Bill, here is what happened:

About fifteen years ago, on behalf of a local commercial landlord here in Jacksonville, we were suing a national women’s clothing chain for breach of lease in federal court. After some intense early motion practice which gave the promise of protracted and expensive litigation, we agreed to a mediation to be conducted by one of the leading mediators in Northeast Florida. The defendant’s representative was its in-house counsel who also, if the matter went to trial, would be a witness in the case.

We proceeded with the understanding that the representative of defendant had authority to settle the case. After a day of intense negotiation, the mediator was able to get the two sides to agree on a settlement and both sides signed a settlement agreement. However, defendant’s representative stated that he had to obtain what he referred to as “rubber stamp” approvals from the home office, but emphasized that there should be no trouble in obtaining these.

While I had a twinge of concern about this, after all the hard work and effort, we decided to go forward.

You can imagine my chagrin, as well as that of my clients, several days later when the mediator called to say that he had been in touch with counsel and his people at the home office and at least one of them had balked in agreeing to the settlement. Despite the mediator’s best efforts, it fell apart and he had to declare an impasse.

Over two years later, after extensive discovery and expense, the parties went to jury trial in federal court. The judge urged us before trial to mediate a settlement, but the parties were unable to agree. After a week of a contentious jury trial, the judge announced at the end of the sixth trial day that he was taking off his judge’s hat and putting on his mediator’s hat. After three or four hours, he got us to agree on a settlement. The supreme irony: the settlement figure was exactly the same as what we had agreed to nearly two years earlier.

The principal teaching of this episode was each side must have absolute and ironclad assurance that the other side will be represented at the event with full authority to settle. The second is that parties need to listen to the admonitions of a mediator who advises each side that the way forward is fraught with substantial risk and expense, which certainly applied to both parties in this case.