As we move into the fourth quarter, it is worth thinking about the timing of mediations.
There is a real benefit to resolving cases by year-end. Plaintiff and defense lawyers alike have cases that have been taking up time throughout the year, and there is an obvious attraction in not carrying a case into 2027, with another year of work, expense and uncertainty.
That can create something of a year-end preference toward settlement. A case that has been difficult to settle earlier in the year may become easier to resolve when everyone is looking at the prospect of starting another year with the case still on the docket.
There is, however, another factor worth keeping in mind when dealing with an insurer: reserves.
Many insurers begin locking in year-end financials toward the end of the quarter, which can make significant reserve changes more challenging. The reserve is an important accounting figure, and timing can matter.
If a case is mediated in October, November or early December, and the settlement opportunity is reasonably close to the existing reserve, there may be a relatively straightforward path to resolution. As the quarter progresses, particularly in late December, moving away from an established reserve position can become more difficult. A settlement that is materially outside the reserve may require additional review or authority, even where the mediation has demonstrated that settlement makes sense.
There are, of course, exceptions. Insurers can and do change reserves, and cases are settled in late December every year. I am not suggesting that December is a bad month for mediation.
The larger point is to make sure the defense lawyer has sufficient information for the insurer to establish an accurate reserve as early in the quarter as possible, regardless of whether the case ultimately resolves. Disagreements about liability, damages or coverage may still exist, but at least everyone knows what they are.
As the year comes to an end, lawyers and clients may have an increasing appetite to get cases off their desks and avoid carrying them into another year. At the same time, an insurer’s ability to move away from an established reserve position may, in some circumstances, become more complicated as year-end approaches.
For me, the practical takeaway is fairly simple: if a case is ready to mediate, October or November may be preferable to late December. You retain the possibility of a year-end resolution while giving everyone more time and flexibility to deal with whatever may come to light during the mediation.
And if the case does not settle, you have still made progress rather than simply carrying the same unresolved case into 2027.
With more than 30 years in the insurance and reinsurance industry, Nigel Wright brings a rare combination of carrier, coverage, and litigation experience to the mediation table. He has held senior leadership roles with two international insurance carriers, where he served as an ultimate decision-maker on complex, high-exposure claims, as well as senior partner roles at two AM100 law firms handling significant coverage disputes and multi-jurisdictional matters. His deep understanding of how insurers evaluate risk, coverage, exposure, and settlement gives him a particularly valuable perspective in resolving complex disputes. Nigel joined Henning in 2024.
