Recently, I mediated a matter in which the defense representative did not appear in person but was available by telephone. Her attorney as well as plaintiff and her attorney were physically present. Prior to the mediation, counsel had agreed that the defense representative could be available by telephone as she lived on the other side of the United States.

Most rules of court as well as good practice require that persons with the authority to settle personally appear at mediation. The reason is obvious: by being “in the moment” of the mediation, matters have a better chance of settling. Parties who are physically present tend not to be distracted by other matters but rather focused on the issues at hand. Oftentimes, the biggest hurdle to settling cases is getting all of the necessary parties in the same place at the same time focusing on the same issue(s). I have found that once this hurdle is overcome, either an actual settlement or progressing a long way towards one occurs.

In contrast, when one party is several thousands of miles away, working on other matters, the telephone call from counsel attending the mediation constitutes an interruption; the representative is not “in the moment” and is not truly focusing on the issue(s) at hand. Simply stated: the mediation does not have the representative’s full and undivided attention.

I do admit that I have handled many mediations in which a representative has attended by telephone, and the matter has settled. But, every once in a while, attendance by telephone proves detrimental which brings me back to my mediation.

The matter involved the alleged erroneous reporting of an event on a credit report. While the plaintiff had not suffered any credit related damages, she had suffered much emotional distress including sleepless nights over trying to have the credit event corrected and repeatedly explaining to potential creditors that it was an error. While plaintiff was able to have the erroneous credit event corrected rapidly and easily elsewhere, this one defendant continued to insist for several years that the “error” was accurate. Thus, her counsel was seeking damages for emotional distress under a theory of defamation rather than any “actual” damages allowed under the appropriate statutes.

At the request of the defense, the mediation was occurring early in the litigation. I suspect one reason was because plaintiff’s counsel was entitled to attorneys’ fees under the statute and so mediating early was defendant’s way to limit those fees.

However, while the defense wanted to mediate early, it was not prepared for the consequences; paying “a lot too early”. After several rounds of negotiation, plaintiff’s counsel provided the “bottom line” which was much much lower than the opening demand. To the defense representative, it was too “high” as it was too “early” in the litigation to be paying that amount of money. This logic did not quite make sense to me because if the matter did not settle, the monetary demand which included attorney fees would only increase. (Indeed, the parties were engaging in further discovery over the next several days if the matter did not settle, thereby immediately incurring additional fees and costs!)  I could not fathom what was restraining the representative from agreeing to pay such a low amount; why was more time (and thus the incurrence of more fees) a “must” for the representative, especially when the facts may not be favorable to the defendant?  According to plaintiff’s counsel, should the matter go to trial, it was not a question of whether the plaintiff would win, but how much and whether it would include punitive damages. Defense counsel understood this risk and presumably explained it to the representative. Who remained unmoved!

Was this one of those mediations in which being physically present would have made a difference? I strongly suspect so. The representative clearly was “not in the moment” of the mediation but rather in the groupthink or mindset of the organization located thousands of miles away. To the representative, it was just another file on the desk that had to be dealt with “in due time”. The “ due time” was not ripe. Had the representative been present and had she had the opportunity to meet plaintiff and her counsel face to face and speak with them as well as the opportunity to have extended face to face conversations with her own counsel, the result may have been different. The representative may not have felt restrained to keep litigating because it was “too early” to settle but rather may have seized the “bottom line” offer of plaintiff fully appreciating that the settlement demand would only increase.

So, while I completely understand that it is not practical to always have a defense representative present at a mediation, careful thought must be given whether that absence will make a difference in reaching a resolution. As in this case, sometimes it may well be the decisive factor.

… Just something to think about.

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