You’re heading to trial and there is one last hurdle: the mandatory settlement conference that your judge is gunning for. He has signaled at every opportunity that he thinks this is a case the parties should resolve prior to trial, and that nothing would please him more than to have this one off his calendar. And, of course, you and your clients would just as soon have it justly resolved as well. But there’s the rub: As far as the two side’s offers being in the same ballpark, if their offer is in Dodger’s Stadium, yours would be in Fenway. And the judge’s repeated nudges to ‘Get it done’ aren’t really bringing you any closer. So your client asks the question: “Should we really have to sacrifice our own honest assessment of what the case is worth in order to accommodate a judge who at this point knows a lot less about it?” And, more troubling, “Will we incur the judge’s wrath in a way that will affect rulings or even the ultimate judgment if we don’t?”

Being in that kind of box is uncomfortable for a number of reasons. A recent article by retired U.S. Magistrate Judge William P. Lynch of the District of New Mexico provides well-supported overview of the decisional biases that are created through a judge’s pressure toward settlement. Specifically, the article takes aim at Federal Rule 16 which expressly permits judges to preside over settlement conferences. In some cases, that means using another judge not assigned to the case, but in other cases that means the trial judge assigning themselves or assigning a pretrial judge to take charge of the settlement conference. Reviewing social science research on negotiation and bias, as well as practical experience with court ordered settlement outcomes, Judge Lynch argues that trial judges should not hold settlement conferences in their own cases, and argues that courts should adapt an objective standard for “good faith settlement negotiations,” and not award sanctions against companies that fail to bargain in a subjective sense of ‘good faith.’ In this post, I will take a look at the first part of that, and the problem and the solution as it relates to the civil litigant.

The Problems When the Judge Steps Into the Settlement Conference:

Noting a rise in mandatory settlement conferences with the trial judge or pretrial judge often being involved, Judge Lynch shares research indicating that all potential participants in a negotiation — lawyers, parties, insurers — can hold biases which can cause errors in settlement or trial decisions. But when judges also hold those biases, it means that their role in a court-ordered settlement could also bleed over into their role as a judge. Lynch notes correctly, “Research shows that judges, like litigants and lawyers, rely on the same decision-making processes that can produce systemic errors when evaluating cases.”

Some of the specific factors he notes include the following:

  • Emotional influence: After a negotiation fails when you think it should have succeeded, it is hard to not feel frustration toward one party or both.
  • Bracketing information: It is fair to assume that people are unable to effectively disregard information because it is admissible.
  • Biased assimilation: Once we form an impression, that impression is a filter for what we understand, remember, believe, and use in making a decision.
  • Anchoring: Unrealistic numbers used early will set a baseline for determining the perceived reasonability of numbers down the road.

In addition to this, many judges simply spend insufficient time. For example, Judge Lynch reports on one study showing that judges spend as little as an hour or hour-and-a-half preparing for a settlement conference.

A central problem is who decides whether a judge is the right person to play a role in a mandatory settlement conference? Usually the same judge. And self-diagnosis is never a good solution to bias. As Lynch notes, “Many judges would believe that they are impervious to the effects of these intuitive biases and that they know the value of a fair settlement. Judges are often very confident in their decision-making abilities, but it is important to be skeptical of judges’ own assessments of their abilities. Studies show that judges, like all people, are susceptible to egocentric bias and overconfidence.”

Beyond a judge’s bias, the greater problem is the factor of coercion, particularly where courts are under pressure to reduce the docket and may track their own rates of success in that effort. “The possibility of coercion,” Lynch notes, “is inherent in the structure of a settlement conference because the judge may rule on substantive or procedural motions in the present case or future cases after an unsuccessful settlement conference.” He cites surveys showing that parties on both sides feel they have been nudged into settlements that are not necessarily in their client’s best interests.

Since trials generally don’t happen, the settlement conference is often the stage where litigants should experience the perception and reality of procedural and substantive fairness. “As most cases settle before trial, a settlement conference may be a party’s ‘day in court,’ and consequently,” he concludes, “it is imperative that the settlement conference process provide both substantive and procedural fairness to the parties.”

The Solutions: A Separation Between Negotiations and Trial

The solution is to have someone else, not the trial judge or a still-involved pretrial judge, serve as the facilitator in a settlement conference. Parties may not always have a chance to express a preference, but when they do, there are clear reasons to prefer an uninvolved neutral. Some might be tempted to think that, “If the judge sees the unreasonability of the other side’s settlement position, that judge will be biased in our favor.” That temptation is better off being resisted, not only because it is unpredictable, but also because at this stage both sides will generally think that the other side is being unreasonable.

Apart from exercising choice when you can, Judge Lynch also argues that Rule 16 should be amended to prevent judges from attempts to play a settlement role in their own cases. That reform, he writes, would “ensure that the parties believe that the settlement conference process is a fair procedure in which they freely and fully express their positions, discuss the issues with a neutral decision maker, and consider resolution of the case without being pressured to do so.”

Bottom line, the judge should serve as a judge. serving as a settlement facilitator interferes with that role.