Battling Your Brain
Understanding behavioral science and setting the stage for a successful mediation
By Lisa Unger , Mark LeHocky
The work done before a mediation session takes place is as important—sometimes more so— than anything accomplished at the actual mediation. Time spent in advance to thoroughly calibrate strengths, weaknesses, and tradeoffs as well as in pre-calls with the mediator is key to everyone coming to the table with reasonable expectations. Why? As it turns out, our brains are hardwired to overweight the good news and underweight the bad when it comes to supporting our preconceived notions and preferences. Individuals do it; so do groups and organizations. The brain science proves all that.
We suggest using that brain science to best prepare our clients, carriers, and counsel to set realistic expectations for mediations. We also suggest steps to best prepare the mediator—in direct communication as well as in briefing—to focus the mediation dialogue on those issues that matter the most. Finally, we offer some thoughts about getting the most out of the mediation session by practicing curiosity as well as flexibility.
How We Fool Ourselves
A growing body of behavioral studies shows clients develop unrealistic views of their prospects in litigation. In one study where litigants were asked to rate their prospects of winning, 57 percent of respondents believed that they had at least a 90 percent chance of winning, while roughly 24 percent believed they had a 100 percent chance of winning. Those numbers don’t add up. Rather, this data actually proves that parties filter information in a self-serving way, believing their cases are much stronger than reality dictates.
Attorneys often fare no better when handicapping their skills. Multiple studies reveal that lawyers also overestimate their clients’ litigation prospects—i.e., the likely outcome at trial—compared to the settlement offers left on the table. In one set of studies—repeated in different years in both California and New York—plaintiffs on average erred in their assessments more often than defense counsel. Specifically, plaintiffs often left money on the settlement table when comparing what they turned down in pre-trial settlement offers with the eventual outcome, reflecting a 60 percent error rate for plaintiffs versus a 25 percent error rate for defense counsel.
While this handicapping data might sound encouraging for defendants, it has a dark side. While plaintiffs’ average cost of decision error was $73,400, defendants’ average cost of error was over $1.4 million—19 times greater. Thus, defendants show fewer errors, but ones that are exponentially costlier when they hit, both in terms of financial losses and the internal discussions to follow. In order to achieve results that accurately reflect a balance between fact and fiction, a few strategic tactics may be helpful.
First, engage the other side early and often to test what they see differently. Here, communication is key. Pick up the phone or set up a face-to-face meeting to test their understanding as well as the assumptions behind yours. No emails or position statements, please. Those typically only result in self-serving statements that rarely improve underlying misunderstandings.
Second, share that input with your stakeholders promptly. While good news is easy to share, no one wants to be the messenger of bad news. The behavioral science suggests that the longer anyone holds onto an unrealistic view, the harder it is—and the more time it takes—to readjust expectations, including recalibrating the bookends for any settlement. That process takes time, particularly where multiple levels of decision-making are involved. If material and negative facts or issues first surface at the mediation session itself, the prospects for settlement then and there are significantly reduced.
Third, share your mediation briefs with the other side. While some jurisdictions require it, some do not. Do it anyway, and here’s why: When briefs or positions are not shared, the respective sides are left agreeing with themselves, believing their briefs are so good that they will win. In this scenario, it’s easy to buy into your own position, drink your own Kool-Aid, and cement your position rather than educate yourself on the strengths and weaknesses of each side. By sharing your briefs, each side hopefully sees the other’s best case as well as the worst case objectively, and, if recalibration is warranted, there is time for it to take place.
Preparing the Mediator
A mediation brief should always be paired with a pre-mediation conversation with the mediator. During that call—subject to applicable privileges and evidentiary exclusions—counsel and carrier representatives can highlight key facts, issues, objectives, and concerns in a more informal but equally impactful direct exchange. Indeed, these pre-calls go a long way toward establishing rapport as well as reasonableness, allowing the mediation session to move efficiently and effectively. Be aware, though, that not all mediators conduct pre-calls with counsel or carrier representatives. If a mediator is unwilling to do so, think hard about what you are giving up.
Exercise discipline in the pre-call and the mediation itself by focusing only on key issues and arguments. Arguing everything usually backfires, as subsidiary arguments distract from the key ones, and weaker points or ambiguous facts undermine the stronger points. Indeed, attempting to argue weak or inconsequential points threatens everyone’s credibility in a process where credibility with the mediator, as well as with the other side, is key.
Here are some tips to help you make the most of the mediation session.
Leave the invective at home—Given that our brains tell us to discount adverse input, tone and temperament are key in both briefing and advocacy in the mediation session itself. Never forget the endgame of the mediation is settlement. There will be moments when discussions get heated and fuses run short. It is crucial at those times to “temper the temper” and “tone the tone.”
Arguments laced with words like “specious,” “baseless,” and “frivolous” rarely motivate the opposition to move in your direction. Rather, they prompt adversaries to respond in kind, and the mediation becomes sidetracked with satellite attacks and affronts that rarely advance the ball. Instead, focus on core elements missing from a claim or a defense. Doing so prompts the other side to listen and to recalibrate, enhancing your credibility along the way.
The idea of recalibration is not one-sided. There may be a point where an emotional insured, an overzealous attorney, or a frustrated claims professional needs a timeout. As hard as it may be, try to detach (emotionally, if possible), take a breath, and listen to the other side. Listen quietly—not for the purpose of responding, but rather for the purpose of understanding.
Share the mediation dialogue—Often, clients as well as carrier representatives rarely speak or engage in the mediation sessions—particularly in joint sessions. But think about the tradeoffs of that approach. Sure, there is often a concern about oversharing, tipping off positions, and providing “free discovery.” But clients and carrier representatives always have insights and input to help shape the discussion, as well as questions that may otherwise not get raised or fully vetted.
Never fear being that voice, as it underscores the simple principle of preparation. If you are prepared (i.e. you know your case), then you will be able to speak eloquently and articulate the points most needed, all while establishing your credibility. And in the real world, the proverbial cat is almost never let out of the bag through more candid and open exchanges.
Practice curiosity—Open-ended questions to gauge what the other side sees differently and why always go a long way. If the other side asserts that a case does not fit the usual pattern for a scenario—regarding either liability or range of possible damages—simply ask, “Why?” If the parties involved are asked to pay substantially more or take substantially less than the usual case of this type, then the decision-makers should understand what is different.
It is perfectly acceptable to inquire, “What happened? What changed? How did you arrive at that conclusion?” No trick questions or “gotchas.” The other side will see through those cross-examination questions and little will be gained. Instead, aim to practice genuine curiosity.
Prepare for the unprepared—Sometimes mediation sessions proceed as you anticipate; other times not so much. Avoid becoming wedded to a particular course, as flexibility usually pays dividends. If the mediator wants to explore damages earlier on than normal—perhaps to flag the relative value of the case and the resources it warrants—give it a try. Similarly, a discussion of settlement alternatives (reinstatement, resumption of a business relationship, or a purchase or sale of underlying assets) may be more productive early on than an initial deep slog into liability, especially when ill intent is alleged and denied. The same is true for using joint sessions early on, or perhaps reserving them for later. No one size fits all.
Additionally, invite the mediator in a breakout session to identify her view of your principal vulnerabilities and key weaknesses (not a prediction of who wins and who loses, as that often risks undermining the credibility of the mediator as well as the advocates). If our brains are working in rose-colored-glasses mode, then we are likely underweighting some weaknesses and ignoring others. Having a neutral party weigh in may reshape your view (as well as your opponent’s view) as to liability, value, risk, and reward. Doing so allows everyone to move toward a settlement that makes sense for everyone.