How often have you filed or defended a case that you knew ought to be settled out of the gate, but it just does not happen? How often does your case settle after the close of expensive and ultimately wasteful discovery? Certainly we have all had cases for which early mediation and settlement have saved defendants money and have provided additional resources for resolution. So why don’t all cases settle early?
There are a myriad of reasons why parties are reluctant to engage in early mediation. But, by and large, most lawyers and insurance adjusters cite the following three reasons: (1) nobody wants to be the first to “blink,” fearing a loss of leverage; (2) lawyers and insurance adjusters are reluctant to negotiate with incomplete information; and (3) excessive demands, paired with defendants’ economic incentives. These barriers can be overcome, as this article will explain. In our next article, we will offer ways in which parties can get great results early in the life of litigation.
Nobody wants to be the first to blink
Lawyers on both sides often want to negotiate resolution or mediate but fear that if they are first to suggest it, the other side will think they have the upper hand. Instead, both sides dive headlong into costly discovery, depositions, retention of experts and so on. Resources that could resolve the case are wasted. According to recent statistics from the National Center for State Courts, the cost to litigate a simple automobile case can reach into the five figures and the cost of a medical malpractice case often exceeds six figures. Costs to litigate complex cases can run in the millions. This is extraordinarily inefficient, especially when well over 90% of all cases settle or otherwise resolve before trial.
Often, by the time the parties hire a private mediator or attend a court-ordered settlement conference, trial is weeks away, costs have been expended and positions are hardened. There needs to be a system that allows litigants to reach out to a neutral without losing, or perceiving to lose, leverage. In our next article, we will suggest how that can be done.
How much information is enough?
Understandably, parties and their attorneys are reluctant to consider settlement terms without full understanding of the facts and evidence. The discovery process can help parties obtain those facts, but it is highly inefficient. Answers to interrogatories can be meaningless. Requests for production of documents often ask for everything under the sun — a fraction of which is actually relevant to the claim and defenses. Hours of depositions require a costly court reporter and perhaps a videographer. Inevitably, a discovery disputes emerges. There is a better, more efficient way to gather and exchange information.
Information exchange is an important part of mediation and resolving litigated disputes. When parties engage a competent mediator at the beginning of the litigation, the parties will identify and agree on what information is truly needed to address the contested issues and negotiate their resolution. This practice is used successfully in construction cases.
Excessive demands and enticements to delay
Although the facts of a case may warrant prompt mediation, parties delay because of the perception that “defense lawyers have to make their fees.” This would be a cynical and self-defeating approach to dispute resolution if it were not echoed by both plaintiffs’ and defendants’ attorneys themselves. But some defense attorneys feel differently. They understand that an early resolution of a case is an efficient use of time and money and that usually creates return business.
In a similar way, insurance companies usually want to hold onto their money as long as possible and may not be motivated to settle early. For wasting policies (where litigation costs erode the amount of coverage), both the plaintiff and defendant are left with diminished resources for settlement. Insurance companies do their clients no favors by protracting cases that should otherwise be settled. Finally, some plaintiffs’ attorneys make excessively high demands, deterring and disincentivizing the defense from engaging in meaningful settlement talks.
Although obstacles to early mediation may exist, many litigated disputes can be resolved early and efficiently. We will explain how in our next article.
Barry L. Gogel, a litigator and mediator with the Baltimore office of Rifkin, Weiner, Livingston LLC, can be reached at [email protected] Jeff Trueman, an independent mediator in Baltimore and the former director of ADR for the Circuit Court for Baltimore City, can be reached at [email protected]