Originally from:

AAA Handbook on Mediation - Third Edition

EVERYTHING YOU NEED TO KNOW ABOUT AUTHORITY TO SETTLE A MEDIATION

James R. Madison

I. Introduction
Imagine being the mediator who convenes a mediation with the objective of settling a dispute between Party A and Party B only to learn when the participants gather that no one present for Party A is authorized to reach an agreement. Imagine the reaction of Party B. A disaster for the prospects of settlement? Of course.
So what needs to be done to forestall such eventuality? What kind of authority is necessary to create a realistic potential for settlement? Who will have the authority? Must that person be present in the room? And how and when should a mediator go about the task of ascertaining the answers to questions such as these?

II. Authority to Settle—An Overview
In a private mediation—i.e., one that is not administered by or referred from a court—it is easy to say that a settlement cannot be achieved without the participation of a representative of each side who has authority to decide whether to settle and for what amount of money based on a combination of what is known before the mediation conference, plus anything that is learned at the conference. Presumably that authority includes the ability to reject a settlement that arguably is reasonable and decide instead to “roll the dice” by going on to court or arbitration.