Inside the Caucus: An Empirical Analysis of Mediation from Within Dan Klerman Lisa Klerman Quinnipiac-Yale Dispute Resolution Workshop September 27, 2013

Summary

• • • • • Empirical study of mediation practice – 400 employment related cases Unique, because mediation and settlement negotiations are confidential 94% overall settlement rate Analyzed – Factors influencing settlement – Factors influencing settlement amount – Pattern of offers and counter-offers Welcome suggestions – What else can do with these data?

– What data should collect in future?

Mediation Practice

• • • • • • • • • Private Consensual Paid Parties represented by lawyers Los Angeles County Employment disputes – Discrimination, Whistleblower, Wrongful termination – Class Actions Usually one intense day Evaluative and/or Facilitative Average settlement amount: $176,210

Factors Influencing Settlement Rate

• • • • • • • 94% overall settlement rate Class Actions: 85% Plaintiff lawyer mixed practice: 87% Pro-bono cases: 80% Mediator’s Proposal: 99% 98% settlement rate if four or more rounds of bargaining No significant differences by – Plaintiff gender – Lawyer gender – Law firm size

Bargaining

• • • • • Plaintiff usually made the first offer Parties start very far apart – On average, plaintiff’s first offer was 68 times higher than defendant’s first offer Median rounds of bargaining: 4 Mediator’s proposal in 89% of cases If case settles without mediator’s proposal, plaintiff accepts defendant’s offer

Settlement Amounts

• • Cases settle much closer to defendant’s opening offer – ¼ of difference between plaintiff’s and defendant’s first offer – E.g. if defendant’s first offer was 10K, and plaintiff’s first offer was 680K, then average settlement was 175K = 10K + 0.25 x (680K 10K) Settlements closer to plaintiff’s initial offer if initial offers are closer – 1/3 if ratio of plaintiff to defendant’s offers is less than 15 – 16% if ratio is greater than 75 – Explicable if defendants’ offers are not significantly affected by plaintiffs’ offers • But some plaintiffs start with more realistic offers, while others “shoot the moon.” – Or explicable if plaintiffs’ offers are not much affected by defendants’ offers

Plaintiff’s and Defendant’s Offers (Normalized)

1 0.9

0.8

0.7

Offer Amount (Normalized)

0.6

0.5

0.4

0.3

0.2

0.1

0 1 2 3 4 5

Bargaining Round

6 7 8 Plaintiff's offers, if 1 round of bargaining Defendant's offers, if 1 round of bargaining Plaintiff's offers, if 2 rounds of bargaining Defendant's offers, if 2 rounds of bargaining Plaintiff's offers, if 3 rounds of bargaining Defendant's offers, if 3 rounds of bargaining Plaintiff's offers, if 4 rounds of bargaining Defendant's offers, if 4 rounds of bargaining Plaintiff's offers, if 5 rounds of bargaining Defendant's offers, if 5 rounds of bargaining Plaintiff's offers, if 6 rounds of bargaining Defendant's offers, if 6 rounds of bargaining Plaintiff's offers, if 7 rounds of bargaining Defendant's offers, if 7 rounds of bargaining

Conclusion

• • • • • • No significant gender differences Mediation can be very successful Parties settle, in spite of starting very far apart Mediator’s proposal is most important technique Caution about interpreting data – Cases are not random selection of all cases – Party strategies and mediator techniques are not randomly chosen Further empirical work – What else could do with these data?

– What data should collect in future cases?