Bracket Midpoints: Signals but not Promises
Updated: Jan 14, 2021
A customary presumption in mediation is that a party will not disclose to the mediator the party’s “final number” – that is, the lowest value plaintiff assigns to the case or the highest value in the defendant’s estimation And, certainly, the parties may be presumed not to intend to reveal this information to one another.
It follows, then, that a party should not necessarily treat the midpoint of a settlement “bracket” proposed by one’s opponent as an implicit promise that the opponent will settle at that figure. By way of background, a settlement “bracket” is a dollar range offered by a party in settlement negotiations; for example, where the plaintiff offers to lower its demand to $500,000 if the defendant agrees to raise its offer to $250,000. Sometimes, based upon experience or other expectations, the defendant in this example may regard a “$500,000 - $250,000” bracket as an implicit assurance that the plaintiff ultimately will accept the midpoint of the bracket -- $375,000 -- to settle the case. When, as not infrequently occurs, a plaintiff exercises its right to decline an offer at that figure, that can destabilize the negotiation it if upsets the other party's expectations.
But logic tells us there should never have been any such firm expectation. Remember that, going in, the customary presumption is that -- at least not until the parties have exhausted the process of offers and demand and agreed on a settlement amount --- neither party will reveal to the other party its “final number.” Why then would one assume the other party has done exactly that merely by proposing a bracket? Yes, the bracket’s midpoint frequently does signal a party’s ultimate settlement figure. But the offering of a bracket makes no such promise. It may be, for example, that in our example plaintiff aims to entice the defendant by offering a bracket with a relatively attractive low end. In such a case, the plaintiff may have no intention of accepting an offer at the midpoint of that bracket. Such is a party’s prerogative, as the only promise it has made is that if the defendant accepts the bracket then plaintiff's demand is reduced to the high-end figure (and, though this almost never occurs, if the defendant accepts the high end of the bracket the case is settled at that number). A bracket offer contains no promise based upon a midpoint, though, again, it often signals the figure at which the case might settle.
A party’s concern that a “signal” will be interpreted as an implicit “assurance” can discourage that party from proposing any bracket. However, if the parties correctly regard a bracket as a potential signal, but not a promise, negotiation employing brackets often promotes resolution.