Mediation Is an Effective Risk Management Strategy, but Be Thorough.

An old adage states, “The worst settlement is often better than the best trial, particularly for the losing party.” This was true in a recent upstate New York case where a jury awarded damages twenty times the realistic settlement value. How does that happen? What did the defense miss to be so far off? Quite simply: it is all about risk analysis.

Risk is certainly a component of any dispute. Litigation is not a straight line, but a path infused with nuance and variables which cause risk. In the extreme, when the defense takes a “no or minimal pay” position, a plaintiff has nothing to lose by going to trial. There is no risk to the plaintiff. Conversely, an exorbitant plaintiff demand decreases the risk for the defense not to settle.

Mediation is a process by which risk can be mitigated by identifying, isolating, and resolving the risk variables. An effective mediator should anticipate and identify these variables and guide the parties through them to achieve a settlement or, at least, a partial resolution of the issues. Although parties most frequently mediate hoping to resolve the entire dispute, a settlement being the ultimate mitigation of risk, not achieving a final and total resolution need not be a failure. By agreeing to mediate, the parties and their counsel are seeking to resolve issues. It is the purpose of the mediator to assist them in their quest.

As a trial judge for 42 years, I have found issues that arise during a trial that become more or less significant than initially anticipated and can affect the outcome of the trial. The pretrial conference immediately before jury selection, where motions in limine are heard, presents the court and parties with a final opportunity to settle, hone, or, at least, minimize the issues. But litigants need not suffer the delay and expense to resolve their case until a pretrial conference, often well into the litigation. Think of mediation as a type of private pretrial conference instigated and controlled by the parties. The mediator, as would an experienced judge, focuses the parties, creates a dialogue, suggests resolutions, and hopefully settles the case or parts thereof.

An experienced trial judge who has settled hundreds of trial-ready cases and is now serving as a mediator is well-suited to guide parties through the gauntlet of issues, both obvious and subtle, to eventually resolve the case. A mediator with judicial experience can give insight into possible legal and procedural issues. An experienced trial judge has ruled on evidence, charged juries, and dealt with the outcome of the litigation: the verdict. More subtly, mediation recommendations involving an experienced judge should impact the parties' comfort in settling.

The areas of possible agreement are extensive and are limited only by the experience and creativity of the mediator and counsel. The more obvious examples may include stipulations as to expert testimony, admission of evidence, and high/low limits on a verdict should the case ultimately be tried or, in the alternative, agree to arbitrate unresolved issues. When there is an existing arbitration agreement, statute, or a court order requiring arbitration, consider pre-arbitration mediation. An experienced mediator will point out strengths and weaknesses and encourage the parties to resolve as much as possible, with the goal of a full settlement. Indeed, I have found that settling a few of the lesser issues can create a cascade of further agreement, ultimately resolving the entire matter.

Experience matters.

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Republished with permission from the January 10, 2025 edition of Rochester Business Journal

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The Hon. John J. Ark (Ret.) is a member of NAM's (National Arbitration and Mediation) Hearing Officer Panel. He served as a Justice of the New York State Supreme Court for 28 years. Justice Ark has presided over matters in each of the eight counties in the Seventh Judicial District, as well as serving five terms in New York County. His remarkable judicial career includes eight years as a supervising judge overseeing a multitude of toxic torts cases and five years handling matrimonial matters. Justice Ark is available to arbitrate and mediate cases in Western and Central New York, including the Greater Rochester area.

For any questions or comments, please contact Jacqueline I. Silvey, Esq. / NAM General Counsel, via email at jsilvey@namadr.com or at 646-737-1414 ext. 128.