The short answer to this question is “by preparing their cases thoroughly.”
The true answer, however, lies in the details.
If you look at the websites of most BigLaw firms, they will describe commercial litigation that emphasizes the business needs of their clients, the need for sophisticated counsel for complex matters, and the resources required to go to trial to achieve success. Those same websites further detail their attorneys’ industry background and pedigree, offering a seamless national presence that allows those firms to bring their resources to any venue.
These websites indicate to their client base the reality large commercial clients face, namely that their litigation needs can arise anywhere and involve any subject. For large corporations, there are obvious advantages in having an established relationship with a law firm that can respond at a moment’s notice to whatever issue arises through a single point of contact or client relationship.
Companies often look for established Biglaw firms where processes are known, and results are expected when the stakes are high. However, all sides cannot win in litigation, and settlement is almost always the most likely outcome. BigLaw takes settlement very seriously because they understand that being right about the law matters little if your client is unhappy, considers you didn’t provide value, or, even worse, affected their business negatively.
So does the approach to settlement differ in the larger firms and, if so, in what ways? First, it is essential to understand that losing a client is a big deal in all firms, especially where the client retains counsel for numerous business lines. In the investment world, this is akin to the recurring revenue model. Often corporate and regulatory work drives revenue, not litigation. When litigation arises, the law firm effectively has two clients- the client paying for the work and the internal client and the team responsible for executing and benefiting from recurring revenue of the corporate and regulatory work.
As a result of this dynamic – needing to keep the client happy enough to keep using the firm’s corporate and regulatory services, BigLaw firms rightly spend much time on risk assessment, expectation management, and establishing the highest degree of certainty concerning the outcome. Companies generally don’t like the risks of trial (absent a clear business objective) due to the uncertainty that trials generate.
So, assuming the parties have a high degree of certainty concerning the possible outcomes of litigation and have already established the risk/reward of proceeding to trial, how do they resolve their cases? A surprising number of cases are resolved between the lawyers, often with direct General Counsel (GC) to General Counsel (GC) communication and without third party involvement, as the parties consider that they are in the best position to discuss the relative legal and factual merits of their positions. Most GCs or clients will take a similar approach to risk assessment, making it easy to agree on the financial number required to resolve the case. This is the traditional positional bargaining approach beloved by litigators who are convinced on both sides that they are stronger negotiators than the other side irrespective of the relative merits of the claims.
However, mediation is a better option for some complex litigation cases than Biglaw’s traditional two-party, GC to GC negotiation. Specifically for issues where:
- Resolving the case directly between opposing parties would involve internal or external questions and confidential matters; or
- There is a need to resolve the claims quickly because of client pressure, an approaching trial, acrimony, or potential negative impact on an impending deal.
Once the parties have concluded they will need the services of a neutral third-party mediator, the selection process begins.
The parties typically look for three main things when selecting a mediator – 1) reputation, 2) expertise in the subject matter and, 3) neutrality. The parties will often research the mediator’s background, make internal and external inquiries as to the reputation and, almost above all else, look to see if the mediator has a propensity to favor one side over the other. This does not mean that perceived bias will be grounds for rejection, simply that it is a factor involved in the selection process. Both sides may suggest up 3, or even more, potential mediators, with the winning mediator often being the mediator on both, or neither, party’s shortlist. Once received, the shortlists will be analyzed, and ultimately a decision will be made based on mediator availability from the shortlist.
In preparation for the mediation, the parties’ lawyers will prepare carefully as though going to trial, as resolution will affect the parties’ rights. Therefore key terms and provisions of any settlement resolution will be worked on before the mediation commences. The advantage of undertaking substantive pre-mediation work is that it enables the parties to ensure that they have addressed the likely arguments of the opposing side, managed their client’s expectations, and carefully assessed the risks of any given position advanced by the other side. This process is, in effect, a Best Alternative to a Negotiated Settlement (BATNA) and enables all interested parties on either side to reach a consensus which will be critical in whether a settlement can be achieved.
During the mediation, the parties will often seek to persuade the mediator of the strength of their arguments to create an imbalance of 2 against 1 in the mediation negotiation process, rather than allow the mediator to influence them. The parties will assess the mediator’s effectiveness based on how close they can get to their preferred outcome. The parties typically emphasize technical positions over compromise as they negotiate in front of their peers and adversaries.
In all, BigLaw commercial litigation mediations usually involve more interests than are apparent, and consensus-building is required before the mediation. In addition, the need to establish technical credibility is often greater where the parties and their lawyers may face each other at a future date. Whatever the outcome, it is essential for mediators to help parties manage their dispute while building credibility in anticipation of future disputes. This is how BigLaw successfully resolves commercial litigation cases in mediation.