J. Anderson Little on “Making Money Talk”—an Approach to Mediation


making money talk littleI recently had the opportunity to hear J. Anderson Little speak about mediating claims where money is at stake. He has written a book, Making Money Talk, that deals with this same subject. In fact, most lawsuits involve disputes over money, and most mediations and settlement discussions are therefore negotiations over how much money one party (usually the defendant) will pay to the other party (usually the plaintiff).

I’ve written before that I am not a transformative or interest-based mediator. I tend to be more evaluative. Most former lawyers and judges who mediate tend to be evaluative. Their careers have been spent evaluating lawsuits, and they know that in many cases there is no ongoing relationship between the parties to try to preserve. These mediators leave the transformative approach to social workers and psychologists.

Mr. Little’s presentation made it clear that he eschews the interest-based approach in favor of going straight to the heart of the matter—the parties’ positions on the value of the case, which is in fact an evaluative approach to mediation. But he also emphasized that as a mediator he is not the one evaluating the case. Instead, he helps the parties and their attorneys make their own evaluations.

Mr. Little explained that parties who do not rationally assess their positions during a mediation tend to devolve into a “death spiral” that makes it harder for them to reach a good settlement. The mediator’s role is to steer the parties away from the death spiral and to facilitate their rational discussion of the case. Mediators do this by facilitating

  • the flow of information,
  • analysis of the merits of the case, its risks, and each party’s BATNA (Best Alternative To Negotiated Settlement), and
  • movement in the parties’ positions on settlement.

Mr. Little favors use of decision tree analysis to assess the likelihood of various outcomes. Litigants tend to evaluate a settlement proposal against their best case—what they perceive as total victory. But it is important for litigants to assess the likelihood of obtaining that victory, as well as the cost of doing so. I started using decision tree analysis in the mid-1980s as a defense attorney, and it always helped me evaluate my cases.

Here’s how it works:

  • A settlement offer of $500,000 may not seem very appealing if a plaintiff thinks he can obtain a $2 million verdict. But if there is only a 20% chance of obtaining that verdict, then a $500,000 settlement is a better deal than going through the risk of a trial.
  • Or, if there is a 50% chance of getting the $2 million verdict, but it will cost $1 million to get through trial, then the real value of the verdict is $1 million, and the $500,000 settlement is equal to the weighted odds of getting the verdict.

Mediators can help the parties assess their monetary claims rationally. It all boils down to leading the parties to determine their most likely outcome is if the case doesn’t settle. What is each party’s BATNA, and is there overlap between the parties’ positions? If so, how should the parties plan their settlement offers to avoid impasse and reach an agreement?

Unfortunately, too often parties send the wrong signals in their offers and counteroffers, and their miscommunications lead to impasse. Mr. Little recommends that parties have a plan based on their own assessment of the appropriate settlement range. Parties should refrain from letting their emotions cause them to punish the other party for unhelpful approaches during the mediation.

Mr. Little’s approach jibed with how I always approached settlements as a defense attorney, and how I approach damage cases as a mediator. I have always thought that lawsuits settled when the parties were equally unhappy with the settlement. Mr. Little didn’t really dispute that attitude, though he offered ways in which mediators can help the parties get more comfortable with settlements. I have not read Mr. Little’s book, but it seems like a worthwhile addition to a mediator’s library.

When do you think it is important to use an evaluative approach to mediation, and when does an interest-based approach work better?

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