Mediation Tips and Arbitration Bits
| Publication year | 2021 |
| Author | By Hon. Michael D. Marcus (Ret.) |
By Hon. Michael D. Marcus (Ret.)
Judge Michael D. Marcus (Ret.) is a mediator, arbitrator, and discovery referee at ADR Services, Inc. Prior to being a full-time neutral, approximately 20 years ago, Judge Marcus was a trial lawyer, a law firm partner, and a judge at the California State Bar Court. Judge Marcus has also taught at law schools, is a legal author, and was a member of the Executive Committee of the Labor & Employment Law Section. He can be reached at (310) 201-0010 or christie@adrservices.com.
Opinions about the use of brackets at mediations are mixed—some attorneys like them, others use them reluctantly. This article explains the mediation participant bracket procedure and demonstrates why said process is an integral part of mediation negotiations.
Party brackets are the use of contrasting numbers by litigants to create a range for continued negotiations. For example, assume that a plaintiff first demands $300,000, and then successively reduces the demands to $275,000, $265,000, and $255,000; the defendant, in turn, offers $5,000, $7,500, $9,500 and $11,000. Following the mediator's recommendation, the plaintiff then proposes to demand $175,000 if the defendant would offer $75,000. The receiving party infrequently accepts the first bracket, thus, the defendant answers that it would offer $40,000 if the plaintiff were to demand $90,000.
Mediation negotiations rarely begin with brackets. Most often, the parties make several demands and offers (sometimes described as "marketplace bargaining") before the mediator (rarely a party) suggests using brackets because the marketplace process has ceased to become effective as the parties' moves become smaller or when a party refuses to make another move. There is no set number of the demands and offers that should be made before a bracket becomes a viable alternative—marketplace bargaining should continue as long as it produces reasonable movement.
The party initiating the bracket process should counter a responsive bracket with a new bracket or a single number, depending on the circumstances. Obviously, that choice is negated if the recipient rejects the initial bracket and comes back with a fixed number.
There is no rule or custom as to which party should initiate the bracket process. The first bracket as well as the initial presenting party, is often the result of a mediator's recommendation. A party may not want to present first, for several reasons, including being unsure about the bracket process or believing that a responsive bracket is more advantageous.
How to create a meaningful bracket requires an understanding of how to use them. A lack of understanding can cause hesitancy in the process. The following is a foolproof method: Start with a midpoint, which can be the amount that the party believes is the reasonable value of the case, where the party wants to settle or even an unrealistic number but, for strategical purposes, would be useful in negotiations.
For the purpose of this example, assume that the plaintiff's midpoint is $125,000.
Next, the party should select an amount that it wants the plaintiff or defendant to demand or offer (for example, the plaintiff wants the defendant to offer $75,000); multiply the $125,000 midpoint twice, which is $250,000, and then subtract the $75,000, which is $225,000. In other words, the third number is a pure matter of math after the midpoint and one number has been decided.
The bracket here is that the plaintiff will demand $175,000, if the defendant will offer $75,000. If the defendant's midpoint is $65,000 and it wants to offer $40,000, the $65,000 multiplied twice is $130,000, less the $40,000 becomes $90,000. The defendant's bracket, therefore, is it will offer $40,000, if the plaintiff demands $90,000.
A party can "adjust" the bracket midpoint and corresponding offers and demands after the initial bracket has been created if it is not satisfied with the original numbers.
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Assume that the above parties' last "moves" before bracketing had been, respectively, $11,000 and $255,000. If the plaintiff, before giving the mediator her bracket, believes $75,000-$175,000 is too big a jump from $255,000, she can change the $75,000, the $175,000 and/or the midpoint to create a smaller move. The defendant has the same option.
As noted, generally, brackets are used after...
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