The cornerstone of a successful mediation comes from parties navigating uncertainty in order to find an acceptable, self-directed resolution. Sometimes, this process stops mere inches from settlement.
Instead, the parties sit outside the fringe of resolution while remaining entrenched in their positions.
This is the textbook scenario for the mediator to assess the gray area with a mediator’s proposal.
Although there can be variations of a mediator’s proposal, the underlying premise is fairly straightforward.
The mediator makes an offer to both parties usually at the end of a mediation session when the parties are at an impasse.
If neither party has any more room to negotiate, the mediator may attempt a “take-it-or-leave-it” offer.
The distinguishing and attractive component of this mediation tool is that it does not require either party to lose ground on a negotiating position.
Instead, the proposal comes from the neutral mediator as opposed to having a party appear weaker in its final position.
The proposal is confidential and is managed through a double-blind system. Thus, neither party knows if the other has accepted until both parties have agreed to the deal.
The process begins when the mediator separately provides the terms to the parties. The mediator sets the terms in all respects including all monetary and non-monetary components.
In order to legitimize the proposal, neither party may add nor alter any terms.
It is the mediator’s proposal in its truest sense and can only be accepted or rejected without modification.
The reason is because once a party makes a modification, it is no longer the neutral’s proposal.
The procedural advantage of the proposal comes from the double-blind system.
If a plaintiff accepts the proposal, but the defendant rejects the proposal, the defendant never knows that plaintiff would have accepted it.
Conversely, if a plaintiff rejects the proposal, but the defendant accepts the proposal, the plaintiff never knows that defendant would have accepted it.
The accepting party never loses negotiating leverage with the rejecting party.
Now, if both parties accept the proposal, the mediator will advise both sides of the settlement.
The mediator may develop his or her proposal based upon the mediator’s understanding of the subject matter, the parties’ positions during mediation, as well as a range of potential outcomes.
Based upon these factors, the mediator would craft a settlement that the mediator believes might bridge the gap between the parties.
It is important to note, however, that bridging the gap does not necessarily mean finding that easy middle ground.
It requires more than this inasmuch as a proposal that finds the mathematical equal split could still fail.
There are several benefits of the mediator’s proposal.
The proposal helps parties move past initial posturing in order to focus on a realistic resolution.
Even if the mediator’s proposal is ultimately rejected by one or both parties, it still has value for the parties.
For instance, it can assist parties to understand where an independent third-party might value the case.
Moreover, a rejected mediator’s proposal has the potential benefit of fostering additional communications between parties after having time to evaluate the proposal. This may lead to a post-mediation- session settlement.
While a mediator’s proposal is not an option for every mediation, there are certainly situations where parties can benefit from this additional effort by the neutral.
Bryan Rendzio is a former 7th Circuit Court judge. He is board certified in construction law by the Florida Bar and is co-chair for the Alternative Dispute Resolution Subcommittee of The Florida Bar’s Construction Law Committee. Rendzio is a full-time neutral at Miles Mediation & Arbitration.