The Limitations of Mediator Proposals

By Paul F. Monicatti –

Introduction

Much has been said and written about the subject of mediator proposals used to potentially close a deal in mediation. A search of Mediate.com, a leading source of scholarly articles, produced 11 pages listing 320 articles under the topic “Mediator Proposals”. A more refined search, however, produced only four articles actually on point. We were able to locate another four articles on our own. Their common thread is that use of mediator proposals is somewhat controversial within the professional mediation community. For some practitioners, they can be an effective way to break an impasse. For others, they undermine the core values of mediation, especially party self-determination and mediator neutrality. This article briefly explores factors to consider when contemplating use of mediator proposals.

Why or Why Not?

According to my mediator colleague Bill Gillbride in Michigan, since January 1, 2022, when cost sanctions for rejecting a case evaluation under the Michigan court rules were removed, case evaluation became meaningless as a useful pre-trial reality check on the merits of a case. Consequently, Michigan mediators have learned that in some instances the parties appreciate an objective assessment of a case. For whatever reason, getting that feedback from an independent third party may be more palatable to the parties than making concessions or offers they previously were reluctant to make.

My viewpoint, based on nearly 40 years of mediation experience, has been that mediator proposals should be relegated to an option of last resort after all other negotiation techniques have been exhausted and failed to yield a settlement, and only when counsel and/or parties request it.

There are alternatives to mediator proposals to try first in order to close a monetary gap between the parties, allowing them to retain exclusive control of the outcome instead of deferring it to a third party. For example:

Bracketed bargaining which lets parties test settlement ranges without committing themselves to specific offers unless both sides arrive in the same negotiation neighborhood.
Floating (asking) hypothetical “what if” questions to each side in caucus; at first, what if one side would move to $X, would the other side move to $Y, and, for closing moves, what if one side would move to $Z, would the other side accept it?
Adding value by means of tangible tradeoffs or intangible non-monetary terms, either of which have greater value to the recipient than the offeror.
Convening a cross caucus between clients-only, preferably with or even without the mediator, when the attorneys’ natural tendency to zealously advocate for their clients is becoming a settlement obstacle, has worked for the author in the past.

In the very few instances when I’ve been asked and used a mediator proposal, it has resulted in a better than 90% success rate. So, under what circumstances should it then be used, if only sparingly? Among the situations in which mediator proposals have been found suitable are the following:

As a means for decision-makers to save face because they can point to or blame someone else (i.e., the mediator) for the result;
When the ultimate decision-maker hasn’t previously been participating in negotiations;
For psychological reasons when someone with avoidance tendencies is struggling to commit but will accept a trusted third party’s suggestion more easily;
When party or mediator frustration or fatigue is setting in.

When used sparingly, mediator proposals can provide closure and finality for an otherwise continuing dispute.

On the other hand, mediator proposals seem inconsistent with the fundamental spirit of mediation, i.e., self-determination, and are antithetical to the mediators’ perceived impartial and neutral roles when mediators miss the “sweet spot” with their proposal and it’s rejected by one or more of the parties. However, a way for mediators to avoid the negative impact of a missed target is to invite further contact and discussion beyond simple acceptance or rejection of a number. In any event, the trick for the mediator is to correctly make an educated guess on a number that both sides reluctantly can live with even though they may not be completely satisfied with the result.

Another downside risk of a mediator proposal is that if parties, based on the mediator’s reputation or their previous experience with them, expect to inevitably receive it, at best this could have a chilling effect not only on their candor in acknowledging their weaknesses and risks but also on their earnest problem-solving efforts and generation of their own solutions, which are essential principles of mediation. At worst, savvy negotiators could attempt to manipulate the negotiation process to set up a favorable mediator proposal by withholding information and withholding information and limiting their offers made during mediation in order to create their desired impasse gap.

How?

If all parties first ask and agree that a mediator proposal is an acceptable method, then the mediator (at the end of or after mediation) can make a suggested solution, which will be a specific amount or monetary bracket for parties’ consideration to confidentially and unconditionally accept or reject within a specified time period. This confidential response insulates an accepting party from creating a new floor or ceiling for later negotiations if the other side rejects. The proposal is based on signals and disclosures made by the parties during mediation and on the mediator’s own instinct and intuition. It also could depend on the attorneys’ own candid numbers told to mediators outside the presence of their clients that they would consider recommending to them.

The proposal may include the mediator’s rationale, e.g., that the recommendation (or “invitation” as my mediator friend and colleague Jeff Kichaven in northern California calls it, probably to soften perceptions of outside pressure and client loss of control) is for settlement purposes only as a practical compromise and not as a prediction of the eventual outcome in court or arbitration or as an evaluation of the relative merits or value of the case. Obviously, mediators have a unique and valuable advantage over the parties as a consequence of their separate, private conversations with each party during caucus, typically giving them information known only by one party and now them, which the other party doesn’t know.

Conclusion and Food for Thought

Despite its potential benefit in limited circumstances, mediator proposals can be risky for mediators as an end-game gambit. According to mediator Richard Webb, “the mediator’s proposal leaves the mediator with no place to go if it is not accepted by both parties”. Is that final outcome really worth the risk to mediators and the process? Is that all that mediation participants ultimately want from the magic of mediation? Or is it merely a convenient escape from a frustrating and unproductive experience without spending further time and effort?

Deeper questions are: whether mediator proposals strengthen or weaken the effectiveness and integrity of mediation and its core values; whether mediator-proposed settlements actually reflect a product of skilled negotiation when parties engage fully or just a shortcut past the hard work of open-minded dialog and finding creative solutions; whether mediator proposals are an easy fix for mediators and discourage their patience and persistence in pursuit of the parties’ hidden interests underlying their stated positions.

One might rightly say that the true measure of mediation success is not the mediator’s ability to devise a clever recommendation but in the parties’ satisfaction that they crafted a solution themselves.

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Paul F. Monicatti is a Detroit-based ADR professional affiliated with Professional Resolution Experts of Michigan (“PREMi”). An attorney since 1978, arbitrator since 1983, and mediator since 1986, he has served in nearly every neutral role, including court-appointed mediator, settlement master, arbitrator, case evaluator, receiver, umpire, referee, and expert witness.

He has received top honors from Martindale-Hubbell, Best Lawyers® in America, Super Lawyer, Leading Lawyers, U.S. News & World Report, Crain’s Detroit Business, and Who’s Who Legal: Mediation. In 2019, Michigan Lawyers Weekly named him a Leader in the Law, and Best Lawyers® has named him Lawyer of the Year in mediation, arbitration, or ADR five times.

Other recognitions include the State Bar of Michigan ADR Section’s Distinguished Service Award (2024), the International Academy of Mediators’ Certificate of Recognition (2024) for elevating the visibility of women in ADR and encouraging gender equality for women worldwide, and the Center for ADR in Maryland’s Recognition Award (2017) for dedicated service and commitment to the needs of its culturally diverse community.

He has authored or co-authored ADR chapters in Michigan Civil Procedure (ICLE, all three editions), taught ADR advocacy at Western Michigan University Cooley Law School, and co-founded ADRoit Dispute Resolution, Strongbridge Negotiation Strategists, and the International Academy of Mediators. Additionally, he’s contributed hundreds of hours of his time and expertise to help establish a pro bono early mediation program for pro se prisoner civil rights cases filed in federal court in the Eastern and Western Districts of Michigan.

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Paul F. Monicatti is affiliated with Professional Resolution Experts of Michigan, LLC. He’s been an arbitrator since 1983 and a mediator since 1986 in all areas of the law except family law and criminal law. He’s earned the highest ratings possible from Martindale-Hubbell, Best Lawyers in America, Super Lawyer, Leading Lawyers, U.S. News and World Report, Crain’s Detroit Business, and the international Who’s Who Legal: Mediation. A Michigan Lawyers Weekly 2019 Leader in the Law, he’s been named Best Lawyers’ 2024 Troy Area Lawyer of the Year for Arbitration, 2019 Troy Area Lawyer of the Year for Mediation, 2018 Troy Area Lawyer of the Year for Arbitration, and 2011 Detroit Area Lawyer of the Year for ADR. He’s served as a court-appointed mediator, settlement master, arbitrator, facilitator, case evaluator, receiver, expert witness, umpire, and referee. He authored the chapter on Mediation, Arbitration and Other Dispute Resolution Methods in addition to co-authoring the chapter on Settlement, Negotiation, and Alternative Dispute Resolution for ICLE’s Michigan Civil Procedure. He has taught ADR Advocacy Skills in negotiation, mediation, and arbitration at Western Michigan University Cooley Law School. He is a co-founder of ADRoit Dispute Resolution, Strongbridge Negotiation Strategists, and the International Academy of Mediators.