What will you do if you don’t strike a deal at mediation?
What will you do if you don’t strike a deal at mediation? The common, and most obvious, answer to this question is, “we’ll just take the case to trial.” Seems simple enough. But, if trial is your Plan B should you not strike a deal, a full understanding of the costs and potential benefits of trial (for all sides) must be achieved. Without that understanding, the line between striking a deal and walking away will remain arbitrary, and options for resolution will be restricted.
Most litigators are familiar with the concept of the best alternative to a negotiated agreement, or the BATNA. Put simply, the BATNA is your best option if you don’t strike a deal with your negotiation counterparts. Your BATNA, i.e., your no deal options, may be better or worse than your deal options. Just because you have a BATNA doesn’t mean that it’s any good. Your BATNA may be downright terrible. Or, your BATNA may be excellent, in which case striking a deal with the other side may not be very attractive.
Understanding your BATNA, as well as the other side’s BATNA, is an immensely valuable undertaking prior to and during mediation. Lawyers tend to have an intuitive sense of their clients’ BATNA. They can fairly accurately assess the strength and weaknesses of their client’s case based on experience and a good understanding of the facts and law before them. This basic understanding is as far as many of us get before heading into mediation. And it’s usually not enough.
Understanding the BATNA is a thorough process that must account for the budget (the cost) and potential benefits of litigation. Many things outside of money must be considered to develop a good litigation budget: opportunity cost, actual cost, emotional cost, time, public relations, consistency with mission, and so on are all included in the litigation budget. Once your litigation budget is understood, an estimated return must also be understood. You must ask what you stand to gain if litigation goes well, and what you stand to lose if things don’t turn out as planned. This includes a good, honest assessment of legal and factual issues. This process should include an assessment of your client’s interests – i.e., what they really want (which warrants a post of its own). Once you conduct this exercise for both sides, you’ll have a decent understanding of the BATNA.
During mediation, your BATNA, and that of your counterpart, will evolve. If mediation is properly designed, you will develop a much better understanding of your counterpart’s litigation position and motivating factors (i.e., its BATNA). Deal options that are developed during a meaningful mediation session should be analyzed against your BATNA before a deal is struck. In this way, your client will have a good, full understanding of all options available and will be more likely to avoid the dreaded post-deal buyer’s remorse.
To learn more, or to get a conversation started, please contact Marc Menkveld at marc@menkveldlaw.com.