Mediation in Personal Injury Cases

October 9, 2010

With the advent of the fourth quarter of 2010, my personal injury practice has, as is usual, focused on reaching year end settlements of cases which are currently in litigation. This trend is in large measure driven by the defendants’ insurance companies desire to “clear their books” of cases before the start of the new year if possible for accounting and tax purposes.

I try to capitalize on this motivation to settle by scheduling as many “mediations” as possible before January 1st of the coming year. A mediation is simply a conference attended by all parties to a lawsuit where the case is discussed before an agreed upon mediator, followed by settlement negotiations. There is no requirement that an agreement be reached nor can the mediator force one to occur.

While the insurance adjusters are well versed in how mediations are conducted, most plaintiffs have never attended one before and often have no idea what to expect.

The first thing to understand is that all that occurs at mediation is confidential. The theory is that, if the parties are permitted to speak freely about the issues presented, the chances of an agreement are increased. As a result, most mediators require all parties to sign a confidentiality agreement at the outset of the conference. This prohibits either party from later calling the mediator to testify about any statements or offers of settlement made at the mediation should no agreement be reached.

The mediation begins in a group setting where each side makes an opening statement detailing their view of the facts, damages and any legal issues which may arise should the case proceed to trial. Following those statements, the parties separate into different rooms to caucus. The mediator thereafter moves back and forth between the parties to exchange settlement offers, additional pertinent facts, and arguments in an attempt to forge a compromise and ultimate agreement.

I always prepare my clients to not be offended by the initial offer from the insurance adjuster. A first “lowball” offer is always expected and never accepted. As the mediator moves between the parties rooms, the subsequent settlement offers generally move closer to the other until one or more parties indicate they will not negotiate further.

This is the point at which the effective mediator earns his or her fee. Both sides know that trials are expensive, time consuming and
carry no guaranteed outcome. The plaintiff is particularly vulnerable at this point, since while the insurance company is simply making a business decision, the plaintiff may be counting on the settlement funds to pay outstanding medical bills or replace lost wages.

The mediator’s job is to point out to the insurer that because their position is business driven, they should contribute the few additional dollars it will take to close their file, cease any further legal fees and release any excess reserve funds being held.

While some insurers apparently do not view these arguments as compelling, most will bend more during the fourth quarter than other times of the year. Remember, the operative concept is compromise – often a little bit beyond the pre-mediation “bottom line” if necessary.
If no agreement is reached, an “impasse” is declared and a report is sent to the trial judge who will therafter schedule a trial date, usually six months or more into the future.

Al mediators say that a successful mediation results in neither party leaving happy following an agreement. They will leave with finality, certainty and an end to legal fees. Given the prospect of a subsequent jury of six strangers deciding the case, possibly with disastrous results for one party or another, the grumbles following a successful mediation are most often quickly forgotten.