MICHAEL D. MARCUS’S MEDIATION MESSAGE NO. 132
NEGOTIATION PHASES OR PROCESSES AT MEDIATION
The types of negotiation tools used at mediations go through stages. This Mediation Message examines each of those processes in the order that they usually occur.
Distributive or marketplace bargaining – In most instances, mediations start with distributive or marketplace bargaining, in other words, the parties exchange single numbers, a process very similar to how people buy houses and cars. Generally, the plaintiff makes the first move, although the defendant, for strategic reasons, may go first. (See Mediation Message no. 14 which discusses the pros and cons regarding who should make the first move.) There is no set number of demands and offers before integrative or market place bargaining loses its effectiveness; it occurs when the exchanges cease to produce significant movement. For example, if the plaintiff’s opening demand is $425,000, the defendant responds with a $5,000 offer, the plaintiff answers with $410,000 and the defendant next offers $7,500, it should be obvious to everyone that distributive-marketplace bargaining has run its course.
Integrative bargaining – Distributive bargaining is competitive and concerned with distributing something (generally money) whereas the parties in integrative bargaining are trying to make more out of what is at issue and discuss the process as equals, which is not the situation with distributive bargaining. Integrative bargaining may be more useful in partnership and marital dissolutions.
Brackets – Brackets are most often the next method used when marketplace bargaining ceases to be effective. They invigorate the negotiations, provide some insight into a party’s thinking and allow the parties to make bigger moves without compromising their respective credibility because the brackets are conditional or amorphous, since a party is indicating it will move only if the other side is also willing to move. (See Mediation Message no. 80 for an in-depth discussion of brackets.) Brackets, however, rarely lead to settlement by themselves, so the parties may return to distributive or marketplace bargaining after the financial divide has become smaller.
Where are you or what is your authority? – This question is not an existential inquiry. Instead, at some point in the mediation (especially, the bracketing process), it may become obvious to the mediator that a party is disinclined to make meaningful or significant moves. When that occurs, the mediator should attempt to find out, with an absolute promise of confidentiality, what that party is attempting to achieve. This discussion may reveal that the party has limited authority or sees the value of the case much differently than does the opposing party. If it’s an “authority” issue and cannot be resolved immediately by a telephone call, the options are either to recess the mediation or have the mediator make a proposal (see below), which is kept open so that the party with the “authority” problem has an opportunity to resolve it.
Wouldya-Couldya – After lengthy negotiations have taken place and with some sense of how the parties value their respective cases, the mediator, on his own, “floats” a settlement term to one side or, alternatively, asks that same party what it is trying to settle the case for. The mediator then may discuss with the disclosing party the term’s reasonableness or probability of success. (This process is always undertaken with the promise of absolute confidentiality.) If the mediator believes the suggested settling term is achievable, he may, at an appropriate moment and without any telegraphing, discuss that term with the opposing side. The subject is dropped if it does not produce a favorable response. However, if there is some comparability between the “wish lists” for the two sides, the mediator will then attempt to narrow the divide between the two positions until unanimity (and a settlement) is achieved.
“Split the baby” – This tactic simply has the mediator suggesting that the pending demand and offer be equally divided. It works best when the parties have been negotiating for a while and the difference between the demand and offer is relatively small, although larger amounts are susceptible to this device. It also can be a corollary to or work in conjunction with “wouldya-couldya.”
Take it or leave it – One of the parties, either because of limitations on its authority to settle the matter or out of frustration, tells the mediator it wants to make a “take it or leave it” demand or offer. The mediator should warn that party that it has to “walk” or promptly leave the mediation if the demand or offer is not accepted because to continue negotiating after a rejection demeans the offeror’s credibility. Obviously, this tactic is used sparingly since it is drastic and often rejected.
Best and final – This negotiating step often occurs after an impasse in negotiations and, unlike “take it or leave it,” allows for further negotiations because it is not absolutely final. It is used when one party believes the only way to resolve the conflict is to have the mediator make a proposal.
Baseball – Like baseball arbitration, the parties submit their respective settlement terms (usually financial numbers) to the mediator. The mediator must pick one of the two submitted terms and may not offer an alternative. This method is rarely used because it is totally unpredictable.
Mediator’s proposal – The proposal has two approaches: it either reflects the mediator’s expectation as to which settlement terms will be acceptable to everyone or, alternatively, is the mediator’s evaluation of what the case is “worth.” In the second approach, for example, the mediator might have opined that the plaintiff’s case has a substantial chance of being “defensed” at a motion or trial. In that situation, the proposal will have a lesser value than the first type that attempts to bridge the parties’ goals. Because of the potential disparity between the two types of proposals, mediators should advise the parties which approach they are using. Depending on the wishes of the parties, the proposal can be responded to immediately or kept “open” for an agreed upon period of time. Also, depending on the nature of the individual case, the proposal may reflect input from one or both parties or solely reflect the mediator’s educated guess on terms that will be acceptable to all. (See Mediation Message no. 127 for a detailed discussion of the mediator’s proposal.)
Court trial or arbitration – If the case cannot settle, the mediator may discuss with the parties their waiving a jury trial or arbitrating it, if the case does not have strong emotional appeal or holding down costs is an important consideration for both sides. If they choose arbitration, it is preferable that the parties not ask the mediator to be the arbitrator but, if they do, the mediator must, pursuant to Rule of Court 1620.7(g), inform the parties, inter alia, of the consequences of their having previously revealed confidential information to him or her.
Hi-Lo – If the case cannot settle at mediation and if it shall be tried to a court, jury or arbitrator, the mediator may suggest that the parties agree beforehand that any judgment or award shall be no greater or less than two specified amounts.
Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
Copyright Michael D. Marcus, April 2017