Running blind in a multiparty mediation may seem, at first glance, to be dangerous. In reality, negotiating without knowing the amount that co-defendants are offering, i.e. being “blind” is a frequently used tactic in larger construction cases as it expedites the process of negotiations. By purposefully choosing not to be informed about the nature and extent of offers being made by their co-defendants, parties are faced with individually making their own decisions about value and risk. Collectively, this often resolves a case.
Too often hours are wasted and frustrations grow when individual parties stake out lines in the sand between themselves, preventing progress towards an overall resolution. For example, it is not uncommon for one defendant to be unwilling to make an offer commensurate with its own risk valuation, if that offer exceeds the amount they believe a co- defendant should, at that point, be offering. This reticence and gamesmanship drag out negotiations and can exacerbate tensions. Being free from the knowledge (and distraction) of what their co- defendants may be offering at a particular stage of the negotiations allows each party to focus on their own interests and make the move they feel appropriate.
Taken together, if the mediator keeps the process moving and stresses the value of each party making their own moves, the global negotiation typically progresses and often leads to resolution
While always important to clarify, the mediator typically will take a global demand from the plaintiff and present it to the Defendants. The mediator will then caucus with the individual defendants, adding their offers to a global pot. Before returning to the plaintiff with the global offer, the mediator will typically disclose the amount of the global offer to the Defendants, being careful not to disclose the individual contributions.
In presenting the global offer to the plaintiff, the mediator shall not disclose who contributed to the offers or the amount of the individual offers. Doing so keeps the focus on achieving a global resolution, which is normally the preferred outcome.
Note that there is an incentive to add something to the pot as otherwise there would be no consideration for a release or reason to extinguish any cross claims. Further, if the pot does not grow, or if it becomes evident that a significant player is not contributing an amount commensurate with their likely exposure, the global negotiations are likely to break down, but at a point closer to resolution then when the mediation began
If the global process does falter, nothing prevents an individual defendant from making its part of the offer known to the plaintiff. This can lead to independent negotiations that can break an impasse either by resulting in settlements with one or more defendants, or by putting pressure on a recalcitrant defendant to offer an amount more in line with what is perceived to be their true exposure.
A few final takeaways:
1) Clarify whether individual offers will be disclosed if negotiations break down.
2) Remember that the numbers will come out in the final agreement, unless agreement is reached for separate releases.
3) This approach may not be appropriate if your client has a valid claim for indemnity against one of the co-defendants.