As any litigator who has represented clients in mediation knows, there can sometimes come a point in the process where the parties have dug in their heels, neither side will budge off its last settlement position, and the process is at a cross-roads. One path leads to the parties, and the mediator, simply giving up and calling it a day. The better path can still lead to resolution, if the parties are willing to go down it, with the mediator using certain tools to help get a resolution across the finish line. Two of those tools are the “mediator’s proposal” and the use of “binding mediation.”
The mediator’s proposal. As you no doubt know, a mediator’s proposal involves the mediator using his or her best judgment, based on everything learned during the process, as to what compromise outcome would most likely be accepted by both sides. The mediator then proposes that outcome to each side separately. If both sides separately say yes, then there’s a deal and a settlement agreement is written up accordingly. If both sides say no, or if one side says yes and the other side says no, then there is no deal and the mediator never discloses to the side that said no that the other side had said yes, so as not to jeopardize further settlement discussions. The mediator’s proposal can be an effective tool to get past impasse, with the following caveats:
- It should be used only if both sides have first agreed to the process, with a full explanation of what it involves.
- It should be used sparingly, and only after it’s clear that no other efforts to narrow the remaining gap are likely to succeed. I firmly believe that the best settlements are those in which the parties have reached their final resolution without a mediator’s proposal being made, because doing so gives them “ownership” of the outcome.
- It should be used only after it’s clear that the “gap” between the parties has been narrowed to the full extent possible. The smaller the gap, the greater the chance that the mediator’s judgment will be correct as to what proposal will most likely be accepted by both sides.
Binding mediation. Since Bowers v. Lucia (2012) 206 Cal.App.4th 724, a second tool has been added to the mediator’s toolbox for getting past impasse. That tool is binding mediation. You ask, how can a process whose very foundation is the parties’ self-control over the outcome (and indeed the process itself) be binding over them? The Bowers case answers that question. Simply put, with a properly-drafted written agreement, the parties can give the mediator the power to make a decision for them, that’s binding on the parties if they have been unable to reach agreement through the mediation process. The court held that, if the agreement is properly written, the mediator’s subsequent decision becomes a binding settlement agreement that is enforceable by motion pursuant to Code of Civil Procedure Sec. 664.6.
Here are some thoughts regarding binding mediation:
- It’s definitely not appropriate for every case; to the contrary, it’s appropriate only for a small minority of cases. One example where it worked well was a neighbor view dispute I mediated some time ago. Through mediation the parties reached agreement on a number of issues, but couldn’t reach agreement on the height to which the vegetation on the downhill neighbor’s property would be allowed to grow. Each side made a proposal for a height limitation. They then entrusted me with making the final decision, after site visits to the properties where we set up story poles connected by ropes that represented various view planes. That decision then became binding and enforceable under the authority of the Bowers case.
- Before the parties are meaningfully able to agree to the binding mediation process, they must first develop a great degree of trust in the mediator. That means that, in most cases, the agreement for binding mediation won’t be made until the parties have already spent enough time in the mediation process to get a comfort level with the mediator.
- For the reasons mentioned in the Bowers case, the agreement for binding mediation must be properly, and clearly, written so that there is no room for misunderstanding as to what the parties have agreed to. There should also be a clear, written understanding as to what, if any, additional information the mediator will receive from the parties before making a decision.
- The parties should clearly understand that, unlike an arbitrator, the mediator will be making a decision based on information that is not under oath, and which may include information that has been given to the mediator by each side out of the presence of the other. (Indeed, Rule 3.857(g) of the California Rules of Court requires the mediator to let the parties know this, and to obtain the informed consent of the parties before entering into binding mediation. That rule also requires the mediator to give the parties the opportunity to select another neutral for the subsequent, decision-making process.)
Click here for an article I wrote for The Recorder shortly after the Bowers decision came down for more information about the case and the binding mediation process.
As always, I remain dedicated to providing the best possible ADR services in the format that best suits the parties’ needs, whether through Virtual Dispute Resolution or in person when it is safe to do so. I look forward to working with you.