Is bracketing dead? New strategies for mediation

As Cole Porter famously wrote: "You say tomato, I say tomahto, you say potato, I say potahto, tomato, tomahto, patato, patahto - let's call the whole thing off." Parties in mediation could be singing this song when the plaintiff says: "I want $500,000," and the defense responds with "We offer $5." Followed, sometimes, by: "Let's call the whole thing off."

Demanding $500,000, offering $5 and spending the whole day going back and forth is the tried and true method of "bracketing." In the bracketing mode, the plaintiff makes a demand, which is usually an arbitrary number that is substantially higher than the plaintiff's reasonable expectation for settlement. The plaintiff's number is, accordingly, met with derision, disgust and disappointment by the defense. The defense "counters" with a number that is artificially low, causing howls of protest from the plaintiff and accusations of "bad faith" negotiating. After that friendly start to the process, the real bracketing begins.

A typical bracketing scenario, using the above example, might look something like this: After demanding $500,000, the plaintiff reduces the demand from $500,000 to $490,000 to "send a message to the defense" that they are tough and intend to stick to a high range of numbers. After an hour or so of working with the defense, the mediator convinces the defense team to put some "real money" on the table, not the token and insulting $5, and the mediator conveys a $50,000 offer from the defense side. Now the plaintiff is at least a little encouraged and the mediator is able to convince the plaintiff to make some real movement. The plaintiff comes down to $415,000 after 45 minutes of discussion and much hand-wringing.

Nearly an hour later, the defense team comes up to $95,000, but only $95,000, because they are reluctant to break the magic "six figure barrier." Occasionally, this seems to have about the same basis in reality as the fear that aeronautical engineers had in the 1950's that breaking the sound barrier might cause the destruction of the aircraft and the death of the pilot. In response, the plaintiff wants to "slow down," because the defense isn't in the magical "six figure range." After much discussion, the plaintiff demands $385,000, but only because the mediator suggests that a higher number won't be productive. The ball is back in the defense court. The mediator persuades the defense that it's time to get serious and make a six figure offer. After a long discussion, the defense agrees to put a "really big" number on the table, but only with the understanding that the mediator will convey that they are "running out of room." $150,000 is offered by the defense.

After four hours, the parties are $235,000 apart, but there's some troubling disparity in their bargaining positions. The plaintiff has come down only $115,000 from its initial $500,000 demand, but the defense has come up $150,000 from its opening offer of $5. The mediator senses that the plaintiff really wants something like $250,000 and that the defense would be okay with that number as well. The mediator also senses that the parties are deeply embedded in the bracketing process and that further brackets are necessary before the parties are close enough to close the deal.

The mediator spends an exhausting hour trying to convince the plaintiff to make a demand that starts with a "2." The plaintiff reluctantly agrees to reduce the demand to $315,000.

Back to the defense room. The defense says they will only go up to $185,000. Now the parties are $130,000 apart, and it's starting to become clear that splitting the difference gets to around $250,000. Thus far, the parties have spent more than 6 hours in the bracketing process. The mediator spends the next hour in one more bracketing round and then makes a mediator's proposal at $245,000, which is accepted by both parties.

Whew! Is there a better way? Is there at least a more efficient way? The answer is a qualified yes. But the "yes" might be absorbed entirely by the qualifications.

To start the analysis, perhaps the most important thing to understand about the dynamics of efficiently negotiating a settlement in mediation is that both parties almost always arrive with a settlement figure in mind. Let's call that the parties "real settlement number." The question is to how to obtain the real settlement number, followed by the second question, which is how to bridge the gap, if there is a gap, between the plaintiff's real settlement number and the defendant's real settlement number. In our example above, the real settlement number of the parties was always around $250,000. It just took a long time and lots of effort to get there.

The first qualification to the "yes, there's a more efficient way to settle" is that the ability to get to the real settlement number depends on a variety of factors. How well do the parties know the mediator? How much do the parties trust the mediator? Do the lawyers need to "perform" for their clients or do the lawyers and the clients have a relationship that allows them to be "bottom line" with one another and with the mediator? Do the parties or their lawyers have unrealistic expectations? Are the parties and their lawyers missing essential information or are they making decisions based on erroneous or incomplete information? Are the parties and their counsel able to rapidly assimilate new information and change their positions accordingly? Are the parties and their counsel at the mediation with the idea of reaching a settlement or are they simply going through the motions? Is the mediator able to read between the lines and determine what the real settlement number likely is even if the parties don't share that number with the mediator?

The second qualification to the "yes," is that the mediator must be cautious to substitute his or her own "value" for the settlement for that of the parties. Even though the mediator might have a strong sense at the outset of the mediation, or even before it starts, of the range of settlement, and even if the ultimate settlement is exactly the same as the "mediator's number," experience shows two things: first, when the mediator "values" the case, the mediator tends to drive the parties toward that number; and second, even if the parties would have arrived at the number by themselves, they usually don't feel good about having been driven to the number by the mediator because it becomes the mediator's settlement and not the settlement of the parties.

How can the parties and the mediator accommodate these seemingly conflicting issues and arrive at a settlement more efficiently? A technique that I sometimes employ is to ask the parties early in the process to share their goal with me, in a confidential way, so that I can get some idea of the real settlement number. This allows me to determine early in the negotiations how far apart the parties really are. If the parties are quite close, I can use a "modified mediator's proposal," a process where I can sense where the case might resolve itself and I can ask the plaintiff: "If I could get you 'x' amount of money, would that be enough to settle this case?" I can ask the defense: "If I can get the plaintiff to accept 'x' amount of dollars, would that resolve this case?" This is a "pre-sold" mediator's proposal and often works extremely well and does not consume hours of back and forth offers and counter-offers.

Sometimes, simply having discussions with both parties, independently, allows me to get a clear picture of what it will take to settle, without ever asking for a demand or asking for an offer. In my experience, this can be a very efficient approach. When it's clear, after an hour or so with the plaintiff, that the plaintiff really wants 'x' dollars, I can say to the defense: "It's going to take 'x' amount of dollars to settle this case. Let's talk about whether it makes sense." At that point, we can spend our time making a rational analysis of the worth of the case instead of spending our time and energy convincing the parties that their bracketing increments are too low or too high.

It is my experience that approaching the settlement process in this way is, in fact, not only more efficient for the parties but also less stressful and less adversarial. It allows the parties to concentrate on reaching one settlement instead of putting their energy on a series of mini-settlements, or brackets.

Is bracketing dead? Not entirely - bracketing can be useful in a given case, at least for a while, but bracketing is only one approach, and parties and their lawyers need to be receptive to more efficient and productive approaches that are outside the bracketing modality in order to get better results at mediation.