Quoting extensively from a study published by the Journal of Empirical Legal Studies leading Pacific Northwest Mediator Susan Hammer has written reflective article Let’s Not Make a Deal looking at some of the reasons why cases do not settle. The study is not confined to personal injury and clinical negligence disputes. One observation from the study is that in only 15% of cases going to trial do both sides do better at trial – in other words the claimant gets more than the defendant’s last offer and the defendant pays less than the claimant’s last offer. It seems a surprising figure and it means that in 85% of the cases somebody made a mistake. In clinical negligence cases the claimants got it wrong 81% of the time and in personal injury compensation claims the claimants’ error rating was 53%. It has to be borne in mind that contingency fees which do not yet apply in the UK seem to have had an influence in those figures.
Susan suggests some of the reasons why cases don’t settle :
In the real world, settlement decisions are based on many factors other than economic efficiency. There are extrinsic factors that cause parties to sacrifice the optimal economic outcome in favor of a compelling, non-economic need. A party may put a premium on having his or her day in court, setting a precedent, sending a market signal, punishing or needing to “bet the company.”
There is nothing wrong with these attitudes as long as it is understood that they can come with a substantial price tag. Susan believes lawyers do a very good job of advising clients about the value of their claim but suggests some ways of doing even better.
Avoid what she calls “aggressive advocacy”. Claiming exaggerated losses or denying liability at the outset are two examples. Clients may take their lawyer literally and from then on there will be problems managing expectations.
Attorneys can save their client relationships and have an easier time managing expectations if they use caution from the beginning, by talking about evidence that may surface during discovery or mediation that could change the risk assessment and by explaining the difference between an initial advocacy letter and a settlement analysis.
Vet your own cases with a colleague who may hold a different point of view. I know from practice there can be great comfort from hearing a colleague give the same evaluation of risk as you have made but how much more valuable is it to hear a contrary point of view? It will certainly induce more vigorous risk assessment on your part.
I play golf and every now and then go through one of those phases where I decide I am going to crack the game and get a single figure handicap. I go to the driving range and smack a hundred balls with my driver. I never practice my putting. I use my more putter for half or more of the shots I hit on the course. The obvious conclusion is that I should practice putting. Likewise most cases settle without trial. Do you practice your dispute resolution skills? What do you do to hone your negotiating skills?
Some come to mediation and repeatedly present some version of their closing arguments. The best dispute resolution advocates come to mediation ready to learn something new and to thoughtfully analyze cost, risk, opportunity and non-economic factors. They are a counselor. Their clients are prepared to see their lawyers play a different role than they would at trial, and they are ready to appreciate it.
With all the will in the world sometimes your carefully considered advice will fall on deaf ears. Most lawyers know and understand that and are sanguine about it, knowing they have done their best to advise the client to the best of their ability. Mediators can have a role to play here. As a mediator I would be happy to work with a lawyer and a client who is having difficulty seeing past the non-economic factors effecting their decision making. My independent reality testing sets the role apart from advice a barrister might give in conference. Such work excludes me from any future mediation but it would be designed at getting the client closer to the point of dispute resolution and therefore valuable.
Is this a valuable service, would you use it? Let me know – as always post your comments below.
Thanks to Geoff Sharp for highlighting this piece.
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