When a workplace dispute arises, employers and employees often seek to resolve the matter through alternative dispute resolution processes such as mediation. Generally speaking, the choice to mediate a dispute is voluntary — meaning that a party cannot be forced to try and resolve their claims in mediation if they do not want to.
However, mediation can also be a contractual prerequisite for resolving disputes arising out of or in connection with an executive’s employment prior to either the executive or the employer being able to file a lawsuit or demand for arbitration. Even if this is the case, exhausting mediation as a dispute resolution process before filing suit can still be beneficial because it is a minimal cost compared to litigation and also provides the parties with an opportunity to obtain more facts and information from the opposing party to size up the strength of their case or their risk exposure.
During mediation, a trained third-party (the mediator) facilitates formal negotiation to assist the parties in reaching a mutually acceptable resolution. The parties cannot be forced to agree to a settlement, so if they cannot reach a resolution, then the dispute continues through its cycle of litigation or arbitration.
Below are some of the most common (but often preventable) barriers to successful negotiations during mediation. Whether you are attending mediation because you are contractually obligated or because you are seeking to resolve a dispute in a timely and cost-effective manner, knowing the potential pitfalls below and how to avoid them can assist you in preparing for mediation.
Crucial decision-makers not in attendance or available
For the best chances of settlement, the individuals with authority to settle the dispute need to be present. If the dispute is already in litigation, these will typically be the named individuals in the case. However, this becomes more difficult when a corporation or company is involved, or if insurance coverage is in play.
While it may be impossible for corporations to have the designated decision-maker in the room on the day of mediation, the corporate representative who attends should have some authority (even if not unlimited) to make decisions on behalf of the corporation or company.
Moreover, the inconvenience and delay involved with relaying updates to a remote decision-maker over the phone makes in-person attendance the ideal, with phone participation a distant second. In-person attendance also conveys to the other side that the claim and process is taken seriously and the opponent’s commitment to the mediation process respected.
There is no set time frame for when mediation should occur in the life of a dispute. The timing aspect of mediation is highly variable depending on the circumstances of each matter. Sometimes parties will agree to mediate pre-suit; other times mediation occurs after discovery has taken place in a lawsuit.
Mediation that occurs pre-suit or before much discovery has taken place may not yield settlement because a party does not have sufficient access to information for counsel to be able to fully analyze the strength and weaknesses of the claims. Lack of full knowledge of the evidence and facts supporting the claims and/or defenses for each side can lead to unreasonable settlement proposals and unrealistic expectations of clients. However, early mediation may be advantageous in cases with a corporation or company party who wants to avoid negative publicity or those where there is a high risk of liability but minimal damages that can be proven.
On the other hand, mediation that takes place too late may not result in settlement because by that time the client has already spent so much time and money on the case that they are willing to roll the dice with the risks of trial over a less than favorable compromise.
One great benefit of mediation is that it can result in unique settlement agreements that would not otherwise be achieved at trial. Because of this, parties should go into mediation with an open mind and be encouraged to come up with creative bargaining positions to satisfy the needs of each side. If either party begins mediation with a fixed bottom line or is unwilling to negotiate, the dispute will likely not settle. Successful mediation requires compromise and flexibility; Each party must be willing to give up something in order to arrive at a mutually agreeable resolution.
Lack of preparation
Attorneys and clients need to be fully prepared for mediation. This means bringing all documents and evidence that support your side’s claims and/or defenses. Attorneys should explain the process of mediation to their client so they know what to expect. Clients should understand that although the attorney will be there to advise, the ultimate decision on whether to accept a settlement offer falls on their shoulders. Parties must also be emotionally prepared. Some clients may not be ready to “let go” of their dispute. A skilled mediator can facilitate appropriate cathartic communications that may assist in helping clients begin the process of moving on.
A joint session at mediation often occurs at the beginning of a mediation. Both parties sit in the same room and present their side of the dispute directly across from one another. Attempting joint sessions at mediation is often counterproductive to achieving settlement because of its inherently adversarial nature and the strong emotions that can be evoked during the process. Emotions can cloud rational judgment and disrupt a party’s desire to compromise.
For that reason, many mediators and attorneys disfavor joint sessions and opt for caucus mediation, where the parties are split into two separate rooms and the mediator moves back and forth between the rooms conveying the proposed offers and counter-offers. Other mediators and parties find joint sessions helpful, and provide an opportunity for candid — even collaborative — discussion of resolution.
The decision regarding whether to use a joint session should be discussed by counsel and the mediator in advance of the mediation session to manage expectations and attain agreement on the mediation “ground rules.”
Prior to mediation, each party should take some time to meet with counsel to set realistic expectations. This means analyzing both the potential best and worst case scenarios, likely risks and barriers to full recovery, and prioritizing the objectives that the client hopes to achieve. Additionally, clients should be informed of the hurdles they will still have to jump over before a final resolution can be achieved. These may include any remaining discovery, motions (both pre- and post- trial), and potential appeals.
Setting realistic expectations also means taking the time to calculate a client’s financial exposure if they were to be on the hook for any damages, attorneys’ fees or costs at trial. Clients must often weigh the risks of going to trial against the alternative of accepting a less than desirable settlement offer at mediation. Therefore, those clients who fully understand the risks and unpredictability associated with trials are often more willing to settle beforehand.
Even if all of the above common pitfalls are avoided, some disputes will nonetheless fail to settle at mediation. However, going through the process of mediation is still valuable because it allows clients and attorneys to explore and evaluate their case on a deeper level. In addition, failed mediations may serve as the springboard for future settlement discussions as the dispute progresses.
For assistance with workplace matters contact Clouse Brown PLLC. Our attorneys are available to counsel and advise executives and corporate clients who desire to settle employment disputes through mediation.