Most mediations inevitably involve the shuttling back and forth of offers. A stalemate can sometimes result where neither party wants to give up ground. Often a party will believe that the counter-offer has not moved enough to warrant further offers on their own part, which it fears may mean it is bidding against itself
Recently, in a mediation involving Swiss clients, we proposed a “bracketing” approach to help try and resolve the impasse. The outcome was a more efficient path toward a settlement. This technique is regularly used in American mediations, but rarely in Australian ones in my experience.
Assume this scenario:
- The plaintiff is at $6.5m and the defendant is at $2.7m.
- After some difficult back and forth, the plaintiff comes down to $6.2m while the defendant refuses to go beyond $2.9m.
Both parties are frustrated at the small, incremental movements on either side. Each believes the other is not giving enough.
At this juncture, the parties are outside the “bracketed” zone in which a settlement is more likely to occur.
A party – or the mediator – could propose a move for both parties that would bring each into the realm where (i) the parties are likely to make more constructive moves toward a settlement and/or (ii) more likely to reach a settlement. The parties set for themselves a range in which they are prepared to discuss settlement figures. This is called “bracketing”.
The proposal might be: “The defendant will put a figure on the table with a ‘5’ in front of it, if the plaintiff puts up a figure with a ‘3’ in front of it”. At this point it doesn’t really matter which party moves because the discussion has moved to try and produce a constructive, joint effort; rather than a “who blinks first” stand-off.
In the example above, the defendant might offer $3.2m and the plaintiff comes down to $5.7m. Hopefully, the heat will have been taken out of the earlier impasse. Further bracketing may be used as the mediation progresses.
Naturally, depending on the parties and the time of day, a mediator may need to be more bullish and propose actual figures, or figures which move the parties closer together.
Bracketing does not necessarily mean the settlement will occur at the mid-point of the two bracketed figures. For example, it may give parties an opportunity to introduce non-monetary consideration.
Some advantages of bracketing can include:
- Speeding up a stalled mediation.
- Allowing the parties to feel that constructive efforts are being made on either side.
- Encouraging parties to think about resolution rather than tactical back and forth offers.
- The process opens up flexibility in the way future offers may be presented.
However, as ever, practitioners should be aware that it might not suit every mediation. Some downsides can include:
- Parties may be reluctant to propose bracketing because they fear that they may be signalling to the other side that they will settle in the middle. It does not of course follow that the settlement will be precisely in the middle of the two figures, but a party could take it the wrong way.
- Particularly aggressive parties may use it as a way to anchor any future offers at the outside range of the bracket rather than genuinely seeking to explore the settlement zone.
Bracketing can be a useful tool for assisting stalled mediations to move closer to a settlement.
