Vermont Bar Journal, Vol. 40, No. 2 Vermont Bar Journal, Summer 2019 | Page 37

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set to avoid regulatory displeasure resulting
from settlements or judgments exceeding
them. It is unlikely the true reserve will be
shared with the neutral, though common-
ly we are told the authority level has been
reached. The discrepancy between the re-
serve and authority figures allows for some
flexibility at mediation, and that is where an
anchoring effect may influence how far into
that gap the defense is willing to go.
Contrast and Reciprocity. I often hear
parties complain at mediation that they
have moved much more than the other side.
Neutrals typically will respond to such com-
plaints by pointing out that starting points
are often unrealistically high or low and the
relative size of ensuing moves is unimport-
ant compared to the ultimate amount the
opponent is willing to pay or accept to re-
solve the dispute. But I have come to un-
derstand that this response lacks an appre-
ciation of two related psychological princi-
pals – the contrast principal and the reci-
procity rule.
The contrast principal is well understood
and utilized by claims professionals, even if
not by name. It holds that something larg-
er following a smaller similar item will ap-
pear even larger than if it was not preceded
by the smaller item, and vice versa. 7 Thus,
an offer to pay a sum following an offer of
a much smaller sum may be perceived as
more significant than if made without the
prior move. Conventional negotiating wis-
dom says never make a move larger than
preceding moves, but the contrast principal
says there may well be a marginal benefit in
doing just the opposite.
The reciprocity rule offers a power-
ful tool commonly used by marketers and
salespeople. Reciprocity holds that by giv-
ing a person something a deep-rooted psy-
chological sense of obligation to re-pay is
created. 8 We see examples of this rule at
work when a charitable organization sends
unsolicited free items, like address stick-
ers, pens, T shirts etc., along with a request
for a donation. Time and again it has been
demonstrated that the success rate for rais-
ing donations increases significantly when
the request is accompanied by a gift. The
life insurance salesman who delivered my
free atlas when I was in college made good
use of the gift to leverage at least tolerance
for listening to a pitch I would have rejected
out of hand otherwise.
Likewise, a concession made at a media-
tion which is perceived as genuine may in-
still a sense of obligation to reciprocate,
especially if the concession is made when
not required by the process. Astute coun-
sel and parties have made good progress
towards resolution by making concessions
at critical times in the mediation to avoid
impasse and demonstrate a willingness to
compromise deserving of reciprocity by the
opponent.
THE VERMONT BAR JOURNAL • SUMMER 2019
tancy in Chile is 100 and if not, what do you
think it is?” Of those who don’t happen to
know the actual answer the average guess
will be a larger number than if the question
were simply “What do you think the aver-
age life expectancy in Chile is?” Likewise, if
the question is asked using the number 60
the average guess will be lower than that
for an open-ended question. The influence
of a suggested figure is called anchoring.
Studies show that people are reluctant to
stray too far from the suggested number if
they do not know the actual number. 5
Anchoring occurs in mediations at vari-
ous levels. Pre-mediation it happens when
counsel advises a decision maker of her or
his opinion about the value of a claim. I am
grateful for those instances when counsel
has not tried to lock in a value by anchoring
her or his client to a set figure. This is espe-
cially important to the flexibility of parties
in cases with multiple moving parts. An-
choring can happen inadvertently when a
neutral solicits counsel’s view of case value
in the presence of her or his client. And it
happens when the neutral states an opinion
of value, or even value range, especially if
done early in the session. A neutral has an
opportunity to suggest value ranges that a
party should consider on target with what
an eventual trial might bring. But it is best
for a neutral to avoid rendering an opinion
of value unless deemed necessary to avoid
failure and continue progress towards reso-
lution. 6
It often happens that a claimant’s counsel
will have a strong opinion of case value and
minimum acceptable settlement amount.
In most cases the lay claimant will defer al-
most completely to the views of his or her
counsel, especially in non-quantifiable dam-
ages cases like personal injury. In such situ-
ations the neutral must explore the basis for
counsel’s views without becoming seen as
an advocate for the other side. The stron-
ger the reasoning, the more talking point
the neutral has to work with in the other
room; the weaker the basis, the more in-
roads the neutral can make in suggesting
flexibility.
In cases involving an insurer for the de-
fense, anchoring has been methodically
completed before most mediation sessions.
Not only are value figures pre-determined,
often by superiors not present at the ses-
sion, but regulatorily mandated reserves
are set in advance. Insurance claims pro-
fessionals are generally not allowed to set-
tle claims for an amount beyond the reserve
without first going through an internal pro-
cess to adjust the reserve. So, what can a
mediator hope to do other than elicit the
full authority posted on a given claim?
It turns out that insurance claims profes-
sionals’ settlement authority on a claim is
normally substantially lower than the case
reserve. Reserves are usually generously
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