Winning At Mediation
- 01 December, 2023
- 82 MB
Want to hear from the former head of Farmers on how to maximize mediation? This time on the Justice Team Podcast, Bob Simon is joined by Craig Hartsuyker and Ryan Conger to explore effective strategies for winning mediations and maximizing settlements. They delve into the crucial aspects of preparation, such as informing the defense and their insurers about key case elements and presenting new, impactful information. Together, they cover choosing the right mediator, fostering trust and open communication for successful negotiations, and the strategic use of midpoints. This jam-packed episode underscores the significance of building positive relationships with opposing counsel to facilitate favorable outcomes and offers practical advice for navigating the mediation process effectively.
Craig Hartsuyker, Hartsuyker Mediation Services
Ryan Conger, Conger Law
Transcript
Bob Simon:
All right. Welcome to this edition of the Justice Team Podcast, and today we’re going to talk about something very useful in all of our practices, and that’s how to kind of win your case of mediation and get max amount of dollars. And we have very esteemed guests today, one who’s now a full-time mediator, right, Craig, full-time?
Craig Hartsuyker:
Yeah.
Bob Simon:
So Craig Hartsuyker?
Craig Hartsuyker:
Hartsuyker.
Bob Simon:
Psych. Hartsuyker.
Craig Hartsuyker:
There you go.
Bob Simon:
Who was the law firm name of Farmers, right?
Craig Hartsuyker:
I was at one time. Yeah.
Bob Simon:
So, that being either the managing attorney of Farmers in Southern California.
Craig Hartsuyker:
I was the regional head of litigation, so I had about 10 managing attorneys throughout the state.
Bob Simon:
Wow.
Craig Hartsuyker:
So, we had a lot of fit files.
Bob Simon:
Yeah, we sent a lot of… You guys were on South Flower back in the day and go through that little spinny thing to go… The parking lot feature was a pain in the ass. But all your mail went to Oklahoma. Another pain in the ass. You were there for that.
Craig Hartsuyker:
The Oklahoma?
Bob Simon:
Yeah.
Craig Hartsuyker:
Yeah. I think about then. I might be a little older than that, but-
Bob Simon:
There you go, there you go. And then we also have Ryan Conger. And Ryan, you were a partner at Lewis Brisbois?
Ryan Conger:
I walked.
Bob Simon:
You walked from big law.
Ryan Conger:
That’s right. Started my own thing I think in 2014 or ’15.
Bob Simon:
Wow. Never looked back. And Ryan, we handle a lot of complex cases together, but Ryan is the master negotiator, does something we call damages stew and it does very well. Both these guys know how to leverage mediations to get maximum amount of dollars. Okay, so we’re going to start here. So, a lot of listeners are law school lawyers and they’re going to be listening like, “I thought I just read a mediation briefing, get paid.” Is that right? What stakes are they making?
Ryan Conger:
No, I think it’s funny that you said win at mediation because I think a lot of trial lawyers will always say, “You can’t really win a mediation.” But I think you kind of can.
Bob Simon:
Oh, yeah.
Ryan Conger:
I mean, by getting that thing teed up properly in advance, and the mediation starts long before the actual mediation. I think it starts with what Keith Bremer always calls the coffee talk or the soft talk. You call up defense counsel and kind of lay yourself a roadmap for the case and keep that open line of communication so there’s no surprises at mediation.
Craig Hartsuyker:
And I come at it from a couple different angles here. The preparation going into a mediation, you’re not only preparing yourself, your client, you’re preparing the other side too. And when you’re talking about insurance companies, there’s a lag time for what they need to digest the information, long before they get to the mediation. It’s a surprise to the defense counsel and the insurance carrier when they’re at mediation, they probably don’t have enough money.
Bob Simon:
It’s probably mediation over, try to reconvene.
Craig Hartsuyker:
Well, yeah, that and you know what? You’re not going to get full value for your case.
Bob Simon:
No.
Craig Hartsuyker:
I mean, they came in with a certain expectation of what that value was. They’ve got layers of authority that they’ve got to get through. They prepared for one mediation and if you haven’t prepared them fully, the other side, then there’s not going to be enough money.
Bob Simon:
So, let’s talk about that. What do they do? Let’s talk about a litigated case because not very often we have this pre-mediation or pre-litigation mediation. You’re in litigation, you’re not in expert discovery yet. It’s looming. The trial dates may be six, nine months, sometimes 12 months in the future. What are some things that these lawyers should be doing in advance up until, practical tips up until that mediation? Let’s start with this. How do you select your mediator?
Craig Hartsuyker:
I think that-
Bob Simon:
Other than call your office.
Craig Hartsuyker:
Yeah, there’s different… Well, I’d love to be part of-
Bob Simon:
This is where you put your cell phone.
Craig Hartsuyker:
Yes, exactly. But I think part of that discussion is, it depends who you want your mediator to be. Do you need them to be advocating for your side of the case? If you’ve got a really great case, you probably want defense counsel to pick their case, right? If you’ve got not such a great case and you have some explaining to do, then you might want somebody that can kind of broker in between. So, it depends on what kind of case you have and what kind of relationship you have with the different mediators out there. Some help you more than others, depending on…
Ryan Conger:
For sure. And I think you can a lot of times predict the problem. If a case should settle and it’s not settling, there’s usually a reason. There’s somebody out there, whether it’s somebody with the insurance company, whether it’s defense counsel, whether it’s an expert who’s gone too far out on a limb, but sometimes it’s your client.
Bob Simon:
It’s your client. Yeah. Or our client.
Ryan Conger:
And so, if your client is the problem and the reason why the case isn’t settling, that may be reason to get a different type of mediator. There’s guys who you know will beat up on your client a little bit.
Bob Simon:
And that’s what Ryan calls it, the mediation within the mediation, he’s doing two different mediations. One about the case, one with the client. I think there’s one mediator, she’s fabulous, comes to my mind and she will just grind your client down to nothing. It works. Sometimes you need that, right?
Craig Hartsuyker:
Sometimes you do.
Bob Simon:
[Inaudible 00:04:57].
Ryan Conger:
And sometimes I think the case calls for a retired judge. There are certain situations where one side or the other is going to respect that gravitas of a retired judge. And sometimes the case does not call for a retired judge, it calls for somebody who’s a businessman and understands policies and politics of the carrier.
Bob Simon:
And also it depends on who the carrier is, right, Craig? I mean, because carriers listen to certain mediators.
Craig Hartsuyker:
It does. That’s true. But I think a good mediator though can kind of, if they know the racket on both sides… And so, I don’t know if I mentioned, so Bob, I’m working with Mike Alder too. Did we talk about that?
Bob Simon:
Oh, yeah.
Craig Hartsuyker:
Yeah. So, I’m working with Mike as well. Mike’s valuation of a case and my valuation of a case are often different, so it depends on what you’re trying to accomplish by your case and what kind of case you have, and who you want to pick out of that. I think you can do a lot of different things with mediators that grind, if you need that. But if you need somebody that understands the insurance companies, understands the defense counsel and understands the politics behind that, then you want to get somebody that’s got that kind of experience.
Ryan Conger:
Three Ps, the people, the politics, and the policy limits.
Bob Simon:
Oh, look at that.
Ryan Conger:
Now that I think about that.
Bob Simon:
That’s a good one. I probably like the OPP, the old hip hop. So, sometimes it also, leveraging your communities and who’s the best fit for that case? Because sometimes a sexual assault case is different than a PI case. Who’s going to be able to handle those? For us, we do a lot of above contractual limits, open policy, bad faith leading up cases. And that sometimes you got to have… I like to have ex-defense lawyers on as mediators in those cases because they understand what’s in the claims file and how to leverage, if you need to, those extra contractual dollars or what exists.
Ryan Conger:
And there’s some mediators out there who specialized in bad faith when they were practicing and those guys are great too. One thing I want to say that I’ve been focusing on, and it should be obvious, but I actually think for young lawyers this is important to understand. Your case is a lot of times all about credibility. You tell your client that, “Hey, we win this case based on your credibility. You have to be credible.” I think in mediation, the lawyer’s credibility is super important. When I start the mediation, I don’t come in hot, 100% advocating every single fact of the case. I tell the mediator that I understand the downsides of my case and get on the same page as the mediator. And mediators are people too. I think if they like you and they find your position to be credible, just inherently, I think they fight a little bit harder for you.
Craig Hartsuyker:
Yeah. And I think on all these cases there’s some gray area, like your valuation of a case, Bob, might be a little different than mine. Hopefully that lands in the gray area, versus the extreme positions like I see sides take a lot when we come and mediate a case. And trying to get them immediately off those extreme positions and into that gray area-
Bob Simon:
That’s where you do your work.
Craig Hartsuyker:
Exactly.
Bob Simon:
I always say, “Here’s our conceptual in my mind where the bracket, where the case should be. I know where the defense’s bracket is and if they ever start to intertwine, that’s where you got to do your work, Craig.”
Craig Hartsuyker:
And you can settle a case if they intertwine.
Bob Simon:
Yeah. Or if they even get close enough. But let’s first talk about for our listeners, what work do you need to do in advance of the mediation? We’re talking educating the defense and their carrier, and how much before the mediation do you have to do that stuff?
Craig Hartsuyker:
Yeah. That second thing is super important. I think a lot of times folks think, “Hey look, I’ll get the mediation brief or I’ll get the information to the other side a week ahead of time and we’ll all be good, right?”
Ryan Conger:
It’s too late.
Craig Hartsuyker:
It’s too late.
Bob Simon:
Really.
Craig Hartsuyker:
It’s way too late. A week ahead of time, it cannot, especially on a high value case. If it’s under $100,000, hey, no sweat, right? No big deal. There’s a lot of adjusters out there that have under $100,000 in authority. When you start getting to higher levels, 250 and above, there’s fewer and fewer people in an insurance company that typically have that kind of authority. And if you’re looking at a $1 million plus case, it’s probably going to vice presidents in order to get authority. That’s got to go up through the chain. I spent three years managing a catastrophic claims group, group of claims people, about 100. The layers that it would have to go through the case in order to round table just to me was the adjuster, a supervisor, a regional, and then to me, and then I’d make a decision on it-
Bob Simon:
So, when they say, “We got a round table,” they’re not kidding.
Craig Hartsuyker:
They’re not kidding.
Bob Simon:
I thought it was just a delay tactic.
Ryan Conger:
Yeah, I would say 60 days is ideal, at least 30.
Craig Hartsuyker:
Yeah, at a minimum I would say 30. You can do it in 30 days, but if you think it can be done in a week or two, it can’t. And so, you’re just short-changing yourself and what the other side’s going to bring to the table if you’re doing it in the last couple of weeks before mediation.
Ryan Conger:
Can’t get paid for stuff they don’t know about.
Bob Simon:
Well, be specific, Ryan. What stuff are you sending 30, 60 days in advance to make sure they’ve set their reserves and they’re coming with money?
Ryan Conger:
Yeah, medical reports. I mean, if you’re going to do a deposition that you think matters, you got to do that. You got to get the transcript, you got to make sure that any bills and records, if you’ve got an important medical document, you got to get that to them. If you’re going to depose a witness or something that’s going to be really good for you, let’s say on liability, or even a damages witness, frankly. Anything that’s going to change the value, potentially value of the case, you got to do all those things 60 days in advance. I always schedule, by the way, I ask. And some people, some defense lawyers get a little cagey about it, but most totally understand. I say, “When is your pretrial or your pre-mediation report due? Because I need to get this stuff to you a few days before you write that thing.”
Bob Simon:
And I want to write it for you.
Ryan Conger:
Yeah. And I say-
Craig Hartsuyker:
That’s a great point.
Ryan Conger:
And I say also, “Do you know yet when your pre-mediation round table is?” Because sometimes you just can’t control it. You might get something last minute, the schedule just didn’t work. But at least want to get it to them before that, and I always schedule a pre-mediation phone call with defense counsel before they do their round table, just to say, “Hey, do you have all the bills and records? At least are we looking at the same economics here?”
Bob Simon:
And do you calendar all that ahead of time to make sure it pings you?
Ryan Conger:
I try to. Yeah.
Bob Simon:
Man. See, that’s why. And Ryan, do you expect… I know this is such a loaded question, but let’s bring up the higher value cases. When’s the right time to mediate those cases?
Craig Hartsuyker:
I think that you’ve got to get it at issue. So, you’ve got to have all the medical records, understand what the future medical care is going to be. That’s just kind of a baseline. But on these high value cases too, there’s always an issue. We take these cases, whether it’s the defense side or the plaintiff’s side, you take these cases and there’s an issue in the case, whether it’s liability, whether it’s a causation on the injuries, there’s an issue.
Bob Simon:
Or coverage sometimes.
Craig Hartsuyker:
There could be. Yeah, well coverage is-
Bob Simon:
A whole nother animal.
Craig Hartsuyker:
Yeah, a whole different animal. A lot of times you may get a death case, but you only have a $50,000 policy on this side. I mean, what are you going to do?
Bob Simon:
Yeah, who’s fighting? Who’s indemnifying who? And sometimes when they say, “Hey, we’ve got to sort this out amongst us before we go to mediation,” it’s got to be sorted out.
Craig Hartsuyker:
But I think what, Ryan, to your point, is talking about, if you can identify that issue though and have a conversation with the other side, “Hey look, we recognize that this is the issue in the case. Let’s talk about our perspective on it and your perspective on it. Let’s clear it up so you can take it to your adjuster or your insurance company and explain to them, ‘Hey, their position is on this issue. That’s the crux of the case.'” And then they can make a risk analysis on the other side and get the proper money.
Bob Simon:
That’s… I think boils down to, educate the other side, be an open book about it if you want to have them to open their checkbook, be an open book about it. So, it’s education first, not holding any cards back, unless you want to sandbag the mediation and force a trial, which I think is silly. You’re not doing a service to your client.
Craig Hartsuyker:
It’s just expensive.
Ryan Conger:
You got to remember too-
Bob Simon:
Sometimes I use mediation as just an expensive focus group, or to figure out the side they’re taking.
Ryan Conger:
I think you got to remember too, first of all, the plaintiff lawyer most of the time has had the case a lot longer than the defense lawyer. So you know the facts much more intimately. Also, you’re the one who’s building the case. It’s your vision that you’re looking at. So you’ve got to explain that to them. Don’t just assume that what you see is what they see. There’s so many times where I think I have a conversation with defense counsel and kind of enlighten them and bring them up to speed, and they don’t often go, “Oh, now I get it. Yeah, I’m going to get you a ton of money.” But you can tell it’s sinking in a little bit. It’s kind of like when you get in an argument with your spouse and they’re not going to tell you you were right, right then on the spot, but later on you kind of go, “Oh yeah, you got it.”
Bob Simon:
Well, they won’t ever say that.
Craig Hartsuyker:
Yeah, and I think kind of explaining the risk. Sometimes that risk analysis doesn’t get through to the upper echelons of, what are the claims?
Bob Simon:
And sometimes you outline that risk in your letter that you’re sending to the defense lawyer, that they’re going to put into their writeup for value because you didn’t even, “Here’s our outline of the case. Here’s why we think your risk analysis… Or here’s some…” Ryan, do you put similar verdicts or settlements in there too sometimes?
Ryan Conger:
Sometimes. Sometimes I do. I try not to be too kind of crazy of an advocate when I’m talking to the defense. I think it takes away your credibility. I like-
Bob Simon:
Yeah Craig, but what tools though does the claims folk need to have or see? What’s the driver for them? Is it the economics? What do they want to see come off the chain to them, to make them move that needle?
Craig Hartsuyker:
Yeah, sometimes I hear when I’m talking to, whether it’s a plaintiff’s PI firm, in particular, “Oh, the evil insurance companies.” And I think that narrative-
Bob Simon:
It’s stupid.
Craig Hartsuyker:
… is stupid, right?
Bob Simon:
Most defense lawyers and adjusters are good friends.
Craig Hartsuyker:
Yeah, exactly. They’re good people for the most part, right? And yeah, there’s some bad folks there that… but that’s true-
Bob Simon:
On both sides.
Craig Hartsuyker:
… in any industry you work.
Bob Simon:
I think there’s probably more bad folks on our side.
Craig Hartsuyker:
Yeah. So, that narrative, it just doesn’t hold a lot of ground with me. But sometimes they’re super busy and they get behind like everybody else and it’s not that they don’t want to pay or don’t… They want to do a good job, and they want to keep their jobs and look good at what they do. So, you can help them look good.
Bob Simon:
Yeah. So, that’s the other point-
Craig Hartsuyker:
Spoon feed them the information.
Bob Simon:
A lot of times the defense lawyer also wants to get it done.
Ryan Conger:
Yeah. I had an adjuster back when I was on the defense side one time told me, I’m sure Craig’s heard this, “The only type of good file is a closed file.” That’s what they say. So, they’re motivated to close the case, but it’s all CYA for them. They don’t want to get audited or have somebody look back at the file and say, “You did what? You paid what?” We were talking about this before we started. I don’t know if you totally agree with me on this, but I honestly felt like sometimes if you gave the person at the insurance company the choice, “We can settle this case now for 750 grand, but we don’t have all the boxes checked and we don’t have all the information in the event we got audited later, or we could settle it later for $1 million, but every box is going to be checked and we covered everything,” I think they’d choose option number two.
Bob Simon:
Oh, yeah. Has to be. You don’t have to say anything.
Craig Hartsuyker:
Yeah, but you know what though? They do want to close files. Think about, most files as they get older, get more expensive. To insurance companies, that expense is both in carrying costs of the employees that they may have, whether it’s claims people or staff counsel. But it’s also just ordinary expenses. Now you think, “Oh, they’ve got millions upon millions of dollars. It’s not that big a deal.” But they’ve also got thousands of litigated cases. So, those millions of dollars add up.
Bob Simon:
So you’re talking to close a case-
Craig Hartsuyker:
They wanted litigation costs.
Bob Simon:
… and all this stuff to just…
Craig Hartsuyker:
Yeah. They want to close the case, this is-
Bob Simon:
I always thought it was like they had a blank check for just the litigation costs. We’ll hire whatever experts, whoever we’re seeing, six experts on every case and just doesn’t cut… but it’s two different pots. Why don’t they consider the whole of that?
Craig Hartsuyker:
I think on an individual defense counsel level, I think that’s more true. But when you get to a more regional level and you’re looking at the whole book of business, expert costs are millions of dollars to an insurance company. You’re talking about bigger insurance companies, they might be 50 or $100 million.
Bob Simon:
Wow.
Craig Hartsuyker:
And we’re just talking about expertise. Then you’ve got court reporting costs and everything else. All those things add up. They want to close their file. Give them a reason to.
Bob Simon:
So, the takeaway for the first half of this portion of this podcast is educate your other side. Do it nicely. Give them information to be able to set the reserves. Now, let’s get into the mediation aspect. Let’s have a case now where a lot of times new counsels been brought in for the plaintiff. Maybe the reserves are set very low because the first plaintiff lawyer demanded half the value of the case. They didn’t know how to negotiate. And all of a sudden you go to mediation and the new lawyer’s demanding four times what the prior lawyer did, and the reserves are set much lower. How do we then get more than that original lawyer demanded? That’s like a fucking draw a line in the sand, that sometimes is a big impediment for us.
Craig Hartsuyker:
And it shouldn’t be.
Bob Simon:
It shouldn’t be. But you know what? It is.
Craig Hartsuyker:
Here’s the rub on that, is most carriers have a philosophy that you shouldn’t change the reserve unless you get new information.
Bob Simon:
That’s it. New information, you need new information.
Craig Hartsuyker:
So, give them the new information.
Bob Simon:
What new information are we talking about, guys? What’s new?
Craig Hartsuyker:
It depends. You step into the case, right? And you said, “Look, you know what? I didn’t tell you about the fact that my client had knee surgery that didn’t get conveyed to you. Let me convey it to you now.”
Bob Simon:
Yeah, let’s see if we can do a running list of new things, like we’re playing Family Feud, new things, the top five reasons, the top 100 defense lawyers have voted, the top five reasons why reserves have been reset to a higher value. Ryan, first answer on the board is…
Ryan Conger:
Surgery.
Bob Simon:
Surgery. Ding, ding, ding. Surgery sends number one, number one, number one. Craig, what is also on the board, the top five?
Craig Hartsuyker:
I would say the other thing is how it changed their life.
Bob Simon:
Ding, ding. Changing life is very-
Craig Hartsuyker:
As the general damages, right?
Bob Simon:
It’s number five, educational general damages. Ryan, you’re up now. Go ahead.
Ryan Conger:
I would say any new, let’s say they lost their job. I mean, anytime you’re adding economics, so new future wage loss.
Bob Simon:
Ding, ding. More economics, outlining more damages, econs, that was not available before, shows up on the board as number four. One that we missed, let’s talk about concessions from a defense expert. You get into expert discovery-
Ryan Conger:
Ooh, that’s a good one.
Bob Simon:
… and you’re starting getting concessions, or the big liability depositions that change that momentum. So again, these are new facts that set the reserves. So Craig, does it ever matter? Do they ever say, “Well, new lawyer, new sheriff in town, just on that metric alone, we’re going to reset the reserves.”
Craig Hartsuyker:
Rarely.
Bob Simon:
Yep.
Craig Hartsuyker:
Rarely, that has an impact. Now, there are some names out there, yours being one of them, Bob, that carriers kind of flag and say, “You know what? His name pops up…” I could go through the list, “But these lawyers, they pop up…” And I am well aware of you and others from the defense industry. “Hey, if these names pop up, let’s try to settle this early.”
Bob Simon:
Yeah, to settle it early because Ryan, what does that one well famous partner in another firm say about our firm?
Ryan Conger:
Oh, “They’re like the merry band of pirates,” or something.
Bob Simon:
They just try cases, don’t give a shit.
Craig Hartsuyker:
Well, and the reason-
Bob Simon:
It’s crazy.
Craig Hartsuyker:
Yeah, from an economic standpoint, you think about it, you don’t have that many files that can hurt a carrier, really.
Bob Simon:
No.
Craig Hartsuyker:
So, if they settle those cases early, worry about the rest of them.
Bob Simon:
Yeah, that’s true.
Craig Hartsuyker:
I don’t know.
Bob Simon:
They’re more worried about a hailstorm in Oklahoma tearing off some roofs, that’s into an eight figure verdict.
Craig Hartsuyker:
Yeah, the property damage aspect of most carriers is way bigger than the indemnity on litigation.
Bob Simon:
Really?
Craig Hartsuyker:
Oh, yeah.
Bob Simon:
Wow.
Craig Hartsuyker:
Yeah. Property damage to insurance carriers is a humongous number.
Ryan Conger:
Yeah. Did you see, we guess we won’t say the carrier, but just, well, it’s been in the news, State Farm stopped writing coverage in California.
Bob Simon:
We’ll see if California lets them do that though, with the insurance commissioners, there are certain things they can and cannot do. But be that as it may, just remember, the carrier aren’t going to be sweating you, beating your chest to try your case and overvaluing it. They’re going to be like, “Well, go ahead. We don’t care.”
Craig Hartsuyker:
Yeah, not on a single case.
Bob Simon:
Not on a single case.
Craig Hartsuyker:
No.
Bob Simon:
No, no. Yeah. So okay, we talked about how things could change the metric. Okay, now you’re in the mediation. Let’s say we’ve picked a good mediator that we think can move the needle for us here. Let’s talk negotiation tactics. Let’s give us hypothetical, let’s work on this. There’s a 1 million policy with a 10 million excess. Different carriers, okay? I don’t want to give you the full value of the case. Well, let’s just say that Ryan, the plaintiff lawyer, believes this value of the case to probably be in the two and a half to four range, probably thinks that’s what the value of the case is. The defense probably thinks the case, one and a half-ish range, one to one and a half. But demand going in has been policy limits of the full 11. Ryan comes in and says, “Well, that expired. It’s now 13.” The defense’s top offer has been half a million dollars.
Ryan Conger:
Let’s start with the fact that I wouldn’t do that.
Bob Simon:
Why wouldn’t you do that?
Ryan Conger:
I just wouldn’t go up, unless I really needed more money than the policy, I wouldn’t go backwards in a situation like that where I think the value is in the twos and I had an 11 out there, I would just start at my 11 again. I wouldn’t go in the wrong direction, because I just think that just gets things off on the wrong foot and rubs them the wrong way. I also would say, “Okay, you think I’m at 11, you think I’m in funny money because you guys think the case is worth one and a half or whatever, but we all know that it’s worth more than a million. So, until you tender the one, first primary carrier, then what incentive do I have to not stay up in la la land too?”
So, tender the one, and what I do there is, I just keep doing brackets and saying, “I’m not coming off until you tender the one. I don’t want to negotiate with you.” And then I’ll tell the excess carrier, “Whatever money they’re forcing me to spend off of my 11 right now to get to you is less money that I have to negotiate later with you.” So I’ll do it, I’ll blow some money down if that’s what it takes to get past the one, but just let the excess carrier know that then I’m not going to have a ton of room left to negotiate with them.
Craig Hartsuyker:
Yeah. The one thing about that hypothetical is this, I think it would be pretty rare that the underlying carrier or the $1 million policy wouldn’t pop it pretty quick. They want to kick it over-
Bob Simon:
Okay, wait.
Craig Hartsuyker:
They want to kick it over to the excess carrier.
Bob Simon:
Question. That’s different-
Craig Hartsuyker:
The last thing they want to do is-
Bob Simon:
Different scenario we a lot more recently, let’s say it’s SIR, that it’s a company’s first million and then you get into the 10 million excess.
Craig Hartsuyker:
Yeah. So, I think there too, where you have a case that’s clearly worth more than the SIR, they want to kick it over too so that they can kick the expenses to the excess carrier.
Bob Simon:
Interesting. Because a lot of times we struggle where it’s like we’re not even in excess yet, or we show up to the mediation and it’s like, well, we just have the SIR or the first million.
Craig Hartsuyker:
They’ve got a good argument though, if they’ve got an SIR though to say, “Hey listen, we’re putting up our million. If you want to stick and not pay any money on this, it’s on you now to take over this.”
Bob Simon:
So, walk through our-
Craig Hartsuyker:
It depends on the coverage-
Bob Simon:
So, that dynamic we’re talking about first layer, then tendering and second layer, what does that all mean as far as a negotiation or a leverage standpoint?
Craig Hartsuyker:
Particularly when you have, the hypothetical you posed was $1 million and a $10 million excess with a different company. So, the underlying carrier, they want to just protect themselves, that they cap it at the $1 million policy limit, so they never pay more than that. They don’t want to risk letting the excess carrier off the hook for a case that potentially has a significant value of more than twice what their policy limit is. They didn’t price for it, they didn’t get the premium for it, and so they want to make sure that hey, they can get that done quickly, pay the $1 million. So, you need to leverage that and say, “Hey, look,” and give them enough incentive to pop the million and move on.
Bob Simon:
Change the facts a little bit. $1 million policy, say a 5 million, it doesn’t matter. It’s a 5 million, say on top, different companies. The case is worth borderline, though 1 million.
Ryan Conger:
Yeah, I was going to say that that other-
Craig Hartsuyker:
That’s more [inaudible 00:26:31].
Ryan Conger:
… gets more interesting if the policy was two, but this is the same difference. So now, yeah, your best friend is the excess carrier-
Bob Simon:
Excess.
Ryan Conger:
… there, to push down on these other guys to tender the-
Bob Simon:
Well, how do you get this excess carrier to push down on the first carrier? So say, Ryan, you’ve done your… now you think this case is worth, you’d take 800 grand, but you think there’s a scenario that… How do you get-
Ryan Conger:
It’s a one-level fusion or something like that, or like a disc replacement, whatever. I think you say, “Look, this thing could be explosive.” That’s where you start talking about your other verdicts, by the way. You go, “Look, I’m not saying this particular case on paper has a blue book value of 2 million bucks, but we’ve hit these things for four and five and six and seven. So excess carrier-“
Bob Simon:
11 and 17. We did a couple of those.
Ryan Conger:
That’s right. Are you going to let these guys be cowboys with your money, right? Because trying to pinch pennies to get this thing done at eight or eight 50, but if we hit it, we’re going to hit it for five and it’s going to be four of yours and only another 150 there.
Bob Simon:
So then, what do you do to get that excess to put leverage on the first?
Craig Hartsuyker:
By the same token though, the excess carrier is in the position to say, “Yeah, you know what? Go ahead, let them.”
Bob Simon:
Because it’s your money.
Craig Hartsuyker:
Let them bargain, right? They bargain too hard, it’s all their money.
Ryan Conger:
Right.
Bob Simon:
So, how does that work? What does that mean? It’s all whose money?
Ryan Conger:
The first primary.
Craig Hartsuyker:
The primary, right.
Ryan Conger:
Because they committed, I don’t think it’s technically called bad faith at that point, but there’s a case on that. What do you guys call that?
Craig Hartsuyker:
Well, whether you’re-
Bob Simon:
A non-[inaudible 00:28:02] case.
Craig Hartsuyker:
Yeah, whether you’re opening up the policy or not, right?
Bob Simon:
Yeah. So, what’s the best mediation tactic? If you’re in mediation, you have this in play, single level, double level fusion, whatever, it’s you have… they’re offering below the first million. You’re sitting there with excess. You know excess is in the room.
Ryan Conger:
Right. Well, let’s start with that. If excess is there, I’m assuming that they’re there with-
Bob Simon:
But you know Craig, on your end that the primary’s fighting to even tender their million, they’re fighting it.
Craig Hartsuyker:
And I think as a mediator though, you have to recognize that dynamic and talk to the claims folks on the underlying policy and say, “Look, at the end of the day, we both know that you’re going to tender your policy and you’re not going to take the risk on a case that…” And maybe it’s worth a million, 2 million, five, whatever it is, “You’re not going to take the risk of expending the money to continue to litigate this case for another 150, $200,000 only to potentially most likely pay your policy and potentially more.”
Ryan Conger:
Here’s how I’m handling it-
Craig Hartsuyker:
So, you can get the money on the underlying, and now the mediation’s with the excess carrier.
Ryan Conger:
Here’s how I’m handling it. In that very first Zoom, I’m going to say, even before we go on the mediation, I’m going to call Craig, before anybody’s on there, my clients are-
Bob Simon:
Because Craig’s the mediator in this situation.
Ryan Conger:
Yeah, Craig’s the mediator. And I’m going to say, “Craig, I need all of the underlying and a little bit of the excess, and I’m going to go make some phone calls, and do some other stuff.”
Bob Simon:
And then what is it other stuff that you do?
Ryan Conger:
Just cook up some soup.
Bob Simon:
Yep, make up some damages soup, and then that’s what you use. Educate the carrier, and then you tell excess… What’s the pucker? If you’re in this, you got one and they got five on top of the excess. Where does the excess really start to have to fucking hammer them? Where’s your demand got to be from the plaintiff for them to be like, “Guys, you got to give us that first million so we can get this done.”
Craig Hartsuyker:
I think one of the issues that the hypothetical you posed, was the excess carrier is actually there at the mediation?
Bob Simon:
That’s a hostile situation.
Craig Hartsuyker:
Right. But a lot of times the excess carrier is not in the loop, so you’re negotiating at a mediation with the underlying carrier and there’s an excess policy, but they’re either not at the mediation, they haven’t been educated, whether it’s the plaintiff’s side or the defense counsel, nobody’s really got them engaged in the process. And so, all of a sudden you get the $1 million, you don’t want to take just a million, you think you can get another 200, $500,000 out of it, but nobody in the room has really communicated with the excess carrier.
Ryan Conger:
Yeah, [inaudible 00:30:31]-
Craig Hartsuyker:
So, making sure you have them at the table when they’re involved.
Ryan Conger:
So, it’s just an interesting thing to know and to know in advance and to make sure you know when you get there, because either direction it tips somebody’s hand. So, if the excess carrier’s there, I think maybe not always, but presumably they’re there with some money to settle the case, maybe, not always. And by the same token, if they’re not there and you’ve been saying you need over the million the whole time, and then you continue to negotiate knowing that they’re not there, you’re kind of tipping your hand that you can settle the case for under a million bucks.
Bob Simon:
There you go, some good practice tips. So, if the excess isn’t there, Ryan, and you know could probably get more if the excess knows what’s going on, what do you do in that mediation?
Ryan Conger:
I think you just say, “Hey, if excess isn’t here, we’re not going to be able to get this case settled today. Maybe we could sit here until we can figure out if they’re going to tender their million, if we at least get that out of the way and move onto the excess.” But just make sure it’s transparent to everyone in that room that I cannot settle this case today because there’s not enough money here.
Craig Hartsuyker:
And I would tell you, don’t be afraid to walk, if you’re the first hour into the mediation, you figure out that that’s the case. If you’ve got that kind of case, close it down. Talk to the mediator and say, “Listen, look, we paid you for a day. We understand that… But can we come back?” And most of the mediators that, when you have a good relationship with them, will be, “Hey, look, fine. We’ll schedule another day when you’ve got all your ducks in a row. Happy to do it.” And those mediators know that that’s a continuing source of referrals and they want to get cases settled.
Bob Simon:
Yeah. And on our end, we’re dealing with our client. I usually tell our clients, and Ryan, I’d like to hear your advice on this, what do we tell our clients? I usually tell them, “Do not expect that we’re going to resolve this at this mediation.” I always tell them, “Don’t ever-“
Ryan Conger:
Always. Especially now, something happened during COVID where now mediation day is no longer the day to settle the case. It seems like the carriers show up to find out what you would take, and then they go back and do the work maybe to get that money. I often thought maybe this whole mediation thing might change and that mediations become one hour. And so, if all the work gets done in advance, everything gets teed up. You show up at the mediation. If they’ve got the money, if they really have the money, you should be able to get it done. If they don’t and they’re there to just kind of learn and maybe go back and forth a couple of times and position the case to settle later with some phone calls, that’s fine. I don’t need to be there for a full day. Everything always happens in the last hour anyway.
Craig Hartsuyker:
The other thing too is, I find too, when a mediated case is in it, doesn’t resolve during the mediation, I’m always happy to, in the ensuing weeks, continue to have conversations with both sides.
Bob Simon:
Yeah, of course.
Craig Hartsuyker:
It’s pretty normal stuff-
Bob Simon:
And I think a good mediator gives you his or her cell phone number.
Craig Hartsuyker:
Yep.
Ryan Conger:
Yeah. That’s where everything’s happening now, is the working the phones afterwards.
Craig Hartsuyker:
And the mediators typically tend to start to have good relationships with both sides, so that they can open up the communications and talk to both of them in a reasonable way. And that’s how these cases get resolved, is everybody gets off their-
Bob Simon:
High horse?
Craig Hartsuyker:
Yeah, their high horse and realize, “Okay, well I understand who Craig is, and he understands the gray areas and the politics of this thing and he’s not steering me wrong.” Right?
Bob Simon:
Yeah. And you got to trust your mediator. During the podcast, checking my phone because I have a mediation, it’s in Boston and we’re hopefully going to wrap it up right now, but I trusted my mediator telling me that we’re going to get to a certain amount. There’s all kind of excess issues and coverage stuff, but we had two mediations and he said by Thursday we were almost there, we’re like 150 K away to get to 3 million. But you have to trust that the mediator is telling you things when he says, “Look, I can’t tell you, this is confidential. I just can tell you that it’s probably good for you that this new fact that unveiled.” You just got to trust the process a lot of the times.
But that’s where you do your homework on making sure that that trust level is there. So, in this hypothetical, million with 5 million excess, it’s worth maybe 800 K. Ryan, let’s say it stalls like this. They put up 750 K, you’re at 3 million. You know where you want this thing to land. You told Craig on that call you wanted the million and a little sugar. What do you do after you walk out of that mediation, and client wants to settle, probably a case you don’t want to try. What do you do when you walk out of there?
Ryan Conger:
You let it sit. You trust your mediator to work the phones on that thing. And if you have a good relationship with defense counsel, maybe even reach out directly to the defense counsel and say, “Hey, where was the breakdown?” But I do think it’s important in that situation to make sure that the mediator knows that you’re reaching out to defense counsel, so that the message does not become inconsistent. But that’s what I do. I just call and say, “Hey, what do you need?” Or I ask the mediator, “Find out, what do they need to get this thing over the top?”
Bob Simon:
And sometimes, Craig, do you ever tell the lawyers, like the plaintiffs, say, “Hey, put a demand in writing. You have to do something in writing after this mediation.”
Craig Hartsuyker:
Sometimes. But you know what? Oftentimes, and to your point, I will tell both sides, “Hey look, I’d like to hold this open and call you both to see if I can discuss your positions a little bit more after the mediation and see if we can’t make some progress.” And when you’re upfront with both sides and they say, “Okay, yeah, that sounds reasonable, you can call me on the phone, Craig.”
Bob Simon:
Love this.
Craig Hartsuyker:
They say, “Okay, yeah. Great, I’ll keep it open and we’ll continue to have conversations.” And let everybody sit for a couple days.
Bob Simon:
We’re almost out of time on this podcast. It’s the one last topic we’re going to talk about for the last five minutes here. I’m going to talk about the use of midpoints. Does such a thing exist? Do the insurance companies really beholden to them when they say, “I’m going to give you this offer, but don’t look at the midpoint.” Is this a real thing?
Craig Hartsuyker:
I don’t love them. I think that they get used a lot, but I think it’s a little bit, I don’t want to say lazy, but it’s lazy negotiations on both sides, and/or from the mediator.
Bob Simon:
Ryan and I have done a few mediations, and after move two they’ll be like, “We’ll just renegotiate. We’re up real high.” And they’re like, “Okay, we’ll do this bracket. If you go to 10 million, we’ll go to five.” We’re like, “These idiots just told us they have at least 7 million.” Why would you jump the gun like that? Right? I mean, those are the mistakes.
Ryan Conger:
We always talk about the midpoint or the midpoints and stuff with the brackets. I like that stuff. I think it’s fun-
Craig Hartsuyker:
And I think people get impatient and they want a trick, and they want to know some predictability rather than thinking it through and having a conversation about, what’s the value of the case-
Bob Simon:
This is why I like the virtual mediations now because I don’t mind the grind. I’ve done a mediation last week where I was working out for half of it because it was just on the phone, just doing your thing and then you get an offer and be like, “Oh, send it back this way.” I’m not stressed out about the grind of it. I used to be because I was always lazy. But Ryan here, he grinded at 3:00 AM on some of these mediations to get-
Ryan Conger:
Look, I like it.
Bob Simon:
Because you’re a sadist.
Ryan Conger:
I think it’s-
Craig Hartsuyker:
I love mediating.
Bob Simon:
Well, obviously you two do. That’s the thing.
Ryan Conger:
It’s a language. I think that the way we-
Bob Simon:
It’s your love language?
Ryan Conger:
… negotiate in PI cases is so different than any other negotiation. If you went to somebody and you wanted to buy their house for a million bucks and your opening offer was 25 grand, you don’t imagine that. But that’s-
Craig Hartsuyker:
That’s what goes on all the time.
Ryan Conger:
In our mediations, that’s the way it is. It’s a $1 million case. We open at 5 million and they open at 25 grand, and the case somehow still gets resolved. So, I think it’s a language that if you can be good at speaking it, you can learn a lot in a mediation and maybe you don’t settle your case, but you’ll learn a lot about what the other side’s willing to do and you get a lot closer to selling it. That’s why I never leave a mediation because I’m just there to gain, once I realize I can’t settle it, I just want to get as much information as I can.
Craig Hartsuyker:
And I’ve mediated cases on every side, as a mediator, defense counsel, all three, and I’ve always taken a shot at trying to short circuit that 5 million versus 25,000. Unfortunately, it’s very, very difficult to short circuit that negotiation process. People want to go through it.
Bob Simon:
Yeah, I always say, “When do we start to get to those bracket arenas so I can say, ‘Look, I can tell them my demand is this, or I give him this bracket. Why don’t you just go in there and say, ‘Look, plaintiff counsel is not taking less than this. I got the sense you’re not here. Can I just do a mediators bracket for this to get the goalpost closer together so it’s the mediator’s idea?'” Because the mediator, I could be at a certain point, I have a good rapport. I was like, “Look, we’re not taking less than this, but I know probably a million less than that.” But working the game a little bit.
Craig Hartsuyker:
And I will tell you, that depends. That depends on the trust level that you as a mediator have with both sides, right? Sometimes I’m working with new counsel and they may know my name, but they don’t know me. So, that takes a while, to build some of that trust. If you’ve got the trust level, then you can go to both sides and say, “Look, you know me, I’m not going to bullshit you.” Oh, can I say that?
Bob Simon:
Oh, yeah. For sure. You can say whatever the fuck you want, just not what I said, the George Carlin other seven deadly words. You can’t say a few words on here but that one’s okay.
Craig Hartsuyker:
So, “I’m not going to you. The reasonable value of this case is in this range, right? So, I get that you’re demanding $5 million and you’re at $25,000, but look, you know what? There’s a reasonableness to this case and let’s get there sooner rather than later so we can actually resolve it.” If you’ve got the trust on both sides, that works.
Bob Simon:
It works.
Craig Hartsuyker:
But sometimes you got to spend several hours building some of your… And teaching people who you are as a mediator.
Bob Simon:
Well, that’s why I do appreciate whenever we go to these legal conferences and events, that you see mediators there on both sides of the table letting you know who they are, because the trust factor to me is critical. Because as Ryan says, you as a lawyer, your credibility is on the table at mediation. It is. And I think that’s very important. Any other parting wisdom here, gentlemen, as we mediate our ways out of here? Do you ever mediate to meditate, or meditate to mediate?
Craig Hartsuyker:
I have to meditate after I mediate.
Ryan Conger:
Do you mediate Farmers cases?
Craig Hartsuyker:
No. I have, but no, not regularly.
Ryan Conger:
If both sides agree, though?
Craig Hartsuyker:
If both sides agree, I could. Yeah, there’s no reason why I couldn’t-
Bob Simon:
Oh, I totally [inaudible 00:40:54]-
Ryan Conger:
I would use you on a Farmers case in a heartbeat.
Craig Hartsuyker:
Well, I appreciate that. I’m not so sure they would feel the same way though, so…
Bob Simon:
Yeah. Not if you have a strong case, you got a good case, just the mediator’s going to be able to project that for you as well. Cool. Well, any parting words of wisdom? Ryan, I’ll let you go first. Don’t talk about cherry tomatoes.
Ryan Conger:
No, I just think everything we talked about, I mean, it’s just about communication, education. Like Craig said, the other side is not the bad guy. Oftentimes the defense lawyer is your best friend. I mean, he’s your voice in that room. So, make sure that he’s all loaded up so that he can be a good voice for you.
Craig Hartsuyker:
Yeah. And I would say, take the time to get the other side the information early, give them a chance to do a good job. And then, as a mediator, build relationships with the folks on both sides, not one side or the other. It’s about both sides. So, you’re trying to build relationships, so both sides will listen to reasonableness. That’s where you’re trying to get this case into that gray area.
Bob Simon:
And I think of the virtual world, a lot of people beat their chest too much, and then as soon as people meet each other in person, it’s a different wall to break down. So, I say to counsel, “Look, if you want to get together and have a few whiskeys together and talk about the case, we could do that.” And you’d be surprised how often relationships develop and cases resolved just because you put down that armor and get to the real value of the case.
Craig Hartsuyker:
You know what I would say though, building those relationships though doesn’t solve just that case. It solves the next 10 cases or 100 cases, [inaudible 00:42:21]-
Bob Simon:
And you get referrals from those defense lawyers too.
Ryan Conger:
For the people, the politics, and the policy limits.
Bob Simon:
And there you go, ladies and gentlemen. Thank you for tuning into this edition of the three Ps. Actually, Crystal [inaudible 00:42:31] has three different Ps, why he takes a case. It’s either public interest, the last one is, it pisses them off. I forget the other P. But whatever. So, if you have any questions, go to justiceteamnetwork.com. We’ll be happy to handle any issue or case or consultation that you may have, or if you want to be on the show, just let us know, and off we go. Thank you guys for this edition of the Justice Team Podcast. Thank you, Craig and Ryan.
Craig Hartsuyker:
Thanks, Bob.
