When negotiating a settlement during a mediation, and the time comes to make an offer, many people believe you need to go high (if you are the recipient of the settlement) or to go low (if you are the one making the payment). The logic is that, this way, you are setting things up so that hopefully the other party responds with a counterproposal that is at or around the settlement you are seeking.
Most family law mediations do not play out that way. Certainly not when both parties have agreed to pay half of the mediator’s fees, possibly in addition to their own attorney’s fees, to get to settlement. If they could have settled the matter merely by trading a proposal and a counterproposal, and that is all it takes, one might wonder whether they needed a mediator in the first place.
In many cases, one is well-served to take a different approach. It may be worthwhile to make an offer that is a stretch for you, a proposal that meets, or even slight exceeds, your limit. Because any offer of settlement that you make that is not accepted, is an offer that you are not obligated to follow through on. You only have to follow through on the offer if it is accepted.
If you make a “comfortable” offer, and the other party rejects or counters it, no big surprise. You haven’t learned much from that negotiation. If you make a “stretch” offer, and the other party rejects or counters it, then two important things result. (A) You are not required to follow through on the offered terms (so, in the end, no harm in having made the offer); and (B) You have learned more than you would have by having a comfortable offer rejected.
Having a comfortable offer rejected results in an impasse of sorts. But it might be an impasse avoided by digging a little deeper and stretching the proposal outside your comfort zone. Conversely, having a “stretch” offer rejected is an indication that the impasse is a true sign that the issue cannot be resolved in mediation. If the parties are going to have to incur the cost and the risk of litigating the issue in court, they are both better off with a genuine impasse, rather than an impasse resulting from one or both parties just keeping their heels dug in the sand.
So, the “risk” of making a “stretch” offer is that it is accepted. Then, you are contractually bound to honor the offered terms. That is a “nice problem” to have if it means that the case is settled, and it is unnecessary to litigate the issue in court.
It is important not to make an offer that you are not prepared to follow through on. But it may be equally important not to limit your “best offer” to something that is not a “stretch,” especially one that perhaps factors in the risk and cost of litigation. Because if you stick with the comfortable offer, you may end up at a somewhat unmeaningful impasse.