Financial Services Mediation
by Layn R. Phillips, Pierre M. Gentin, Jill R. Sperber, and Lindsay R. Goldstein
More sophisticated and specialized than other references, Practising Law Institute’s Financial Services Mediation Answer Book(2017 edition), in question and answer format, comprehensively guides litigators (both plaintiff and defense) and mediators alike through elements of high-stakes commercial mediation.
The Answer Book includes procedural matters like “laying the (strategic) groundwork,” effective preparation, document submissions, and presentations, mediator selection, mediation advocacy, and steps toward “closing the deal.” Additionally, focus chapters on mediation issues relating to auditors, insurance and mediation, and recurring legal issues in the mediation of financial institution disputes provide a wealth of timely information on these subjects.
Thoughtful and critical attention is given to procedural and substantive issues related to class actions, multi-party and multi-district litigation, institutional and individual parties, and loss causation and damages issues, confidentiality rules, and disclosure of insurance policies and coverage issues. These and other technical subjects are very deftly handled and explored by sophisticated professionals. A 49-page appendix provides practical guidance from 12 leading mediators; all with substantial experience handling multimillion dollar financial services and other high-value commercial disputes.
Trial counsel may disagree, but many are ill-suited for mediation. Some litigators often view the process as no different than informal negotiations or only as another form of discovery. Others, just another hurdle before the real contest — a jury or bench trial.
As the editors point out, missteps on the plaintiff’s side abound: “(a) starting with too high a demand; (b) arguing the case in a way that potentially excludes insurance coverage; and (c) allowing internal conflicts among different plaintiff firms to dominate negotiations.” On the defense side: “(a) failing to analyze the litigation exposure and costs along with the cost to the business’ or individuals’ integrity; (b) aggressive motion practice predictions; and insufficient candor with the insurance carriers and/or individual defendants.”
The mediation process requires trial counsel to balance zealous advocacy with realism; a realism conducive to creative business problem-solving. We are told that “the most successful counsel are those who are prepared, flexible, open-minded, non-defensive, and patient” and that “the biggest mistake…common to both sides [is] to come to the mediation without a plan other than to accept the other’s capitulation.” Successful commercial and financial mediation may be best characterized as a principles-based rather than a rules-based process, requiring a skill-set more appropriate to what is a nuanced negotiation environment.
Whether in the financial services or commercial context, the editors succinctly point out that mediation “should be recognized by principals and counsel alike as a critical opportunity both to evaluate litigant’s claims and defenses and to craft a creative and tailored result that is often superior to a fully litigated outcome. Unlike informal settlement negotiations among parties and/or counsel, a formal mediation with a skilled [n]eutral offers a confidential, structured environment to discuss [comprehensively and in depth] factual, legal, timing[,] and emotional factors, and to explore a range of business resolutions without jeopardizing litigation strategies.”
An excellent professional and comprehensive resource for finance counsel, parties, and mediators alike, PLI’s Financial Services Mediation Answer Book is a solid, thought-provoking, and valuable resource for all practitioners engaged in negotiating and resolving high-value, complex commercial disputes.
Carl H. Perdue is a member of The Florida Bar.