Preparation and mediation go hand in hand: Rudner
By AdvocateDaily.com Staff
Preparing the parties for mediation — and letting them know the possible outcomes — is the responsibility of counsel, Toronto employment lawyer and mediator Stuart Rudner writes in The Lawyer’s Daily.
“I know that most lawyers are busy, and it may not seem that much time is needed to prepare for a mediation,” he says. “After all, it is a fairly informal day, the mediator cannot impose a judgment and the entire process is confidential, so why worry?
"However, if your client wants to settle, then you are doing them a disservice if you allow them to go into mediation without being properly prepared. That is particularly true where, as is often the case in employment law matters, the parties have only booked three hours for mediation.”
Rudner, founder of Rudner Law, has seen the bewildered look in a plaintiff’s eyes when they learn the settlement will be reduced due to the requirement that they repay employment insurance benefits, and that once those benefits have been repaid, the termination pay already received is deducted, as well as legal fees and taxes.
“I have also seen the frustration on the part of a defendant who, after a long day of negotiation and compromise, is told by their lawyer that to finalize a settlement, they have to agree to pay the mediator’s costs,” he says.
“When they object, they are told that it is ‘standard practice.’ Both of these ‘surprises’ could easily be avoided, as could almost all surprises, through reasonable preparation."
It is becoming increasingly common for mediation to take place shortly before a scheduled motion for summary judgment, Rudner says.
“I always tell the parties that they should only settle if doing so beats the alternative,” he says.
“Roger Fisher and William Ury, in their leading text on mediation, Getting to Yes, referred to the concept of a BATNA — the Best Alternative to a Negotiated Agreement. That is what any potential agreement should be compared to. If summary judgment is imminent, then the parties need to determine whether a settlement is better than proceeding with the motion. To do so, they must properly understand the options.”
Rudner says he’s been involved in mediations where the focus was on the possibility that the plaintiff would find new work fairly quickly and how to account for that possibility.
“When the employer proposed a ‘clawback’ in the event the plaintiff did find a new job, the plaintiff’s response was ‘forget it — we’ll just go to summary judgment,’” he says.
“They clearly did not realize that if they found new work before summary judgment, then their potential recovery would be dramatically reduced, and that even if they did not, the court would factor the possibility of a new job before the notice period runs out into any award. Knowing that would have allowed us to avoid wasting time explaining the law to the plaintiff and helped us to move toward resolution.”
Rudner says the interests and concerns of the parties must be taken into account.
“If just cause is alleged, is the employer serious about pursuing it? If so, then in order to understand the case and assess what a reasonable resolution would be, we will need to delve into the facts and evidence,” he says.
“The parties should be prepared to discuss them and produce what they intend to rely upon. Saying ‘we will produce that later in the process, if we don’t settle’ is not helpful, and suggests that party’s position is weak. I won’t assume that strong evidence exists if it was not produced.”
If the potential for mitigation is an issue, then all parties need to understand how the plaintiff finding new work, or failing to make reasonable efforts to do so, will impact their legal position, Rudner notes.
“Since many cases are now being decided during the notice period, the parties also have to be told how courts will address this possibility,” he says.
“If the employer is adamant that the individual either will find work quickly, or could do so if they make a genuine effort, do they have evidence to support their position? In some cases, employers want not only a clawback in the event that the individual finds new work, but they want to have the right to judge the individual’s mitigation efforts and reduce or cut off payments if, in their view, the efforts are not reasonable.
“That is often unworkable, and creates a situation where the matter has not been finally resolved. It also creates a significant obstacle to settlement, as no plaintiff will want to be subject to the employer’s ‘whims’ and risk that their salary payments will be cut off because the employer doesn’t think they are trying hard enough to find new work.”
Rudner says it’s not unusual to see pleadings or demand letters that seek additional damages for punitive and moral/bad faith damages.
“The plaintiff and their lawyer will need to determine whether they are serious about pursuing such compensation, or whether this was simply window dressing and perhaps a way to have some funds paid on a tax-free basis,” he says. “That decision should be made before mediation.”
While it may be possible to reach an agreement quickly on the big-picture items, such as the number of months of notice, the negotiation of the details and mechanisms of payment can sometimes be lengthy, Rudner says.
“Do the parties have a preference between a lump-sum payment and salary and benefit continuance, with or without a clawback?” he asks.
“Has the individual been receiving employment insurance benefits? Does the individual want some of the settlement funds paid into an RRSP, and if so, do they have contribution room available? All of these issues should be discussed in advance so that the parties understand their implications and are prepared to discuss them.”
Generally, the mediator will be chosen by counsel, Rudner explains.
“I am honoured when my colleagues ask me to help them settle a file and I am proud that I am usually able to do so,” he says.
“It will make my job easier if the clients are properly prepared, and will also save everyone time and money, since many mediations go into ‘extra time’ because time is wasted explaining or discussing issues that could have been addressed before we all arrived to work toward a settlement.”