Is Your Adversary Really Mediating in Bad Faith

By Marc E. IssErlEs, Esq. JaMs “We think the other side is negotiating in bad faith.” Mediators hear statements like this all the time, often from both sides in the same case. And yet, parties settle difficult cases every day, warmly shak- ing hands with the very peo- ple they accused of “bad faith” negotiation just hours before. What is going on? In my experience, “bad faith” is more of a mediation trope than a negotiation reali- ty. After some questioning, the mediator typically learns that the party making the accusa- tion does not mean it literally. The party rarely believes, for example, that its adversary lacks a genuine interest in settlement or is mediating for some impermissible, strate- gic purpose, such as delay or obtaining “free discovery.” In fact, most parties who come to mediation (even pursuant to a court order) genuinely want to settle. But they want to do so on their own terms. When a party makes an ac- cusation of “bad faith,” it is usually protesting the reason- ableness of the other side’s settlement proposals. “Bad faith” is, in effect, a rhetorically charged way of saying that the other side is demanding too much, offering too little, or re- fusing to move far enough from where it started during the ne- gotiation. The accusation can be prompted by a perception of unequal movement: when one party makes what it re- gards as a big move and its ad- versary does not reciprocate, the mediator will likely hear that the adversary is negotiat- ing in “bad faith.” In voluntary mediations, this charge often reflects a mismatch between parties’ expectations after agreeing to mediate, and the actual proposals exchanged at the mediation. When a party receives a proposal that it re- gards as unreasonable, it will question why the other side agreed to mediate in the first place. “Bad faith” is a seeming- ly irresistible explanation. But even here, “bad faith” usually does not mean an impermis- sible purpose or a lack of gen- uine interest in settlement. It SERVING THE BENCH AND BAR SINCE 1888 Monday, July 17, 2017 “Is Your Adversary Really Mediating in Bad Faith?” www. NYL J.commeans a settlement proposal regarded as so unreasonable as to be a waste of everyone’s time. A party may make a seem- ingly unreasonable settlement proposal for many reasons, and “bad faith” is usually not one of them. Such a proposal may reflect an opening nego- tiation style (hard or position- al bargaining) that ultimately may soften. It may be de- signed to send a message that the other party has not moved far enough to merit a “reason- able” response. Or, it may be a sign that the parties have fundamentally different views about the merits of the case and fair settlement value. What one side regards as a proposal so unreasonable as to signify “bad faith” is quite often, from the other side’s perspective, a reasonable proposal reflecting a sincere willingness to com- promise. These are all real, but potentially solvable, nego- tiation problems. But when a party attributes these familiar negotiation roadblocks to its adversary’s sinister motives, it is usually misdiagnosing the problem. A charge of “bad faith” may also be counterproductive be- cause it can set up additional roadblocks to settlement, and exacerbate the bitter feelings and lack of trust that are rou- tine by-products of litigation. A party fixated on the other side’s purported bad faith is often unable to approach the negotiation dispassionately, let alone make the compro- mises necessary to achieve resolution. “Bad faith” is the kind of accusation that, even if made privately to the media- tor and intended rhetorically, tends to harden parties’ po- sitions and prevent creative problem-solving. When negotiations get tough and you are not getting what you want or expect from the other side, it may seem like your adversary must be moti- vated by bad faith. However, bad faith in mediation is rare. And when parties believe it is affecting the mediation, they tend to get distracted from the actual negotiation problem at hand. Rather than reflexive- ly attributing unreasonable settlement proposals to “bad faith,” try to identify other, more likely, causes – such as hard bargaining, dissatisfac- tion with your own proposals, differing case evaluations, or lack of information. These are likely the real impediments to settlement that the me- diator can help the parties work through, and hopefully resolve, during the mediation process. Marc E. Isserles, Esq. is a skilled commercial mediator and arbitrator for JAMS based in the New York Resolution Center. He is a former law clerk to U.S. Supreme Court Justice Stephen Breyer and has more than 15 years of litigation expe- rience handling complex busi- ness disputes. You may reach him at misserles@jamsadr.com. Reprinted with permission from the July 17, 2017 edition of the NEW YORK LA W JOURNAL © 2017 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 or reprints@alm.com. # 070-07-17-39