Complex Mediation: Key Issues and Considerations

Mediation is a process of dispute resolution in which a neutral third party facilitates negotiations among adversaries and seeks, but does not impose, a settlement of the dispute. Complex mediation refers to mediation of a case where there is more at issue, such as:

The complex mediation process generally follows the same path as any other mediation, but may require multiple sessions to mediate to conclusion (for more on the key stages of a mediation, see Stages of a Mediation on Practical Law). Additionally, in multi-party disputes, each party may have different positions or be aligned on certain issues but not others, adding obstacles in the negotiation process. Some concerns, such as avoiding privilege waivers, are amplified given the more complicated nature of the dispute (see Confidentiality Concerns below). The types of matters that are often best suited for complex mediation include, among others, antitrust, collective bargaining, insurance and reinsurance, mass tort, patent, products liability, and securities fraud cases.

In complex cases, it may require considerable effort and expense to bring the parties to the mediation table, particularly if the participants are geographically diverse, extremely busy, or entrenched in their litigation stances. Moreover, if the process is unsuccessful, much of what transpired in the mediation session may influence the parties’ positions on return to litigation or arbitration. As a result, counsel must delicately balance the opportunities and risks associated with complex mediation and carefully consider certain key issues and strategic concerns when participating in the mediation process.

(For a collection of resources to assist counsel with the mediation process, see Mediation Toolkit on Practical Law; for more on alternative dispute resolution generally, see ADR Mechanisms in the US: Overview on Practical Law.)

Involuntary Versus Voluntary Mediation

Engaging in complex mediation may be:

The circumstances of how the parties arrive at the mediation table will influence the dynamics of the negotiations.

Required by a Court

Where a court imposes mediation as a first step toward resolving a dispute, the parties may have no true interest in settlement, making mandatory mediation a perfunctory exercise. On the other hand, a court-ordered process enables a party who is interested in engaging in early settlement discussions to have a forum in which to do so without having to ask for it. This can alleviate the perceived show of weakness or lack of confidence that may accompany a request to mediate or discuss settlement.

Courts have differing mediation programs that vary in breadth and rigor, for example:

Compelled by Contract

Parties may contractually agree to mediate just as they would for any other form of alternative dispute resolution. By providing for mediation in a contract, the parties can attempt to control in advance the mediation’s timing and certain procedures. In these situations, the fact that the parties contractually agreed that mediation was a viable option may help make the process more efficient and effective.

On the other hand, although mediation compelled by contract is voluntary in nature (given that it arises from the parties’ prior agreement), the party representatives operating under that contract may not have been involved in setting its terms. As a result, this type of proceeding may feel more mandatory than voluntary.

(For a model clause requiring the parties to resolve their dispute through negotiation and then mediation before submitting it to litigation or arbitration, with explanatory notes and drafting tips, see General Contract Clauses: Alternative Dispute Resolution (Multi-Tiered) on Practical Law.)

Voluntary Mediation

By contrast, where parties voluntarily agree to mediate after a dispute arises, all participants likely have at least some interest in settlement and may address issues in a more cooperative and constructive manner. The parties may seek mediation for a variety of reasons, such as to:

Rules Governing the Mediation Process

A variety of rules can prescribe the mediation process, including:

A complex mediation may require many case-specific steps to resolve the parties’ dispute when compared to a simple, single-issue, two-party mediation. Although pre-written mediation rules do not typically address all of the necessary case-specific steps, they usually allow room and flexibility for the mediator to respond to the particular needs of the case.

Court Procedures

The procedures for court-mandated mediation programs can differ depending on the jurisdiction, so it is important for counsel to check the local court rules for guidance. Many of the US circuit courts of appeals use court employees as mediators, but some use trained independent parties for this role. Court guidelines and rules, particularly at the federal appellate level, often dictate the location and format of the first and any follow-up mediation sessions. Nevertheless, there are several jurisdictions that emphasize the case-by-case nature of mediation and prescribe few, if any, rules to govern the process.

State Laws

State statutes may also govern certain mediation procedures and may particularly impact the scope of privilege or confidentiality that applies to mediation. The Uniform Mediation Act (UMA), now adopted by many states, notes that as of its enactment, “legal rules affecting mediation can be found in more than 2500 statutes” (Unif. Mediation Act Prefatory Note § 3).

Contractual and Voluntary Agreements

Contracts that require mediation may provide many or no details regarding what rules and processes to follow. Some contracts may incorporate the guidelines of a neutral third-party organization, such as:

(For more on these arbitration forums, see AAA, JAMS and CPR Comparison Chart for US Domestic Arbitrations on Practical Law.)

Even if not imposed by contract, the parties should consider selecting a set of pre-written rules drafted by a reputable third-party organization to vest the mediation session with the formality necessary to gain the critical trust of the participants. If any party senses unfairness in the process or a lack of mediator neutrality, the mediation is more likely to fail.

Alternatively, if the parties are all sophisticated entities who have previously mediated disputes, they are less likely to be suspicious of the process and more apt to suggest common approaches familiar to all participants. In those instances, it may not be necessary to use a third-party’s set of rules or guidelines.

Timing of the Mediation

Mediation can occur at the outset of a dispute to allow parties to avoid litigation entirely or at any agreed point during the litigation process. Court-ordered mediation at the trial level generally occurs soon after the case has been filed. Mandatory mediation at the appellate level takes place after the dispute has been ongoing for some time in the lower courts and a decision has been rendered. Therefore, the timing of appellate mediation potentially puts the parties in very different bargaining positions from when the case was first filed.

If mediation is voluntary, the parties can agree to mediate at any point. The chosen timing may be driven by a myriad of factors, including:

In complex cases, it is often helpful for the parties to have engaged in some amount of discovery before mediation. Discovery allows counsel to review information that may shed light on the strengths and weaknesses of the case, which will place the parties in a better position to assess settlement value. On the other hand, too much discovery, and its related expense, can defeat the purpose of attempting a compromised result because the parties may be far more invested (financially and emotionally) in their respective positions and therefore less open to compromise.

Another option is for a party to raise the potential for mediation at the outset of the dispute and propose that it take place at a later agreed-on time that makes sense from both a cost and case-scheduling perspective. This may prevent the other party from speculating as to the party’s motivations for suggesting mediation, which can occur where a party raises mediation after discovery of certain facts or after a negative interlocutory decision.

Confidentiality Concerns

Mediation is typically a confidential proceeding based on:

Under the UMA, a “mediation communication” is defined as “a statement, whether oral or in a record or verbal or nonverbal, that occurs during a mediation or is made for purposes of considering, conducting, participating in, initiating, continuing, or reconvening a mediation or retaining a mediator” (Unif. Mediation Act § 2(2)). Subject to certain exceptions, a mediation privilege extends to these communications (Unif. Mediation Act §§ 4-6).

However, some information disclosed during mediation may not be protected in a later proceeding. Indeed, the UMA states that evidence “otherwise admissible or subject to discovery does not become inadmissible or protected from discovery solely by reason of its disclosure or use in a mediation” (Unif. Mediation Act § 4(c); for example, Cal. Evid. Code § 1120(a); Fla. Stat. § 44.405(5)). Counsel should also note that despite the protection against the admissibility of compromise offers and negotiations under Federal Rule of Evidence 408(a), these communications may be held admissible where they are offered for another purpose (Fed. R. Evid. 408(b)).

Additionally, there generally is no “fruit of the poisonous tree” defense against using evidence discussed or shared in mediation should the mediation fail (Unif. Mediation Act § 4, cmt. 5). For example, if a party’s written position statement includes an argument about the existence of certain documents or witnesses that support its case, the other parties will know to obtain discovery on those topics and likely will not be precluded from doing so on the basis of a mediation privilege. Further, if a party shares an otherwise non-confidential, pre-existing document with other parties during the mediation, that document does not typically become confidential merely by virtue of its disclosure in the mediation setting or attachment to a position statement.

Even information protected as confidential may influence matters outside of the mediation should the parties fail to reach a settlement. Therefore, counsel must remain cognizant of the scope of what is being shared. For example, parties may learn which issues are of greater sensitivity to their adversaries and are apt to remember the various positions taken during the course of the mediation-related discussions. Even if confidentiality rules prevent parties from later claiming that certain statements constitute admissions of liability, counsel should carefully analyze the potential consequences of this dialogue before the mediation session begins. Confidentiality protections cannot unring a bell, and they do not prevent one side from obtaining a tactical advantage based on statements made in mediation.

(For more on mediation privileges and protections, see Mediation: US Privilege and Work Product Issues on Practical Law.)

Choosing a Mediator

Complex mediation is a hands-on, intense process of dispute resolution where parties, counsel, and the mediator often spend hours locked in conference rooms attempting to hash out the details of a proposed settlement. As a result, its success can at times hinge on who is facilitating the session. The mediator’s knowledge, experience, gravitas, likeability, and neutrality (or the lack of any of those qualities) will be critical factors influencing whether the process results in settlement.

To choose the best candidate for the mediator role, the parties and counsel should:

Importantly, when evaluating potential candidates throughout the selection process, parties and counsel should vet any potential mediator’s reputation, preferably through colleagues who have had personal experience with the candidate.

Selection Rules

The rules governing the mediation will likely provide guidance on how to select the mediator (see Rules Governing the Mediation Process above). If the rules are silent on this issue or if the parties agree otherwise, there are various options and no one right way to proceed. In some cases, one party may simply suggest a possible candidate to the other side, with the other side having the option to accept or reject the suggestion or respond with another possible name.

However, in complex mediations that involve multiple parties with diverging interests and potential conflicts, it may be advisable for the parties to agree on certain facially neutral criteria that the candidate must possess, for example:

Each party would then propose a slate of three names that they believe meet those criteria. Alternatively, if the parties have chosen to use a third-party organization to administer the mediation, that organization may maintain rosters of certified mediators with accompanying biographical information from which the parties can select candidates. Even in that situation, however, counsel should still explore whether the parties might agree on certain facially neutral criteria. This can help narrow the roster to a more reasonable size from which to select candidates and ensure that the chosen candidate possesses those traits the parties view as most important.

Once the parties have identified the chosen number of mediator candidates, counsel should jointly contact each proposed candidate with an agreed-on statement or questionnaire to vet them for interest, availability, and conflicts. Joint contact by counsel is advisable so that candidates do not know which party suggested them. Alternatively, if the parties are using a third-party organization, that entity would likely reach out to the candidates and conduct the vetting process on the parties’ behalf.

The parties could agree in advance that, barring any conflicts, they will immediately select as the mediator any candidate name in common or that they will consider that candidate first before engaging in any strikes. If no immediate agreement is reached, the parties would then engage in simultaneous or alternating strikes of candidates until only two names remained, with the final chosen candidate selected at random. One common way to make this random selection is through a “long distance coin flip,” for example, by having the parties guess whether the digit immediately to the right of the decimal point in the closing Dow Jones Industrial Average for a specific date, as reported in the online version of The Wall Street Journal, was odd or even.

Personal Characteristics

No one quality defines the perfect mediator, but the parties and counsel should consider several key criteria, including a candidate’s:

Subject Matter Expert Versus Process Expert

The parties and counsel should consider whether, based on the specific needs of their case, it is better to retain a mediator who is a subject matter expert or a process expert. Frequently, the best candidate in a complex mediation is both.

Subject Matter Expertise

Having a mediator with expertise in the subject matter of the dispute is particularly important where the dispute is highly technical (such as intellectual property or actuarial matters) or requires industry-specific knowledge to understand (such as the customs and practices of reinsurance intermediaries). The mediator is not a decision-maker. However, if the parties feel that the mediator does not understand the true nature of the dispute or appreciate the significance of certain issues, they will not trust the mediator’s recommendations. Also, selecting a mediator with a baseline of knowledge helps reduce the extent to which the parties will need to educate the mediator and accelerates reaching the heart of the dispute.

On the other hand, subject matter expertise may lead to the potential for mediator bias, depending on the source of that expertise. For example, a mediator candidate may have gained a technical understanding and knowledge of issues relevant to an environmental dispute while working for a government agency, coal company, or non-profit clean air group. However, each of these experiences has different implications depending on the nature of the dispute.

Process Expertise

Process expertise refers to the mediator’s experience in being a mediator as opposed to a professional in the field or in the subject matter at issue. Some of the key qualities to consider in a mediator, particularly gravitas and creativity, are often associated with process experts. As with subject matter expertise, process expertise is highly useful in complex mediation. With divergent groups and coalitions representing multiple competing interests, participants will require a mediator with deep experience to establish a case-specific structure for the session.

In some complex mediations, it may prove difficult to find the ideal candidate who has both the requisite subject matter and process expertise. Another mechanism for injecting both subject matter and process expertise into the proceeding is for the parties to select a mediator with process expertise and then jointly retain a neutral expert to advise the mediator on the subject matter at issue.

Styles of Mediation

It is useful for counsel to be aware of the various styles of mediation. Mediators with considerable process expertise will typically be familiar with several different styles and may employ some elements from each, including:

Pre-Session Tasks

Once the parties have formally retained a mediator, they typically arrange a conference call among the mediator, counsel, and possibly party representatives. The purpose of the group call is to decide various procedural issues affecting the mediation session, each of which involves important strategic considerations, including:

Decide Who Should Attend

Typically, mediators will demand that party representatives with decision-making authority attend the mediation session. Although the presence of counsel may be optional, it is highly recommended that counsel for all parties attend a complex mediation. (An exception to these practices sometimes occurs in court-mandated mediation where court rules may require the presence of counsel but only encourage the presence of party representatives.) In disputes involving large groups of parties, the mediator can limit the number of people at the table at any given time to encourage constructive dialogue or have subgroups focused on different aspects of the case.

What constitutes a person with decision-making authority can vary, but it is usually a person whose recommendation to settle the dispute will generally be accepted by their company or who can make a phone call to readily get that acceptance (for example, where approval from the board of directors is required).

The presence of senior decision-makers at a mediation is important for many reasons that override any inconvenience. For example, having experienced representatives physically present can:

Pick a Location

An in-person session at a neutral venue is the best option for the location of a mediation. Having all parties travel about the same distance to the site is also preferable. Counsel should avoid non-neutral settings, such as the conference rooms of a party’s law firm or the hometown of a party. The effort involved in getting to the mediation session helps raise a sense of urgency to resolve the dispute. Convenience should not be the overriding concern.

Similarly, although remote mediation sessions may be cheaper and seemingly more appealing than convening in person, they should be avoided absent extraordinary circumstances because:

Counsel should note that remote sessions may be appropriate in certain court-mandated mediations, particularly at the appellate level, where initial mediation sessions are frequently telephonic.

Provide Background Information to the Mediator

Because the mediator will have had no personal involvement in the actual dispute, the parties and counsel must educate the mediator on the specifics of the case and the areas of disagreement before the in-person session. During the initial conference call with the mediator, the participants should agree on how that process will take place.

Typically, counsel provide the mediator with a written statement of each party’s position. Mediators will often request ex parte follow-up calls with counsel to discuss any questions they have about the parties’ positions. As long as each participant has the same level of access to the mediator before the in-person session, these ex parte communications are usually highly beneficial in moving things forward.

Counsel must strategically decide whether to exchange written position statements (or some agreed portions of those statements) among opposing parties at this stage or provide the statements confidentially to the mediator alone (provided the mediator does not have a preference). Although case-specific circumstances could dictate otherwise, it can be helpful for all parties to exchange written statements with each other so that everyone begins on the same page and understands each party’s position. Exchanging written statements ensures that participants enter the mediation knowing the full scope of the dispute and any unanticipated areas of agreement or disagreement. The parties will have numerous other opportunities to share information and concerns with the mediator privately, both during pre-session conference calls and mid-session caucuses.

Nevertheless, counsel should also remember that confidentiality issues are particularly important to consider in the context of written materials shared with the mediator and the other side (see Confidentiality Concerns above). Those concerns may also be influenced by the particular stage of the underlying dispute. For example, whether discovery is ongoing may impact the appropriateness of making certain evidentiary disclosures in a written position statement. Whether summary judgment briefs have already been filed may affect the wisdom of providing a detailed roadmap that reveals both the strengths and weaknesses of a party’s case. Counsel must keep in mind that if mediation were to fail, and position statements were exchanged, the adverse parties will retain this roadmap.

Mediators handling complex disputes will read the written submissions closely and devote considerable time to preparing for the in-person session by:

Consider Additional Multi-Party Issues

Complex, multi-party mediation may involve additional preparation for the parties before they begin the process of preparing and exchanging written position statements or participating in an in-person mediation session. Where multiple parties are on the same side of a dispute (for example, in the context of a large joint defense group), selecting a primary spokesperson for the group will simplify the in-person session, although this typically does not alleviate the requirement that representatives of all parties attend. It is also important for the coalition to discuss its bottom line in advance of the mediation to determine whether the parties are united under all circumstances or whether certain events or specific issues could divide the group.

The In-Person Session

The specific steps for an in-person mediation session vary from case to case, but it traditionally involves:

In a complex mediation, it is likely that the parties will not settle all issues in a single session. They may schedule additional sessions to discuss open issues or choose to resolve only certain claims while continuing others in litigation or arbitration.

Opening Statements

The utility of opening statements in a joint session is case-specific. Counsel should consider the potential pros and cons when deciding whether to advocate for this opportunity or seek to suppress it.

Advantages

Opening statements offer counsel an opportunity to introduce the parties and issues and set out their strongest arguments. In a complex mediation, opening statements can:

If the parties do proceed with opening statements, however, these presentations should be brief and focused.

Disadvantages

Despite the many advantages, opening statements also present certain risks. For example, they can:

Private Caucuses

The mediator typically uses a series of private caucuses with the parties to facilitate offers and counteroffers. In a multi-party dispute where parties may overlap in their positions on some issues but diverge on others, different forms of break-out sessions might be necessary. These sessions are a fluid process where the mediator is gathering and processing information to determine:

Throughout this process, the parties and counsel must assess the mediator’s style (if not known already from prior experience) and whether the mediator has arrived at any conclusions about the merits of the parties’ respective positions. Some mediators are careful never to reveal their opinions, whereas others intentionally employ an evaluative mediation style. Counsel should determine whether the mediator is pushing the parties in a particular direction and whether that direction is desirable.

Counsel should also make clear in private discussions with the mediator what information is confidential and how much can be shared with the opposing parties. For example, counsel may wish to tell the mediator that the party’s bottom line for settlement is a certain dollar amount, recognizing that revealing a true bottom-line position to the opposing parties may be harmful in the negotiation process. In a multi-party mediation, it is also possible that some parties will be privy to certain information and others will not. The mediator must be trusted to keep those confidences straight (see Confidentiality Concerns above).

Resolution of Select Issues

If the parties agree to settle the dispute at the end of a mediation session, they often negotiate a term sheet that outlines the principal points of their agreement. Term sheets enable the parties to solidify the scope of their agreement in writing without committing to formal language that will be included in the ultimate settlement agreement (which may take more time and subsequent negotiations among counsel to finalize).

Importantly, a successful mediation does not need to resolve every dispute between the parties. If the parties are faced with multiple, separate disputed issues, settling only some of those issues may still reduce risk and enable a subsequent litigation or arbitration to proceed more efficiently. Additionally, in a complex mediation, obtaining a definitive resolution of some issues may assist the parties in reaching a compromise solution on the remaining issues in dispute.

The author would like to gratefully acknowledge the assistance of Stephanie W. Wang, Of Counsel at Steptoe & Johnson LLP, in the preparation of this article.