The Psychology of Conducting a Successful Mediation that Doesn’t Create Settlement Regret

By: Charles B. Jimerson, Esq. and John Rutledge, JD candidate

Due to the adversarial nature of litigation, settling a case at mediation can often be a daunting task.  Hence, the common expression of a “good settlement is one where both sides are unhappy.”  Emotions run high on both sides.  Sometimes, these emotions can continue to run long after the case has settled.  These emotions, if allowed to age, can lead to client dissatisfaction with the settlement, which often means dissatisfaction with the attorneys who negotiated the settlement. This phenomenon is known as “settlement regret.”  Dr. Ira D. Turkat addressed the likely causes and possible solutions for this problem in his article “Preventing Settlement Regret Turkat article,” originally published in the American Journal of Family Law.  Dr. Turkat is a psychologist and litigation strategist who specializes in family law matters such as high conflict divorces. His insights have great application to all parties who engage in the mediation process in an attempt to settle their legal disputes.

What is Settlement Regret?

According to Dr. Turkat, settlement regret is dissatisfaction with a previously agreed-upon legal settlement that the individual:

  • is currently discontent for having made the agreement;
  • has been discontent consistently over time about the agreement following its execution, wishes he or she had not made the agreement;
  • desires a particular modification of termination of the agreement and;
  • believes the discontent will not change favorably unless the agreement is modified in the way the individual desires.

This is not to be confused with short term, fleeting moments of second guessing.  It is normal for people to briefly second guess big decisions and settlement agreements are no exception.  Here, Dr. Turkat is more concerned with preventing and mitigating stronger levels of dissatisfaction that have been allowed to persist over time.  Specifically, a dissatisfaction which has been allowed to gnaw at the client until he or she wishes the agreement would have never happened and cannot understand why it was ever entered into.

Personality Traits Which Can Lead to Settlement Regret

In Dr. Turkat’s opinion, the seeds of dissatisfaction which can sprout to become settlement regret are planted before the client even hires an attorney.  The person’s preexisting personality traits, along with the individual’s life experiences, are leading factors which can lead to settlement regret.  To emphasize this point, Dr. Turkat described an experience in which he interviewed two survivors who were found after days of floating in the ocean after their boat capsized.  One survivor was happy and grateful for being rescued while the other was constantly anxious and could not get over the traumatizing experience.  The “happy” survivor had lived a relatively normal life, while the other survivor had previous issues with anxiety and stress.

While a boating accident and mediation seem like two opposite ends of the spectrum, Dr. Turkat’s experience with the two adrift boaters can shed some light on how people react to litigation and the settlement of litigation. Each person comes to the negotiation table with a preexisting personality and personal history that creates the lens from which they view the world.  Similar to two people floating at sea, people can see the exact same situation completely differently.  While a person’s personality traits are obviously not determinative if they will later suffer from settlement regret, if mixed with other factors some people can be more at risk than others. For lawyers, it is important to understand what kind of a client you are dealing with and discern address any issues that may cause them to regret a settlement before the mediation even begins.

Risk Factors

Settlement regret does not happen in a vacuum.  Risk factors are conditions or activities which increase the likelihood of a particular problem occurring.  Dr. Turkat specifically references personality traits, personality disorders, abnormal psychological states and hidden agendas as the main risk factors for settlement regret.  For example, a person may have a tendency to avoid conflict, thus subconsciously enticing themselves to settle early, only to lament the decision after the moment has passed.  In a commercial context, this often happens when a party is scheduled to have their testimony taken, or the testimony of key subordinates. In order to avoid the stress and hassle, they accept a settlement offer that it outside of the parameters of the original set of goals. Dr. Turkat makes the astute point that, even though these types of conversations and observations are not part of a lawyer’s scope of representation, good lawyers need to know their client’s proclivities and prepare them mentally for the process of dispute resolution.

The timing of the settlement of the claims has a big factor on whether parties may regret the settlement or not. As Dr. Turkat notes, it stands to reason that the more complex, hostile, and protracted the conflict is, the more likely the settlement agreement will not adequately address all issues and hence, increase the risk for settlement regret. In my practice, I’ve been involved with many cases where one or both parties have wearily agreed to settle generously with hope the bitterness will dissipate, and the conflict of the litigation will just be finally over. I muse that these clients are the “pound of flesh” clients. Once they’ve exacted their pound of flesh from the other party in some form, they simply want out. They engaged in an expensive cathartic experience and now they just want it to end. Often, this mentality results in reduced leverage, which results in weakened positions, which results in less beneficial settlements. These types of clients often experience great anguish when the ink dries and they realize that the agreement fails to produce the desired outcome agreed at onset.

Dr. Turkat correctly points out that another source for settlement regret risk is when the parties rush themselves to an agreement. The pressure to settle prematurely may stem from various influences, including changes in circumstances, impulsivity, naivete, efforts to “put one over” on the other party, financial considerations, professed need to “get on with our business,” as well as other factors. Lawyers and clients alike can easily see how a rush to settle may set the stage for settlement regret in cases involving complex business issues in which the self-induced speed to settle may interfere with the thorough consideration advised by counsel.

Dr. Turkat notes that settlements are usually produced under pressure. In business litigation, the sources of such pressure are relatively common yet may vary from case to case. In litigated matters, financial considerations, battle weariness, development of factual circumstances, internal unrelated events, and judicial prodding (whether overt or not) are typical sources of pressure. In non-litigated matters, the threat of litigation may generate considerable pressure.

I have found that the actual mediation event itself provides a variety of common pressures including threats, battling egos, the stress of back-and-forth deliberations, time pressure, confronting your weaknesses, and the stress of being pressed to reveal one’s bottom line, as well as inadvertent or intentional pressure to settle from counsel or others involved. Dr. Turkat shows that scientific evidence is clear that stress affects decision making, so it is best to address as many concerns relating to process, procedure and substance of a mediation proceeding as early as possible in order to reduce surprise and stress. Lawyers should pro/con settlement well in advance of the mediation in order to gain a comprehensive understanding of the psyche of your client. Heavy emphasis should be based upon the cons of settlement (including exact terms offered) as clients tend to focus on the pros. Focus on the cons will prevent regret if the contingencies of the cons come to fruition.

Events following the settlement can also lead to settlement regret.  Agreement violations and change of circumstances are just some of the post-settlement factors which can increase the chances of the client later resenting the agreement.  Obviously a party violating the settlement would create animosity, but a change in circumstance can also lead to a party feeling trapped in a bad agreement.  This change in circumstance can be something as blatant as a stock taking an unexpected turn, or something as subtle as a party’s attitude towards a condition of the agreement changing over time.

These risk factors, combined with the inherently stressful nature of the settlement process, make it is easy to see how rash and impulsive decisions can be made- and bemoaned.  Similar to how smoking increases the likelihood of cancer, these risk factors do not guarantee settlement regret will occur but rather increase the chances.  However, like a smoker quitting, things can be done to decrease the chances of settlement regret cancer.

What Can We Do About It?

While the attorney obviously cannot control risk factors, such as a client’s personality traits, steps can be made before, during, and after the mediation process to prevent settlement regret.  Ideally, mediation will result in an agreement that leaves both parties relatively happy in the short and long term.  However, this cannot be the case every time.  Even objectively “good” deals can lead to settlement regret if enough risk factors are present.  Instead, the goal should be to limit these risk factors as much as possible.  Dr. Turkat admits that the factors which lead to settlement regret are varied, numerous, and vastly misunderstood.  However, addressing some or maybe just one of the previously mentioned factors can lower a person’s risk to later developing settlement regret.

Communication is key.  First, recent research demonstrates that during a stressful mediation people will focus on the upside of the settlement rather than long term consequences.  This is where the attorneys can make the biggest difference.  Obviously the settlement process is emotional for everyone involved, but the attorney must be able to take a step back and analyze the short and long term consequences of the deal.  For example, an easy precautionary measure could be to encourage the client to not rush into any agreement without taking the time to weigh the potential consequences.  Informing the client is important, but insisting that the client take the time to consider any long term consequences can be equally important. Ensuring that the client fully understands every significant legal and factual issue is important to giving them comfort that they are making an informed decision.

Although an attorney obviously cannot change a client’s personality, he/she can take the extra step of getting to know the client as to anticipate any future problems.  Not only does this give the attorney more information to avoid any dissatisfaction, it has the added bonus of making the client feel more involved in the settlement process.  Dr. Turkat does list more specific “first steps” to preventing settlement regret, but they all revolve around two general ideas: communication with the client and knowing the client.  Dr. Turkat’s first steps are:

  • Read your client well so that you don’t encourage adopting the wrong language or terms
  • Aim to create an agreement that ends the conflict
  • Approach settlement as a means to an end, not the primary goal
  • Reduce or eliminate unnecessary pressures to settle
  • Do not encourage a rush to an agreement at the expense of proper considerations
  • Approach unresolved issues with specificity over ambiguity
  • Do not advise silence on known issues of concern
  • Do not create terms that sound right but are unrealistic
  • Anticipate where things can go wrong and create terms to prevent that
  • Articulate how the other party could out-maneuver the final version of the proposed agreement

While communication and getting to know the client seem like common sense answers, the attorney who actively tries to prepare for post-settlement issues is already leaps and bounds ahead of someone who isn’t.  As Dr. Turkat said, the goal should not be to achieve a settlement, but instead to help the client be able to “put the current conflict behind them, and to not have to look back.”  To further this goal, an attorney who takes affirmative steps towards preventing settlement regret can save time, money and a lot of future conflict.  Like the smoker who quits tobacco but still gets sick, the steps put forward by Dr. Turkat will not prevent all cases of settlement regret.  However, they are steps in the right direction and can drastically reduce the chances of client dissatisfaction.

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