Home Management 10 Tips When Mediating with a Business Entity
10 Tips When Mediating with a Business Entity
0

10 Tips When Mediating with a Business Entity

0

As a former inhouse counsel who mediated many cases during those days, both plaintiff and outside defense counsel (if there is indeed one of those) are usually clueless about the internal corporate process necessary to get settlement authority for a mediation.

I’ve had comments such as “Just bring the CEO and the checkbook.” Really? That is so not going to happen. So, perhaps some guidance on what goes on internally might be useful to those mediating with a corporate entity, a partnership, or an LLC, whatever the business structure, but wherever there’s more than one shareholder, one manager, or more than just one person who is the decision-maker. Here are my thoughts; make of them what you will:

1. The larger the entity, the more closely it resembles the Titanic. In other words, the iceberg can be avoided, but it takes work and careful steering.

2. Understand that larger entities have levels of settlement authority, and thus, any internal settlement discussions will involve more than one person with differing views. Getting people to agree to settle and what the settlement authority should be takes time and persuasion. If unclear, see #1.

3. To the plaintiff’s counsel: Make a settlement demand that makes sense based on what you think you will be able to prove.   Otherwise, you’re likely to get blown off by defense counsel and/or in house counsel, and settlement authority will be most likely in an amount that may be just nuisance value (the “pique factor”), if that much. Do you want to resolve the case at mediation or just dance around each other?

4. Plaintiff’s counsel should explain how that settlement demand is arrived at. Don’t just talk in round numbers. What does the demand include?   How did you get to that number? The company number crunchers will want specific, and without those, the demand won’t have credibility..

5. To defense counsel: Don’t wait until the last minute (before mediation, arbitration, or that relic of justice, a trial) to ask for settlement authority. Don’t make this a fire drill, a drop everything situation for the entity. The entity is focused on its business and bringing revenue in the front door, not seeing it leave by the back door. No one likes surprises.

6. To both plaintiff and defense counsel: If there is an in-house counsel assigned to the matter, understand his/her role. That person needs to put the settlement authority request in writing, send it to the various people in the settlement authority chain, wait for a response or more than one (which can often be of the “no, hell no” variety), and then get the internal clients to focus on the matter for purposes of settlement authority. This process can involve repeated phone calls, emails, including, but not limited to, verbal arm-wrestling. Your priorities are not the same as the entity’s.

7. To both plaintiff and outside defense counsel: have some patience. Give the entity enough time to consider the demand and figure out the level of settlement authority for the mediation.

8. Consider the tax implications. Provide all necessary tax identification information, including payee instructions, tax identification numbers, wiring instructions, etc.   If the case settles, then give the entity a reasonable time in which to make payment. Don’t expect next day delivery of the funds. Internal audit requires documentation of the payment request and Accounts Payable has other vendors to pay.

9. No one knows the corporate politics and personalities better than an in-house counsel, if there is one. Understand that there may be many other factors at play that you’re clueless about. Corporate politics, concern about setting precedent, loss reserve issues, insurance coverage (if there is any and, if so, self-insured retention levels, adjuster issues), to name just a few, all play a role in how each case is resolved.

10. Come to the mediation with a proposed form of settlement agreement. Even better, exchange the form in advance. If the mediation is successful, then it’s simply a matter of filling in the definitive terms (financial plus whatever else is unique to the case), which both streamlines and accelerates the resolution process.

Jill Switzer on EmailJill Switzer on Linkedin
Jill Switzer
Jill Switzer
Jill Switzer has more than 40 years as an active member of the State Bar of California. She's had a diverse legal career, including stints as a deputy district attorney, a solo practice, and several senior in-house gigs. She now mediates full-time as a panelist with ARC, Alternative Resolution Centers in Los Angeles, and she loves comic books and graphic novels. In addition to her full-time mediation practice, Jill speaks on a variety of topics to state and local bar associations and writes a weeklyr column at www.abovethelaw.com. She is also a certified volunteer long-term care ombudsman in Los Angeles County.

LEAVE YOUR COMMENT

Your email address will not be published.

Time limit is exhausted. Please reload CAPTCHA.