September 10, 2013

The Multi-Party Mediation

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"Never confuse your adversary with your enemy.”
Chinese General Sun Tzu

Negotiating multi-party matters requires preparation, patience and insight.  Counsel for plaintiff and defendant need to balance their roles during the negotiation and exhibit just the right amount of advocacy and problem-solving skills.

If you seek to reach a negotiated settlement in a large multi-party case, remember this wisdom:  never confuse your adversary with your enemy. During the multi-party mediation, unexpected alliances are often created – at least for the purpose of creating closure of the litigation.

How to Begin

Settling multi-party matters can be messy.  There is usually a plethora of cross-claims for indemnity, contribution, vicarious liability, and comparative fault.

How can this gnarly mess be untangled and ultimately resolved?

I begin with a few simple questions:  How will these negotiations be structured?  Who is going to contribute to the settlement?  What information does each party need to reach settlement?

Global vs. separate demands

In a multi-defendant matter, should the plaintiff give a global demand to all defendants or separate demands to each defendant?  I find that the answer generally depends on the type of damages sought, whether the existence of cross-claims will require a global settlement of all parties, and whether the defendants are able to negotiate together effectively.

If the settling defendant can obtain a good faith settlement determination, then settling separately is often the way to go.  But not all defendants are able to settle separately, because there may be claims against them by other parties that will not be barred even if the court determines a good faith settlement under Code of Civil Procedure Section 877.6.

In this situation, I often find that a global demand to all defendants can be useful, especially when the plaintiff’s damages consist of fixed and easily identifiable damages, such as costs to repair or to remediate property, or the present value of a lifetime medical care plan.

Global demand

If a plaintiff makes a global demand, it is understandably challenging for defendants to easily work out their own allocation – and this is especially true if there are claims of comparative fault against the plaintiff.  I often help parties have a meaningful discussion on their relative liabilities by asking them to participate in a confidential allocation exercise.  In this exercise, each party allocates 100% of the liability to the other parties, except itself.

If the case involves complex discovery or expert evaluation, I find it useful for the parties to have completed sufficient discovery and then participate in a joint session so they can make their best case and correct inaccurate perceptions of relative fault.

I then facilitate a dialogue in which the parties collectively agree on the most critical allocation factors; each party uses those factors as a guide in the allocation exercise.  This informal voting process can be an effective way to get the allocation dialogue going.

The parties give their allocation assessment to the mediator in confidence.  Next, I add up each party’s allocation assessment and put it into a percentage.  (See chart)

I then report back the allocation percentages.  Because the parties participated in the allocation exercise, they are more likely to find the results credible.  In fact, the allocation exercise is often used as the template for settlement.

This article is excerpted from Volume 40, Number 9, September 2013 edition of the Advocate, copyright 2013, Consumer Attorneys of Los Angeles, All rights reserved. Reprinted with permission

Filed Under: Mediation

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