Got a Multi-Party Claim That You Would Like to Settle?

Personal Injury Bulletin Law Journal August 2012

Got A Multi-Party Claim That You Would Like To Settle?

As an experienced litigator and mediator I am convinced that mediation really comes into its own in multi-party claims. I have been involved in many multi-party mediations over the years. These have ranged from routine personal injury claims involving more than two parties to a series of Civil Justice Council/Ministry of Justice sponsored mediations of industry agreements relating to personal injury costs, success fees and the like. It could also be said that the character of my work as independent Chairman of RTA Portal Co and the ABI GTA Technical Committee on credit hire, is in the manner of a long running mediation. Here are a few thoughts on why I find that mediation works so well in the multi-party environment and some of the additional issues that fall to be considered.

There are many types of multi-party case. There can be multiple claimants, multiple defendants or both. In the personal injury context multi-party claims include claims for product liability, occupier’s liability, employer’s liability, disease claims and routine Road Traffic Act claims. The latter include innocent passenger A against defendant driver B and defendant driver C. Also, of course, there are multiple vehicle pile-ups.

In any type of claim a mediator acts as a catalyst, and an independent and confidential facilitator. In a multi party situation, however, the party dynamics usually mean that the potential power of mediation to bring about settlement is much enhanced. Once three or more parties are involved the potential range of combinations of interest on any particular issue increases considerably, because any settlement will be multi-faceted rather than two dimensional. In these situations the scope of the mediator as catalyst is extended.

My thoughts on these matters tend to fall into two categories: multi-party dynamics and multi-party process.

Multi-Party Dynamics

Multi-party claims are different from two party claims in many ways. Usually, there is an awful lot more going on. Also, there are often many additional challenges for all involved.

Frequently, an early challenge for the mediator is to consider the personality and presentation of each party and its advisors. Who will, and will not, work together? Is this a simple technical dispute or is it almost symbolic, with a background which is only partly related to the dispute and not visible, at first sight, to the mediator? For example, is the dispute on quantum between two insurer defendants a calm, professional disagreement on evaluation or does it relate more to the fact that insurer X has just trounced insurer Y in the Court of Appeal? Some of these issues can be teased out in confidential pre-mediation telephone conversations (see below).

Another challenge is the interesting fact that the dynamics of inter defendant disputes are very often more intractable than claimant versus defendant disputes. I find it interesting how the approaches to, say, quantum will vary depending on whether it is a two party or multi-party dispute. In the former type, perhaps half of the time taken by the mediation may be negotiating about quantum, often in great detail. In a multi-party claim I can usually get a realistic settlement value from the claimant and his advisers almost straight away. This is on the basis that I need the claimant to give me a realistic “will settle at” figure to define the “pot” before I go off to try and get that “pot” filled by the defendants. Then, meeting with all of the defendants together, they usually get to a quantum figure relatively quickly and the “pot” is then defined. (It is often at a figure not much less than that sought by the claimant.) The rest of the mediation is then spent negotiating about the respective defendant contributions to the “pot”. This is a very practical manifestation of different dynamics producing different behaviour.

Often, however, the challenge for the mediator is more complex than simply “filling the pot”. For example, in one disease case where there were numerous defendants it took some hours to locate the key that led to settlement. This was the realisation that defendant 5, which had strenuously denied liability throughout, was not terribly concerned about this particular claim but considered it necessary to take a strong liability stance in the context of many similar prospective claims. In discussion with the mediator the other defendants readily agreed that defendant 5 could make a money contribution on special, confidential terms. These were that the contribution simply went into the pot, on the basis that the claimant and his advisers were to remain unaware that defendant 5 had in fact made a contribution or departed from its stance on liability.

“Divide and rule” is a tactic often encountered and this can present a challenge to all concerned. I came across this once in a product liability claim made by several members of the same family. The defendant wanted the mediator to put separate offers to each of the claimants subject to the condition that the claimants did not discuss the offers between themselves. The mediator, who by this time had spent some time with each of the claimants, was able to review this condition with the defendant, asking them to consider the prospects of this condition going down badly and in fact being counter-productive. This is the type of “touch on the tiller” reality testing which takes place in any mediation, but it can be particularly important where there is a complex range of dynamics at play. That particular case settled, but negotiations would probably have broken down if the defendant had persisted with its initial tactic.

Another challenging situation arises when the strategy of one of the defendants is to put his “Mr Awkward” hat on. This can be demonstrated by example. Let us say that there are three defendants. Defendants 1 and 2 consider that the broad liability split is 45/45/10 – notwithstanding the fact that each will argue that it is 30% down to them, 50% to the other of them and 20% to the defendant 3. Defendant 3 is Mr Awkward. He will refuse to attend the mediation on the basis there is no liability, or he will turn up, fold his arms and say that he does not know why he has been dragged in because he has no liability. He will vehemently deny that there is any “standard” litigation risk in the order of 10%.

In the past Mr Awkward was often rewarded for his tactics. The reward was often that he would bear his own costs to date but then pay no contribution to damages when, on any reasonable assessment, he should have been paying something between 10% and 20%.

Mr Awkward, however, now has a problem. This comes in the shape of Supershield Limited v Siemens Building Technologies FE Limited.[1] The Court of Appeal considered a situation where party A sought to recover from party C (a part 20 defendant) sums it had paid following a mediated settlement with party B. Party C complained that the terms of the settlement agreed between parties A and B was unreasonable and it was therefore not liable for the sums claimed. The Court of Appeal did not agree, it refused to look into the detail of the settlement and found that the court only has to consider whether the settlement was within the range of what was reasonable. It is not impossible for party C to validly object to such a settlement but the Court of Appeal made it clear that they are going to have very strong grounds indeed for doing so.

This rather turns the tables on Mr Awkward. It leaves his co-defendants free to agree a reasonable settlement which he will then, in effect, be stuck with. If he chooses not to attend, or participate, he will usually forfeit any right to be criticise the settlement. This is a pragmatic view and represents strong support for mediation, and indeed any negotiated settlement in these circumstances, by the Court of Appeal.

Another problem a mediator may have to deal with is that “Mr Awkward” will turn into “Mr Complainer”, saying that the other parties have “ganged up” on him. It is a fact of life in multi-party claims that alliances can be formed by some parties which will be to the benefit of those parties and the expense of others. There can be attacking alliances and blocking alliances. There can be different alliances on one issue to those on another. The multi party environment favours the strong, experienced and above all, well prepared negotiator. You turn up at a multi party mediation without your ducks in a row at your peril. Mr Complainer may complain, but no one will be listening.

Multi-Party Process

When preparing to mediate a multi party claim a different approach, and greater care, is required, compared with a two party claim. With a routine claim it may suffice to find an available mediator, send him or her an agreed bundle and sort out the rest on the day, but this will rarely be adequate in a multi party situation.

First, more thought needs to be given to mediator selection. In addition to finding an available mediator with suitable expertise it is also crucial to find a professional who has experience of multi-party cases. True, every novice has to cut his or her teeth but this is an area where experience really shows. Speaking of the challenges that can arise in this type of case one American commentator suggests that parties will need a mediator with the “drive and courage to persist and resolve”.[2] The mediator needs to agree the process with the parties and then stay firmly in control of it, deploying an authoritative manner, if necessary.

The mediator needs to pay considerably more attention to the design of the process. How many parties are there? Who needs to attend? Is it preferable that some people do not attend? What, precisely, are the issues to be resolved? What are the underlying or background issues that have made settlement difficult? How are parties to be kept up to date when the mediator has many rooms to get round? How can the mediator maintain control of the process and momentum in the negotiations? These questions often lead to the consideration of whether a co-mediator or more than one co-mediator should be appointed.

The accommodation needs to be carefully thought about. In a two party mediation two rooms will often suffice, so long as one of the rooms is big enough to accommodate everyone and there is a suitable corridor or waiting room for the mediator to mull things over when he is not with one or other of the parties. The accommodation for a multi-party mediation needs to be ample and flexible. Each party and its advisers will probably require the privacy of its own room. In addition to the room to be used for any joint sessions it is also often necessary to make provision for different combinations of parties, or their advisers, to “huddle”.

Careful thought also needs to be given to the documentation and any position statements so that everyone can start from a common position. Sorting these things out “on the fly” with two parties only takes a few minutes. If there are several parties a valuable hour can be lost while administrative details are attended to. The mediator can take care of these matters by pre mediation telephone discussions (conference calls where necessary) with the parties advisers.

Conclusion

In two party claims I say that mediation should only be used for difficult claim, where there are difficult parties or where routine negotiations have failed. If I had a multi party claim I would reverse the presumption and my settlement strategy would be to use mediation (with an experienced mediator) unless there was a very good reason not to.

Tim Wallis

Tim Wallis is an independent professional mediator, a solicitor, and a member of the Civil Justice Council. He mediates for Trust Mediation, Expedite Resolution and other organisations.

© Tim Wallis, 1 of 4

[1][2010] EWCA Civ 7(CA).

[2]“Creative Problem Solver’s Handbook for Negotiators and Mediators”, John W. Cooley