Slip-Ups In Mediation Cases Can Cost Employers Dearly, Attorneys Warn

RICHMOND, Va., July 26 /PRNewswire/ -- Given the time, money and headaches associated with going to trial to resolve contentious matters such as accusations of racial discrimination or sexual harassment, employers have increasingly turned to mediation over the past decade as an attractive form of Alternative Dispute Resolution (ADR). In doing so, however, they sometimes hamstring the process by making strategic mistakes that could have been avoided, caution two LeClairRyan attorneys during a recently recorded webinar aimed at highlighting some of the most common missteps.

"Making ADR Work for You: Successfully Mediating Employment Disputes" is available as a free download at www.LeClairRyan.com. In the hour-long webinar, veteran attorney and mediator Robyn Gnudi Kalocsay offers strategic advice based on her participation in literally hundreds of mediation and arbitration cases. She is joined by colleague Brian G. Muse, who shares his own insights culled from years of experience in representing employers and other clients in mediation and arbitration proceedings. Among other things, the two members of LeClairRyan's ADR Practice Team explore strategic ways to handle timing, discovery, communication, negotiating tactics, witness testimony, the mediation submission, and the settlement agreement.

While ADR is growing more popular in nearly all industries, employers, in particular, stand to benefit from the process, in part because of the strong incentives cash-strapped former employees often have to settle the case rather than take it to trial. Securing favorable resolutions, however, can involve a surprising amount of psychology, said Kalocsay, a shareholder in the firm, based in its Newark, N.J., and New York City offices.

"What makes employment matters different from all the rest? Emotions," she noted. "If a longtime employee has been terminated — even if it is simply the result of a structural workforce reduction — that person will often feel angry or unappreciated and seeks to find other reasons for the adverse employment action, including discrimination.

Employers, too, can get defensive and angry in such cases. Kalocsay cited the example of a company representative sitting down at a negotiating table and learning, for the first time, that a former employee had sought an eye-popping damage award. "The defendant goes to mediation and hears the plaintiff say, 'We are seeking $3 million for this,' and gets completely outraged," she said. "At that point, the defendant can hardly resist the urge to counter with something that is ridiculously low and deliberately insulting to the plaintiff."

Such emotions, if handled unskillfully by mediators or legal representatives, can translate into entrenched positions on both sides, thus lowering the prospect of a resolution. However, emotions often can be diffused and redirected in beneficial ways. For example, the defendant's attorney should communicate with the plaintiff's attorney to find out how much money the plaintiff is seeking. Conveying this information to the defendant before the face-to-face negotiation makes it less likely that a mediation session will be waste of time. "This enables the employer, who now has a cool head, to walk into the meeting thinking about strategy — what they are willing to pay to settlement and what increments to use in the back-and-forth of the negotiation process," Kalocsay said.

Precisely because of the emotion involved, communication can prove exceedingly valuable in employment cases. Muse, who is based in the firm's Williamsburg and Richmond, Va. offices, cited the case in which one of his clients engaged in a heart-to-heart with a former employee who had accused the company of race-discrimination. Through the force of sincerity, the employer was able to defuse tensions — and significantly reduce the ultimate amount of the settlement.

"The employer was an older gentleman," Muse recalled. "He looked the former employee in the eye and described all the harmful consequences of discrimination that he had witnessed over his long life, and said to the man, 'Having seen that, I just could not and would not allow myself or my company to engage in those kinds of behaviors.' That was a great opportunity to melt some of the ice and reach a fair, reasonable settlement."

Even in well-handled mediations in which all sides communicated as openly as possible and were thoroughly prepared on matters such as discovery and witness-testimony, parties can make a critical mistake at the very end of the negotiating process — failing to get the agreed-upon terms in writing, Kalocsay said. "You can leave the mediation thinking that you have an agreement, and spend the next three months trying to get the agreement re-agreed to by both sides."

Whether acting as a mediator herself or representing one side in a mediation case as an attorney, Kalocsay never leaves the building without a term sheet. "Both sides in the case will agree that the term sheet doesn't have to include every single line, word or term that will be in the final settlement agreement," she said. "But it should include the terms that are most important to both parties. Sticking points like confidentiality and non-disparagement agreements, or how employee references will be handled, should be raised at this time. This is critically important to maintaining control of the process."

About LeClairRyan

Founded in 1988, LeClairRyan provides business counsel and client representation in corporate law and high-stakes litigation. With offices in California, Connecticut, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Virginia and Washington, D.C., the firm's nearly 300 attorneys represent a wide variety of clients throughout the nation.  For more information about LeClairRyan, visit www.LeClairRyan.com.

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