When to Consider a Mediator’s Proposal

When the parties reach impasse because of exaggerated offers, one option is to present a mediator’s proposal — your professional, unbiased opinion of what you think both parties would likely accept to settle the case. If nothing you do helps them see past their extreme positions, you can draft a proposal. It may go something like this:

I propose that the parties settle the case for $50,000, payable within 90 days. If both parties reject the proposal, I’ll simply report back to them that there is no agreement. I’ll also tell the parties that no agreement has been reached if one party accepts the offer and the other party rejects it. The parties will learn that the other has accepted the proposal only if both parties do so.

Before I make a mediator’s proposal, I want both parties to understand how I’ve reached it. I don’t make this proposal based on who I believe will “win” at the end of the day, nor even what I believe to be fair under the circumstances. No one has presented admissible evidence to me upon which I could base such a forecast. The number I choose is one I believe both parties will accept while at the same time believing it will be a stretch for both of them.

Don’t show your proposal to either party. Meet with each party in a separate caucus to test your assumptions about what each party will find acceptable. Without asking them to reveal their bottom lines, ask each one the question, “If your opponent came down to $X, would you come up to $Y?”

When the numbers don’t overlap, gauge how much pain each party will suffer to bridge the gap. Other purely subjective factors you may want to consider when crafting your proposal include the following:

How invested each side is in walking away with a settlement on this day.
How firm the sides are in their assertion that they wouldn’t go below or above a certain number.
Whether the attorneys needed help in bringing a little more reality to their clients before the parties would be ready to accept a mediator’s proposal.
How much street cred you’ve developed with the parties personally to make them more receptive to your settlement price-point, even if they wouldn’t accept their own attorney’s advice.

Assuming your proposal and follow-up efforts in caucuses are successful in getting the parties to agree, draw up a final agreement that both parties sign off on.

Many master mediators have entirely given up on the mediator’s proposal because they believe it’s ineffective or runs counter to the mediation principle that resolution should be party-driven rather than recommended by the mediator. Too often, settlements reached by way of mediators’ proposals are grudgingly accepted at best.

When settlements are grudging, the deal isn’t durable — you can’t rely on it as a resolution. When buyer’s remorse sets in, the more remorseful party may well fight the enforcement of the agreement, as demonstrated in the endless litigation between the Winklevoss twins and Mark Zuckerberg of Facebook.

Zuckerberg and the Winklevosses entered into a mediated settlement in 2008 and have been fighting to undo that settlement ever since. Their request to void that agreement was rejected by the federal Ninth Circuit Court of Appeals in April 2011. Their attorney has indicated that he’ll seek a review by all the Ninth Circuit’s sitting judges. If the Winklevosses lose that petition, they’re free to seek review from the U.S. Supreme Court.

This is what people mean when they say “don’t make a federal case about it.” The Winklevosses have incurred millions of dollars in attorney’s fees in their fight with Facebook. The mediator who helped them settle their case can’t be at all happy about the work he did.

Some master mediators have turned against the practice of making mediators’ proposals for other reasons. John DeGroote at Settlement Perspectives believes that a proposal for settlement by the mediator based on what she believes is possible has lost its utility.

“Savvy negotiators,” wrote John, “angle for an advantageous impasse rather than a settlement. Compromise is no longer the goal of the mediation exercise; instead it becomes a play to the ‘neutral,’ whose power to craft the mediation proposal will make her the real decision maker.”

Mediation is always more effective when it’s party driven — when both parties engage in collaborative problem-solving to arrive at a mutually beneficial arrangement. Because the parties have solved the problem together, both parties walk away satisfied that their interests have been addressed.

If the parties insist on a mediator’s proposal, try a bracketed proposal first. If that doesn’t move the parties closer and they still demand that you propose a solution, do so. People who insist they’re incapable of resolving the dispute in the absence of an authoritative proposal from the mediator often have hidden interests to satisfy.

One of the parties may need to tell her superiors that the mediator made a final proposal that she couldn’t, in good faith, refuse. Not being the author of a difficult solution may also help a party save face not only with hidden stakeholders but also internally.

Parties who see themselves as people who can’t be pushed around and who will hold their ground under all circumstances often need an authoritative figure to all but order them to compromise. In this way, they can retain their preferred self-image while at the same time make a pragmatic decision that may otherwise make them feel weak, unmanned, or powerless.