STRATEGIES in LITIGATED CASES
An Effective Strategy is to Define the Size of the House:
Through open discussion with the mediator during a caucus period let the mediator know where you stand in relation to the quantum of the case. For the purposes of this exercise, lets use a disability insurance case as an example. I call this exercise Defining the Size of the House.
In the majority of cases it is fairly easy to calculate the arrears to the date of the mediation. This will show your openness to share information and hopefully build some trust with the other side. It also allows the other side to question your numbers and feel part of the process. I find that sharing a copy of the calculation sheet and showing
the arrears calculation is helpful for the other side to see how the arrears were calculated. This calculation sheet should layout the monthly benefit amount along with the number of months and any Cost of Living Adjustments and any monthly deductions such as CPP Disability Pension.
The more difficult discussion surrounds the value of any future monthly benefits, the present value. The factors involved in calculating this amount can be complex from an insurers perspective. This amount could include a variance for mortality based on an individuals age and sex. Insurers refer to their present value as their Reserve. The amount they are required to hold to ensure a stream of monthly benefits for the plan member until the termination of the benefits, typically age 65.
The plaintiffs lawyer will typically want to deal with a Present Value calculation using a discount factor applied to the future stream of monthly benefits.
Typically the insurer will want to use a factor closer to 5% while plaintiffs counsel will want a factor closer to 2.5%. With the lower Present Value percentage the larger the future value dollar amount.
This step is crucial in defining the size of the house. Open discussion with the Mediator and plaintiffs lawyer will need to occur in order to reach your first compromise in the mediation. You may settle on a 4% discount factor or be successful in presenting your argument that the discount factor remains at 5%.
Remember for every give there is a take, so pick your battles wisely. If you give something up be sure to get something in return.
Once this excersize is complete its now time to turn to the facts of the case and start presenting settlement offers.
Next Steps – Who is going to blink first
Here we have it, who makes the first offer? This is a fundamental part of the process by setting the goal posts for the rest of the day. Listen to the Mediator who by this time has had time to caucus with both parties. As an insurer representative I always would like the plaintiff to make the first offer. This will determine the flow for the rest of
the day. If the plaintiff offers $400K and your first offer was going to be $25K, this will make for a long day.
Stick to the merits of your case and make appropriate offers based on the facts that you have. There may be specific milestones that you can attribute a dollar value in order to present offers. For example if there was an defense or plaintiff independent medical examination that
is supportive of the plaintiff not being disabled, you may want to assess a dollar value to the date of the examination. Or perhaps there is some video surveillance evidence that shows the plaintiff more active than might be depicted in the clinical records or answers to questions at discovery about his/her functional ability.
This is my preferred way of negotiating during a mediation. Giving a rationale to the offer you are making and not simply making offers with no real analysis to them. This gives the Mediator something to work with in the other room.
In Part 3 I will Touch on Wrapping Things Up