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Personal Injury Mediation: Success for the Defense? Get Your Real Money on the Table Early.

November 17, 2016

Defense Secret:  At mediation, the Defense “knows” exactly what they intend to pay, that day, and how.   They are risk evaluation specialists, are almost always better prepared for mediation than their claimant-opponents and usually possess and have considered more information about the claim than the Plaintiff/Claimant’s side.

And, (rightly or wrongly) they care little about their opposing Claimant’s initial demand, their subsequent negotiation positions, their pace in negotiation or even their purported “final offer”.

Defense mystery:  If the above is so, just why does the Defense so frequently take such a tortious route to put their really best offer on the table?  (If they will!)

Last month, I identified the most repetitive mediation negotiation error of the Claimant:  Excessive initial “demands”.  See, “Mediation Negotiation:  Want a Home Run?  First, Find the Ballpark”, October 27, 2016.

This month, I want to identify an equally similar criticism for the Defense:  Protracted impossible-to-accept offers that injure negotiation before it can even begin.

Too many of today’s mediation defense negotiators are “old school”.  They live in the past.  i.e., Because a favorite negotiation tactic (i.e.  “wear ’em down”) worked for them “for years”, it will always work.  Because they have the most money and lots of other cases to spread their company’s risks they can  negotiate any way they wish in any case they wish.

They are wrong.  Times have changed.  And, if defendants now wish to maximize their mediation opportunities to actually resolve a volume of matters to reduce risk, cost and wasted time at trial, they, too, will have to change their dated methods of negotiation.  I have hinted at this before.  See, “Mediation Negotiation:  Increase Your Pace For Greater Success”, March 10, 2016 and “The ‘Principled’ Demand or Counter-Offer:  A Better Method of Negotiation”, June 7, 2016.

Dribbling out unrealistic offers incapable of acceptance for hours before finally arriving late in the day at an offer that “can” be considered no longer works.  Scare tactics and constant trial risk emphasis with each meager offer no longer works.   Claimants no longer fear litigation or even the courtroom. The traditional unequal economic and risk taking ability of large insurance carriers versus an individual claimant is a thing of the past.  Claimants are no longer accepting peanuts and they are not quitting when offered them.

Frankly, they don’t have to.

The claimant’s lawyer is now virtually “free” and even risk-free due to the modern interpretation of the ethics of the contingency fee representation.  Claimant’s lawyers can now almost totally protect their clients from adverse verdicts with insurance.  Their lawyers now fully fund their claimant’s litigation.  And the billboards shout out the significant dollars that are available with these free lawyers and a litigation risk that has no downside; even further in a market glutted with lawyers seeking to represent them, particularly if a claimant is significantly injured.

In short, David can now be just as big as Goliath.  Times have changed.

But the defense still has one distinct advantage:  They still hold the checkbook that can resolve any claim.  And, reasonable money, paid appropriately, can settle ANY case.

“Reasonable money” remains the sole decision of any Defendant.

“Paid Appropriately”, however, is the point of this discussion.  How and when to pay is the domain for the Mediator.  It is time for the defense to remember some old cliché’s that are now again so terribly important to modern personal injury negotiation.

Do you recall:  “A bird in the hand is worth TWO in the bush”?  How about “A stitch in TIME is worth NINE”.  Or, “Strike while the iron is hot”?  Too many “old school” proponents forget these time-honored “lay-people” observations about the time-value of money.

And, the Defense is missing the single most OTHER significant advantage they retain:  their intended negotiation target is the uninformed, novice claimant.  The claimant seeks only “fair and timely” compensation.  They have no other goals and seek no others until they become the latest unwilling pawns in the industry-wide generic struggle between their attorneys and some insurance company.

In simple terms, most personal injury clients have no (and want no) experience in lawyers, litigation, or negotiation and certainly not in the evaluation of their own claims.  However, they do clearly know what “money in hand” is (at that moment) worth to THEM.

And here is where the defense most commonly fails:  they simply wait too long to offer to pay a valid claim “fairly”.

They undoubtedly have their reasons; perhaps a subject for another day.

However, while the defense delays payment of even admitted claims, that initially unsophisticated claimant is now learning.  They are getting to know/trust their lawyer, learning about the process of litigation, obtaining evaluations of their claims (often from the wrong sources) and becoming disgusted with objectively poor negotiation practices.  (Remember: they no longer fear any adverse outcome by trial!)

And, simple anger at being treated “unfairly” raises the stakes and hardens the claimant to continue a process they would normally far prefer to avoid.  And, further delay merely increases the hardening.

Even at mediation, with delays in finally arriving (hopefully) at minimally acceptable offers the time delays alone often lose the attention of the most important advocate for resolution in the “other room”: the claimant!

In the United States, consumers either pay the asking price or they simply pass.  No one “negotiates” for a hamburger, new  shoes or a dress against the tag price!  And, for certain, no one would even consider offering pennies for it.  Other than for automobiles the average American consumer has never negotiated for anything in their life!

Thus, such lay-consumers find the process of others making offers to them for their personal injury that are patently ridiculous, i.e. less than their (reasonable) medical bills incurred, as simply insulting.  And, lay people do not take insults well.

It may be acceptable to “insult” a seasoned lawyer with a low-ball offer; it is a huge mistake to take the same approach to an unsophisticated (and injured) claimant.

Again, I suggest that the best way to use that unsophisticated claimant to the best advantage is to use strong early and “fair” offers to get the interest of the claimant (over the objections of even their attorney), and by continuing such “fairness” to actually turn the claimant to your position.

As soon as any offer, after attorneys fees and repayable costs, actually places money to be gained to the SOLE choice to the claimant, the defense begins to obtain the edge.  And, the longer the claimant has to consider just how ‘their’ portion of each offer might be spent, today, for something better (and less stressful) than litigation, the stronger that edge-advantage becomes.

Conversely, the less the time to consider a “finally possible” offer and the more insulting the day, the less effect, even a fair offer, has.

I realize there are many existing arguments about a slower pace to defense offers.  But, I submit they are rapidly losing favor and likely only realistically still possible due to increasing skills of mediators to keep people engaged.  If you want to test my premise, try sending a similar initial offer by mail!

I do not doubt, also, that occasionally, ridiculous offers and tactics succeed.  Unfortunately, such matters are usually the result of uninformed counsel, or desperate claimants; and many result in further litigation over such matters.

However, ask any mediator:  early, significant and fair offers, more frequently arrive at resolution at mediation than any other single contributing tactic.

And, it is only the Defense, this time, that can use this invaluable negotiation advantage.

Now, will they?

Dan, from Clearwater, Florida

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