One of the key advantages of mediation is the ability to be heard by a neutral party genuinely interested in the facts and arguments giving rise to the dispute. Allowing the parties to tell their story to someone who is listening and empathetic to their problem is central to successful mediation.
When parties come to mediation, they have already had some back and forth with each other. Often each side recognizes that both parties have vastly different views on the facts, the law and how to resolve the dispute. They know they are not going to convince the other side of the merits of their position. Nevertheless, often each side continues to bombard the other side with missives on how wrong their position is. That, of course, gets the parties nowhere. More often than not, the “litigation by email” causes each party to retrench even further.
Mediation provides the best forum for airing those views to an audience that will listen and not return the salvo. When parties begin telling their story to the mediator, the parties gain better clarity about their case and about their adversary’s positions. A mediator will encourage robust discussion and allow each party to open up and really dig into the facts, details and law supporting their positions. In doing so, the mediator allows each party to tell their story and have their “day in court.”
The Mediation Statement – A Roadmap to Resolution
In nearly every mediation, a mediation statement from each side is required prior to the first mediation session. The purpose of this statement is to provide the mediator with the essential facts and law relevant to the dispute in a narrative form. I ask the parties to include the outcome they would like to achieve in the mediation as well as the status of any settlement discussions. The mediation statement provides a roadmap for questions by the mediator, which allows the parties to open up and tell their story at the mediation session.
Once both sides arrive at the first mediation session, the question of who speaks for the party at both joint sessions and in private caucuses is important. Typically, counsel takes the lead, especially in joint sessions, but it is also useful for the party or party representative to participate in the conversation. Having the party speak, especially in private caucuses is essential. This is true whether the party is an individual or whether it is a large corporation.
In insurance and reinsurance disputes, business representatives often represent the parties. You might have the risk manager for the policyholder and the claims adjuster for the insurer. In a reinsurance dispute, you might have in-house counsel or the reinsurance claims manager or lead underwriter. The thing is that these individuals, especially if they are the ones involved in the underlying dispute, act similarly to an individual party. Although they are party representatives, many take the dispute personally as an affront to their underwriting or claims handling abilities. It is critical in those circumstances, where the party representative is a key player in the dispute, to have the party representative vent and express their views as much as possible.
Opening Session – The Essential Facts
At the opening session of the mediation, I encourage each side to summarize their positions, so each side hears the other’s thoughts. I do not expect or ask for an opening statement as if we were in court, but just a brief narrative of the essential facts and points that each side would like to make to the other side. This allows the parties to recognize the differences in positions, but also sets the stage for robust discussion in the private caucuses. I also ask the party representatives if they would like to say something. Obviously, if the mediation involves an individual party, I encourage that party to speak as much as possible. But even in commercial disputes, it is helpful to encourage the party representative to speak even at the joint session.
Your Day in Court – Being Heard
What I like to do in the first private caucus is allow the party to tell its story in a more fulsome way. I listen intently and try not to interrupt. I may ask a few clarifying questions, but I mainly want the party to provide its perspective on the dispute and why they think they are right. I find that it has the cathartic benefit of letting the party get off their chest whatever they need to say. It allows for a good discussion of all issues and gives the party the sense that someone is finally listening to their problems and their views on the dispute. This helps set the stage for negotiating toward a resolution in later caucuses.
What I try to avoid in the first session is going right to offer and counter-offer. Parties will not feel that they are being heard if the first thing we talk about is what is on the table. Mediation is not a settlement negotiation session before the judge where the only thing that matters are the dollars. Parties want a hearing; they want to feel like they had their day in court, and that someone listened to them. Whether the parties are sophisticated or not, they want their argument to be heard.
In commercial disputes like insurance and reinsurance disputes, the parties want to know that someone has considered the facts and the legal arguments and understands where the parties are coming from before engaging in settlement negotiations. Insurance and reinsurance parties are skilled negotiators and settle claims for a living. If the parties do not feel that the mediator understands the claim and the contract or doesn’t appreciate the issues in dispute, it will be difficult for the parties to trust the mediator when it comes time to negotiate the settlement.
That is why it is critical to take the time and listen to each party’s story and really dig in and understand the facts and law relevant to the dispute.
While subsequent private caucuses will focus on trying to reach a consensus on settlement, continuing to listen to each parties’ story and gaining a better understanding of where they are coming from, gives the mediator the best opportunity to help guide the parties toward a resolution.
Allowing the parties to tell their story at mediation gives both sides their “day in court,” and frees them up to focus on the best path forward to resolve the dispute.
Larry P. Schiffer is a member of NAM’s (National Arbitration and Mediation) Hearing Officer Panel and is available to arbitrate and mediate insurance and reinsurance cases throughout the United States. Mr. Schiffer is one of the foremost authorities on insurance/reinsurance and has a wealth of knowledge and experience that spans both the property and casualty and the life and health markets. He has provided counsel and advice on a wide variety of insurance and reinsurance issues that include coverage, disputes, insolvency, commutations and recaptures, due diligence for corporate transactions and investments, reinsurance audits and inspections, cyber insurance, claims analysis and related issues.
For any questions or comments, please contact Jacqueline I. Silvey, Esq., NAM General Counsel, via email at [email protected] or direct dial, 646-404-4661.