BATNA, or the Best Alternative to a Negotiated Agreement, is the path you’ll take if your case does not settle at mediation. Attending your mediation with a thorough grasp on your BATNA will give you the confidence and leverage you need to secure the best possible outcome in mediation.
In the world of legal disputes, having a well-vetted BATNA can be the difference between a favorable settlement and a costly mistake. Perhaps this sounds good in theory, but you’re wondering how exactly you determine your BATNA and use it at mediation?
Let’s explore how your BATNA can help you get the best settlement on your case.
How do you calculate your BATNA number?
Developing a realistic BATNA means mapping out the following prior to your mediation. It is crucial to write this assessment down, rather than make a rough guess.
The first step is to look at the current amount spent on the case to date, including attorney’s fees and associated costs. This should be an exact and easily obtainable number, yet few parties to mediation can state this number.
Here’s an example of how costs to date can be used to evaluate a settlement offer. Let’s say you are a plaintiff, who has spent $20,000 prosecuting a case with attorney fees at 25% and you are considering an offer of $100,000. The take home value of this offer is $55,000. ($100,000 less the $25,000 in attorney’s fees, less the $20,000 in costs.)
The next step in BATNA development is an assessment of what continued litigation will cost. This includes:
- The time and expense involved in additional discovery. Does additional written discovery need to be propounded and/or responded to? If the attorney is being paid hourly, what are the time estimates of completing written discovery? What parties and/or witnesses will need to be deposed? Where will these depositions take place and approximately how long will they be? Based upon this, what will be the total cost of these depositions in terms of court reporting fees, subpoenas, and legal costs?
- If there are plans to file a Motion for Summary Judgement, what are the costs associated with bringing or defending against that motion?
- The cost of having expert witnesses prepare for trial and testify at trial.
- The cost of deposing the other side’s experts.
- Trial Preparation: These costs are often the most underestimated costs on a case. Consider exhibit preparation, subpoenaing witnesses, and the workforce of your firm required to get everything in order.
- Focus Groups: In some cases, you might need to conduct focus groups to test your arguments.
The total amount can vary anywhere from say $5,000.00 to hundreds of thousands of dollars with expert witness fees being one of the highest costs.
Once you have a sense of what it will cost to get to trial, you next assess what the anticipated low and high verdict is. This allows you to get an idea of whether going to trial is worth the cost.
While some attorneys may dismiss the cost of going to trial by stating that the cost can be recovered from the other side, if they win, there are many exceptions. If the other side offers to settle the case for more than the jury awards you, you may end up paying both your own costs and the other side’s cost, even though you won.
However, the biggest factor to consider is that most cases that do not settle at mediation, but continue toward trial, will ultimately settle on the eve of trial with parties agreeing to bear their own costs. This means that, even if you hang on and get more settlement money on the eve of trial, the additional costs discussed above will now be deducted from the settlement.
Taking the earlier example of a $100,000 offer and applying these BATNA steps: if the defense is offering $100,000 when the potential verdict is likely to be 500,000 to 1,000,000, and future costs are estimated at $50,000.00, it may make sense for you to continue a tough negotiation stance. Here’s why: even on the low end with a $500,000 verdict: total costs $70,000 (current plus future) and $125,000 in attorney’s fees, your total recovery would be $305,000.00) On the flipside, if a potential verdict is in the range of 100,000 to 200,000 with the same future costs of $50,000, it would be in your best interest to get your case resolved at mediation. (Best case scenario of a verdict of $200,000.00 less costs of $70,000 and fees of $50,000 would yield a recovery of $80,000, but on the low-end verdict of $100,000, it would leave the plaintiff with $5,000 at best ($100,000 less attorney’s fees of $25,000 and total costs of $70,000.)
Developing a BATNA allows you to make sound decisions about settlement numbers, rather than trusting your gut to do the work. This may sound complicated but is worth the time investment. Additionally, many mediators are using decision trees to make these various scenarios easier to digest.
Other BATNA Considerations.
The decision whether to resolve a case at mediation or continue to trial is more than just a number. The following considerations may not be given much thought at mediation but become very real for a party when they go through a trial.
Picture yourself sitting in a courtroom from 8 AM to 4 PM every day, feeling the weight of the jury’s eyes upon you. You’re away from your family, your work, your normal life. The stress of the unknown outcome hangs over you like a storm cloud. Is the emotional toll of a prolonged legal battle worth it? For some, absolutely. For others, it’s a nightmare they’d rather avoid.
Another consideration is that even if you believe you have a strong case, the unpredictability of a jury verdict can’t be overstated. Are you prepared for the possibility of an unfavorable outcome after investing so much time, money, and emotional energy?
Preparing for Mediation with your BATNA.
Imagine you’re in a mediation session, trying to settle your case. The other party seems immovable, and you’re tempted to walk away. Often at this point in mediation, emotions are triggered. Words like “final offer” and “see them in trial” are flung without a clear understanding of what leaving mediation without a settlement looks like.
Do you make another offer? Try other settlement options? Conclude the mediation? This can be a daunting decision to make on the fly in a mediation session, especially if emotions are running high.
This is where your BATNA comes into play. Understanding the full spectrum of costs and benefits and risks associated with your alternatives, you can develop a BATNA that truly reflects your best interests. This knowledge empowers you at the negotiation table. Having thought through the BATNA components, you have a clearer understanding of what numbers mean and whether it’s in your best interest to continue to pursue litigation. It gives you the confidence to stand firm when necessary and the wisdom to recognize a good deal when it’s offered.
Prepare for Mediation as you Prepare for Trial.
With only 1-2% of cases going to trial, most cases settle outside the courtroom. Yet, parties often invest enormous amounts of time and resources preparing for trial, while giving comparatively little thought to mediation preparation. This imbalance is a missed opportunity. As most cases settle, shouldn’t you be dedicating at least as much effort to preparing for mediation and settlement negotiations as you would for trial?
A well-vetted BATNA is a perfect example of comprehensive mediation preparation. It requires parties to thoroughly analyze their case, understand their options, and realistically assess potential outcomes -before they ever get to the negotiation table.
Developing your BATNA forces you to:
- Assess the strength of your case objectively.
- Understand the full costs (financial, emotional, and time) of pursuing alternatives.
- Realistically evaluate potential outcomes.
- Identify your true priorities and interests.
Remember, the goal isn’t always to “win” at all costs. Sometimes, the wisest choice is to find a settlement number that allows both parties to move forward. Your BATNA helps you recognize when you’ve reached that sweet spot.
Are you ready to develop your BATNA and mediate your case with confidence? Take the next step towards a successful resolution. Schedule your mediation with Jennifer Johnston Terando today and put the power of your BATNA to work for you. https://calendar.google.com/calendar/u/0/appointments/AcZssZ31y1FAY0CAcPWO_4_EuQ_4h7ofVIoKWXISUgE=
