This article is intended as a survey of the practice of using brackets in a mediation. When to use, how to use, the decision process regarding mediation brackets will all be examined. Like the bracket in the header image, mediation brackets can support the negotiation process.
Why a mediation bracket is used
Typically, the suggestion of a bracket is made by either one side or the mediator. It comes when seemingly insurmountable gaps remain although negotiations have already gone a number of rounds. A good example:
Let’s assume a plaintiff has sued a defendant for trademark infringement. The litigation has been pending for three years, and there has not yet been any mediation. The plaintiff argues its liability case is very strong, and in direct settlement negotiations with the defendant, demands $25 million. The defendant rejects the demand because it claims it sees things very differently — based on its read of applicable law and the discovery taken to date, it contends that plaintiff’s liability case is very weak. But to spare itself from further defense costs, defendant counters with $1 million.
The midpoint (derived by summing the two numbers and dividing by two) is $13 million, but that number is meaningless since defendant is not going to pay $13 million for a claim it contends is frivolous, and plaintiff is not going to accept $13 million for a case it claims is worth at least $25 million.
A primer on bracketing in mediation. (2019, July 10). Merge Mediation Group Blog. https://www.mergemediation.com/bracketing-in-mediation-when-to-use-it-and-why-it-works/
The difference of $24 million is insurmountable and a bracket will undoubtedly be proposed sooner than later. I once mediated a case that started at P demanding $1 million and D offering $50k. Over the course of a day-and-a-half they got within $100k of one another, partly due to using a bracket. Unfortunately it did not settle and the recalcitrant side lost badly in trial, including paying the opposition’s attorney fees.
The cool-aid
Large gaps exist when lawyers have drunk too much of their own cool-aid and listened far too long to their own melodious voices extolling the virtues of their case. Confirmation bias is the fancy word. We all know that we should look hard at the other side’s case and analyze our own soft spots critically. But confirmation bias makes that terribly hard to do.
I recently discovered another bias, Reactive Devaluation — or at least discovered the term for something we encounter at the outset of almost every mediation. You can probably guess what it is: a proposal is made by opposing counsel — the antagonist — thus it must not be worth what “that guy” is proposing. An interesting experiment explains and (I think) proves it.
In an initial experiment, Stillinger and co-authors asked pedestrians in the US whether they would support a drastic bilateral nuclear arms reduction program. If they were told the proposal came from President Ronald Reagan, 90 percent said it would be favorable or even-handed to the United States; if they were told the proposal came from a group of unspecified policy analysts, 80 percent thought it was favorable or even; but, if respondents were told it came from Mikhail Gorbachev only 44 percent thought it was favorable or neutral to the United States.
Ross, Lee; Stillinger, Constance (1991). “Barriers to Conflict Resolution”. Negotiation Journal. 7 (4): 389–404. doi:10.1111/j.1571-9979.1991.tb00634.x
Reactive devaluation is a cognitive bias that occurs when a proposal is devalued if it appears to originate from an antagonist. The bias was proposed by Lee Ross and Constance Stillinger (1988).[1]
Reactive devaluation could be caused by loss aversion or attitude polarization,[2] or naïve realism.[3]
Reactive devaluation. (2012, March 6). Wikipedia, the free encyclopedia. Retrieved February 19, 2021, from https://en.wikipedia.org/wiki/Reactive_devaluation
Does the mediator have a chance?
Yes, and it is often the “reality checking” mode that can help offset the reactive devaluation and may press into the evaluative mode of mediation in order to lead to introduction of the idea of a bracket. After all, if the delta is still $24 million, the party-proposed bracket is likely to be 2:23. Thus some time may be consumed with the mediator asking each side to take a hard look at their soft spots and considering the obvious good points on the other side — and there always are some. Let’s look at a more realistic-size money issue where the demand is $200k and the offer is $25k.
Mediation brackets in practice
Consider the situation where the demand is $200K and the offer is $25K. The plaintiff might suggest moving down to $150K if the defendant agrees to come up to $75K, creating a proposed bracket of $150K/$75K. The defendant, in turn, might reject that bracket and instead propose that the plaintiff come down to $100K if the defense goes up to $50K, resulting in a counter-bracket of $100K/$50K.
At this juncture the two brackets seem irreconcilable, but something important is occurring. The plaintiff is suggesting that the landing area for settlement is between $150K and $75K. The defense is suggesting, in response, that the landing area is between $100K and $50K.
If we compare the mid-points of the two brackets, the plaintiff might be signaling a willingness to go to $112,500 to settle while the defendant might be signaling a willingness to go to $75,000. If we look at the mid-points (bracketing the brackets), the parties might only be $37,500 apart.
If we now consider the mid-point of the mid-points (the mid-point between $112,500 and $75,000), is there a possibility the case might resolve at $93,750? Perhaps.
Bracketing in civil mediations — Clayton mediation. (2019, October 23). Clayton Mediation. https://www.claytonmediation.com/blog/2018/10/18/bracketing-your-way-to-settlement. That article was Originally printed in the New Hampshire Bar News on October 17, 2018: https://www.nhbar.org/wp-content/uploads/fliphtml5/42/flipbook.html#p=28
What evolves from mediation brackets
- Signaling positions while not giving away too much.
- Avoiding an immediate impasse.
- Kicking the door open again after one side has seemingly slammed it shut.
- Speeding things up. It’s 3:30pm with 1.5 hours to go. Everyone is frustrated and the steps toward a number everyone can live with have become smaller instead of larger.
- Keeping movement going — stopping the impatient guy from trying walk out the door.
- Getting away from Anchoring Bias (the tendency to give too much weight to the first number).
In negotiation no number is irrelevant, and no proposal is ever forgotten. Every offer you make, every figure you float, and every potential path to settlement you communicate to the other side will forever impact your negotiations.
Negotiators ignore this rule at their peril.
DeGroote, J. (2010, March 22). Another look at how the brackets work. Mediate.com – Find Mediators – World’s Leading Mediation Information Site. https://www.mediate.com/articles/DeGrooteJbl20100322b.cfm
John DeGroote is a very experienced and successful mediator. It will do well to keep his admonition in mind. Let’s face it, P makes a demand of X and now he can’t go up. D makes an offer of Y and now can’t go down. That’s a bracket and those numbers are at the outset the most relevant numbers. And if those are last week’s numbers — that’s the beginning bracket. Please, don’t ask me to convey as the first demand a figure higher than what you demanded last week. “They made us go to mediation ” won’t be a good reason.
Beware the “Whisper Number”
DeGroot has a great explanation of this in his article:
If what you say can’t be unsaid, can you say it with caveats? Can you propose, as one well-known Los Angeles plaintiff’s lawyer said to me:
Let me tell you what — my client hasn’t approved this, but I think I can get him to $3 million if you can get there. What do you say?”
The short answer is that you’re stuck with that number. You may want to run away from it, disavow it, or ignore it, but never forget that Galinsky tells us that we’re “highly influenced by any relevant number that enters the negotiation environment.” We are bracketed at your self-named “whisper number.”
id.
Counter-brackets and who should propose it?
If you receive a bracket proposal can you counter with a different bracket? Sure. If you receive a proposal you can: accept it, reject it, reject and just make another counter-offer, or propose a different bracket. So who should propose the bracket?
It depends. A party-proposed bracket is likely to be looked on with suspicion and may lead to a counter-bracket although the mediator can learn a lot from that process too. The mediator-proposed bracket is more likely to succeed because the mediator will first feel out each side and have an idea of what might succeed. And, after all, it seems to be neutral and thus acceptable. Remember the Reactive Devaluation?
Mediation brackets mean what?
The accepted bracket gives hope that the case can settle. Words like “fair”, “reasonable”, and “serious” have proceeded from amorphous, potentially anger-inducing concepts, to dollars. A proposed bracket can offend, just like any offer can, but even if rejected, even a part-proposed bracket conveys a lot of useful information. Remember, every number is relevant.
The takeaway
- Brackets can be highly effective
- A mediator-proposed bracket may work better
- Brackets can “unstall” or even accelerate negotiations
- They are not appropriate in all instances — I’ll write on that another time.
