How To Balance the Scales of Justice

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We’re all familiar with the symbol: Lady Justice carrying the balance scales. She holds a sword and sometimes is blindfolded to show a lack of prejudice. In most depictions the scales are balanced. She has righted the scale to dispense justice. But sometimes the scales are uneven.

What Is Being Weighed?
Perhaps the most common interpretation of the symbol is that evidence on both sides of an issue is being compared. Which side has the heaviest evidence? Does that mean there are more witnesses, more exhibits? What weight does the credibility of the claims bear?

But consider whether the scales might represent something else. There is an imbalance between the parties. Now our justice system is trying to return them to equilibrium.

Rebuilding Balance
As a civilized society, we have granted the government monopoly control over this process. We do not condone vigilante justice. The result is the complex legal system we have today which might leave the parties still feeling unbalanced.

One way our system restores equity between the parties is to impose legal sanctions against wrong-doers. In civil cases this is a money judgment, some of which might be as punitive damages. When a case has gone this far, the parties have surrendered control of the process to the system.

The alternative, which is how approximately 96% of all cases conclude, is settlement. A settlement usually provides financial compensation to the claimant and halts all parties’ expense and stress. Civil settlements avoid a judgment of record. A confidentiality provision can protect all parties’ reputations.

A professional mediator can help parties feel they have achieved better balance by exploring other options, too, such as an apology or agreement to change procedures. Unlike with a money judgment, settlement offers opportunities for creative financial arrangements to better meet the claimant’s needs with the available funds. This might be a structured settlement or a special needs or reversionary trust. Use a mediator who understands these options.

How to Make the Perfect Offer

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You know the case should settle. Why won’t the other side agree to your offer? Here are some tips for creating the perfect offer. I’m going to refer to both offers and demands as offers to settle in this article.
WHEN
As long as you’ve done your homework, there’s no bad time to make an offer. Professionals on both sides of the table have been evaluating the case since it started. The attorney for the plaintiff/claimant made a judgment call about whether to accept the case. The defense set up reserves based on early information. The unique facts of the case will determine how much investigation is needed to put an offer on the table.No one wants to bid too high or too low. Evaluation is an ongoing process. The mark of an expert litigator is knowing when to stop investigating.

You don’t need to look under every rock. For example, if you have the experts’ reports, depositions may be an unnecessary expense.

You don’t need to wait for a demand. Making an offer without a demand shows you are serious about settlement. This also creates an anchor, i.e., you are defining your evaluation range. The offer should be realistic, but at your outer limit. Putting an offer on the table may prompt your negotiating opponent to take a second– or first– look.

Don’t ignore an offer to settle. Nor should your kneejerk reaction be immediate rejection. Ask questions about how this number was calculated. Have you missed something? Have they? Don’t drop the negotiation ball. Look at the offer as an opening to constructive communication. A mediator can facilitate this process.

WHO
In early days, the adjuster may be best positioned to make an offer. Once an attorney is on board, the attorney speaks for the adjuster. But even later in the proceedings, the adjuster may be the best person to make the offer. This can happen when an attorney senses their opposite number harbors a personal animosity. Similarly, some claimants refuse to negotiate directly with their adjuster, particularly if there is a long contentious history.

When adjusters attend mediations, they often take an active role in the negotiation. In rare situations, particularly in commercial cases, the parties can negotiate with each other directly. Direct negotiation like this may work best under the watchful eye of the mediator, but away from the attorneys.

WHAT
The perfect offer will reflect the evaluation effort which went in to creating it. Just like in grade school math, show your work. Avoid round numbers—at least initially. In most cases, the evaluator is considering actual down-to-the-penny bills. The offer should show how they were taken into account, even if a round number ultimately settles the case.

As you close in on a deal, be sure to cover all the deal points. Remember everything you know about the Restatement of Contracts. There needs to be an ironclad offer and acceptance to finalize the agreement and foreclose later attacks. Make sure the deal you struck can be enforced in court if something goes awry.

HOW
Negotiations are often oral. If you encounter difficulties getting your opponent’s attention or you suspect opposing counsel is not conveying your offers to their client, a written offer is best.

Confirm oral offers in writing. The strongest offers are more than an amount. Include a date by which payment will be made. Does the deal include any other consideration? Once you think you have an agreement in principle, confirm particulars such as how liens, costs, and fees will be handled. Identify exactly all the parties doing the releasing and all the parties/entities being released. What is the nature of the release—with prejudice, without prejudice. stipulation?

PERFECTION
Your first offer is unlikely to be the perfect formulation of that combination of factors that everyone can agree on. Keep making offers of settlement as the matter progresses, and keep an eye on the midpoint between offers and demands. Close when the zone of difference becomes negligible. Voilá: perfection.

Workers Comp Litigation Guidelines Should Define These Four Settlement Triggers

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Civil litigators tend to observe certain guideposts as mediation triggers, such as the closing of discovery, setting of a trial date, or an order from the court to use mediation.  Because about 95% of civil cases settle before trial, mediation is the norm for almost every area of civil litigation.

In contrast, many California workers compensation attorneys don’t mediate their cases and are pretty unfamiliar with mediation. Moreover, because a workers compensation case can last literally for the life of the claimant, some practitioners feel no urgency to settle, even though that ratchets up the case value and expenses.

Instead, certain events should automatically trigger parties to actively pursue settlement.

The injured worker is 61 years old. Once the injured worker turns 62½, any buy-out of future medical care must include a Medicare Set-Aside.  That MSA could make this case more difficult to settle. It might increase the evaluation more than any party anticipated and for sure will cause delay. Plus, with professional administration, money is no longer under the injured worker’s control. Settle before Medicare becomes a party.

Indemnity payments reach 70% of the expected total.  Once all the indemnity is paid, there is no reserve to fund any part of the settlement beyond future medical.  This often puts the employer’s side in the position of paying more than they think the case is worth to achieve closure. As for the injured worker, there is little incentive to give up guaranteed medical treatment for life if there is no compensation beyond a sum which may not fully fund future medical needs.  Better practice is to monitor the indemnity payout and aggressively move to settlement before the indemnity reserve is depleted.

The Date of Injury was more than three years ago.  The employer’s side has many reasons to want to get claims off the books.  This is particularly true for private (non-governmental), self-insured employers who are legally required to pay a bond while the claim is open.  “Old Dog” claims, those that are more than three years from Date Of Injury, deserve special attention.  Widows and widowers receiving death benefits may welcome the opportunity to receive a large cash payment; sometimes they don’t even realize this is an option.  In Pro Per claimants may also favorably respond to a settlement outreach.

Trial is Imminent.  Nothing makes people think about settlement more than an upcoming trial date.  You’ve lived with these facts for a long time; how can you be sure the judge will see things your way in the limited time available to communicate?  Going to trial is a risk.  Most people are uncomfortable with the lack of control.  They are happier with a negotiated settlement.

Time to Call the Mediator
When events pull one of these triggers, it’s time to get serious about settlement. A mediator can help parties define the pertinent facts and law and efficiently bring the case to resolution.

Applying the Scientific Method to Case Resolution

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You undoubtedly studied the scientific method in school. You may have even applied it to sophisticated experimentation. Think about how to use that approach for case evaluation and resolution now

Scientific Method

Going Through The Steps
The scientific method can be defined in as few as four steps or as many as ten, but let’s think about a five-step process.

First, identify the problem. Use what you know so far to start your action plan. For each possible issue, determine what information you need to resolve the question. That could be gathering records, talking to occurrence and expert witnesses, and researching alternative theories.

Second, gather data, i.e., discovery. The trick here is to be open to all information. Don’t ignore adverse information, a psychological phenomenon called confirmation bias. Your definition of the issues is likely to change as you collect more information.

Third, develop a hypothesis. This is your theory of the case. An amount of money or other relief is owed/not owed for the reasons shown by the data the parties have gathered.

Fourth, test your hypothesis.  Here is where the art of case resolution and science diverge. Sometimes you can test your hypothesis with a motion to dismiss or for summary judgment. Those are rarely successful. This isn’t like subjecting a cell sample to different catalysts and seeing how it reacts.

The safest place to test your legal hypothesis is in mediation. Come prepared to experiment by seeing the result of your disclosures and negotiation. Besides interacting with your opponent in a structured, confidential process, you will get the benefit of the mediator’s guidance. Of course, unlike a scientific experiment, the best result, settlement, will probably fall somewhere between each side’s result hypothesis.

Without a settlement, parties must test their hypothesis by submitting the case to a judge or jury—and we all know how risky that can be.

Fifth, does the new data agree? What did you learn at the mediation? With this new information, you can revise your hypothesis and litigation strategy and test again. After a motion or trial, somebody won and somebody lost—at least theoretically. But a comparison of the net recovery or liability in comparison to the last offer and demand might show that neither side came out ahead. Depending on the posture of the case, it might not be too late to try to settle.

Use what you learned along this inquiry path to facilitate resolution in the next case.

How Thorough Do You Have To Be?
 

Scientists test every theory before they publish a paper of their results. The experimentation process can be long and expensive. Thankfully, you don’t have to go through that.

As soon as you get a file, you will start making decisions about how serious is this case. On the claimant side, the first decision is whether to accept the case, including what kind of time and money budget it will require. On the defense side, the client and counsel need to assess severity (is it a bet-the-company case/ is coverage available and adequate?) and possibly set reserves.

Even at the earliest stages, in most cases you have enough information to begin the negotiation and dispute resolution process. No, you don’t need to look under every rock for every crumb of information.

This claim may have started with a demand letter—a first opportunity for negotiation. Before litigation or before the parties undertake expensive discovery, consider convening a mediation.

Discovery will uncover facts which affect the evaluation of the case. After all, that is why you do it. Otherwise you are just spinning your wheels. Use that new information to suggest meeting with the mediator to conclude the case.

If that discovery leads parties to file potentially dispositive motions, the period while the motions are pending is another promising window for negotiation.

In Sickness and In Health

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The claimant was in his 30s and paralyzed from the chest down. No bowel or bladder control and no genital-to-genital sex. The settlement was seven figures.

Throughout the years since the accident, his wife had devotedly cared for him and acted as his champion.

Only One Person Perceived The Vibe In The Room
The claimant’s attorney had brought me in on this settlement. One reason, I believe, was my extensive experience. I had seen cases like this before.“Have you considered protecting the settlement to make sure it goes for his care? What if his wife leaves him?” I asked.“Oh, no,” he immediately answered. “She has been a rock. That won’t happen.”

I described a couple financial preservation methods the claimant could consider. All were rejected.

You Know What Comes Next
The next time I spoke with that claimant’s attorney he mentioned, “Do you remember John Smith? It was just as you predicted. As soon as the money was in their bank account, she left and filed for divorce. He didn’t put up much of a fight, and she got a big chunk of the settlement.”

Part of the Job

As mediator, I try to help people recognize issues in the case. That includes how to make available funds go further. That might be through a financial planning device or perhaps characterization of the funds in an insurance reserve. I might even raise the issue of protecting the funds from someone who had promised to be there “until death do us part.”