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JEAN LAWLER:
Hello, I’m Jean Lawler. I’m the host of this ROADS TO Resolution ~Closure and ~Certainty podcast. And it’s so nice to have you here today, to be with you. As a mediator, I am honored to be invited into the lives of other people for a few hours. Lives whose roads have led to “today”, and whose roads–like all of our lives—have led to the “unexpected” and hold the promise of “tomorrow”.
And so speaking of promises of “tomorrow.” What about when you have–as a lawyer–you’re representing a client who’s involved in a multi-party mediation? It could be multiple plaintiffs with differing claims, involving different time periods or differing issues. Habitability cases could be an example. Certainly construction defect cases could be an example, product liability, injury cases. There’s all kinds of them. Or it could be the kind of mediation where there are multiple defendants and your client is one of many–maybe subcontractors–or just one of many defendants. Maybe you’re all the same type of defendant, maybe you’re not. Maybe you’re cross-defendant, maybe you’re a third-party subrogation type of defendant.
But where there are multiple parties–that is a kind of mediation that we’re going to talk about today. And to get those cases settled, they need money–like any case does–but the sources of the money will generally involve insurance funds, and they may involve money directly from an insured–depending on if there are coverage issues–of whether or not there’s actually coverage, and so an insured may be putting in some money of their own.
But let's talk here about how to resolve a multi-party mediation where there are multiple insurers and/or insurance coverage issues, but how to make this happen in an efficient way, as the better way for you to be able to get your client out of the case as early as possible, or at least have a successful mediation so everybody gets out of the case and the case is fully resolved.
First of all, the mantra should be that mediation is a process, not an event. So when you have insurance issues or funding that’s coming from insurers, multiple insurers, I’ll say, not an insurer, but multiple insurers, and maybe multiple insurers and their insureds, then you need to consider how best to approach that so it doesn’t impact or negatively impact the mediation in the underlying case.
The first way–and a way that I have done this many times, both in practice and as a mediator–is essentially, the mediation is bifurcated. And this is where I’m thinking of the mediation as being a process. So there are multiple sessions and the first session really would be with the insurers and their counsel (maybe the insurers and their insureds and all of their counsel), but the goal of this bifurcated mediation–this first session–would be to see if they can work out a funding agreement.
By “funding agreement” I mean an agreement where, say these are all the insurers for defendants, so perhaps they’ve got multiple years and different policy coverages, but they all are providing coverage. Let’s just say that it's not an issue with the insured. Then it's going to come down to the plaintiffs–who had bodily injury or property damage for example, at what point in time.
See these are perfect cases, in my opinion, to do the first bifurcated mediation. You lay out the coverage chart, you plug in the people who have their claims for the particular time period, or if it's construction defect, maybe when the work was completed and then when the people moved into the place and suffered the damages, etc. I’m not talking the liability here, so I’ll leave that in your good hands.
But I’ve often seen it done, and I really encourage the effort to be made–where if defense counsel has said that the settlement value is X dollars or a range of A to B, or A to C, let’s say A to C, then getting the insurers together to see what they want to do and what allocations, percentage allocations they will take. And they agree that they will only go up to X dollars, maybe if the range is A to C and A is the low-end and C is the high-end. Then they agree to a percentages for funding a settlement up to A–the low-end or up to some number between A and C, in the mid-range. And that way then, the defense attorney has the authority and knows what they can do to try and settle the case up into that range.
They of course are reporting back to the carriers and all, and it's a partnership going into it. But it's understood that there’s a funding agreement up to a settlement in a certain amount. Now if the settlement has to go over that amount, then generally what I’ve seen both in practice and as a mediator, is then every carrier’s—you know–you’ll come back to the table so to speak, those carriers, all of them to see what they’ll do then. They’re not agreeing to this funding agreement over a certain amount. They’ll revisit it. And that generally works out fine. Now that doesn’t mean to say that it’ll be copacetic and everybody will be getting along for a higher number. They may well not, but at least if they’ve got the basics for making initial offers and responding to demands, and going up—it's clear how much at least, is available.
And if in fact there is an issue with the insureds contributing money because of non-covered damages, then this is also the time between the carriers and the insured to figure that out–what that contribution would end up being. So again, the insureds may end up being part of a funding agreement as to percentages. So that’s one option.
The second option, another option, is to use co-mediators at the mediation session, itself, for the underlying case. Now, with the bifurcation, by doing the insurance issues first, you then would be coming back on another date and trying to settle–mediating the underlying case.
With this, with using co-mediators, they would both be present and participating at the mediation of the underlying case. But one would be talking maybe coverage to the parties as they work that around and the other would be focusing on the liability and damages issue for the underlying case. And this can be especially helpful in some of these huge, complex cases.
I remember one construction defect case involving university dormitories a number of years ago, when I was in practice, and I went to that mediation. It was outside of San Francisco and oh my gosh, they had–it wasn’t a convention center, but it sure felt like it because there were so many rooms and they were all being used, and there were multiple–not just two co-mediators–there were multiple mediators. And at that point, it was all pretty much for the insurance end of it because there were so many parties and insurers, but in any event, we digress.
The third way to do it is just do it the traditional way. Have your single mediator as you mediate the liability case, the underlying action, and let the mediator work the room. Go to the different carriers, ask them to contribute money, all in the course of the mediation day. Now, hopefully you’ll be able to get the case settled that day, but again, mediation’s a process, not an event.
So it may be certain insurers will need to go back to consider something later on, that there will need to be telephone diplomacy followed up or maybe even another session. And that’s okay, because you will have made great progress that day hopefully, to get to the point of being able to come back, get information that might be needed, and then hopefully resolving it the second day, or if it's a huge massive case, then down the road. And the job for the lawyer is to try and extricate their client out of this as soon as possible. You know how to do that. But these are ways basically to get funding agreements in place, ways to handle complex litigation where you have insurance money involved, multiple insurers, multiple parties.
So thank you so much for your time today. It was a pleasure. Follow me on LinkedIn. Follow me on my podcast or on YouTube. Thanks. We’ll see you next time. Bye.
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