The Mediator Asks for the Bottom Line
You represent a claimant in a partnership dispute worth £1.4 million. The board has authorised you to settle at no less than £600,000 but has expressly told you not to disclose that figure 'under any circumstances'. At the mediation, the defendant's counsel opens at £250,000 and, after three hours of movement, says his client's 'absolute ceiling' is £450,000. Your client's offer of £525,000, made 24 days ago in the form that attracts costs protection, remains open for another two days. The mediator takes you aside and says, 'What is your real bottom line? I can't help you if you won't tell me.' Your client's finance director, who is attending the mediation, says he would 'take £480,000 if it's over today'.
1. How do you answer the mediator, and what are the limits on what you can say about your authority?
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The rule. You must not misrepresent your authority. Saying 'I have no authority above £X' when you do, or inventing a board that must be consulted when it need not be, is a misstatement of fact, not negotiation puffery. Statements about the merits of your case may be robust opinion; statements about your instructions must be true. A settlement concluded outside authority is also a professional problem for you, not just a commercial one for the client.
What you can honestly say. Something along these lines: 'I have a defined authority from my client. I am not going to tell you the figure, because the board has instructed me not to and because it would simply move the negotiation to my number. What I will undertake is this: if you put a proposal to me that falls outside my authority, I will tell you at once, and I will go back to the client. I won't waste your time pretending I can do something I can't.' That is truthful, it gives the mediator a usable process, and it preserves the confidentiality of the figure.
Why not simply disclose the number? Disclosing the floor converts it into the ceiling: the other side will offer exactly £600,000 and not a penny more. The client has forbidden disclosure, so disclosing it would also breach your instructions.
What to do with the mediator instead. Help him help you. Tell him what would make a difference: a proposal with reasons, movement on the structure (payment timetable, costs, confidentiality, admissions), or an indication of what the defendant's board could do rather than what its counsel says today. Ask him to explore the gap between £450,000 and £525,000, because that is where the deal lives. Do not let the conversation become about your number.
One caution. If the finance director's instruction to you conflicts with the board's, say so in the room and in front of the mediator: 'I have a board authority and I need to understand whether you are changing it.' Getting that on the record protects you and the client.
2. How do you use the offer with costs protection and its two-day deadline, and what do you advise the finance director about £480,000?
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The offer. It has two days to run. Do not let the deadline be a bluff you cannot carry out. Advise the client in writing, today:
- If the offer is allowed to lapse, the costs protection it carries lapses with it. A fresh offer can be made, but the clock restarts and the defendant gets a further period to accept.
- If the client intends to withdraw or reduce the offer, say so expressly in writing before it expires, because withdrawal has procedural consequences and a court may need to be satisfied about it.
- Consider whether to leave it open rather than withdraw it. An open offer that the defendant fails to beat at trial may still produce costs consequences, and there is no need to threaten what you will not do.
The £480,000 proposal. Three points, in order.
- Authority. £480,000 is £120,000 below the board's floor. The finance director is one director; the board set the authority and told you the figure was confidential. Ask him directly whether he is authorised to vary it, and if he says yes, ask for it in writing - a board resolution or a signed instruction - before you communicate anything to the other side. If the company's constitution requires a board decision, insist on it, even if it means asking the mediator for an hour's adjournment. An unauthorised settlement may not bind the company and will certainly expose you.
- The arithmetic. £480,000 against £450,000 is a £30,000 gap on a £1.4 million claim. Weigh the costs to trial, the risk of losing on liability, the delay, the effect on the partnership relationship and the value of certainty today. Also weigh £480,000 against the £525,000 offer: is the £45,000 discount worth the certainty?
- The message to the other side. If the client does authorise £480,000, do not simply concede it. Link it to a condition: payment within 14 days, costs, no admissions, and a deadline today. A concession given for nothing invites another request for a concession.
Record everything. Confirm the authority, the figure and the conditions in writing before the mediation closes.
3. The defendant's counsel asks you directly whether you have authority to settle at £450,000. What are the ethical issues?
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The starting point is honesty. You may decline to answer a question - 'I'm not going to discuss my instructions' - but you may not give an answer you know to be false. If £450,000 is below the level at which you can settle, 'no, not at that level' is truthful, and it preserves your position. If you say it when it is untrue, you have misled a professional colleague and, if a settlement follows, potentially misled the client and the court.
The uncomfortable corollary. Saying 'that is below the level at which I can settle' reveals something about the floor by implication. That is why you should not say it until you have considered whether you are permitted to and whether it helps. Sometimes the honest answer is the strategic one; sometimes silence is better. What you cannot do is pick the answer that is convenient.
Statement by statement.
- 'My client will never accept £450,000.' Only if instructed and if it is true. As a prediction about a client's future conduct it is dangerous; as a statement of current instructions it must be accurate.
- 'I'll have to go back to my board.' Only if you do. Using a fictitious board to buy time is a misstatement.
- 'My case is strong on liability.' That is opinion and may be pressed hard, but it must have a proper foundation. Do not assert that a witness will say something you have not verified.
- 'We have an expert who supports us.' A statement of fact; if the expert has not reported or is not instructed, it is a lie.
Correcting an error. If you discover that something you said in the mediation was inaccurate, correct it at once, even though it is uncomfortable. The obligation to correct a misleading statement does not expire when the mediation ends.
Confidentiality. The mediation is without prejudice. Do not threaten to reveal what was said in it if the negotiation fails, and do not use admissions made in the room in later proceedings. The settlement itself must be recorded in writing before anyone leaves.
Practical advice. Agree the answer with your client before the session: decide in advance what you will say if asked about authority, so that honesty and strategy do not collide in the moment.