Impasse in Mediation: Why Cases Fail to Settle

In a litigated case, there are at least four points of view about settlement: the points of view of the plaintiff, the plaintiff’s lawyer, the defendant and the defendant’s lawyer. Add in claims representatives, boards of directors and additional parties and negotiations become more complex as more points of view are added to the mix. It’s a wonder any case settles!

I’ve been thinking about what makes litigated cases difficult to settle at mediation and I’ve come up with the five most recurring causes. While I put the burden on the lawyers in the summaries below, clients need to be prepared also.

1. Lack of preparation.

I’m almost embarrassed at the frequency with which one side or the other hasn’t taken the necessary steps to marshal facts, damages, expert’s opinions and law to be able to realistically evaluate a case’s settlement range prior to the mediation. Lack of mediation preparation is a surefire way to reach impasse.

2. Unrealistic expectations.

(See 1 above.) Many times these are a result of lack of preparation, but not always. You can sharpen your evaluative skills by doing jury verdict research, surveying colleagues, running the facts by friends and zeroing in on the actual, quantifiable damages that you will be putting into evidence or negating. Plaintiff’s lawyers, you’ll want to make sure that your clients aren’t expecting to go to medical school as a result of a minor fender bender. Make sure unrelated goals are not tied to settlement results. Defense lawyers, get real. A clear liability case is not going to settle for one times specials.

3. Inflexibility.

When new facts are uncovered at the mediation, evaluations need to be updated. Huddle with your team and consider the new reality.

4. Win-Lose mentality.

It’s a rare case which is so one-sided that a party can say, “I’m right, you’re wrong” and refuse to negotiate. (See 5 below.) If your client can’t stand the thought of giving the other side money, give it to someone else—the other side’s favorite charity for instance. Be creative. Think of ways to increase value without necessarily increasing the settlement amount.

5. Ego.

I’ve met some plaintiffs’ lawyers who say, “I only take big cases.” I’ve known insurance companies who would rather try a case than pay to settle. My advice to both: Be realistic and evaluate each case on its own merits. Not every case is a big case. Not every case should be tried. (That said, not every case should settle; but that’s the topic of a different post.)  Emotion in negotiation is also part of this.

I’d be interested in your experience as to why cases fail to settle.