5 Key Considerations for Mediator’s Proposals

by Michael Ludwig

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Mediator’s proposals have become ubiquitous, especially in employment cases, but there is ongoing debate about when or how they should be used. When we talk about a mediator’s proposal, we are talking about the mediator proposing terms of a settlement, which the parties are free to accept or reject. There is only a deal if both parties accept the proposal. Usually, mediator's proposals are “double-blind,” meaning that a party only learns how the other side responded if that party accepts the proposal. Is the mediator usurping the parties’ negotiating power by making a proposal? This is a legitimate question and concern. However, a mediator can address this by building appropriate guardrails into the process. Here are five key considerations when using a mediator's proposal:
  1. They are voluntary. A hallmark of mediation is that it is a voluntary process. Parties typically decide to go to mediation by mutual agreement. It stands to reason, then, that both sides should have a say in whether a mediator makes a mediator’s proposal. While there may be rare occasions where a mediator makes a proposal without permission from one or both sides, that rarely is helpful in practice. The mediator’s proposal usually marks the end to the facilitated settlement negotiation, and most parties prefer to have a say in when they are ready for that step. Simply, the control that parties have over whether to mediate and whether to settle should extend to whether a mediator makes a proposal.
  2. They are not necessarily what the mediator thinks is "fair." Determining fairness in settling employment disputes is a complex and subjective exercise. What settlement amount is fair for a defendant-employer who is certain they did nothing wrong? What is fair for a plaintiff-employee who lost their job and livelihood due to alleged discrimination or retaliation? A mediator's proposal is not necessarily an assessment of what the “fair” settlement amount should be. Rather, it is the mediator's best estimate, usually after a full day of negotiations and candid conversations, of the amount most likely to be accepted by both parties.
  3. They can be rejected. It is crucial for the parties to remember that they can reject a mediator’s proposal. Mediators often do not disclose the precise proposal beforehand, which can be unsettling for some parties. Thus, it is important to reinforce to the parties that the mediator does not decide who wins or loses or what the case ultimately is worth. Even with a mediator’s proposal, that still is true. The parties retain control over the settlement process because they are free to reject a mediator's proposal.
  4. They are not an invitation to further negotiation. Most mediators only make a mediator’s proposal when it appears that the parties’ continued negotiations will no longer be productive. Perhaps the parties are making progressively smaller moves or otherwise marching toward a foreseeable gap or impasse. In these situations, either party’s attempt to unilaterally close the gap or “cut to the chase” is likely to result in yet another counteroffer from the other side. And on it goes. A mediator's proposal provides no option for a party to make a counteroffer. This increases the stakes, because both sides know that a rejection means no deal while an acceptance, if accompanied by an acceptance from the other side, means settlement and certainty and finality.
  5. Rejection does not mean all hope is lost. Attorneys and parties often legitimately are apprehensive that a rejected mediator’s proposal can end all hopes of settlement. But effective mediators are notoriously optimistic and persistent. Indeed, a mediator must tread cautiously if a proposal only garners one acceptance, because they cannot betray the confidentiality inherent in the double-blind proposal process. But a skilled mediator can still work to close the gap between the parties and find a path to settlement, while maintaining the confidentiality of the process.
When used judiciously and with appropriate party buy-in, mediator's proposals can be a highly effective tool to resolve employment disputes. The key is for the mediator to build trust with both sides and have candid conversations about their interests and expectations. With the right approach, a mediator's proposal can provide the breakthrough needed to reach a mutually acceptable settlement.
Mike Ludwig Employment Mediator

Hi I'm Mike Ludwig

I committed myself to honing my craft as a mediator and relentlessly learning everything I could about dispute resolution. I will endeavor to share thoughts and insights about some facet of mediation, negotiation, and dispute resolution, and other information that could be helpful or interesting to you.

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