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Negotiation/Mediation Advice (1 Viewer)

chet

chet

Footballguy
I am on the board of a small company and the CEO has asked me to help negotiate a dispute with a much larger company.  Essentially, the larger company bought a division of another large company that we were performing work for.  We continued the work with the blessing of the acquiring company  but they refused to make the last payment--small potatoes to them but big to us ~$5mm.

We filed suit and are waiting for a court date. Last week, the bigger company asked if we would be interested in mediation.  I think we will accept.  Has anyone here been through something similar?  Any advice?  How is it likely to work?

 
Is the large company disputing that the work was done or the charges? What's their reason for not paying?

 
Mediation:  you demand 5 mil.  They offer 0.  Mediator spends 8 hours explaining to both of you why your positions are weak and why you may lose at trial.  When you’re tired and want to go home you settle for 2 mil.

 
the rover said:
Mediation:  you demand 5 mil.  They offer 0.  Mediator spends 8 hours explaining to both of you why your positions are weak and why you may lose at trial.  When you’re tired and want to go home you settle for 2 mil.
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Exactly. Like was asked above, what’s their reason for not paying? 

Giving in to mediation weakens your legal standing in this matter imo. If you deserve the full amount go for the full amount. Sucks to pay $500k in legal but at least you net $4.5. Mediation isn’t going to get you a vast majority judgment.

What do the firm’s attorneys think about pros and cons?

 
chet said:
I am on the board of a small company and the CEO has asked me to help negotiate a dispute with a much larger company.  Essentially, the larger company bought a division of another large company that we were performing work for.  We continued the work with the blessing of the acquiring company  but they refused to make the last payment--small potatoes to them but big to us ~$5mm.

We filed suit and are waiting for a court date. Last week, the bigger company asked if we would be interested in mediation.  I think we will accept.  Has anyone here been through something similar?  Any advice?  How is it likely to work?
Click to expand...
First and foremost, hire a lawyer you respect and trust, and take his/her counsel on whether to mediate, when to mediate and how to approach the mediation.  In every dispute, there is leverage that comes from the relative strengths of the parties' legal positions, but also from the costs of litigation and the parties' ongoing business relationship, if any.  You need to understand these leverage points (and others) in order to make a decision.  In many civil litigation matters, the court will order mediation, but the parties have significant say in terms of when and how that happens. In some cases, its in your best interest to mediate early in the case. In others, its better to go through some discovery, perhaps motions, to establish certain facts, then mediate after both parties have a better understanding of where the bodies are buried. In my experience, its almost always worthwhile to go through a mediation. Even if there is no chance to settle the case, you learn about the other side's position, what they think their strengths are.  Additionally, other than the other parties' deposition, this is the one time you get a chance to be face to face with the other side's business representative (not just the lawyer) prior to trial.  You get to sit across the table from him and size him up. In many cases, this is a highly underrated, extremely valuable benefit that comes from a mediation.

 
CletiusMaximus said:
First and foremost, hire a lawyer you respect and trust, and take his/her counsel on whether to mediate, when to mediate and how to approach the mediation.  In every dispute, there is leverage that comes from the relative strengths of the parties' legal positions, but also from the costs of litigation and the parties' ongoing business relationship, if any.  You need to understand these leverage points (and others) in order to make a decision.  In many civil litigation matters, the court will order mediation, but the parties have significant say in terms of when and how that happens. In some cases, its in your best interest to mediate early in the case. In others, its better to go through some discovery, perhaps motions, to establish certain facts, then mediate after both parties have a better understanding of where the bodies are buried. In my experience, its almost always worthwhile to go through a mediation. Even if there is no chance to settle the case, you learn about the other side's position, what they think their strengths are.  Additionally, other than the other parties' deposition, this is the one time you get a chance to be face to face with the other side's business representative (not just the lawyer) prior to trial.  You get to sit across the table from him and size him up. In many cases, this is a highly underrated, extremely valuable benefit that comes from a mediation.
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This is less and less true.  In many mediation sessions you are in different rooms, if not different floors.  Many mediators find having people in the same room simply encourages position-taking and prevents candid settlement discussions.  I've settled dozens of cases where I've never even seen the people on the other side.

 
chet said:
What are the key points to negotiate specifically regarding the mediation?
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You gotta start with the breakfast snacks. Some people will try to sneak in stupid bagels and baguettes and #### with those fruity effing spreads. You need to hold out for donuts.

Donuts only. You win the donuts - you win the case. Mark my words.

 
chet said:
What are the key points to negotiate specifically regarding the mediation?
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If the mediation is about money, the key point is how much you're going to agree to.   There are ancillary things like confidentiality, etc., but unless they're important to someone they don't matter.   Mediation isn't about arguing your case, and the faster both sides abandon position-taking and actually start exchanging numbers the more likely it is that you'll reach a resolution.  

If there aren't already offers on the table, start the day by saying you want a firm offer from the other side within an hour.  

 
the rover said:
If the mediation is about money, the key point is how much you're going to agree to.   There are ancillary things like confidentiality, etc., but unless they're important to someone they don't matter.   Mediation isn't about arguing your case, and the faster both sides abandon position-taking and actually start exchanging numbers the more likely it is that you'll reach a resolution.  

If there aren't already offers on the table, start the day by saying you want a firm offer from the other side within an hour.  
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I was asking about prior to the mediation.  Presumably, both sides have to agree on site, mediator but what else?

 
chet said:
I was asking about prior to the mediation.  Presumably, both sides have to agree on site, mediator but what else?
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How the mediator's fees will be paid.  Usually the parties split it evenly, but sometimes if one party is pushing harder for the mediation you can get them to pay the whole fee.

Each individual mediator usually has their own style and rules.   Some want the parties to meet in the same room first, then break into separate rooms.  Some just shuttle back and forth the whole time.   Old-school mediation had everyone in the same room most of the time, with a breakout room for private discussion.  

Figure out what you think is best for you and talk to the mediator about how they like to work so you can choose a mediator that's a good fit. 

If insurance is involved, you need a commitment that an adjuster with settlement authority will be present or at least available by phone.

 
oh and mediation briefs...public or private.   

some mediators want a private brief that they don't share with the other side.  that makes you more willing to address weaknesses in your position, as well as being more forthright about your demand.   some want a public brief, meaning it gets distributed to the other side.   these tend to be more a dress-rehearsal for court, where you make your best arguments, but you don't concede any weaknesses.  

 
I’m still curious to hear why they won’t pay.  :popcorn: What are your weaknesses in the case? Do they have a legit complaint?

Also, nobody with legal background on the Board? It’s always one of the boxes that get checked off on the Boards I’ve been on. 

 
Johnny Rock said:
I’m still curious to hear why they won’t pay.  :popcorn: What are your weaknesses in the case? Do they have a legit complaint?

Also, nobody with legal background on the Board? It’s always one of the boxes that get checked off on the Boards I’ve been on. 
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Happy to post details after but I was advised on another board that anything I post is discoverable.  Small company with only 5 on the board. 

 
So without knowing any specifics it would seem that mediation, assuming you don't have to take too big of a haircut, may be a good option.  Why in the world would your company allow the new parent co to pay the bill rather than the party that originally engaged them?  I would have held firm that funds were due in full when the sale occurred.  I guess that is an entirely separate issue (ask your attorney if you possibly can have recourse against the original company for any deficit).  Next, do you want to do business with the new company again knowing what you know now?  I would imagine probably not.  Depending on which state you file in, litigation is a long expensive process and you still have to collect if you win.  If you can get away with a small haircut it is probably worth it know that new co has deep pockets.  Being right and winning is not always a perfect science.  If i were you, i would assign some level of litigation risk (10-30% chance of losing) plus your cost of capital and that is the discount you will be willing to take.  As another poster noted, make the new co pay for the mediation.   

 
I'm shocked...shocked that there aren't dozens or more FBGs with more advice and experience on a subject like this.

Thanks again, Chet.

 
So they owe you 5 mil and all of that is billable actual work or product, not fees or service charges or interest, penalties etc.

Usually the extraneous fees get tossed and the focus is on actual debt. You might look at that number and see how it compares to the 5mil total.  Take that number to your counterpart at the other company and see if they want to settle prior to meditation. Once mediation starts assuming they rebuff you then go back to the original 5mil and work back from there.

Otherwise hire a lawyer and do what they say.

 
CletiusMaximus said:
First and foremost, hire a lawyer you respect and trust, and take his/her counsel on whether to mediate, when to mediate and how to approach the mediation.  In every dispute, there is leverage that comes from the relative strengths of the parties' legal positions, but also from the costs of litigation and the parties' ongoing business relationship, if any.  You need to understand these leverage points (and others) in order to make a decision.  In many civil litigation matters, the court will order mediation, but the parties have significant say in terms of when and how that happens. In some cases, its in your best interest to mediate early in the case. In others, its better to go through some discovery, perhaps motions, to establish certain facts, then mediate after both parties have a better understanding of where the bodies are buried. In my experience, its almost always worthwhile to go through a mediation. Even if there is no chance to settle the case, you learn about the other side's position, what they think their strengths are.  Additionally, other than the other parties' deposition, this is the one time you get a chance to be face to face with the other side's business representative (not just the lawyer) prior to trial.  You get to sit across the table from him and size him up. In many cases, this is a highly underrated, extremely valuable benefit that comes from a mediation.
Click to expand...
Enh, not really.  It's standard practice for the parties never to see each other or, if you do have a mediator who believes in an opening sit-down, only the lawyers talk or the mediator takes up the entire time talking about how mediation works and promoting his or her settlement record.  In my experience, with one notable exception - and I think I've done 300-350 mediations, maybe more - the best mediators skip the phony opening session. 

 
the rover said:
If the mediation is about money, the key point is how much you're going to agree to.   There are ancillary things like confidentiality, etc., but unless they're important to someone they don't matter.   Mediation isn't about arguing your case, and the faster both sides abandon position-taking and actually start exchanging numbers the more likely it is that you'll reach a resolution.  

If there aren't already offers on the table, start the day by saying you want a firm offer from the other side within an hour.  
Click to expand...
This is exactly right.  Depending on the personality and style of the mediator, any pretense of caring about the merits of the case will, or should, be abandoned very quickly.  I usually hope for an hour, at most, of lip service to the facts of the case.  If you're still arguing with the mediator over the merits of the case after lunch, it isn't going to settle.  However, if you can get to horse-trading and exchanging figures (sometimes with little darts thrown in with the latest demand or offer about the case facts, which is the only appearance those facts should make after the real work begins) within 60 minutes, 90 at the most, you'll settle over 75% of the time, maybe 90% of the time.      

 
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Aerial Assault said:
Enh, not really.  It's standard practice for the parties never to see each other or, if you do have a mediator who believes in an opening sit-down, only the lawyers talk or the mediator takes up the entire time talking about how mediation works and promoting his or her settlement record.  In my experience, with one notable exception - and I think I've done 300-350 mediations, maybe more - the best mediators skip the phony opening session. 
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Maybe it depends on what kind of case it is. I had one a couple years ago where we were all together in the same room almost the entire first day. We went for two days, settled about a week later. On the other hand, I know a guy who has a good practice mediating accident cases. He sometimes does 3 or 4 cases in a single day and is booked months out. I don’t understand it, but I guess it works. 

 
CletiusMaximus said:
Maybe it depends on what kind of case it is. I had one a couple years ago where we were all together in the same room almost the entire first day. We went for two days, settled about a week later. On the other hand, I know a guy who has a good practice mediating accident cases. He sometimes does 3 or 4 cases in a single day and is booked months out. I don’t understand it, but I guess it works. 
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That sounds more like a conciliation session or a mediation imposed by contract as a mandatory dispute resolution step before any judicial or arbitral resolution can begin.  I've mediated seven-figure cases, one eight-figure case, and we finished in a day, although in both New York and California, going until 11 PM or midnight is not uncommon for difficult or large-dollar cases, and we certainly did that for the larger ones I've been involved in.  Thankfully I've never had to book a mediation for more than a day; what a nightmare.  

 
Aerial Assault said:
That sounds more like a conciliation session or a mediation imposed by contract as a mandatory dispute resolution step before any judicial or arbitral resolution can begin.  I've mediated seven-figure cases, one eight-figure case, and we finished in a day, although in both New York and California, going until 11 PM or midnight is not uncommon for difficult or large-dollar cases, and we certainly did that for the larger ones I've been involved in.  Thankfully I've never had to book a mediation for more than a day; what a nightmare.  
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Thanks for sharing your experience. 

Is the case more likely to settle if the defendant is the one requesting mediation and the plaintiff is open to settling?  

Any recommendations given our situation?  i.e. Small plaintiff going up against multi-billion dollar Fortune 500 defendant?

 
chet said:
Thanks for sharing your experience. 

Is the case more likely to settle if the defendant is the one requesting mediation and the plaintiff is open to settling?  

Any recommendations given our situation?  i.e. Small plaintiff going up against multi-billion dollar Fortune 500 defendant?
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Sure.

Well, I have done many mediations where one side (usually the other one) was clearly only participating because the judge ordered it, and in those instances, you just go in and get out as fast as possible once it becomes clear there's no chance of settlement.  On the other hand, in my experience, if both sides are interested in settlement and the other party is voluntarily talking about mediation, yes, that's a good climate for a possible resolution.  Of course every case is different and there are no guarantees. 

Without knowing your facts I can't make recommendations, but I can say that mediation rarely hurts as long as the client has the time and can cover the expense.  I believe roverfish or someone else above mentioned that at the very worst, it can be free discovery and a chance to learn about the other side's or sides' view of its or their position(s) and case(s).  

 
chet said:
Happy to post details after but I was advised on another board that anything I post is discoverable.  Small company with only 5 on the board. 
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Yep.

Interrogatory No. 13 - Identify any communications between you and any third parties concerning the dispute between the parties.

 
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chet said:
I am on the board of a small company and the CEO has asked me to help negotiate a dispute with a much larger company.  Essentially, the larger company bought a division of another large company that we were performing work for.  We continued the work with the blessing of the acquiring company  but they refused to make the last payment--small potatoes to them but big to us ~$5mm.

We filed suit and are waiting for a court date. Last week, the bigger company asked if we would be interested in mediation.  I think we will accept.  Has anyone here been through something similar?  Any advice?  How is it likely to work?
Click to expand...
@Kid Charlemagne

 
chet said:
I am on the board of a small company and the CEO has asked me to help negotiate a dispute with a much larger company.  Essentially, the larger company bought a division of another large company that we were performing work for.  We continued the work with the blessing of the acquiring company  but they refused to make the last payment--small potatoes to them but big to us ~$5mm.

We filed suit and are waiting for a court date. Last week, the bigger company asked if we would be interested in mediation.  I think we will accept.  Has anyone here been through something similar?  Any advice?  How is it likely to work?
Click to expand...
With 5 mil at stake, you might consider asking a lawyer good buddy. 

 
Otis said:
With 5 mil at stake, you might consider asking a lawyer good buddy. 
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Of course I will talk to a lawyer.  We have the lawyer that the company hired and I have a lawyer friend who's a world class negotiator who's also agreed to advise me.  I was hoping to get a jump start from some FBGs.

 
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