Strategy #1– Find a Lawyer Skilled in Settlement Advocacy

 

          Trials are not good for business. Unfortunately, lawyers are trained in law school to prepare for trial, not settlement. Law schools still focus on trials as the ultimate use of a lawyer’s talents. All law students study the appellate consequences of a trial to learn the law. Few law schools use case studies involving alternative dispute resolution as the model for teaching future lawyers how to best represent clients.

 

         Most lawyers would agree that the ability to effectively try a case is a prerequisite to being creditable in settlement negotiations. Personal Injury plaintiffs may need the jury trials to extract the maximum compensation. Businesses need additional skills to avoid jury trials. They should hire savvy lawyers who have made their bones in trial but are experienced at settlement advocacy. Businesses need creative dispute resolution strategies. Courts are over docketed suffering long delays to trial. Some judges and many juries do not understand technical cases. The jury system of trial by one’s peers may not be fair to businesses that are assumed to be deep pockets. The cost of protracted litigation has become untenable for all but the biggest companies. Trial in a complex case means casting a company’s fate to the rushed decision of an unsophisticated jury.

 

         A business may find itself in the role of a plaintiff where it has no insurance. Business defendants may have limited insurance coverage. In either posture, the business needs an effective settlement lawyer to cut off the costs and risks of litigation. Businesses pay twice for litigation: once for legal fees and again with lost productivity during increasingly consumptive litigation.

 

        

  Strategy # 2 - Negotiate Instead of Posturing

 

           Avoid the classic “Settlement Demand letter” - Typically, businesses approach their attorney only after they have made an attempt to resolve a dispute with telephone calls, e-mail, and correspondence. This may or may not be cost effective. When I review the history of the problem with a new client, the communication history often reveals admissions against interest, misunderstandings and an exacerbation of the problem(s). Could early dispute resolution techniques have prevented the escalation?  When a client can’t resolve a legal problem and finally calls his attorney, he says, "Mr./Ms. Attorney, draft a letter for us seeking a settlement or threatening suit." Attorneys love to write such letters, they get to bill for them and make arguments as to why their client is right such that the recipient should pay. Are such letters effective? The recipient instead of being intimidated, turns the letter over to his attorney.

 

         Find me an attorney that writes such a letter without posturing; and then, find me a reply from an attorney that doesn't posture in response. This exchange is almost always followed by the famous "two-step”: Step one, a lawsuit seeking extensive damages and in time, Step two, The Answer to the lawsuit, denying everything, often including counter claims. Afterwards the dance goes on, with discovery and trial preparation. Then, a settlement ensues just before trial. The settlement involves a compromise on top of the expense of paying for the trial preparation - only the lawyers really win.

 

         Better Approach: Hire a settlement advocate who is retained to solve the problem without litigation if possible.  The settlement advocate does not write a demand letter. Instead, the Attorney seeking settlement calls the other side and/or their attorney and invites them to a meeting to discuss the dispute. The attorney and client prepare thoroughly for the meeting. They bring proof to share with the other side that supports a favorable compromise. The proponent’s attorney must be disciplined to avoid conflict and look for creative solutions, even if the opposing party and/or their attorney are quarrelsome. One concern may be that an attorney preaching settlement will appear weak.

 

          There are many ways to ask for settlement without telegraphing weakness. One way is to deal from a position of superior knowledge. The most effective settlement advocacy involves a client-attorney team that has thoroughly prepared for the first settlement meeting such that the other side realizes that you mean business and are prepared for litigation if compromise is not achieved. Another technique is to bring a final draft copy of the yet to be filed lawsuit, written in plain English. Use it as an outline of the claims being “negotiated.” The other side will get the point.

 

         There is little to lose from a pre-litigation settlement meeting. Information must be disclosed but the other side will eventually learn most of it in the litigation, through the discovery process. The money is well spent when compared to the cost of litigation. If one must litigate, the effort in preparing for a pre-litigation settlement conference will place the party one step ahead. The compromise discussions in such meetings cannot be used in evidence under the Federal Civil Rules of Procedure and almost all state rules, because the courts want to encourage settlement. 

 

         One would think that cost conscious, mature business professionals could resolve their differences rather than enrich the attorneys with litigation. Many can but I have learned that internal politics often interfere with settlements. The persons who made the mistakes do not want to admit they were wrong. This problem can sometimes be solved through mediation. 

 

 

Strategy #3 - Try Mediation

 

      Business litigation unlike personal injury litigation is particularly susceptible to mediated settlements. When someone is physically injured the only question is liability and how much should be paid in damages. But business disputes can often be settled in a multi-faceted manner. The paying party may be able to obtain something in return because more than money is at stake.

 

         Mediation by definition is not binding, a factor which distinguishes it from most arbitrations. Mediation is a consensual settlement meeting with a “mediator” who helps the parties come to terms for resolving the dispute. A whole cottage industry has arisen wherein retired judges and attorneys become specialists in either facilitative or adjudicative mediation. Facilitative mediators bring the parties to an agreement without actually rendering an opinion as to the likelihood that any specific party will prevail. Adjudicative mediators achieve settlement through persuasion including opinions on material issues, to help the parties understand their exposure.

 

         I find that adjudicative mediation is particularly helpful because the parties can get the advisory judgment from someone they respect who will study their case and focus on the deal points. A public judge can give only so much time to settlement; a private mediator will spend as much time as the parties will pay for.

 

          I try to bring the parties together for mediation as soon as there is enough evidence for the parties to understand their exposure and to appreciate that settlement is better than fighting. I find adjudicative mediation particularly helpful when the party on the other side has layered management. Those at the mediation usually report to someone higher who is a decision maker. Many decision makers may have to report to a Board of Directors or higher authority. A big settlement has to be justified, not only when entered into but also afterwards. The settlement decision may be second-guessed. A decision maker can obtain ample cover from the adjudicative opinion of a former judge who places his imprimatur on the settlement. Also, good mediators use their temporary power to force the parties to sign binding agreements before they leave the mediation to make sure that the case stays settled.

 

         Many civil litigation specialists engage in mediation but too often they just come to talk. The best ones treat it like a summarized trial. They prepare with demonstrative exhibits, a graphics embedded mediation brief and expert opinion summaries for persuasion. When going to trial, after I have completely prepared my client’s case for trial, I take time to prepare the other side’s case for trial. A good settlement advocate must do the same for mediation.

 

 

Strategy #4 – Use Specialist Neutrals In technical cases

 

        I like to use technical Neutrals skilled in a particular industry when the case turns largely on who is right technically or where industry standards are pivotal. The parties must agree on a technical expert they both respect but who does not have an economic or other interest aligned with either. The mediator’s integrity must be above reproach.  Engineering, maintenance and service disputes often involve questions of whether a manufactured product conforms to requirements. Similarly the dispute may turn on whether overhaul and maintenance was performed according to standards or whether a party satisfied requirements under a contract. As business litigators know, contract disputes often involve evidence of custom and practice or course of dealing and the specialist mediator is knowledgeable of these factors.

 

         To make the most out of technical mediation, the lawyers agree to submit a specific issue or issues to a neutral technical expert and the parties split his fee evenly.  The neutral expert agrees to write an opinion to be shared with both sides – it is not binding, but is advisory. The neutral tells both sides what he needs to evaluate the problem, examples: “the subject components,” “the pictures,” “the test results,” “the service history,” “a brief of no more than 5 pages from each side,” etc. The lawyers can agree in writing under the applicable settlement negotiation compromise rules of the jurisdiction that the technical mediator’s opinion will not be admissible in evidence and that will be kept confidential, to preclude others in the industry from seeing the litigant’s dirty laundry. 

 

 

Strategy # 5 – Your Trial Lawyer Can’t Negotiate a Settlement - Try the “Mutt and Jeff” Strategy

 

         What if your business is embroiled in expensive litigation in a big case with no solution is in sight -- except trial?  What if your business already has a good trial lawyer but you want one last attempt at settlement - use the “Mutt” and “Jeff” strategy

 

         You may already have the barracuda lawyer, “Mutt,” preparing to go to trial. But you haven’t given up on settlement so you call in settlement advocate “Jeff” to negotiate a compromise. Some sophisticated insurance companies use this technique in large dollar value special risk cases. They send a message by having the trial lawyer pour on the coals but signal that they will give settlement one last chance and are sending in their “settlement attorney” for the effort. The idea is to entice the opponent to discussions with the good cop, or face the bad cop. This strategy works best just before trial in cases with a lot at stake.

 

         For this strategy to succeed, the client has to be willing to pay the settlement attorney for enough cramming time to learn the case well enough to become a persuasive settlement advocate. The cost of a second lawyer can be controlled when “Jeff” has access to the files, briefings from the client and is able to tap the knowledge of his counterpart “Mutt,” the barracuda trial attorney.

 

         The client gets extra dividends for this relatively economical expenditure of additional attorney’s fees. For one thing, the client will get an independent second opinion from the settlement attorney who is not in the main lawyer’s law firm. Further, many well prepared trial attorneys, do a confidential mock trial with hired jurors before going to trial. The settlement attorney who gets up to speed for the final settlement effort can play the role of the opposing counsel in the mock trial. Typically the independent attorney can bring a fresh perspective and muster the fervor of a real opposing counsel.

 

The Best Strategy - Preventative Legal Medicine:

 

         With business litigation, I often discover that the parties should never have had a dispute; or if they had a dispute, it should never have ended up in litigation.  The parties should have had a lawyer draft a detailed contract or memorandum of agreement, setting forth all the essential points of any agreement. Good lawyers will help to identify missing terms and ambiguities in order to prevent later disputes.

 

         Even the best contracts can be breached, the question is, should the parties be allowed to resort to litigation? Should the contract have a requirement to mediate before litigation or should one use a binding arbitration clause. Mandatory mediation does not mean binding mediation, nor does it compel a settlement. Mandatory mediation just requires that the parties make a formal attempt at settlement in front of a mediator. Try this before opening the Pandora’s litigation box. I recommend mandatory mediation clauses for contracts, requiring that parties engage in mediation as a precondition to seeking other remedies in court.

 

         Binding arbitration may also be appropriate in some contracts but it may favor one side. Arbitration sounds cheaper than litigation but some arbitration systems allow extensive discovery. Arbitration hearings can be more expensive than a public judge trial. Sometimes a business party is better served by a judge trial than a binding arbitration. Arbitrators are often predisposed to compromise awards whereas judges are compelled to award judgment to a winner based on the evidence. If you need to win and if you can locate the evidence, avoid binding arbitration.

 

                                    Conclusion

 

         Statistics show that 95% of civil cases end up in settlement. More often than not, settlement occurs “on the door steps of the courthouse.”  One explanation is that the parties are reluctant to settle until discovery is over and they know the strength of each other’s case. But in my experience, a small amount of key evidence obtained early, constitutes most of the persuasive proof at trial. Thus, a settlement advocate will push for a settlement to resolve the case, sooner rather than later.

 

                                    PHILLIP J. KOLCZYNSKI

 

 

 

  NOTE: The issues discussed in this article do not constitute legal advice. My objective is to alert you to some common issues so that you can avoid or minimize legal trouble. Anyone with an aviation law problem should be guided by the advice of his or her lawyer, under applicable federal and state laws, after a full and confidential disclosure of all relevant facts.