6 Reasons Why Bankruptcy Mediation is a Process, Not a One-and-Done Session: PART FOUR — FRESHNESS OF THE FIGHT

By Donald L. Swanson

I’m in a mediation session for a state court commercial case. The parties have been at it for a couple years. And everyone’s expectation is that this will be a one-and-done session.

One of the first things Plaintiff’s president says to me is, “Can you believe we’ve paid over [$xxx] in attorney fees?!”

One of the first things Defendant’s president says to me is, “I absolutely hate sitting through depositions!”

Additionally, it’s obvious from the beginning that everyone grasps this concept: “Our case will be a close-call at trial, and we might lose.”

And I’m thinking, “The parties are weary of the fight and want to get it over.  This case will settle today—100% certainty.”

Sure enough, both parties are highly motivated to settle—and they get it done.

By contrast, I’m in another mediation session over Chapter 11 plan confirmation disputes between two parties.

Denial of confirmation, with opportunity to amend, occurred recently.  And trial on the amended plan is scheduled in about a month.

The confirmation battle has been running for several months. But the battle has been limited:

–no written discovery, no depositions, no inspection of property, no preliminary motions, no pretrial motions; and

–fees incurred to date are relatively small on both sides.

In the mediation session, no one is complaining about fees or about depositions. No one is weary of the fight. Gloves are up!

Yet, it’s clear that expectations are for a one-and-done session.

And I’m thinking, “This could be a tough day. Is a successful one-and-done session possible? . . . I don’t know . . .”

Sure enough: one-and-done doesn’t work. The fight is too fresh.

So . . . here is where the one-and-done model breaks down.  In a one-and-done, the mediation is now over.  And the parties are not going to reconvene the session.

A conscientious mediator might follow-up informally with the attorneys to encourage additional discussions.  But such follow-up is, typically, a gratuity: the mediator’s follow-up is without additional charge.

Such a freebie follow-up model is inadequate in bankruptcy — for the various reasons discussed in this series of articles.

Action Item. In every bankruptcy mediation where the fight is still fresh, we need to recognize that a one-and-done session expectation is probably unrealistic—and adjust our expectations accordingly.

This post is Part Four in a series of six articles explaining how and why bankruptcy mediation needs a different model from the one-and-done session commonly used in non-bankruptcy cases.