Originally from:

AAA Handbook on Mediation - Third Edition

PRACTICAL TIPS FOR USING RISK ANALYSIS IN MEDIATION

James E. McGuire

I. Introduction
This chapter discusses the use of risk analysis  as a tool for mediators. In money disputes, parties may be very far apart and a settlement seems unlikely. In such cases, a suggestion to “split the difference” rarely works and may leave both parties unhappy with the mediation process. Risk analysis provides a more structured approach the parties can use to re-evaluate their perceptions of the fair settlement range of the claim. The facts below derive from an actual mediation, although the names and certain facts have been modified to preserve confidentiality.

II. Background
Fifteen years ago, Peter Plaintiff’s father died, leaving him $350,000 in blue chip stocks and a vacation home worth another $350,000. Peter was then 50 years old, married, with two adult children. He made $40,000 per year as a technical writer and owned a modest home, with mortgage. Peter’s knowledge of investments started and ended with managing the family joint checking and savings accounts. His wife, Mary, did not work outside the home and had less investment knowledge than Peter. With this inherited wealth, they wanted to have a little more money to spend and save for their retirement. “I also wanted to make more money, but not by investing in anything too risky,” said Peter.