FLYING BLIND

After mediating an interesting case last month, it struck me that mediators and air traffic controllers share something in common. Like air traffic controllers, mediators are responsible for managing the transmission of critical information to multiple parties, providing advice and guidance along the way to assist them in reaching their destination. Sometimes, as in the case I mediated last month, that may require taking an alternate route.

Plaintiff had been injured in an automobile accident and had undergone surgery as a result. Arguably, his claim exceeded defendant’s policy limit, but there was a legitimate dispute as to whether plaintiff had ever presented an effective policy limit demand. If the policy was “open,” plaintiff’s claim was potentially worth several million dollars. If the policy was not “open,” however, the remaining limit of defendant’s insurance policy was less than $500,000. To the carrier’s credit, it agreed to attend the mediation with settlement authority in excess of the underlying policy limit.

Based on my pre-mediation calls with each of the attorneys, I was concerned that plaintiff and his counsel had higher expectations than were likely to be met. The carrier was convinced the policy was not “open,” and defense counsel believed he had strong defenses to the underlying claim. Unless plaintiff was willing to make what the carrier deemed to be a reasonable opening demand, I was certain the parties were in for a bumpy ride and that things could easily spiral out of control, which led me to conclude that a different approach was required.

In light of my concerns, I recommended that the parties engage in “blind” settlement negotiations, disclosing their opening and subsequent demands and offers to me with the understanding that I would not reveal any demand or offer until the gap separating the parties was $200,000 or less. After considerable discussion, both sides agreed to the suggestion.

I separately asked counsel for plaintiff and counsel for the carrier to write down their respective opening demand/offer on a piece of paper, fold the paper in half so I could not see the number, and hand it to me. After privately reviewing the opening demand and opening offer, I returned to each room and informed both sides that the gap was greater than $200,000.

I then asked each side to write down a new demand/offer, which they did. The gap remained more than $200,000, so I requested a third demand/offer, with the same result. And so on and so on.

The eighth time I requested a new “number,” counsel for the carrier informed me the offer he was about to write down would be his last because he did not have any further settlement authority. Unfolding plaintiff’s demand and the carrier’s “final” offer, I discovered the parties were still more than $200,000 apart.

Given that counsel for the carrier had exhausted his settlement authority, I asked both sides whether they would authorize me to disclose their current “numbers,” notwithstanding the original agreement that I would not disclose any demand or offer if they were more than $200,000 apart. Both sides agreed and I revealed that plaintiff’s current demand was $900,000 and that the carrier’s current offer was $675,000 — a difference of $225,000.

Under the circumstances, counsel for the carrier made a call and was able to obtain an additional $25,000 in settlement authority. Counsel for plaintiff requested more time to consider the offer. Last week, the parties informed me they had reached a resolution!

Despite flying blind, they had managed to successfully navigate their way from beginning to end, encountering virtually no turbulence along the way.

It would be my pleasure to assist you and your clients in the dispute resolution process. If you think I can be of service, please don’t hesitate to contact me.

Wishing you and yours a very happy holiday season,

Floyd J. Siegal

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