The Economic Dance of Pricing Claims: Recalibration and Reconciliation in Mediation

In mediation, each side comes armed with a valuation—a numerical expression of what they believe the case is worth. Each party assigns a value based on their own analysis, their own risk tolerance, and the variables they believe relate to the final outcome. The core tension of mediation is the need to reconcile these disparate views into one palatable outcome.

Rationality Collides: Reconciling Parallel Realities
In the crucible of mediation, valuation becomes more than a static number—it’s a dynamic narrative, a reflection of each side’s deeply held beliefs about justice, risk, and outcome. Each party has done the math, consulted experts, and relied on experience, yet they often arrive at dramatically different figures. The plaintiff may see a figure representing what they need to feel whole again, factoring in medical bills, lost wages, pain, suffering, and a sense of justice. The defendant, however, sees a number calculated to protect against excessive risk while ensuring they aren’t overpaying for a case they believe lacks the full merit the plaintiff claims. These numbers are rational in their respective worlds, but in mediation, those worlds collide.

The number one rule in economics tells us that everyone in the equation is acting rationally, even if their conclusions conflict. Mediation is the meeting point for these parallel rationalities, and it often reveals more than just the gap between numbers; it highlights the assumptions, blind spots, and even the psychology behind each valuation.

Understanding the Plaintiff’s Valuation Mindset
For plaintiffs, valuation often involves a blend of optimism and caution. They may feel empowered by a compelling narrative of harm and fairness, believing that a jury will see things in a similar light. This “valuation optimism” leads them to assign a high price to the claim, especially in venues known to be sympathetic to plaintiffs. They might focus on the impact of injuries, the life adjustments required, and even the ripple effects on family or career. Yet, they can sometimes overlook or misprice the defendant’s strong counterarguments or certain venue-specific trends. A key part of mediation, then, is helping the plaintiff reevaluate their optimism, not as a loss, but as a recalibration based on the tangible risks of proceeding to trial.

The Defense Approach: Pricing for Risk Management
On the defendant’s side, valuation tends to skew toward risk management. A defense valuation often includes factors like venue history, the judge’s tendencies, the strength of comparative negligence arguments, and the nuances of potential damages calculations. They assess not just the present case, but also the precedent it might set for future claims. Defendants may undervalue the plaintiff’s storytelling power or misjudge how certain evidence will be perceived by a jury. Mediation forces them to confront these oversights and consider the risk that their valuation is too conservative. This requires them to put themselves in a jury’s shoes, moving from defense-focused logic to an empathetic understanding of how a third party might perceive the case.

The Wildcard of Post-COVID Juries
The wildcard of post-COVID juries has added an unpredictable layer to litigation, making mediation and settlement discussions more challenging. Since the pandemic, jury verdicts have at times swung to extremes in both directions, defying traditional case analysis and sometimes lacking clear motivation or explanation. In certain cases, juries have issued eye-popping awards, often in personal injury and wrongful death cases, where the public’s heightened awareness of health and safety risks may amplify sympathy toward plaintiffs. Conversely, other juries have delivered surprisingly conservative verdicts, possibly influenced by economic anxieties, wariness of high damages, or a cautious perspective on litigation altogether. This volatility means that neither side can confidently predict a jury’s likely stance based on pre-COVID patterns alone. For attorneys and clients alike, these post-COVID juries represent a new variable that demands careful consideration in evaluating the risks and potential outcomes of taking a case to trial.

The Mediation Microscope: Testing Each Side’s Analysis
In this economic dance, each side tests the other’s valuation. Mediation is the ultimate pricing analysis—a test of who understands the claim’s strengths and vulnerabilities best. It’s an examination of what each side may be overlooking, misjudging, or mispricing. Mediation tests the accuracy of each party’s economic analysis under the mediation microscope. Each side is asked not only to justify their number but to articulate why they believe in it so deeply. The skilled mediator pushes both sides to engage in what can feel like a mental recalibration. What about the opposing side’s argument might be right? What if certain assumptions they’ve held are misplaced? Could they be undervaluing the impact of a specific piece of evidence or miscalculating the weight of a particular jury-friendly witness?

Flexibility and Pragmatism: Reaching a Productive Middle Ground
This recalibration can feel uncomfortable—it can be hard to let go of a firmly held valuation. Too often, the parties fixate on their “bottom number” without reassessing the assumptions that created it. But mediation calls for flexibility and pragmatism. What values or risks have been priced in, and are they accurate? Are there hidden costs or unseen values that could skew the calculus?

This is the work of mediation: to move beyond numbers as mere figures and see them as reflections of deeper values and judgments about risk. Mediation encourages both sides to recognize and account for variables they might have missed in their initial pricing. A defendant might start to see that a jury’s perception of liability could sway higher than their own projection, or a plaintiff might begin to appreciate the legal challenges that make a certain damages figure less achievable than they had hoped.

The final resolution hinges on whether each side is prepared to revisit their valuation. When both can acknowledge the rationality of the other’s position—even if it doesn’t align with their own—a productive middle ground emerges. Mediation is about finding the overlap between these rational valuations, where both parties’ revised numbers can align in a realistic range. This is where resolution lies, in the acknowledgment that both sides are acting rationally but with different priorities and risk tolerances. The goal isn’t necessarily to meet in the middle, but rather to reach a number that reflects the most accurate pricing each side can offer after assessing the full picture. And when done right, mediation isn’t just a compromise—it’s a consensus built on a clear-eyed understanding of the claim’s real value in all its dimensions.

Conclusion: Beyond the Numbers to a True Meeting of Minds
In the end, mediation is where valuation transcends the purely economic and becomes a true meeting of minds—a convergence of calculated risks, hard-won experience, and the delicate balance of hopes, fears, and practicalities each side brings to the table. It’s not about reaching a perfect number, but rather about arriving at one that both sides can reconcile themselves to, recognizing that each party’s valuation is rooted in a rational perspective, even if those perspectives diverge. When mediation succeeds, it’s because both sides have been willing to reexamine their assumptions, to see the value the other side perceives, and to adjust accordingly. This is the real triumph of mediation: transforming a conflict of numbers into a shared understanding, and ultimately, into a settlement that respects the unique logic and values each party possesses. Here, resolution isn’t just an outcome—it’s an accomplishment born from a nuanced dance of economics, empathy, intellectual honesty, and professional judgment.