28 Mar Mediation Design and Process For Complex Claims
If two is company, three is a crowd, and four is a party, what is more than a dozen? The answer, as I recently learned when conducting a multi-party mediation for a complex claim, is that more than a dozen is a challenge (and that may be an understatement).
This two-part blog series reviews two particularly challenging, multi-party and multi-day mediations I conducted over the past year. The key difference between these mediations and a standard two party single day mediation was my involvement at an early stage in the design of and process for the mediations.
In this first blog post, I discuss a case where multiple plaintiffs were making claims against finite resources. I believe that advanced preparation and co-ordination among the plaintiffs, with the knowledge of the defendant(s), made a significant difference during the mediation.
When Many People Want a Piece of a Small or Finite Pie
A tractor trailer caused a multi-vehicle collision with several fatalities and several very serious injuries. There were other claims that were not of similar severity or magnitude. The tractor trailer maintained middling seven-figure insurance limits. Although there was an additional or peripheral defendant with significant financial resources, that defendant had a very strong liability defence.
I was first consulted after the parties had booked a two-day mediation but several months before the date of the mediation proper. Defence counsel for the target defendant indicated that based on his assessment of all claims, it was possible but not probable to resolve all claims within the target defendant’s insurance limits. Consequently, defence counsel thought that the primary exercise in the mediation would likely be prorating the available insurance limits. A secondary exercise would be to determine whether the additional peripheral defendant could be persuaded to part with anything, having regard for their strong liability position.
Extensive written background material from defence counsel for the target defendant provided me with some understanding of the nature and magnitude of the claims which would be under consideration at the mediation.
Consulting the Plaintiffs
A series of 15-30 minute telephone appointments with counsel for the various plaintiffs allowed me to get further insight into the nature, magnitude and complexity of their respective clients’ claims, to learn about any particular client sensitivities, and to elicit their views as to how to put our collective time together to best use.
During these calls, which took place three to four months in advance of the mediation proper, it became obvious to me that counsel for the plaintiffs, as a group, had no doubt that the target defendant’s insurance limits would be exhausted. With one exception, which had more to do with strategy and tactics and situational necessity, all plaintiff lawyers agreed that the additional defendant was unlikely to attract liability but might pay something to avoid the ongoing costs of the litigation.
In the course of these calls, I reviewed the process of prorating and the unnatural and awkward task of not only assessing the realistic value of their own client’s claims but also the competing claims of other plaintiffs when there were likely finite insurance resources.
What is Prorating?
Let’s assume that there are four claims made against a $1 million insurance policy. The claims are valued at $200,000, $300,000, $400,000 and $500,000, amounting to $1.4 million. If one takes $1 million of available insurance and divides this by the total claims figure of $1.4 million, this produces a percentage of 71.43%. Each plaintiff would recover 71.43% of their valuation amount. In my example, the plaintiffs would recover approximately $142,860, $214,290, $341,435 and $401,793, respectively.
The mathematics are relatively straightforward. Persuading counsel for the plaintiffs to provide a candid and realistic view of their client’s claim and, moreover, to realistically value the claims of the competing plaintiffs, is another matter altogether.
Fact Sheets and Timelines
After completing a series of about a dozen teleconferences with lawyers for the plaintiffs and receiving input from all, I developed the idea that each plaintiff lawyer would produce what I described as a fact sheet.
This document would be provided to me and to all lawyers for all plaintiffs. It would provide, in one or two pages, the essential features of a given plaintiff’s claim. Essential details like age, a brief description of injuries, nature of employment and financial details [if there was a loss of income claim] and a brief description of the claims for other heads of damages would be set out.
While l I believe there was universal buy in to the process, the effort expended by both the authors and the readers and the level of candour was inconsistent as amongst the lawyers for the various plaintiffs.
Timelines to create and share mediation memoranda and fact sheets were established and compliance was substantial. However, I suspect the effort expended by various plaintiff counsel, when reviewing the mediation memoranda of other plaintiffs, was inconsistent.
Finally, it was imperative that all plaintiff lawyers produce a list of assessable disbursements or, at minimum, an amount for assessable disbursements as early as possible in advance of the mediation to allow the lawyers for the defendants to obtain adequate authority to fund these disbursements at the mediation.
The Mediation
Ultimately, after all this preparation, the mediation unfolded in the following manner:
Day 1
1. At the beginning of the first day of the mediation videoconference, all parties were invited to attend. I had something in the order of 35 Zoom windows open. After briefly reviewing the mediation’s structure, I spent time explaining the process of prorating – what I anticipated to be the likely outcome of our time together and the largest challenge. The lawyers for the plaintiffs certainly agreed with my assessment and, “unofficially”, it was what the lawyer for the target defendant expected. Counsel for the target defendant had asked me privately for an opportunity to speak first [more about this shortly].
2. In a typical two-party mediation, there would be an opening session where the plaintiff lawyer would make submissions on behalf of their client, followed by a statement by the plaintiff themselves, followed by defence counsel and the defendant representative or insurance representative. In this case, it was recognized by all parties that this was going to be too time consuming and a poor use of our time together. Instead, I explained to all plaintiffs that extensive briefs had been delivered by their respective lawyers and that these briefs had been read not only by defence counsel but by counsel for the other plaintiffs, all of whom were competing for what may be a finite amount of financial resources available to be shared amongst all plaintiffs.
With the benefit of hindsight, I wish we had designed the process to allow for brief opening sessions for each individual plaintiff. All plaintiff counsel would observe these sessions, but the other plaintiffs would be put in breakout rooms while this was happening to respect privacy. The individual plaintiffs may have had a better experience and perhaps felt better about the outcome if given the opportunity to speak, even if briefly. Nevertheless, the process we designed was driven by the imposed time limitation. The parties had scheduled a two-day mediation without any input from me or discussion amongst themselves in relation to the process or design. While a two day mediation (in comparison to perhaps a three-day mediation) was certainly more efficient for the lawyers, it seemed to be less satisfying for the parties themselves.
3. Counsel for the target defendant spoke next and, to the surprise of no one, advised all concerned that he had been instructed to tender his insurance limit in exchange for the usual terms. Counsel for both defendants spoke politely and respectfully to all of the plaintiffs and made the appropriate sympathetic and empathetic comments.
4. At this point, counsel for the defendants and all individual plaintiffs left the mediation. Each plaintiff lawyer made an opening on behalf of each of their clients for the benefit of other plaintiff lawyers and the mediator. On the first pass, there may have been some comments made in relation to valuations and some questions by way of clarification from the lawyers for the other plaintiffs. During the second pass, more effort was put into critical evaluation and number crunching. The use of an Excel spreadsheet was very helpful as it demonstrated not only the individual valuations but the valuations in the aggregate and prorating.
5. By the end of the first day, there were rough assessments for each of the claims and rough prorating, but nothing was set in stone. Unusually, all or most of these discussions (or early stage negotiations) were conducted with all plaintiff lawyers in the same room at the same time. There were no caucus sessions that I can recall. Each plaintiff lawyer was charged with the responsibility of explaining what had transpired at the mediation to this point in time to their clients. I reported what had transpired to defence counsel without getting into any details, percentages or otherwise. I was also able to gain some insight as to the views of defence counsel, uninfluenced by discussions amongst plaintiff lawyers, in relation to the relative valuations of the claims. This information was going to be very helpful to me in group and caucus sessions on day two.
Day 2
6. On the morning of the second day, the mediation appeared to take a step backward. Many of the lawyers tried to backpedal on valuations and assessments made on the first day and expressed discomfort about assessing the claims of other plaintiffs. While not unexpected, this was exactly what we tried to anticipate and address through early exchange of memoranda and fact sheets. In any event, we made what was essentially a third pass around the “main room” with further thoughts, comments, evaluations and assessments of the individual claims.
7. Caucus sessions were a principal focus of Day Two. I was able to speak privately and confidentially with individual plaintiff lawyers. I obtained their views on the evaluation of their individual client’s claims and gained insight as to whether they agreed or disagreed with the valuation of the other claims. When there was disagreement, I attempted to gain a sense of its extent, detail and magnitude. It was very important to keep track of all of these comments so I could remind myself of the extent to which I could quote individuals when speaking with other plaintiff lawyers. Augmented by insights and guidance I had received from defence counsel, suffice it to say, I made no friends as I relayed messages which were perceived as critical of their valuation as each plaintiff lawyer tried to maintain their share of the “pie.”
8. Toward the end of the second day, a consensus was reached – with one exception. One of the plaintiffs appeared to be a worker in the course of their employment for purposes of the Workplace Safety and Insurance Act (WSIA). This plaintiff elected to opt out of the WSIA to pursue a civil action. Unfortunately, the claim against the target defendant appeared to be barred because the owner and driver of the tractor trailer was similarly covered by WSIA. The peripheral defendant had a very strong liability position, but did not have the benefit of a WSIA defence. Their contribution, motivated more by economics than by principled evaluation of exposure, was divided on a prorated basis as amongst all plaintiffs but for the exceptional plaintiff. In a bold move, the peripheral defendant agreed to allow the claim of the exceptional plaintiff to continue for purposes of establishing damages and the percentage liability, if any, as against this defendant. This required confidence on the part of the peripheral defendant and their counsel that their offer would be equivalent to the result after an application to the WSIAT which would have the same net result from their perspective.
As I understand matters, the exceptional plaintiff ultimately did re-elect to receive benefits under the WSIA. I do not know whether the exceptional plaintiff has continued the action to establish negligence and damages as against the peripheral defendant.
9. By the end of the second day, there was an agreement in principle to settle the claims of all plaintiffs, but for the exceptional plaintiff, with the lawyers for all plaintiffs prepared to make recommendations to their clients. The plaintiffs returned to the Zoom mediation so that concluding remarks could be made by all concerned. Given the “loose ends” in relation to the claim of the exceptional plaintiff, claims of minor plaintiffs, court approval and the like, it did take several months for the settlement achieved in principle at the end of the mediation to be implemented.
Takeaways
In a case where the insurance limits are likely insufficient to satisfy the claims of competing plaintiffs, I cannot emphasize enough the importance of plaintiff lawyers sharing information and documentation with the lawyers for competing plaintiffs early and often. As the mediation approaches, it is imperative that each plaintiff lawyer evaluate the claims of competing plaintiffs with almost the same rigour as they apply to evaluating the claims of their own clients.
If I was designing a process for a similar multi-party mediation again, I would try to ensure space and time are reserved to give individual plaintiffs a greater sense of participation and involvement. This might extend the time for the overall mediation, but I believe it would provide the individual plaintiffs a better understanding of and satisfaction with the process and the outcome.
In the next part of this series, I will review another multi-party mediation with very different circumstances and processes. That case involved a large number of claims arising from an event for which the defendants might not attract any liability. This was certainly the united defence view but, win or lose, there were going to be significant legal expenses defending these claims which would involve months of trial time.
ABOUT THE AUTHOR
Vance Cooper is principal of Cooper Mediation Inc. Vance devotes 100% of his professional time to mediating and arbitrating primarily personal injury and insurance cases. He serves as an arbitrator in loss transfer and priority disputes under the Insurance Act.
Vance can be reached at vance@coopermediation.ca or (647) 777-4011.
To schedule a mediation with Vance, visit: https://coopermediation.ca/vances-online-calendar/.