June 20, 2024
Mediations do not always end in settlements, even when all parties are well-prepared and willing to participate in good faith. Here are several key reasons why a mediation may fail:
- Mistakes in Valuation or Unrealistic Settlement Expectations: A mediation may fail when parties cannot agree on a price or when one party has unrealistic expectations.
- Premature Mediation: Early mediation with little time for discovery might create a lack access to crucial information, and parties may be reluctant to compromise without a clear understanding of the claims.
- Reluctance to Justify Settlement Offers: Parties should present legal or factual justifications for their settlement offers, as unsupported offers often lack credibility and frustrate the settlement process.
- Animosity or Distrust: Settling disputes is difficult if one party perceives others as untrustworthy or acting unethically or, which may result from misinformation or overreaction.
- Lack of Settlement Authority: If individuals with decision-making power to affirm a settlement are not present, the mediation cannot succeed. For instance, business directors may have the authority to settle instead of their counsel, and thus, need to be present.
- Excessive Number of Involved Parties and Issues: In disputes with more than two parties or numerous issues, a single day may be insufficient, and limited time for mediation can contribute to its failure.
To minimize the risk of mediation failure, consider the following strategies:
- Alter your valuation by weighing the benefits and costs of trial: Remain flexible to adjust your position on the settlement you seek. Evaluate whether settling for a lower amount in mediation outweighs potential losses in a prospective trial.
- Provide more information: Foster transparency by continuing to share newly found information through discovery. This ensures both parties have a clear understanding of the merits of each side’s argument, and a good-faith gesture may encourage the other side to settle.
- Ensure counsel is well-prepared: Thoroughly disclose information to your legal team to help them prepare best for you. This preparedness enhances negotiation strategies and overall case presentation.
- Don’t give up: A failed mediation does not mean future attempts won’t succeed. Continue with discovery and further negotiation and utilize new insights to refine your approach to future mediation sessions.
To read how CASTAYBERT PLLC can assist you with mediation matters, click here [1].