Mediation Is Not the Only Way to Successfully
Resolve Your Case: How to Recognize and
Capitalize on Other Settlement Opportunities
By: William B. Smith, Abramson Smith Waldsmith, San Francisco, California
Doris Cheng, Walkup Melodia Kelly & Schoenberger, San Francisco, California
Timing is critical when it comes to settlement. The key to successful resolution is figuring out when the time is right and then what to do in order to maximize the chances of a favorable settlement. The plaintiff's attorney has more control over this than you might expect. Sir Francis Bacon observed, "A wise man will make more opportunities than he finds." But many attorneys are programmed not to discuss settlement until they are in a formal mediation setting, and that is foolish. The following is an analysis of critical stages when maximum settlement can be achieved.
A. Prior To The Filing of the Case.
Claimants now have two years to file suit (unless the action involves a public entity or medical negligence). If the damages can be determined within this period, you may be able to resolve your case early, but an initial consideration is the amount of the insurance policy limits. In situations where the damages exceed the policy limits, a resolution may be very swift. But more often than not, the available policy limits are unknown, as California law does not require such disclosure prior to the filing of a lawsuit. Therefore, you have to use your wits to get this information from the insurance adjuster.
Adjusters routinely respond that they cannot disclose policy limits without authorization from the insured, and they often do not get it, nor do they even try to do it. Nevertheless, they always want information and favors from you as the plaintiff's lawyer. One technique to shift the paradigm is to bargain with the adjuster. For instance, consider sending copies of medical records and other evidence of damages in exchange for the policy limits information. Another consideration is permitting the adjuster to speak with your client (in your presence) in exchange for coverage information. However, never let an adjuster record your client. If the case does not settle, the defense would get "two bites of the apple" with a deposition during the litigation phase. Alternatively, consent to an early deposition with a stipulation that this is the only deposition that will ever be taken, and defendant waives any future deposition as part of any litigation.
Remember that an adjuster has a job to do, too, and if you can befriend the adjuster, it may go a long way either to get your case settled early or increase the reserve the insurance adjuster needs to settle the case later.
Along the vein of getting more bees with honey than vinegar, it is not beneficial to antagonize insurance adjusters needlessly. Relationships are paramount to facile resolutions. Adjusters, who have amiably resolved cases with you in the past, are more likely to settle with you early. Sometimes you have the luxury of dealing with a very seasoned adjuster who may have worked on other cases you have handled. In these rare cases, consider having lunch with the adjuster to discuss the case informally. This type of situation often leads to favorable settlements and saves everyone a lot of time and money.
The bottom line is that you should keep an open mind about dealing with adjusters. Size them up and always try to get something for everything the adjuster requests. Treat them with respect and you may be surprised at what you are able to accomplish.
B. After A Key Deposition.
Once the lawsuit has been filed, the best way to settle a case is to treat it as if it is going to trial. Develop a habit of propounding form interrogatories, special interrogatories, requests for production and requests for admissions, and noticing depositions of the key witnesses, as soon as you receive the Answer to Complaint. You cannot sit back and hope for a favorable settlement without doing any work or spending any money. Conviction is worthless unless it is converted into conduct. You must convince your opponent that you are prepared to take the case to trial.
Also bear in mind that the defense firm has to bill something to justify its appearance in the case. By the amount of discovery conducted and the amount billed, the defense attorney must demonstrate that he or she has adequately evaluated the case before recommending settlement.
The reality is that cases do not settle until the key depositions are taken. The key depositions are of the defendant, any eyewitnesses, a police officer (if applicable) and the plaintiff. If the defense is taking its time noticing the deposition of the plaintiff, take the initiative and offer your plaintiff up for deposition, particularly if the value of your case is improved by the appearance of your client. It does not matter that your client is not a critical witness to liability. The defense recognizes that the value of a case may increase or decrease depending upon the believability and likeability of the plaintiff. In almost all cases, the defense cannot evaluate damages without meeting the plaintiff.
Do not miss an opportunity to sit down with a defense lawyer after a key deposition to discuss settlement. There is no harm in doing this and you would be surprised how often it leads to an early resolution. For example, your opponent may invite a demand or outline specific things that have to be done to resolve the case, such as a defense medical examination, additional critical depositions, streamlining of remaining discovery, or the informal production of damages evidence that may shortcut things. If you do not consider this approach you may be missing a great opportunity. It is not a sign of weakness to discuss resolution of your case at this stage.
Face to face encounters (and even telephone calls) are under-utilized in this electronic age, where emails substitute as meaningful dialogue. But so much more information is gained by being in another person's presence. Comments that people fear to put in writing may flow more freely in oral conversation, where words seem to disappear into the ether rather than embedded in someone's hard drive. Without the fear of print and permanence, you may learn how the defense feels about the impression your client made; it may admit problems it has defending the case; and you can get a sense of how serious it is about trying your case. These bits of information are not easily obtained in a letter or an email. Face to face meetings are invaluable and often set the tone for settlement.
Your ability to engage civilly at deposition and during the discovery process will pay large dividends as the defense gauges whether and how to resolve your case. Most of the civility violations occur during discovery and frequently arise during depositions, so be sure to become familiar with the State Bar's Civility Guidelines published in July 2007. They are only "guidelines" thus far and are not rules of court, but the American Board of Trial Advocates and JAMS are making an effort to enact these as official rules of court. It goes without saying that if you do not treat your opponent with respect and dignity, he or she will not want to deal with you openly and honestly so the risks of early settlement will be reduced. No one wants to try to settle a case early with a jerk.
C. At or After A Court Hearing.
It used to be that everyone had to personally appear for a trial setting conference and/or case management conference. With the availability of telephone appearances, that has become a relic of the past. Nevertheless, such hearings are often a watershed moment for the parties to stop and take stock of where the case is going. It is another time for discussion of possible settlement.
If the parties do not appear personally for the hearing, create an opportunity by calling the opposing counsel immediately before or after the telephone appearance, when you know your opposing counsel is sitting in the office.
If the court hearing is in your favor (for example, a summary judgment motion or key discovery motion), treat this as another opportunity to discuss settlement.
The old saying "trial dates and an open courtroom settle cases" is still true. You may find that setting the trial date alone makes people more focused and ready to discuss resolution to save the time and money of expert depositions and trial preparation. However, you may have to wait until you get closer to trial to be sure that a courtroom is available.
D. After The Key Discovery is Accomplished But Before Mediation
This is what we call informal mediation. It is not ordered; it is not supervised; and there are no briefs. You simply evaluate your case, get the proper authority and make a demand with a good letter with damages verification attached. This demand may or may not be accompanied by a CCP 998 statutory offer or policy limits demand to get the attention of your opponent. You want to use whatever "arrows" in your quiver to put pressure on your opponent to settle the case now and not at some distant future date.
Consider a demand letter that illustrates (visually and photographically) the liability issues, rebuts the defenses and identifies the injuries and damages clearly and completely. The demand letter should always have a reasonable deadline (at least 30 days) for a response. If a CCP 998 accompanies the demand letter, the deadline is statutory.
As to when you should use a CCP 998 offer, opinions vary. The advantages are that, if you beat it, you can claim prejudgment interest (CCP 3291) and post-offer costs (CCP 998 c(1) and can request expert costs. Bear in mind that expert costs are within the discretion of the trial court (CCP 998 c(1)). If you are making a policy limits demand and you have sufficient discovery to support the demand, send a CCP 998 offer.
A disadvantage of a CCP 998 demand is that if you make the amount low enough to insure you can beat it, you take out all of the water in your demand. It may be better to serve a CCP 998 offer after a mediation when you and your opponent have negotiated and you are now down to a demand that you would be willing to try the case against. If so, that should be your CCP 998 offer and you must remember that there are time limitations for getting one served. It must be served not less than ten days before trial or arbitration (CCP 998 (b)). If the offer is not accepted prior to trial or arbitration or within thirty days after it is made, whichever occurs first, it shall be deemed withdrawn. (CCP 998 (b)(2))
Should you make a policy limits demand? The answer is that it depends how realistic it is. If your case is likely to exceed the policy limits, you definitely should inform your opponent that the case is worth considerably more than the available policy limits and that a likely verdict will exceed those limits and expose the insured to personal liability. You should then demand the limits and add that you are sending along a second copy of the letter so it can be transmitted to the insured and any Cumis counsel. This will increase the chances that your offer will be discussed with the insured, who more likely than not will encourage his carrier to pay and be done with it, rather than be exposed to an excess verdict.
If a policy limits demand is made before filing a lawsuit, you should also request a copy of the insured's insurance declaration sheet and a declaration under penalty of perjury from the insured that the policy you know about is the only available policy of liability insurance and that the insured was not in the course and scope of employment at the time of the incident.
Policy limits demands get the attention of the defense because no one wants to risk a result outside the coverage limit. Excess verdicts reflect poorly on the evaluation and trial skills of defense counsel, as well as the judgment of the insurance adjuster; plus, excess verdicts may well create a bad faith cause of action with additional attorneys fees and liability exposure.
Informal mediation is becoming a "lost art." Prior to mediations, the only formal vehicle for settlement was the court-conducted settlement conference scheduled just before trial. We now have bench/bar mediation panels, voluntary formal mediation and court ordered mediation. There are many other opportunities to resolve a case but too many lawyers overlook informal mediation. It requires person-to-person contact and a willingness to be candid. Again, in this internet age, it seems that few (lawyers and clients) have the conviction to make their word their bond. Many seem to want a mediation setting so that discussions can be held separately in a controlled environment where nothing that is said can be used against the other side.
Of course, formal mediation has protection under Evidence Code § 1119, which seems to be inviolate given recent cases. See Rojas v. Superior Court (2004) 33 Cal. 4th 407 (holding that the statute unqualifiedly bars disclosure of specified communications and writings associated with mediation absent a statutory exception); and Long Beach Memorial Medical Center v. Superior Court (2009) 172 Cal. App. 4th 865 (the confidentiality of statements made and materials used during the mediation continues after the mediation ends). However, you can accomplish the same result with a stipulation. Simply ask your opponent to agree to an informal attempt to resolve the case with the confidentiality of Evidence Code § 1119, and then cite that in all of your communications. This provides you with the statutory protection of mediation, but without the expense.
In the 1970's and 1980's, before the days of formal mediation, this is how many attorneys settled their cases. This was done by the attorneys agreeing to submit demands and then dealing directly with each other in negotiation by letter or telephone. The most effective method was a face-to-face meeting after a proper demand was made. A personal lunch was popular and resulted in many settlements.
Today, however, many insurance carriers simply do not trust their defense counsel as they once did. It is difficult for defense lawyers to get the authority they need to settle during lunch. Nevertheless, lunch may be a great prelude to future resolution, and both sides learn a lot in the informal setting. Give it a try.
E. After a Formal Mediation.
Mediation is an effective settlement tool, but not all cases settle during the first mediation session. Mediation fails for a number of reasons including incomplete discovery, a new issue, or the fact that it may have been too far from the trial date. A good mediator will follow up with the parties to make every effort to resolve the case.
Use your mediator's help to make the case ripe for further mediation or resolution. Do not be afraid to contact the mediator to ask for help or to explain problems that the mediator may be helpful in resolving. The sooner you follow up on the things that made the mediation fail, the better the chances that it will be successful. Sometimes it takes time for one side to adjust and/or seriously evaluate a case.
F. After the Depositions of the Experts.
Some cases require expert testimony before they are ripe for resolution. Medical malpractice cases are an example and the same may be true of construction cases and products liability cases. Sometimes the parties will agree to the early disclosure of experts or to conduct an expert deposition prior to the time mandated under Code of Civil Procedure § 2034 in order to posture the case to settle. After a necessary expert deposition or series of depositions, the parties may be able to engage in meaningful informal mediation or re-engage in formal mediation. This is a great opportunity, especially if you have strong expert witnesses.
G. At the Court Supervised Mandatory Settlement Conference.
Of course, this is a logical time and place to settle your case. Trial courts generally assign the mandatory settlement conference within three weeks before trial. You have the pressure of a trial date, you know what your experts will say and you have an indication that your case will be assigned to a courtroom for trial. You need to develop a list of all of the reasons why it would be advantageous to the defense to settle the case rather than try it. This list could include an excess verdict, adverse publicity, increased attorneys fees and unrecoverable costs, exposure to your cost bill and possible expert fees, lack of an opportunity to request confidentiality, lack of an opportunity to structure any resolution, and the likelihood of losing.
If the parties are interested in resolution, an impediment at the mandatory settlement conference is whether you trust the neutral assigned to mediate your case. The Court has the power to assign a judge or referee. Consider whether there is a particular civil trial judge who has a reputation for resolving cases and request that judge. Frequently, the assignment is random, but many courts will accommodate specific requests.
As a general rule, avoid using the assigned trial judge as your settlement conference judge. If your case does not settle, the judge may be predisposed to ruling one way or another based on information gained in confidence.
Alternatively, you can agree to mediate in lieu of attending a mandatory settlement conference. This is an opportunity to flesh out the seriousness of your opponent's inclination to settle the case. Most defense attorneys and insurance representatives are willing to spend money on private mediation at this stage of the litigation in order to achieve resolution. Private mediation with a neutral whom the parties trust to finish the job is a better utilization of resources than appearing before an unknown settlement judge, who has no investment in whether the parties settle or try the case. Courts are amenable to releasing the parties from the mandatory settlement conference, if a mediation is set around the same time as the mandatory settlement conference.
If your case settles at the time of the mandatory settlement conference, be sure to state the terms in open court with a court reporter present. The settlement is not enforceable under Code of Civil Procedure § 664.6 without the parties' specific consent. Therefore, when the agreement is made on the record, be sure that all parties agree to enforceability under Section 664.6. Also be sure that the parties (specifically each side's client) verbalize their consent to settlement on the record. The settlement is not enforceable without the express consent of the actual litigants. Agreement or stipulation between the attorneys or the parties' agent or representative is not sufficient. See Levy v. Superior Court (1995) Cal. 4th 578, 585; Williams v. Saunders (1997) 55 Cal. App. 4th 1158; Davidson v. Superior Court (1999) 70 Cal. App. 4th 514, 528; Gauss v. GAF Corp. (2002) 103 Cal. App. 4th 1110, 1113.
H. At Trial.
Do not overlook the chances of settling your case once you have been assigned to a trial department. Many cases settle with the assignment, after the jury is selected, or after opening statements. Recently, it seems that the defendant waits to the last possible moment to resolve large cases, taking advantage of everything it can until the opportunities run out. Your opponent is often betting on your resolve to try the case or your client's fears about going forward.
Remember that your mediator (if you have one) is always available to assist if the parties reach an impasse. Sometimes this can be accomplished after hours or over the weekend. Trial is unpredictable and you never know when you may be approached for settlement. Frequently, the largest hurdles to settlement during trial are the attorney's emotional investment and ego. You must always keep in mind the best interests of your client. Remember that the major advantages of settlement are still present, e.g. there will be no appeal, costs can be kept down and you can structure a settlement. You still have control over the result, whereas in the hands of a jury, you have no control over the outcome.
Critical moments for settlement during trial are: (1) after the jury is impaneled; (2) following opening statement; (3) after the testimony of a key witness; and (4) before closing argument. After the jury is impaneled, both sides have an idea of whether the jury is favorable or not. There is more information about the major unknown associated with trials - who are the finders of fact. The opening statement reveals the compelling nature of each sides "story." Where the parties may not have envisioned how the other side intended to tie together all of the information, they now can , because the opening statement, if done well, weaves the facts together in such a way that garners sympathy and righteousness. Sometimes, the lynchpin in a case is the untested appearance of a key witness before twelve strangers. Once that variable has been eliminated, settlement is less elusive. Certainly, by the time the case is ready for closing argument, each side has seen everything that the jury has seen and assessed the risk of an unfavorable verdict. Nothing drives action like fear.
I. After Trial.
Even if you get a good verdict, the case is not over. There will be a motion for new trial and efforts to settle the case. You have to assess the chances of a new trial motion and the benefits of post-trial interest which beats any investment you can get today.
Again, your client may be better off settling the case after a verdict to avoid a retrial, to avoid an appeal and to gain control over how the funds are paid.
J. During an Appeal.
If there is an appeal, the appellate courts have an early mediation program and your case can be settled there. The mediation panel is made up of seasoned mediators and they have a good record of resolving cases for all of the reason stated for settling a case during or after trial. The barrier on appeal is that one party got a judgment, and the mediator has to break through this to get the parties to be realistic about settlement. The establishment of harmful precedent, the avoidance of delay, the avoidance of a retrial and the avoidance of appellate lawyer fees, among other things, may motivate resolution at this stage.
Again, it is wise to approach your opponent to discuss informal resolution listing all of the advantages for that.
Private mediation is a tremendous development for plaintiffs' lawyers. It is a far better alternative dispute resolution tool than court-ordered arbitration and mandatory settlement conferences shortly before trial. It brings final resolution, and usually, at a much earlier stage which saves fees and costs. However, too many lawyers use mediation as a crutch and wait until the formal hearing to be creative about settlement.
If you approach your cases aggressively and seriously with your eye on a trial, you will settle many more cases than you try. Discussion of settlement with this approach is not a sign of weakness. On the contrary, it is a sign of industry and skillful lawyering. Thomas Edison said, "Opportunity is missed by most people because it is dressed in overalls and looks like work." Look for settlement opportunities at each stage in the development of your case and capitalize on them.