Pulling the Plug on Negotiations

I recently wrote about parties being too quick to abandon mediation and settlement discussions, and the need for patience and persistence. Today I want to talk about pulling the plug on further negotiations. There is a time and place for it. But rarely is it handled strategically and rarely is it handled without damaging the relationship and dooming or severely challenging further negotiations.

Sometimes, despite the best-laid plans, mediations are scheduled before the parties are really ready to negotiate.

Perhaps there is an unknown fact, an unfiled motion, or an unready client. Hopefully, our pre-mediation discussions will shed some light on whether these unknowns are really an impediment to settlement negotiations. After all, there are always unknowns in litigation. In fact, it is these unknowns that help encourage compromise settlements – people want to avoid the unknowns by creating some certainty.

Once the mediation session starts and negotiations proceed, it may become evident that further negotiations will not be fruitful – at that time.

For example, there may be some unknown fact that is in the possession of a third party and has not yet been obtained (think subrogation interest). Negotiating against that unknown or trying to put a value on it can lead to an impasse. If simply determining that variable removes the hurdle, then perhaps that should be done. It should be the mediator who is trusted to determine when that point is reached. And this can only happen when the negotiating parties are honest about where they are. My goal is to develop credibility and trust with parties so that they will be honest with me. In return, I will be the first to say that negotiations need to be discontinued if I believe that is in the parties’ best interest.

If the mediation is to be discontinued without a settlement, there are ways to accomplish that which help ensure that no bridges are burned, and the parties’ negotiations can continue later.

1. Identify the impediment.

2. Identify what is going to happen once that impediment is removed. This can actually help a party realize that continuing to negotiate might be a better idea. For example, I often ask the parties how their bargaining position will change based upon how the impediment is resolved. When a party realizes that resolving the perceived impediment might cause the value of the case to change, perhaps it makes more sense to bet against it. If a defendant believes having a motion for summary judgment resolved is going to help, it must also realize that the plaintiff’s settlement evaluation is going to change if it is denied. If the unknown has some objective and distinct possibilities, then perhaps the negotiations can continue and a conditional settlement can be reached (maybe even containing multiple options) depending on its value.

3. Identify how the impediment is going to be resolved. If it is clear that the issue is indeed an impediment, and both parties agree that resolving it will allow further negotiations, then we move on to identifying how that impediment is going to be resolved. Who is going to ask for the missing information? By when? What is going to be done with it? What contingencies must we address and anticipate? Once obtained, then the parties will get back together to negotiate further. It helps to pick a date and schedule our follow-up session right then and there. I put all of this in writing for the parties so that we are all on the same page. And I calendar to followup.

Much like an electrical cord, there is a correct way to pull the plug. Pulling it out of the receptacle by the plug rather than yanking it out by the cord ensures that the appliance can be used again. Mediation is no different. While most cases reach some impasse in negotiations and seem as though they will never be resolved by agreement, somehow 95% do. It saves a lot of heartache and hassle if discontinuing the negotiation is handled deftly.