Mediation is one of the two approaches used to reach settlements, with the other one being a full trial in a court of law. Mediation is normally preferred by parties when they are fully convinced that if the case reaches a full hearing, then they will have slim chances of winning.

Through mediation, therefore, they save time and money as well as the public scrutiny into their conduct which they may have been exposed to during the trial. Mediation also gives them an opportunity to pay slightly lower amounts in settlements compared to when the jury decides the case.
However, the average settlement offers during mediation are widely skewed due to many reasons. Some of them are as discussed below-:

Diversity of cases settled by mediation

The main reason why a party would agree to a mediation process is so that they don’t waste a lot of time and money if the case gets before a jury. There is a wide variety of cases that could be solved through mediation, and since not all cases have the same weight and merits in the eyes of the law, it is difficult to apply the same settlement to all of them.

For instance, a sexual harassment case and cases involving hostile work environments are sometimes solved through mediation when the accused parties are afraid of losing at a full trial. These two types of cases are different and will not usually result in the same settlement even if they were to proceed to trial. Even in mediation, therefore, they will attract very different settlements.

Willingness of the participant to compromise their position

A mediation process will only be successful if both parties agree. If this is not the case, a full trial will be imminent. In a typical mediation process, the accused will be given a chance to make an offer, which will then be countered by the accuser. The settlement that will finally be agreed upon will be based on each party’s willingness to compromise their position.

For example, in a sexual harassment case, the accused may agree to pay $100, 000 to buy the silences of the victim, but the victim may decide that they want a higher figure, maybe $130,000 so as not to proceed for full trial. For them to avoid trial, they will both have to settle for a sum they had not initially stated, and this is where the compromise comes in.

The time of the mediation

Mediation will in most of the times come at the early stages of the case. It is when mediation fails that the case will proceed to full trial, though there are instances when the concerned parties can decide to withdraw the case amidst trial and resort to mediation. When mediation comes in as the very first process, the average settlement value will be lower. However, if mediation comes in amidst trial, the average compensation is likely to be very high.

This is because when the accused requests the plaintiff to withdraw the case amidst trial, they have sensed defeat, and are trying to salvage the amount of money they are likely to give in the settlement. At this point, the plaintiff is very confident of a win and will without a doubt ask for a huge settlement knowing that the defendant is cornered and has no options but to pay.

The other factors that may potentially determine the average settlement offer during mediation include the mediator’s perspective, the authority to settle, the clients’ participation and the preparation of both parties for the negotiation.