Canadian Underwriter
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Crossing The Impasse


November 30, 2008   by Laura Kupcis


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The biggest problem in a mediation is the lack of funds being brought to the table on the part of insurers, according to Alfred M. Kwinter, plaintiff’s counsel for Singer, Kwinter. “I don’t think insurers are bringing enough money to mediations” he told delegates during a panel discussion at the third annual ARC Group of Canada seminar. “I don’t think insurers are properly evaluating the files for their full value.”

If one is going to go to mediation, be ready for mediation — both the defense and the plaintiff. “I think of the biggest problems we face is not having the case properly evaluated from the other side and finding out about it at four o’clock in the afternoon . . . that that’s all the money you’ve got and a phone call won’t help,” he added, at the conference held in November.

Parties are required to come to mediation with proper authority and money to settle the case, according to a stipulation on every mediation agreement the parties are required to sign, Michael T. J. McGoey, defense counsel, Hughes Amys LLP, said. However, the problem arises because there are two views of the case: the plaintiff’s view and the defendant’s view. “This means that there is always a backdoor escape clause to this at about four in the afternoon when all of a sudden the money runs out and the only thing that the ambassador from the insurance company can say is that ‘we don’t see the case in that light’,” he said, adding that it could be a matter of hundreds of thousands of dollars between the plaintiff’s view and the defendant’s view.

This is often the reason for failure, he noted, adding sometimes the situation is rescued only by the fact that the mediation is conducted sufficiently close to a threatening file that people are prepared to make major compromises. “But if it’s a voluntary mediation trying to get a case settled early and that’s the approach that’s taken often, with the greatest respect it’s a complete waste of time.”

Carol McNulty, senior vice president of claims at AIG Commercial Insurance Company of Canada, said there are, of course, instances where parties show up to mediation unprepared and unfunded. However, there are a great number of times when there is premature pressure for mediation without full disclosure. Information one would normally receive in discovery is not being provided in advance of mediation, which means an insurer is caught off guard during mediation.

“Obviously an insurer who is led to believe that they have a solid case based on only one side of the information available goes in maybe not funded at all if they believe they have a solid liability position,” she pointed out. “Or, they go in with a nominal amount that they consider to be an economic trade-off for the cost of trial. Not all the time is it because somebody wanted to facilitate an early mediation. Sometimes it’s mediation by ambush.”

What Kwinter said he was often surprised by was insurers who would request a particular mediator — one that is quite costly and often has a lengthy waiting list — only to show up and comment that due to the strong liability argument the defense holds, there will be no money available. “If that’s the case, you could have had anybody sitting there to tell me that, secondly we could have had [the mediation] very shortly after you formed that opinion.”

McNulty pointed out that sometimes there are unrealistic expectations — something that can happen on both sides — and until you get into a room with a “Swiss-style” person, someone who isn’t tied to the position on either side, bringing a party’s expectations into line with what is reasonable is not possible.

“In every case you need to decide who you want to have as the mediator and what kind of style you want to use,” Craig Walker, director, Maltman Group International, added. “Some facilitators may work okay but other times, if . . . you know you’ve had issues with this claim as its gone along, and it hasn’t gone well, you’re going to need [a mediator] that is going to grab somebody by the lapels and shake them and say ‘you’re not making sense’.”

Mediation Styles

Kwinter agreed that you have to tailor the mediator to the case.

There are varying mediation styles, but, according to McGoey, there are two main styles most often found in the insurance arena: facilitative and evaluative. Determining what style of mediation to follow varies by case, the panel determined, but which style of mediator is chosen, can often impact the timeliness of an agreement, McGoey noted. A facilitative mediator is quite laid back and encourages the parties to come to a deal on their own terms. However, the problem arises when the parties come to an impasse and there is very little direction provided on the part of the mediator. While the parties can take a break, getting through the impasse can prove time consuming.

An evaluative mediator, on the other hand, gets involved, asks questions, offers opinions in terms of what is likely going to occur and what will likely happen if the mediation does not settle. The evaluative mediator helps the parties understand the cost benefit of settling the dispute now or trying it later, McGoey noted.

It is the evaluative mediator that the marketplace is seeking out, in McGoey’s opinion, because this more aggressive style of the mediator tends to reach agreements quicker than the more relaxed, facilitative mediator. Both styles are used at various points within the course of an average mediation, he said, adding that most parties who are litigating simply want to know that the mediator is equipped, trained and inclined to know when it is appropriate to step in and encourage things in the hopes of bringing the parties together.

The confidence built by a mediator with the parties involved in a dispute is in the key element in successfully concluding a mediation, McGoey said. “The quality of the mediator you are looking for is somebody that has more than one speed,” McGoey said. “Somebody who can read the room. Somebody who has empathy and is capable of expressing empathy to parties who are looking for some empathy.”

For McNulty, the key to entering into a successful mediation is to not only know and evaluate your own case, but all the parties sitting at the mediation table. “I hate the style of some mediators that keep a plaintiff sequestered off and away from the parties throughout the entire process, event up to and including if there is a negotiated settlement reached,” McNulty said. After every mediation, the company creates a report taking into account who was at the mediation, who acted on behalf of AIG, who acted on behalf of the other parties, who was mediating and with what type of style, the outcome of the mediation, what worked and what did not. This way, the company is able to review in future the chances for a successful mediation. “That’s what this process is really about in my mind,” McNulty said. “It should be a way to bring the parties to a table and reach an understanding, at the very least, of your positions.” The real reason to be at mediation is that all parties involved are committed to bringing the issue to a conclusion. If this is not the case, “you may as well save your money and just go to trial,” McNulty said.

Determining what the other party needs, while conveying what you need is imperative to opening the lines of communication between the parties.

I’m sorry

“I really, truly believe that sometimes you have to listen more than you speak,” McNulty said. “There are a lot more dynamics to things than just the all mighty buck. Some plaintiffs want to hear ‘I’m sorry’ before they will ever consider a number.”

This cannot be done from a position of insincerity, however, McNulty noted. “They will see right through that and once you’ve offended somebody, I think the chances of you reaching a settlement with them are nil.”

Kwinter agrees that apologizing is a good tactic and one client’s appreciate. “It’s like chicken soup,” he said. “If it doesn’t h
elp, it won’t hurt.”


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