Sunday, November 9, 2008

What's Behind Door Number 2?

A new study provides empirical support for the idea that parties are often wrong when they reject the last best settlement offer and let a judge or jury determine their fate.

According to the study which looked at 2,054 cases between 2002 to 2005, plaintiffs were wrong 61% of the time when they opted to go to trial.

Defendants were wrong less often, 24 percent of the time, but the financial consequence was greater; $1.1 million when the defendant guessed wrong vs. only $43,000 for plaintiffs.

The study points out that part of the problem is the difficulty that attorneys have in presenting bad news to their clients. Law schools do not teach risk analysis or how to manage client expectations.

Sometimes, this becomes a primary task for the mediator who can prepare a party for the inevitable attack on their theory of the case and communicate adverse facts in a non threatening manner.

Sometimes this occurs in a pre joint session caucus where the mediator can explain that the other side may raise difficult questions about aspects of their case. It may even feel like they are being attacked personally. While hearing this may be unpleasant, their choice is to hear this information now or wait until they are in trial where they risk getting blindsided after committing significantly more time and money to the process.

With preparation, most parties can constructively process even the most damaging type of evidence. Once they realize that their interests are served by knowing now what could hurt their case at trial, they are more likely to listen objectively to the other side’s position. I sometimes suggest that it helps to imagine that they are a juror on their own case.

A client that will look at the warts on their case will have a more realistic view of the risks going forward. By facilitating this analysis, the mediator takes pressure off the attorney who may have felt the need to sugar coat bad facts to avoid a shoot a messenger reaction.

Knowing that those who choose “door number 2” are more likely to find a goat, than a boat, underscores the importance of this aspect of the mediation process.

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