It is the end of a long day of mediation. The parties have skillfully argued their positions, and outlined for each other the downsides of litigation, and the need to compromise. Questions have been asked and answered, with positions at times solidified and at times conceded. Attorney and mediator sidebars and private sessions have yielded small breakthroughs, and agreements to general terms. All sides have made great progress, courteously and professionally moving the numbers ever closer. It is 6 o’clock in the evening.
And then, the negotiations stop. The worn-out and hungry parties have reached their final numbers. Impasse is imminent. Trial is scheduled to commence next week, and the attorneys will need time to prepare.
But there is hope! One of the parties suggests a “mediator’s proposal.” “What the heck is a mediator’s proposal?” the other party wants to know.
A mediator’s proposal is a tool used to break an impasse, particularly where the parties are within striking distance of settlement and where an impending trial will limit or put pressure on post-mediation negotiation efforts.
When parties request a mediator’s proposal, a mediator typically adjourns the mediation session and then presents his or her proposal to the parties in writing. The written mediator’s proposal should outline the general terms of the proposed settlement, including the amount, to be considered by all parties. The proposal should indicate the precise deadline for all parties to respond, after which time and date, absent agreement from all parties, the proposal shall be deemed rejected. The proposal directs each party to respond, in writing, only to the mediator, and confirms that each party’s response shall be kept strictly confidential by the mediator unless all parties are in agreement to accept the mediator’s proposal. The proposal directs that acceptance must be made without changes or modifications – each party must simply agree in whole with the proposal terms, or reject the proposal.
The mediator’s proposal has several advantages. First, the mediator often has a good idea of the settlement number likely to be agreeable to all parties, making settlement much more probable. Second, the mediator’s proposal gives the parties an opportunity to pause and reflect on true settlement appetite – sometimes “sleeping” on the decision to settle can be a healthy exercise after a long day of futile negotiations. Third, the parties do not risk revealing a one-sided willingness to compromise – the mediator keeps confidential each party’s response to the mediator’s proposal. Only if all parties agree to accept the mediator’s proposal does the mediator reveal each party’s acceptance. If any party rejects the mediator’s proposal, the mediator reveals only that the proposal was not accepted by all parties. So, by choosing to agree to the mediator’s proposal, a party is not made more vulnerable because that choice is never disclosed to a party who rejects the mediator’s proposal.
The mediator’s proposal is less helpful when post-mediation negotiations are likely to be fruitful; i.e., where there is still time before trial to settle. This is because parties may view a mediator’s proposal as the “right” number, impeding further negotiations. And, having presented a mediator’s proposal that the parties reject, the mediator’s effectiveness to assist with further negotiations may be diminished.
A mediator’s proposal can be an effective tool for breaking an impasse, but where post-mediation negotiations remain a viable option, the mediator’s proposal may not be the best avenue for breaking the impasse.