Hello everybody. In the context of lawsuits filed by tenants or resident managers against their landlords or employers, ask any landlord or employer, and even their attorneys, what their objective would be if they went to mediation while the lawsuit was pending. Almost all of them will tell you that the objective would be to settle the case.
But settlement should NOT be the landlord’s, the employer’s, or their lawyer’s objective for mediation.
I will explain the proper objective of mediation of such cases later in this column—but first, let’s review what “mediation” is and what its procedures are.
The Basics of Mediation
Mediation is a semi-formal process in which (typically) two parties participate with the hope of resolving a current legal dispute (usually in the context of a pending lawsuit) through the assistance of a neutral third person called a mediator. Most frequently, the mediator is a retired judge or an attorney who has expertise in the area of the dispute.
Mediations are private proceedings conducted by a mediator, generally in a large office building suite. In fact, I have never seen any mediation conducted in a courthouse. (It is true that settlement conferences performed by sitting judges or by court appointed personnel are conducted in the courthouse, but such conferences are significantly different than mediations.)
The function of the mediator is to help facilitate a resolution of the dispute between the parties. However, the mediator, even if he or she is a retired judge, has no power to compel the parties to settle. Nor does the mediator have the power to compel a final resolution of the dispute or bind the parties to it.
Unlike an arbitration where a neutral arbitrator determines the outcome of the dispute and issues a final, binding award (which would be similar to a binding court judgment), the mediator can only make suggestions or recommendations which each party is free to approve or reject in his or her sole discretion.
Mediations normally last 4 to 6 hours on a single day. If the parties are able to voluntarily settle their dispute by the end of the mediation, the settlement is made binding when they sign the appropriate paperwork. Thus, if an agreement is reached during the mediation, ideally the lawyers or the mediator then and there prepare the paperwork before anyone goes home (and possibly change their minds).
If the parties are unable to settle, then the dispute remains unresolved and the parties will move forward with the prosecution and defense of the lawsuit.
Additional Detail of the Mediation Process
The mediation process begins with each side paying his/her share of the mediation fees and costs. Typically, those expenses are split 50/50 by the two parties. A mutually convenient date for the mediation is then selected.
Usually, each party will have his/her lawyer file a confidential legal brief with the mediator which sets forth the facts, law and proposed settlements from each party’s perspective.
When each party and his/her counsel arrive on the day of mediation, each side is quickly escorted by the receptionist or other assistant to a private room in the suite. Often the parties do not even see one another.
Some mediators prefer a joint session at the beginning of the mediation with both parties and their counsel simultaneously meeting in a large conference room to discuss how the mediation process will proceed. However, in recent years, such joint sessions are on the decline as just seeing one another might cause the parties’ egos and hostilities toward the other to get in the way of their reasoning.
In any event, for most of the 4 to 6 hours that mediations typically consume, the parties are separated from each other in a private room with their counsel present.
Throughout the mediation, the mediator walks back and forth multiple times between each room to privately confer with each side. During those private conferences, the mediator listens carefully to what the lawyers and their clients have to say. The clients typically discuss factual occurrences, express their interests, and communicate their feelings to the mediator. The attorneys typically focus on the applicable laws and try to convince the mediator that the law supports their client’s position and undermines—if not completely rejects–the position of the other party.
The mediation will continue until the dispute settles or the mediator determines in his/her own mind that it will not settle, at least within the time reserved for the mediation.
If it settles, ideally the settlement is documented (in long-hand by pen and paper is fine) by either the lawyers or the mediator. The mediator then walks the paperwork to one of the rooms for one party to sign it. Following which, the mediator walks the paperwork to the other room for the other party to sign it. The mediator then makes photocopies and gives each party and their counsel one copy. All parties and their counsel then leave.
But even “leaving” is frequently planned out. The mediator might request one of the two sides to wait in their private room for an additional five or ten minutes to give the other side time to go down the elevator and drive away so that the parties do not interact or personally see one another.
The Objective of Mediation is NOT to Settle
Let’s now return to the topic of this column about what should be the “objective” of mediation from the landlord’s or employer’s perspective.
First, let me tell you what the objective is “not.” It is NOT to settle the lawsuit. Conversely, if settlement were the objective of mediation, then no settlement would mean that the mediation was a failure.
Of course, it is true that landlords and employers who are about to attend a mediation do so with the hope that the case will settle then and there. But if settlement were the landlord’s or employer’s objective of mediation, then just about every case could be settled. Just offer the tenant or resident manager $1,000,000 or some other ridiculous amount of money and the litigation will settle. Would the landlord or employer then view that as a successful mediation? Obviously not.
Here is the Landlord’s/Employer’s Objective in Mediation
The objective of mediation is for the landlord or employer to determine by the end of the proceeding the answer to this question: What is the minimum amount of money the tenant or resident manager will accept in exchange for a complete dismissal of the tenant’s/resident manager’s lawsuit? Once the number is determined, the mediation was successful from the landlord’s or employer’s perspective, whether or not the case is then settled. Here is why:
Once the amount is determined, the landlord/employer is in control of his/her owner destiny. That is because he/she is then in a position to pay the lowest number and end the litigation, or reject it and continue with his/her defense of the action.
But ascertaining the tenant’s or resident manager’s bottom line amount that he/she will accept in exchange for a dismissal is the difficult part and is where expert skill and negotiation come into play by the landlord’s or employer’s attorney. To obtain the lowest number, the attorney needs to make compelling, or at least persuasive, arguments to the meditator, who in turn presents them to the tenant’s/manager’s attorney, as to why the claimant’s facts are weak, why the landlord’s/employer’s facts are strong, why the law does not support the claimant’s claims based on those facts, and why the law is more favorable to the landlord or employer based on the facts.
How persuasive the landlord’s or employer’s attorney can be is what separates effective and excellent attorneys from ineffective and mediocre ones.
If the mediator is persuaded more by the landlord’s/employer’s counsel than the claimant’s lawyer, it is likely that the mediator, employing his/her own set of skills and artful influence, will be effective in undermining the claimant’s and the claimant’s lawyer’s confidence in their case. Once that is accomplished, then near the end of the time reserved for the mediation, the claimant is likely to reduce his/her demand for settlement to the lowest amount he/she will take in exchange for a dismissal of the litigation.
Some Additional Insights About Mediation
The exact opposite of the landlord’s/employer’s objective (i.e., to ascertain the lowest amount of money the claimant will accept to dismiss the lawsuit), should be the claimant’s objective. The claimant’s objective at the mediation should be to ascertain what is the maximum amount the landlord/employer will pay in exchange for the claimant’s dismissal of the action.
The claimant’s objective should not be to settle the case.
From the mediator’s perspective, he or she is not concerned about how much either the landlord or employer will pay or the minimum the claimant will accept in exchange for a dismissal. The mediator’s sole objective is to have the parties settle the dispute regardless of how much or how little is paid.
In fact, the mediator does not even care if the settlement is fair, just or equitable. He or she only cares about whether or not the case settles. That is entirely different than the objective of a judge while sitting on the bench during a court trial.
While on the bench, judges endeavor to render judgments that are fair, just and equitable. Once judges retire and become mediators, their mission changes. It goes from one of fairness to an effort to persuade the parties to settle the dispute no matter what the terms of the settlement are, even if the retired judge would have ruled completely differently had that jurist tried the case in court before retiring from the bench.
To summarize, from a landlord’s or a resident manager’s or an employer’s perspective, a successful mediation should not be measured by whether or not the lawsuit settled at mediation. Instead, a successful mediation must be measured by whether their skillful attorney with expert negotiating technique was able, with the assistance of the mediator, to undermine the claimant’s confidence in the case so as to ascertain the lowest number the claimant would accept in exchange for the dismissal of the action.
If the lowest number is ascertained, then the mediation is a complete success regardless of whether the landlord or employer is or is not willing to agree to that amount. The ball is then entirely in the landlord’s or employer’s court as to whether to settle or take his or her chances in court.
Let me conclude by recommending that landlords and employers of resident managers be willing to participate in mediation in practically every lawsuit before it is tried in court in front of a judge or jury. That affords the landlord and employer the opportunity to determine his or her own destiny. Once it is submitted to a jury or courtroom judge for determination, outcomes are always uncertain.
Dale Alberstone is a prominent real estate attorney who has specialized in real property and resident manager law for the past 40+ years. He is a former mediator of real estate disputes and is a former arbitrator for the American Arbitration Association.
Mr. Alberstone has been awarded a 5-Star AV rating from Martindale-Hubbell, the 134-year-old national rating service of attorneys. A 5-Star AV rating is the highest possible rating bestowed and reflects an attorney who has reached the heights of professional excellence and who is recognized for the highest levels of legal expertise, communication skills and ethical standards.
The foregoing article was authored on August 1, 2021. It is intended as a general overview of California law only and may not apply to the reader’s particular case. Readers are cautioned to consult a lawyer of their own selection with respect to any particular situation.
Questions of a general nature are warmly invited. Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 269 S. Beverly Drive, Suite 1670; Beverly Hills, California 90212, or phone: (310) 277-7300.