Good Faith

Over the years, I’ve spoken with counsel about the definition of “good faith” in mediation and I’ve received many different responses. Some say that so long as you come to mediation with at least one reasonable offer, it’s good faith. Others have said that merely being present at the mediation is good faith. Recently I had a case in which one of the parties said something like this, “Our good faith offer is the amount of damages for the lawsuit. If they can’t come to that number, we’re done.” In my experience, tactics like these tend to sabotage any chance of real negotiations and ultimately prevent settlement on the day of mediation as well as in the future. So, the question is, why does this happen? What is the goal of doing this? I really have no clue. Squandering any opportunity to move toward settlement is beyond my comprehension.

According to Black’s Law Dictionary, Good Faith is “An intangible quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage…” If we’re applying the definition of Good Faith, I would have to say that coming to mediation with only one offer probably has some malice or design involved!

Equally so, good faith requires that any pre-mediation demands/offers not be raised or lowered on the day of the mediation. On a rare occasion, I have witnessed previous demands or offers changed without any real justification. Again, these bad faith strategies freeze all negotiations and fosters deep distrust. If a demand or offer is made, good faith encourages you to stick with it.

One way to prevent these situations is to communicate with the opposing party well in advance of mediation. There might be changes in circumstances that affect a demand and the other side should be given time to consider whether these new circumstances affect their evaluation of the case. The same for those “non-starter” offers. If your position is that a demand or offer is a non-starter, let the opposing party know in advance so that valuable time and resources are not wasted at mediation. I have learned that when both counsels come to the table in good faith, the atmosphere for good negotiations is created and settlement is a reality.