponent attorney also “knows”, with some bias, this likely ultimate verdict outcome. I test this mutual evaluation premise at every mediation.  And, the more experienced the opposition, the more credibility your opposition’s opinion deserves.

But, what about truly “early” proposals for settlement?  Many excellent lawyers use a truly “early” proposal for settlement for any number of valid reasons.  Including some I have suggested before.

And, if early proposals for settlement did include a reasonable “probable verdict test” AND the mandatory “discount” of that fair value, by the 75% required to utilize the intent of Florida’s proposal for settlement rules, than choice “number 2” can be fairly made.  Beginning at 125% (+ or -) of the early, and now expired, proposal, essentially merely begins the negotiations only at the original “verdict value” of the case.

Discounts that then must follow in incremental negotiation then reflect only the potential for error in the prediction and the practicalities of time, money and uncertainty that drive all negotiation.

And, with these truly early proposals, with the expiration of time, the opponent who did NOT accept the truly early proposal, is already “proven” the bargain, at the passed-up original verdict value, by the time and monies BOTH sides have had to expend for their now full knowledge of the bargain passed.

(Note:  It is a “mistake”, however, to try to ADD/SUBTRACT these expended (“wasted”?) monies to/from the presumed future verdict beginning position;  the probable verdict start is already your likely best outcome, and, as such, the opposing party would be justified in feeling punished for you to ask for reimbursement simply for their fair legal discovery.)

That is not to say, however, that AFTER beginning the complete negotiation process, that these additional factors cannot play a role in the amount of concession that one or both sides must surrender as the negotiation process moves, hopefully, to a successful conclusion.  One of the benefits of both sides BEGINNING fairly, is that the incremental moves simply can be much smaller, and quicker, as both sides move to that firm point in which one side or the other believes their TOTAL upside at trial is superior to the final position proffered by their opponent.

As before, I believe the intent of fair usage of the proposal for settlement is to narrow the range of negotiation.  In so doing, it also greatly enhances your chance of  a complete resolution.  Even if your proposal (and resolution) comes only AFTER mediation (but because of your mediation effort).

But, it is how you BEGIN mediation that often determines how your mediation ends.

Thus, I offer these humble suggestions on how to begin your mediation negotiations in the special circumstance of a previously served, but now expired, proposal for settlement under Florida law.

Try it.  I think you will find it pays to know how to begin your mediation.

You gain credibility.  And, at the least, you will save yourself time, money and unnecessary mediation stress.

Dan, from Ft. Benning, Georgia and Houlton, Maine.

*Note:  ALL negotiation.  Formal or informal.  (And, verbal, always included!)  (It is a good habit, following every “off the record” conversation with your opponent, to make a written note of any “dollars” mentioned by either side in any context;  trust me, your opponent is recording it, and he/she will have long-ago forwarded your informal discussion on to their client.)

No comments yet

What Do You Think? Your Insight Can Be Helpful To Others.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: