When the Parties Are Valuing Different Cases: How to Identify and Resolve a Valuation Impasse Before the Mediation Begins

By William Thomas

William Thomas

Mediations rarely fail because a party refuses to compromise. More often they fail because the parties arrive prepared to negotiate two different cases, and no one realizes it until the afternoon is gone. The defendant sees a defensible claim with thin damages and real problems of proof, while the plaintiff sees clear liability, a sympathetic witness, and the potential for a runaway verdict. Each side may have evaluated the case carefully, prepared its client, and secured meaningful authority. Yet their ranges never overlap, making the mediation inevitably ineffective. That outcome is avoidable, if steps are taken well in advance of the mediation.

What is a Valuation Gap?

A valuation gap occurs where the parties genuinely disagree about something that drives value, (the probability of liability, the damages model, the credibility of a key witness, the likely reaction of this judge or this jury). No amount of incremental moves resolves it, because the parties are answering different questions and the numbers never overlap. The first task, for counsel as much as the mediator, is recognizing the issue with sufficient time to do something about it.

The cost of discovering a valuation gap late is not merely a wasted day. Once a client has sat through hours of fruitless exchange, the gap acquires an emotional charge it did not start with: the other side is no longer simply mistaken, it is unreasonable. Reserves and reported demands harden into positions that must now be defended internally. And the information that might actually have moved the number is unavailable in the room.

Recognizing a Valuation Gap

The first person(s) who will potentially identify the case suffers from a valuation gap are the lawyers for the parties. Should they recognize the tell-tale signs, they can recommend the mediator hold a pre-mediation call that covers not only scheduling, attendance, and briefing, but also a substantive conversation, either joint, or in separate calls with the mediator, about how each side values the case and what assumptions are carrying it. This does not require disclosing final authority or a confidential range. It requires enough candor for the mediator to judge whether both sides are evaluating the same case.

A short set of questions surfaces most divergence: what two or three issues most affect your valuation? What is the other side misunderstanding? What single fact, ruling, or document would most change your view? Is the number driven by liability, damages, collectability, cost, or business considerations? And, are you ready for the possibility that the other side sincerely values this case very differently?

The next opportunity to see the issue is in the mediation statements. Too often they are simple, advocacy pieces that trumpet the strengths of the case and weaknesses in the opposition’s position. A submission that identifies the principal liability assumptions, the damages model, the strongest and weakest evidence, the procedural and evidentiary risks, the estimated cost of continued litigation, insurance limits, indemnity, lien, or collectability issues, the client’s non-monetary interests, and any additional information that could change the assessment.

While most often these papers are confidential and only shared with the mediator, parties should consider sharing them with the other side. Understanding what the other side needs to see, hear, or understand before it can responsibly change its position could make the difference. If one side holds information the other has not seen, the parties read the same record differently, or they disagree about whether a pivotal fact can be proven. The fix is disclosure or a focused factual exchange, not concession.

Addressing a Valuation Gap at Mediation

Once at the mediation, if an impasse seems possible, the parties, with the help of the mediator, should consider these tactics:

1. Build a valuation map. Ask each side, separately, for its probability of success, damages range, litigation cost, principal downside, key non-monetary interests, and the one fact most likely to change its view. The mediator can then show exactly where the analyses diverge without breaching confidence.
2. Run a quick decision tree. Where several contingencies drive value, a simple tree often reveals that the entire disparity rests on one disputed probability, defeating liability, say, or excluding an expert.
3. Ask what would justify movement. Rather than demand another concession, tie a proposal to a produced document, a clarified damages component, a confirmed coverage position, a conceded legal point, or a modified term, so concessions become reasoned responses, not unexplained retreats.
4. Develop non-monetary value. Payment timing, confidentiality, releases, non-disparagement, corrective measures, future work, tax treatment, or structured payments can bridge a monetary difference. Ask what each side can give cheaply that the other values highly.
5. Plan a strategic adjournment. When a critical issue is simply not yet ripe, agree in advance on the limited next step, targeted discovery, a document exchange, an expert review, briefing of a legal question, or looping in an absent stakeholder, that would make the next session productive. A mediation that ends by identifying exactly what must happen before settlement is possible has not failed.

Counsel should prepare the client for difficult bargaining and for the harder possibility that the other side sincerely sees a different case. Before the session, the client should understand that an aggressive opening is not the final range; that slow movement is not necessarily bad faith; that the other side may hold information or assumptions the client has not weighed; that ordinary negotiation will not cure a genuine valuation difference; that movement can be justified by avoided cost and reduced risk even when the merits evaluation does not change; and that walking away is appropriate when the price of settlement exceeds the value of certainty.

Finding the divergence before the day begins, diagnosing its cause when it surfaces, and matching the intervention to the problem (information for a facts gap, reality testing for a probability gap, a creative term for an interest gap, the right person for an authority gap, and a planned adjournment for an issue that is not yet ripe) could turn around an otherwise unsolvable problem. The goal is not to make two parties see the case the same way; they rarely will. It is to help them understand the source and the cost of their disagreement clearly enough to choose, deliberately, between a negotiated resolution and the uncertainty that remains.

William Thomas is an attorney and mediator at Miles Mediation & Arbitration in St. Louis.