Settlement Authority in Mediation

Mediation is only successful when the parties have come to a negotiated settlement. While there are other benefits to mediation, such as exchanging information or gaining insight of the other party on the case, the ultimate goal  is to have both parties reach a settlement. If this does not happen, mediators and the involved parties often feel as if they wasted their time with the process. The three most common reasons mediation fails are:

  1. Absence of persons with real settlement authority
  2. Lack of a genuine intent to settle
  3. Choosing the wrong time to mediate

The first reason listed above is perhaps the most important. There are many times when the wrong people are sent to a mediation meeting. In this blog post, we will focus on the consequences of sending the wrong person to mediation. When someone is sent to mediation on behalf of their company or their boss, they are generally given limited authority to settle. These people usually purport to have full authority, but their position as a client representative becomes clear when the other party is willing to settle and they are hesitant. People with limited authority are given a certain set of terms that they can negotiate on, so any attempts by the mediator or other parties to convince them on different terms are futile. The other side can obviously become very upset if they came in with the intent to settle and now they are unable to because the person will full authority is absent from the mediation.

It is recommended that parties make it very clear to each other and the mediator on the authority of the person being sent to mediation. It is understandable that sometimes the person will full authority to settle will not be able to make it to the meeting. In this case, all attempts should be made to schedule a time where he/she can be present. If this is still not possible, we recommend having the decision-maker available on standby or by telephone. With advances in technology, Skype or Google Hangouts may also be an option. If the other party was ready to settle and you were unable to settle because of limited authority, the other party may not want to return to the table. If they do, mediation may not be a success the next time. We highly recommend being completely honest with your mediator about who will be present at mediation and how likely they are to settle the dispute.

Source referenced: Mediate


About rauschmediation

Rausch Mediation & Arbitration Services
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