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THIS CASE IS GOING TO SETTLE:
A Guide to Negotiating Matthew McCusker, SheldonSinrich Trial Consultants “The fellow who says he’ll meet you halfway, usually thinks he is standing on the dividing line.” – Orlando Batista
Introduction: Welcome to the Mediation Millennium When young trial attorneys first enter law school, they arrive with dreams of being charismatic lawyers who stride into the courtroom and mesmerize jurors. These students have spent countless hours honing their skills through pre- pre-law tutorial programs like Boston Legal , The Practice , and Ally McBeal. Some want to be the altruistic plaintiff’s counsel who right wrongs and help the helpless. Others picture themselves as the silver- tongued defense attorney who can manipulate words like a surgeon uses a scalpel. Everyone has a dream.
These fascinating caricatures born from ‘must see TV’ always win and never compromise. Rarely does Hollywood venture into the land of boring negotiations over the phone or extensive preparation for a major arbitration. For some reason, the mediated settlement agreement has considerably less sex appeal than a hushed courtroom listening to a verdict being read: “We the jury, find in favor of... .” As we all know, the truth is far from John Grisham’s latest novel. The ABA estimates that fewer than 2% of federal cases filed and less than 16% of state court cases filed
are actually going to trial. 1 While a portion of these cases are dismissed, the fact is that settlements are the chief outcome. This has not been a sudden change, but a steady decline in the proportion of jury verdicts over the past 40 years. Interestingly, the field of civil litigation has been surprisingly slow to react and to adjust tactics in the face of this new definition of victory. People do not like change. People like predictability and doing things as they have always been done. Attorneys are no different. In 2009, most civil cases are very likely to end well before a trial date is ever set. Imagine a sport that has an 84 to 98 percent chance that every game would end at half time. Would you coach your players as if the full game was likely to be played? Probably not. Even though the practice of law has transformed and there is a new definition of winning, the old preparation methods remain the same. Attorneys’ tactics have not
(^1) Marc Galanter, The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts (2004) American Bar Association.
significantly altered with the arrival of the mediation millennium. This is a mistake. As Charles Darwin said, “ It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change .”
What’s the point if the case will settle? Why has there been so little change? Many practicing attorneys will say, ‘Why spend time, money, and energy if the case is going to settle?’ Those with this attitude tend to speak about a settlement amount like an agreement that has already been predetermined but has not yet been uncovered. This creates a vision of a stone on which has been carved a dollar value that will somehow be revealed on mediation day. Settlements are not preordained; they are negotiated. This could be through mediation, arbitration or even simple conversations between attorneys. Much like a trial, the case with the strongest presentation will have the most power in a negotiation. As a
new problems within the case. At worst, a witness may give damaging testimony or disclose problematic facts that seriously impede a successful settlement agreement. At best, an unprepared witness may seem nervous and unconvincing. This can create a sense of false confidence in the opposing counsel.
- Even if the witness gives an adequate deposition, an opportunity has been lost. Well-prepared witnesses are intimidating to the other side and suggest both a strong case and a skilled opposing counsel. As a result, settlement negotiations will likely be influenced when the other side meets to discuss each side’s relative case strengths.
Case Strategy Telling a powerful story is crucial to any negotiation. Not only must the story convince the mediator
or arbitrator of the case’s strength, but it must undermine the other side’s rebuttals. Effective stories take time and effort. As Emerson said, “ Put the argument into a concrete shape, into an image, some hard phrase, round and solid as a ball, which they can see, and handle, and carry home with them, and the cause is half won.” Often, attorneys do not commit the necessary time to create an effective story until the case has moved to the trial phase. As a result, the negotiations are based on a simple exchange of random helpful facts and arguments that are thrown back and forth across a table. This does not present a cohesive story or a powerful case. Instead, it is most effective to enter the negotiation with a powerful case strategy that will catch an opponent off-guard. While many attorneys worry about showing their hand at mediation, there is a greater than 84% chance that this may be the only opportunity to ever play the cards.
Focus Groups and Mock Trials A focus group or mock trial provides a test scenario that will help refine the storyline and determine what evidence is most powerful. It will also arm an attorney with data to bring to the negotiation. In the case of mediation, lawyers have the option of revealing focus group or mock trial results to the mediator alone, or showing the results to the other side. Assuming that the outcome was positive, a focus group can be helpful by casting doubt on an opponent’s predictions of likely victory. Additionally, a mock trial of substantial size can be helpful in understanding the potential value of your case. While there is no guarantee that the results of pre-trial research will mirror an actual jury verdict, it will still produce valuable information when analyzing case values. It may provide a picture as to what some of the dollar parameters are and what would be a
fair settlement amount according to jurors in your jurisdiction. Video Presentation A growing trend in the field of mediation preparation has been the use of professionally created video presentations. We live in a television age that has predisposed us to being moved by potent visuals accompanied by effective soundtracks. Whether it is ‘day in the life’ clips or choice statements from focus group participants, video is a powerful medium to use when making arguments on behalf of your client. Often, these videos will be interlaced with strong PowerPoint presentations that create multi-modal performances. Imagine how the negotiation dynamic shifts when one side enters the room with a high-tech, polished, and well-organized demonstration of their case and the other side simply has a legal pad with several facts written on it. Of added benefit, videos demonstrate a commitment to
of the hard work and preparation has resulted in a very beneficial settlement. However, if this has not occurred, the prepared attorney is poised for trial.
A financial cost benefit analysis The idea of spending such a large amount of time and money on a case prior to mediation will likely cause some lawyers to scoff. Upfront costs prior to the negotiation of a settlement are often viewed as wasted expenditures. Why prepare a witness that will never see trial? Why test opening statements in front of a focus group when they will never be utilized in front of a jury? The answers to these questions (and many more) require attorneys to perform honest evaluations of the costs and potential rewards of their cases. For example, let us assume that an attorney does a little bit of everything that is suggested for preparation. This includes an exploratory focus group, a video presentation and some help with various aspects of preparation and negotiation. While much of this may
be completed through the use of consultants, other portions could be performed by the lawyer. Let’s assume that the total cost ends up in the neighborhood of $30,000. While $30,000 is a large number, think of it in the context of a settlement negotiation. Would witness preparation, case strategy development, an exploratory focus group, a professional video presentation and the presence of a negotiation consultant move a $300,000 settlement to $330,000? Would it move a $1.2 million settlement to $1.1 million? The question is not how much money was wasted prior to mediation, but instead, how far the number has moved as a result of effective preparation?
Conclusion A recent review of 2,054 civil cases by Kiser, Asher, and McShane evaluated the decision making of plaintiff and defense attorneys when choosing whether or not to take a settlement offer. The authors compared settlement offers during negotiations to eventual trial
outcomes. 2 The study corroborated what other research has demonstrated, that parties would often have been better off with the settlement than the trial verdict. 3 The research found that plaintiffs would have fared better when accepting the settlement offer in 61. percent of the cases and defendants would have gained more in 24. percent of the cases. However, even though defendants made the correct decision more often, the magnitude in the dollar values of the defendants’ errors dwarfed that of plaintiffs’ errors. As a function of
(^2) Randall L. Kiser et al. Let’s Not Make a Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations. Journal of Empirical Legal Studies Volume 5, Issue 3, 551–591, September 2008. (^3) Samuel Gross & Kent Syverud, Getting to No: A Study of Settlement Negotiations and the Selection of Cases for Trial, 90 Michigan L. Rev. 319 (1991); Gross & Syverud (1996); Jeffrey Rachlinski, Gains, Losses and the Psychology of Litigation 70 S. Cal. L. Rev. 113 (1996); 7George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. of Legal Studies 1 (1984); George L. Priest, Reexamining the Selection Hypothesis, 14 J. of Legal Studies 215 (1985).
dollar amounts, both sides should have settled at even higher rates than we already see. This suggests that if attorneys notice the trends, the number of settlements will continue to increase while the number of trials will continue to decline. Attorneys must adapt to this changing legal landscape. While jury trials will continue, they are no longer the norm and should not be considered likely. As a result, the strategies for representing clients must also change. The realization that the game will likely end at half time is a significant tactical advantage over opponents. Those attorneys who adapt and use their skills earlier rather than later will find themselves in stronger bargaining positions. Those who continue to view settlement negotiations as mere pit stops on the path to trials will find themselves facing opponents who are inches from winning the race.
