Claims teams that hold off on mediation until they feel sure of their position risk increasing the cost of settlement. By the time both sides have spent heavily and become entrenched in their positions, the cost of reaching a compromise can be much higher.
Rebekah Ratliff, a mediator and arbitrator at JAMS, spent 25 years on a commercial claims desk before moving into alternative dispute resolution. She understands that courts and insurers on both sides of the Atlantic are making more use of early mediation to establish the facts and test the strengths and weaknesses of a dispute. That helps every party set a strategy even if the case does not settle.
Ratliff said claims teams most often go wrong when they lose sight of risk management. A defensible case can still be a strong candidate for mediation, while a claim with apparent liability problems may not warrant early settlement if damages are highly uncertain or the claimant's demand is unrealistic.
She frames the decision around three figures: expected litigation value, a probability-weighted verdict including fees and costs; realistic settlement value, which sits lower because settlement is a compromise; and the cost of being wrong.
Those figures rest on work done with counsel well before the mediation date. That means identifying weaknesses as well as strengths and estimating the costs, delays and potential downside if the case does not settle. It also means understanding what the other side needs and fears, and recognising that a deal may turn on non-monetary terms. The question every party should ask is: "If we don't settle today, what's the most likely thing that happens next, and what will that ultimately cost us?"
A legal win can also carry a commercial cost. Ratliff advises separating the client's legal position from the broker's commercial relationship, while recognising that some damage may already need repairing.
"A settlement that technically wins the dispute but destroys a valuable customer-carrier referral relationship or future business may be a poor outcome." Parties need to weigh settlement options that are equitable and protect the relationship.
Assessing evidence now also means establishing whether the content itself is authentic. Ratliff said AI-generated material creates a two-sided problem. A fabricated video, voice recording, photograph or document can create settlement pressure before its authenticity has been tested. Genuine evidence can be dismissed as AI-generated, forcing a party to spend money proving it is real, a dynamic described by the International Bar Association as the liar's dividend. Mediation is particularly exposed because a single questionable item can shift how parties assess their risk.
"The more immediate problem is the increasing cost of uncertainty about whether digital evidence is authentic," she said.
The response centres on chain of custody. That means keeping original files rather than screenshots or re-encoded copies, documenting who captured, stored and transferred them, preserving metadata and corroborating against independent sources. A neutral forensic expert may also be needed where the stakes justify it. Parties can agree those protocols, including disclosure of any AI processing, before mediation begins.
Gaps in preparation tend to surface in the room. Ratliff said a partner standing in for the associate who has run the matter can lack knowledge of the case, leading to posturing and communication breakdowns that delay or derail negotiations.
Unrealistic expectations leave the mediator having to reality-test positions. A claimant may arrive with numbers "in the stratosphere" that the defence views as "Monopoly money", while a defence team may underestimate its own exposure. Early mediation, even before disclosure begins, gives parties a chance to understand each other's communication styles and what each will need at the table.
Ratliff will discuss how claims are evaluated and settled with Rob Powell, global chief claims officer at Marsh, at a JAMS fireside chat in London on 18 November. She recently received ISC Group’s Women of Excellence International Impact Award, recognising her contribution to the insurance sector internationally.
The authentication problem is likely to raise the stakes of that early groundwork. Ratliff said ADR organisations are beginning to build AI-specific guidance into their procedures, but the technology is advancing faster than the rules. She expects evidence authentication to become a more valuable litigation and mediation service, with forensic experts, evidence management systems and contractual ADR protocols growing in importance "precisely because nobody can simply trust their eyes and ears anymore".
For claims teams, that adds another figure to the calculation before anyone reaches the table: the cost of proving that what they hold is real.
Disclaimer: The content is intended for general informational purposes only and should not be construed as legal advice. If you require legal or professional advice, please contact an attorney.
