WHY MEDIATE? No Winners

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1 WHY MEDIATE? By Robert E. Lee Wright 1 Parties to lawsuits often do not understand the litigation process or what is involved in going through trial until too much money and emotion have been spent. Only after parties have experienced the financial, emotional and relational drain and pain of taking depositions, written discovery, and costly motions in court on every conceivable subject and ground, do they realize that the trial has not even begun and there is still a long expensive road ahead. No Winners Though parties begin litigation with the expectation of winning, rarely is a case a 'slam dunk' winner. Even "slam dunk winners" have downside risks for both plaintiff and defendant. Getting to the point of an award or judgment will likely be extremely expensive in terms of cash outlay and the impact upon each party's emotional, personal and business life, including disruption of normal routines and loss of potentially advantageous relationships. Difficult Questions Many difficult and painful questions arise for clients and their attorneys: How much is trial going to cost? What are my realistic chances of success, including collecting on any award I receive? How do I stop my stomach from churning? Eventually, it dawns on almost every party that it would be wise to settle the dispute before trial. Since only 2% of all lawsuits end in a verdict after trial, how does one resolve the dispute sooner rather than later? Alternatives to Litigation and Trial Alternatives to litigation and trial are referred to as Alternative Dispute Resolution, or ADR, and include arbitration, court settlement conferences and mediation, among others. The focus of this article is mediation. 1 Robert Wright has been a practicing trial lawyer since 1980 and a professional arbitrator and mediator since He received his basic mediation training in a program certified by the Michigan Supreme Court and the Harvard Program on Negotiation. He has augmented his basic training with over 1,000 hours of advance training on various mediation topics. In addition, Mr. Wright holds a masters degree in psychology with an emphasis on the listening skills needed as a mediator. Mr. Wright is an arbitrator and mediator for AAA and other ADR providers.

2 Mediation Mediation is a process in which a neutral third party, called a mediator, assists the parties in exploring issues in the case. The mediator facilitates discussion between the parties and their attorneys if they are represented, and guides the parties toward finding their own solutions to the dispute. In traditional mediation, unlike arbitration or court trials, the mediator does not make a decision, there is no court reporter present, and, with the exception of a rule concerning confidentiality, no rules of evidence or procedure control the process. Private and Confidential All information exchanged during mediation, including any documents prepared just for the mediation, cannot be used by any party outside of the mediation process or in any portion of litigation or trial if the dispute is not settled. The purpose of confidentiality is to provide a setting in which the parties and attorneys can discuss the facts and issues openly, without fear that what has been said may be used against them outside of the mediation. The ability to speak openly leads to solutions and settlement. Since there is no record of what is said, the proceedings may remain private too. What Role Do the Parties Play in Mediation? Each participant in the mediation has a critical role. In fact, if each participant does not play the role the way it needs to be played, the mediation may fail. Parties to a dispute or lawsuit need to participate fully in the mediation process, preferably even before the mediation begins. Each party benefits by helping plan the mediation process, and each needs to help their attorney prepare for the mediation. Parties need to listen very carefully to what others say in their opening statements. This is a preview of what the judge or jury will hear during trial, so listen carefully. Who Must be Present at the Mediation? Each party must have a person present who can make a binding decision on behalf of that party. If the party is an individual, he or she must be present. If the party is a corporation, there must be an officer present who can bind the corporation. If the party is a governmental agency, all persons from the agency who are necessary to make a recommendation to the governmental board must be 2

3 present. If an insurance company is involved, a representative with sufficient authority to make a decision on behalf of the insurance company must be present. Why go to all this trouble of making sure that each party is present and represented by someone who can make a binding decision? The dispute will very likely not settle otherwise. In some cases parties may wish to have their technical experts at the mediation. When all parties have their experts present, this allows the opportunity to learn more than they would from days of costly experts depositions. In some disputes emotional issues are a major, if not controlling, component. Unless the emotional issues are addressed during the joint session and explored during the caucus sessions, the dispute may not settle. Insurance bad faith, wrongful discharge, sexual harassment, and discrimination disputes are usually very highly emotionally charged. In such disputes, it may be helpful for a party to have their therapist present. How Do the Costs of Mediation Compare to Trial? Time. Mediation may take several hours, a day, or longer though most are concluded in a single day. The length of the mediation varies with the number of parties, the complexity of issues, and how well the parties and their attorneys prepare for it. More importantly, the length of the mediation is dependent on how flexible the parties are, and how compelling their desire to resolve the dispute. Cost. The cost of mediation is economical compared to the alternatives of trial and what leads up to it. Just one deposition or pre-trial motion may cost more than the entire mediation. Trial is infinitely more expensive, financially, emotionally, and relationally, and is much riskier than mediation. Besides, over 70% of cases settle at or shortly after mediation, so it is a good investment. What is the Best Time for Mediation? Timing is critical in mediation. The best timing for mediation is as early in the dispute as possible after the parties and attorneys have a good handle on all of the factual and legal issues. Preferably the mediation will take place before expensive discovery, such as depositions, which can become very costly. Once all discovery is completed, the parties have already lost! By that time, most of the cost savings available from an early resolution will be gone. Also, after investing a lot of money in the litigation process, parties will have become less flexible and more entrenched in their positions. In fact, the task of settling the 3

4 dispute seems to increase in difficulty as the parties and their attorneys become more prepared to do battle at trial. Parties and attorneys begin to believe that theirs is the only possible "correct" or even "righteous" position. Sometimes parties and their attorneys believe that they therefore have nothing to lose by going to trial. This is an unfortunately common and expensive exercise in self-deception. You can always lose by going to trial. Just consider some of the recent high profile court cases which resulted in an upset verdict nobody predicted and the bankruptcies of major companies unable to pay astronomical jury verdicts. As a rule, one party always loses in a trial. In multi-party cases, several parties lose. In a successful mediation no one loses more than they are willing to spend. Will You Recover Your Attorney Fees? When mediation is attempted in the later stages of a lawsuit and thousands of dollars in attorney fees and litigation costs are already invested, parties may seek to recover them from the other side. The reality is, however, that in most trials and negotiated settlements, whether through mediation or otherwise, each party usually has to pay their own attorney's fees. So don t count on it happening at mediation. How Much Time Should You Allow for the Mediation? Mediation requires patience. It takes time to work through each phase. If the mediation is rushed, parties will feel they have not had an opportunity to be heard. This may cause the mediation to fail. So plan on a full day and possibly longer, depending on the complexity of the issues and number of parties. Sometimes it may seem mediation moves slowly. However, as the parties invest more time and energy into the problem solving process, it gains momentum and leads to settlement. It takes time for the participants to work through the process and for the mediator to learn all the important facts and legal positions. This becomes an investment by everyone so that they cannot easily walk away from the mediation without saying the process was a total failure. How Do I Get the Opposition to Mediate? Just contact a mediator and ask them to discuss the possibility of mediation with the other side. Not only do mediators help parties settle disputes, they can help get all parties to the negotiating table. Once they agree, what should you do to prepare for the mediation? 4

5 Preparing for Mediation Several days before the mediation begins the parties will be asked to exchange mediation summaries, usually prepared by their attorneys. Unlike legal briefs -- which are never brief -- mediation summaries are snapshots of each side s factual claims and legal arguments. After the mediation summaries are exchanged, the parties should review the strengths in the opposition's position and the weaknesses in their own position. These are risk factors. Each party needs to understand and discuss the risk factors very thoroughly with their attorney and evaluate them before the mediation begins. In complex cases, a decision tree is useful to help evaluate risks. This is a good time to begin seriously considering solutions, both monetary and non-monetary. Be creative in your brainstorming of solutions. Also consider how far you can stretch to settle the dispute. Do not wait until the mediation to start thinking about these critical points. Stages of Mediation The mediation process has several distinct phases. In the first phase, the joint session, all parties, attorneys and the mediator are present. The parties may choose to have additional persons present, such as experts or psychologists. The attorneys present their client's view of the facts and a discussion of the law which is applicable. The parties will each be given the opportunity to tell what the dispute is about and their view of the facts and issues. It is critical for the parties to be permitted to personally tell their stories and be heard by the opposing party. If the parties listen carefully, they are likely to learn that the opposition's perceptions are starkly different from their own. Becoming aware of these major differences in perceptions of the events which led to the dispute can be extremely beneficial. When the parties carefully consider their different positions on important issues, they can begin to understand how difficult it can be for a judge or jury to make a decision. Which party is right? Which party is telling the truth? What proof does each party have to support its claims? Private Meetings In the second phase of the mediation, the mediator may meet privately with each opponent to develop additional information which could assist in resolving the dispute. These sessions are usually strictly confidential and matters discussed 5

6 will not be shared with the other parties to the mediation without express permission. Some mediators prefer to continue to meet privately, shuttling back and forth between rooms seeking to find an agreement. Others keep the parties together as much as possible, permitting them to exchange information and offers directly in order to observe the other side s reaction and head off unproductive options without wasting time on them. Each approach has its merits, but you should check with your mediator to see what method they employ if you have a strong preference. Documenting Agreements Reached in Mediation Once settlement is reached, it should be documented immediately and signed by all parties. Nail it down before you leave the site of the mediation! If this is not done, there is a risk that the parties will suffer buyer s remorse and change their minds. Drafting the settlement agreement immediately with the mediator present helps to resolve disputes over the language of the agreement which could otherwise take weeks to resolve. Mediators also can troubleshoot potential issues by asking questions, such as What if x does not occur as planned? and then planning for that contingency. The mediator will usually draft the agreement for the parties if they do not have counsel. But this is where the participation of an attorney is invaluable, especially since the mediator cannot advise the parties on their legal rights or whether the settlement is good or bad for them. The Need for Closure and Commitment Many disputes are fueled by emotions of pain and anger which give rise to a desire for "justice". The closest most parties will come to justice is through settlement on terms that they help to construct. Justice will likely not be attained in trial because there is an enormous risk the judge or jury may not see the facts with the same passion or emotion as the party and any judgment they award will not satisfy the emotional needs of the party seeking vindication of their position. Therein lies the need for closure, at a point in time the parties control and before their emotions become so powerful that they preclude meaningful negotiation. Closure in litigation means bringing an end to the grief, constantly churning stomach and outflow of money which fuels the engines of war. Seize the opportunity! 6

7 However, the mere desire to settle a dispute is not enough. A successful mediation is like a successful relationship, it requires commitment. If all parties and counsel commit to resolving the dispute with the aid of a skillful and committed mediator, there will be a settlement. Conclusion Mediation is a living process which evolves as a result of the parties' participation in it. When all the ingredients are present, it works phenomenally well. 19,377,550.1\

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