Breaking Impasse and Closing the Deal: The Mediator’s Proposal
February 14, 2024
If all attempts to avoid impasse have failed but the parties are close enough to a deal that both sides see the merit in one final effort, a mediator might suggest a mediator’s proposal.
A mediator’s proposal is a settlement offer made by the mediator to all parties, who are asked to accept or reject it, exactly as proposed, in a confidential communication to the mediator. The mediator suggests a specific dollar amount or terms between the parties’ positions, not based on a legal evaluation of the case, but on the mediator’s judgment of what both sides are likely to accept. A mediator’s proposal is not a mediator’s “recommendation.”
The mediator aims to set the proposal within a “win-win range,” which represents a better outcome for both parties than their alternatives through litigation, even if both parties’ initial stances fall outside of this range. The mediator typically gauges each party’s reactions in caucuses before revealing the proposed amount.
The mediator provides a written settlement proposal to counsel for both sides, outlining key points to break the impasse and setting a deadline for acceptance or rejection. Some mediators prefer simultaneous responses from both parties and may inquire about the time needed for a decision before setting the deadline. Each side can respond with a “Yes” or “No.” If both parties say “Yes,” a settlement is reached. If one or both parties say “No,” the mediator only announces that there is no settlement, without disclosing individual responses. Therefore, you and your client, and the other party and their counsel, may respond “Yes” knowing that your compromise will not be disclosed unless there is a deal.
The mediator’s proposal carries benefits and drawbacks. On one hand, the mediator can propose a figure that neither party felt comfortable suggesting, thus assuming the role of a neutral arbiter and mitigating blame. Knowing the mediator will propose a figure within an objectively determined range increases the likelihood of acceptance by both parties.
There are drawbacks, however. For the defense, it may be disadvantageous as the neutral mediator assigns a value to the case that was not previously on the table. For plaintiffs, the proposal may disappoint if it falls far below inflated expectations. Nonetheless, the mediator’s proposal may yield a more favorable agreement than litigation alternatives.
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