Three Take-Aways from the PLUS Seminar on Mediating Complex Director & Officer (D&O) Claims:
Mediation is not a day-of event. Counsel are well served to work very hard before the mediation to set expectations of parties, carriers, other counsel (including coverage counsel), and the mediator. The panel noted that, even when a mediation is conducted in person, plaintiffs and carriers often have a range of authority that can be difficult to alter the day of mediation. Surprises at mediation frustrate the process and do not materially advance settlement potential. Counsel for all sides must engage constituent decision makers so that they are well informed and understand the risks so that they can bring appropriate authority to a mediation.
- Informational asymmetries may hinder the mediation process before, during, and after a mediation. Participants need to understand what risk plaintiffs are presenting in a case. Defendants must offer honest assessments to carriers—it does not help to tell a carrier that there is no liability throughout a case and then ask for a large check in mediation. Likewise, if you expect coverage to play a role in the negotiation, in most cases it makes sense to brief the mediator and plaintiff so that they can factor a coverage issue into their calculus. Finally, no one is scared by a plaintiff or defendant who says they have a persuasive case but is reluctant to present detailed facts about the elements of a claim.
- Defendants should be up-front with insurers about their settlement preferences. Broadly speaking, litigants fall into two camps at a negotiation: (a) pay a plaintiff as much as needed to end litigation today and (b) pay defense counsel as much as needed to defeat the claim. While the party’s attitude towards settlement won’t be dispositive of the carrier’s willingness to negotiate, it will inform the carrier’s authority and attitude about the case. Psychology matters more than people care to admit.