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Mediation and Arbitration: Why to Use & How to Prepare

ADR or, Alternative Dispute Resolution, consists of a number of methods to avoid formal trial and/or avoid the traditional litigation method of dispute resolution altogether. To understand why it works, one must first have a fundamental understanding of its various styles.

ARBITRATION:

Is arbitration ADR? Court ordered arbitration, which is pursuant to Code and non-binding is technically not a form of alternative dispute resolution. Why? Because it provided for by the same rules that move the case to trial. The parties have not selected it, the court has imposed it.

However, non-traditional forms of arbitration, elected by the parties to the case, are properly referred to as ADR. They include:

Baseball : A form of stipulated binding arbitration used when the parties have deadlocked on value. Plaintiff is firm at $1mm while defendant insists that the case is only worth $100,000. The parties select an arbitrator and agree that, if the award is below $499,999 it shall be $100K and if it is above, it shall be $1mm. A variation occurs when the parties tell the arbitrator the amounts. After hearing the testimony or reviewing the submitted documents, the arbitrator selects on of the two figures.

Binding : Traditional arbitration, either through live testimony, submitted documents or a combination. The arbitrator's award is stipulated to be binding on the parties. It may thereafter be confirmed as a judgment.

Binding high/low: Like baseball, the parties have agreed to place a floor and ceiling on the award. Unlike baseball, the award is rounded up or down to the whichever figure is closest to the award.
The arbitrator should not be informed of the range agreed to by the parties.

Simplified : Cases are decided solely on the basis of the written pleadings, reports and/or even letters - depending on the agreement of the parties. Disputes are typically for amounts below $25,000. This a very low cost method to obtain a neutral's evaluation of the case for a fixed fee..

Arbitration works because it streamlines or avoids the litigation process, provides for a final result, and significantly reduces the costs associated with preparing and presenting a case in the civil trial court. Arbitration may be as formal or informal as the parties elect. An informal arbitration may be conducted by the parties themselves, or with legal representation. Example, claims adjusters frequently present their own cases in arbitration. They bring the reports, and argue their evaluation.

Key Disadvantage: The power remains with a third party - the arbitrator.

MEDIATION

Separate and apart from arbitration is mediation. In one sense, a mediation is like a voluntary settlement conference. A key difference is that the parties select the mediator and, generally, the mediator does not place an evaluation on the matter in dispute.

In mediation, the parties agree to take part in a structured discussion with an agreed to neutral expert skilled in the area of facilitation of dispute resolution. The sessions are usually informal. The parties indicate the case, from their points of view. Thereafter, the mediator engages in separate discussion with the parties designed to privately expose the downside in their individual cases. Tis facillitates recognition of strengths, weaknesses and costs. By exposing each party to the true litigation risks, including costs, settlement ranges then to emerge. The mediator then works to close the gap, and produce the resolution. The mediator probes "below the line" for hidden issues or emotional situations which must be addressed to promote resolution.

Mediation works because it brings the parties to the table, educates them to the real risks of litigation, and permits the mediator to work confidentially, behind the scenes, to bring about resolution.

Key advantage: The power remains with the parties. They must agree to the resolution.

WHY ADR?

ADR is here to stay. The key is selection of the best method to resolve the dispute. A trained and experienced provider of ADR services can assist in the process and shorten the road to resolution, recovery, renewal and productivity.

One fact is settled, when a matter is resolved, legal costs cease and litigation risk ends, along with the emotional strain that often accompanies that risk.

Where necessary, ADR permits the parties to select a neutral with subject matter expertice -- not possible in litigation.

WHAT TYPES OF CASES?

ADR is a suitable vehicle for virtually all disputes. If you listen for it, you'll find it used in international trade and even current international tension spots where "special mediators" are flown in to try to calm the warring factions. Mediation is a mandatory process in child custody cases and often assists in focusing the parties "below the line" to recognize the impact of protracted legal proceedings on the well-being of the child. It is very affective in cases involving monetary valuations such as personal injury, transactional and property disputes.

In high interest/risk cases, mediation provides a confidential forum to identify the interests, and, through settlement, eliminate the risk. This is common in labor and employment, premises and product liability cases.

In construction defect, toxic or other complex litigation, mediation combined with neutral case management (discovery referee) assists in managing the discovery process, resolving preipheral parties and issues, and providing cost effective early relolution.

HOW TO SELECT YOUR ADR PROVIDER?

If the provider is an attorney, he/she should have extensive experience in the field of ADR. Facilitation skills are different from advocacy skills. It is not requisite that the provider be an expert in the field that is the subject matter of the dispute. However, when that expertise is available, it should be utilized. As an attorney, an AV rating from Martindale Hubbell indicates that he/she has been rated highest in both technical skills and ethics by peers in the legal community.

As a special master, the provider should be committed to work with the parties to establish a cost sensitive discovery schedule which identifies the parties effected by the discovery, and exempts all other parties from attending. The neutral should maintain an instant accessibility system to ensure that, when a discovery dispute arises, he/she will be notified from the site of the dispute. In this manner, the parties will receive an immediate tentative ruling permitting them to continue with the discovery, rather then recess to proceed to Law and Motion.

Discovery, and mediation sessions, should be staged beginning with the most peripheral parties, and working toward the complex issues. In this manner, in a complex case, peripheral parties/issues are disposed of with a minimum of time and expense.

Providers should be prepared to arrange a single independent expert (including IME) to render an impartial technical opinion binding only in regard the particular ADR. In less complex cases where the parties are aiming for resolution, this will reduce the expense associated with multiple experts and provide a neutral expert's opinion.

Fees should be straightforward and hours flexible, with evening and weekend availability when required.

PREPARATION FOR MEDIATION

Select appropriate mediator based on: subject matter expertise (if appropriate); mediation expertise (essential); mediation style; cost and availablilty.

Agree upon mediator and confidentiality agreements.

Educate the client about the process. Obtain written consent.

Realistically evaluate the case for the client. Avoid unrealistic expectations. Discuss difference between early dispute resolution vs. Judicial process on costs, result predictibility and emotions.

In early stage mediation, expert reports may not be necessary. An analysis of expected expert testimony is appropriate.

In late stage mediation of a litigated case, present evidence and information in advance, by way of brief. Consider sharing pertinent information with the other side.

Prepare exhibits for presentation to all parties.

Prepare your opening statement for a mediated format. Be thorough with reduced adversarial tendencies. Do not be overly casual.

CONCLUSION

ADR has been a mutually reinforcing success story for litigants, counsel and the courts. It provides an expedited dispute resolution format, preserves relationships where appropriate, reduces cost and removes litigation risk. It is an element of case preparation that counsel should discuss with the client at the retainer stage, and considered as part of an overall dispute resolution format.

Alexander S. Polsky is an AV rated civil litigator who specializes in Alternative Dispute Resolution, nationwide, through the JAMS/ENDISPUTE organization. He has extensive experience litigating, arbitrating and mediating serious injury, and complex commercial litigation including construction defect, labor & employment, general business, franchise and environmental cases. He can be reached at 310.421.9999 or Alexpolsky@AOL.com.