This post is a continuation of the 10 most horrible, terrible, no good, “bang your head against the door” mistakes that I have seen lawyers make before, during and after mediations in which I was the mediator. As stated in previous posts, it takes more than throwing together a mediation statement at the last second and showing up at the mediation. Doing it right requires the same kind of due diligence and work that goes into preparing for a key deposition or even trial. Great “mediation” lawyering is essential and is the best way to get to an acceptable deal.

Number 6: Failing to Be Intellectually Honest with the Mediator

Number 6: Failing to Be Intellectually Honest with the MediatorLet’s get real. All mediators know that there is a game to be played if a settlement is to be reached.  They understand there are client representatives in the caucus rooms who are paying their lawyers by the hour (normally) and expect their lawyers to be tough, hard-nosed bulldogs fighting (especially if there is bad blood between the parties) to bat down any arguments. However, that is often incompatible with meaningful settlement discussions which require, both for lawyers and clients, a realistic assessment of the dispute. Mediators understand that there is a fine line to be balanced by the mediator and the lawyers.

Mediators expect good, tough representation, but do not insult the mediator’s intelligence and knowledge about the subject matter of the dispute and the law. Beyond the initial presentation of your client’s position (in which you can certainly be a zealous advocate), mediators want frank and candid discussion of the strengths and weaknesses of the case.  What are the best and worst case scenarios? What will be the future litigation expenses and legal fees? That can sometimes mean pulling the lawyers out of the room to have those frank discussions. Good lawyers want that from the mediator, even in front of their client. Because no matter how many times a lawyer may have told a client about the weaknesses in a case, there is something about having an experienced mediator explain to the client, face to face, the same thing and that all of the great lawyering in the world (of course) cannot change a set of facts or the law. Your job as counsel is not to show the mediator how smart you are and how you are going to kick the other side’s backside in court, but to see if there is a way to reach your client’s goal of getting the case resolved as efficiently as possible. Rare is the client who will willingly spend unlimited legal fees, allow the company’s key workers to spend hundreds of hours in discovery and depositions, and put his business into the hands of a third party, whether it’s a judge, arbitrator or jury. Sometimes it is not just about the money…but most of the time it is about the money.

Read numbers 7, 8, 9, and 10 on the list.

The U.S. Small Business Administration (SBA) recently issued an interim final rule “adjusting the monetary-based industry size standards (i.e., receipts- and assets-based) for inflation that has occurred since the last adjustment in 2014.”

According to the SBA, “[a] number of businesses may have lost small business eligibility for Federal assistance under SBA’s monetary-based industry size standards simply because of inflation-led revenue growth that has occurred since the 2014 adjustment.” This interim final rule—which will take effect on August 19, 2019—“aims to reinstate those firms’ small business eligibility for Federal assistance.”

The following table, which is set forth in the interim final rule, “summarizes the results of the inflation adjustment for 16 different receipts-based size standard levels, ranging from $0.75 million to $38.5 million, as well as one assets-based size standard of $550 million.”

Table 1 - Inflation Adjustment to Monetary-Based Size Standards
Table 1 – Inflation Adjustment to Monetary-Based Size Standards / Federal Register / Vol. 84, No. 138 / Thursday, July 18, 2019 / Rules and Regulations pg. 34263

Notably, the adjustment for inflation “applies to all monetary-based industry size standards, including the $750,000 receipts-based size standard for agricultural industries, which was previously set by statute.”

While the interim final rule will take effect on August 19, 2019, the SBA has stated that it will accept comments on the rule until September 16, 2019.

If you have any questions about this noteworthy development, please do not hesitate to contact Aron Beezley.

This post is a continuation of the 10 most horrible, terrible, no good, “bang your head against the door” mistakes that I have seen lawyers make before, during and after mediations in which I was the mediator. As stated in previous posts, it takes more than throwing together a mediation statement at the last second and showing up at the mediation. Doing it right requires the same kind of due diligence and work that goes into preparing for a key deposition or even trial. Great “mediation” lawyering is essential and is the best way to get to an acceptable deal.

Number 7: Not Doing Your Homework

No. 7 of the Top 10 Horrible, Terrible, No Good Mistakes Lawyers Make in MediationsYou have to know your case in and out to represent a client properly in a mediation. How else can you effectively manage your client and also discuss the issues with the mediator?  You are counting on the mediator to make sure the other side understands and appreciates your positions. You may not be able to look under every single rock that can derail a mediation (or even know how many rocks are out there), but you better have identified in advance the key factors that will impact settlement.  This homework must include a frank evaluation of future legal fees and costs. I have on more than one occasion as a mediator angered lawyers by challenging their low ball evaluation of legal costs and expenses in front of their client.

The mediator will also expect that you have done your homework. If you have not, you (and your client) will lose credibility with the mediator if she brings up those rocks in front of you and your client for the very first time.  You will also lose face with your client if he turns to you and says “what was that all about” when the mediator leaves your room. When it comes time to close the deal, it is vital that the client still has full faith and confidence in your advice.

To help you think through those rocks, use your draft mediation statement as a guide, even if you carve off some parts before you send it to the mediator. It is also very important to send any draft and final statement to your client.  This also helps prepare the client.  If you get something from the other side, send that to your client (you may need to send it to your client Team, even those who are not coming to the mediation).  Having the client read the other side’s arguments in black and white always helps prepare the client to make the difficult business decisions about settlement. The client’s homework should include an evaluation of not just legal fees and costs, but the time and effort from key employees that will be necessary if the dispute is not settled.  This is especially vital if the client has never been through a complicated commercial dispute before.  Does the client really want its key employees spending hundreds of hours with the lawyers, or trying to sort through project documents (and deal with e-discovery production)?

That homework should also include calling the mediator in advance of the mediation. Recall this is not binding arbitration, but structured settlement discussions. Let the mediator know confidentially about the rocks on both sides. That can include your candid assessment of the other side’s lawyers, and even issues with your own client representative. Every mediator appreciates and covets that type of advance information which can help him hit the ground running when the mediation begins.

Read numbers 8, 9, and 10 on the list.