Mediation Message No. 18

THE LAST-MINUTE DEAL BREAKER

After several hours of intense back-and-forth discussions, the mediation process prevails once again and the mediator, with great satisfaction, informs one of the parties that “We’ve got a deal!” only to be told, in response, “Oh, by the way, we can only make payments in installments” or that “We must have a confidentiality clause; substantial liquidated damages for breach of the confidentiality clause and/or a stipulated judgment for an amount far above the settlement figure.” Not surprisingly, the timing of this additional condition or conditions is enough to cause the other side to feel that it has been blind sided and, as a result, to threaten withdrawal of its offer.

The last-minute introduction of a substantial term in a mediation is sometimes inadvertent but, just as often, is a conscious decision by a party to hold back out of fear that the term’s earlier inclusion in the discussions may impede settlement or reduce that party’s bargaining power.

Reference before the end of a mediation, however, to a new condition need not be a problem if it is brought up early enough by one of the parties in a separate and confidential caucus so that the mediator has the opportunity not only to review with that party the implications of the condition on settlement but also the timing of when to mention that term to the other side. As an example, a request by a defendant to make payments rather than a lump sum of an agreed-upon amount of money may cause the plaintiff to want a greater amount of money in return but, at the same time, a reasoned justification for that or any other condition can be the basis for some give-or-take on a related issue, especially if the mediator has had the opportunity to consider the arguments in support of the request and to present them in a logical, rather than hurried last-moment, manner. In other words, it is more expedient for the parties to rely on the good sense, knowledge and experience of the mediator in negotiating all material issues rather than risk the collapse of a settlement because of the late, unilateral insistence on new facts or terms.

Copyright, Michael D. Marcus September 2004

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