Playing the Odds
Ever meet a professional poker player? They win or lose by playing the odds. A good poker player understands the cards, can anticipate the other players’ moves and knows the odds of winning.
Mediation is not that different from playing poker. In mediation, the parties make decisions based on their knowledge of the facts and their odds of success. Just like poker, each side bluffs, angling for the best deal, often trying to get it through manipulation of facts, pure bluster and hardline negotiating. The parties engage in a game of back and forth bargaining, waiting for the other side’s “tell,” so they can make an appropriate move. The difference in poker is that once you’ve made your bet, you either win or lose. Arbitration and litigation offer the same win or lose dynamic, but mediation allows for mutual gain. Moreover, in mediation, parties have a choice. They can choose to take a deal, they can choose to offer alternatives, or they can choose to walk. The tricky element is that choice requires the participants to make some very difficult decisions in a relatively short amount of time. Parties must understand their case inside and out so they can play the odds with as much information as possible.
I’ve had three separate employment cases in the past several weeks where the participants were offered choices that seemed impossible. Despite the fact that all three cases had potential fatal flaws, defense made offers that the plaintiffs’ lawyers considered reasonable considering the evidence. The problem was that these offers were universally much less than what the plaintiffs hoped to get. The plaintiffs were absolutely petrified to settle, worried that the deal offered might be less than what they could win in court. All three plaintiffs asked, “What are the odds of winning at trial?” Now, as any good mediator will tell you, we don’t have a clue about the odds of any one person winning their case. All we can do is ask well thought-out questions and ensure the parties answer them honestly. The goal is to facilitate a process that will help the parties determine odds on their own.
Asking the right questions is of utmost importance in these situations. Knowledge is power, so the mediator asks questions that help the party gain knowledge, moving the considering party from a position of fear to a position of empowerment.
Below are just a few sample questions that the mediator can ask in these situations:
- Is there an immediate need for money?
- How much will a trial cost the party in real world dollars? Consider more than attorney’s fees and costs or whether a statutory offer to compromise has been made. How many days will the party have to take off work? What will that cost in lost wages, travel expenses and childcare? Would that cost you more than what you could expect to win at trial? What is your budget?
- What are the pros or cons of taking this offer? Do you have better alternatives? Are you open to creative ideas?
- What is your risk adversity?
- Are there any pre-trial hearings or exams that could cause defense to lower future offers?
- If the jury awards you the exact same amount after a lengthy trial, would you take home the same amount as you would today? Would it be less or more? How much less or more?
- What is the worst case scenario? What if you lose? How much money would you give up to make sure you came away with something? How would a judgment against you affect your business or personal life?
- What is your honest evaluation of the facts, witnesses and law? Are you a good witness? Why or why not? Are there other witnesses you’d rather not involve (i.e., a minor or superior)?
These types of questions help parties move from fear-based decision making to knowledge-based decision making. Answering such questions helps parties understand the odds as defined by their own needs and risk aversion.
Next time you’re in a mediation and an offer has been made that is lower than expected, but not so low that you can’t walk away without real risk, the offer must be seriously considered. Mediation is an opportunity to explore whether an offer that seems low now may have been wonderful in hindsight. It often depends upon the cards you’re dealt, but remember that in mediation, how you play those cards and how you determine the odds can be defined by you.