Building an ADR System for each Case
The trend toward Alternative Dispute Resolution started a little over a decade ago, when the chief justice of the United States Supreme Court began to make public statements condemning our system of resolving disputes through litigation. Chief Justice Burger initially argued:
“The law is a tool, not an end in itself. Like any tool, particular judicial mechanisms, procedures or rules can become obsolete. Just as the carpenters’ handsaw was replaced by the power saw and his hammer was replaced by the stapler, we should be alert for better tools to serve our purposes.” Burger, Isn’t There a Better Way? 68 A.B.A.J. 274 (1982).
Two years later, Chief Justice Burger dropped the subtlety from his message when he said:
“Our [litigation] system is too costly, too painful, too destructive, too inefficient, for a truly civilized people.” Burger, 52 U.S.L.W. 2471 (1984).
Some courts in the U.S. have even held that it is culpable malpractice for an attorney to fail to notify his client of the availability of ADR procedures and, within the foreseeable future, a lawyer may be held to the standard of care already existing for health care professionals. In effect, the lawyer will be required to demonstrate that the client’s informed consent was obtained prior to proceeding with the prosecution of a claim. This informed consent will probably involve demonstrating that the client has been advised of the various options which are available for resolving a dispute, including the advantages and disadvantages of each. Certainly, the client could assert that any non-binding ADR process would expose the client’s dispute to little risk of harm; however, as those of us who have experienced various ADR processes have come to know, certain processes work better than others in given cases, particularly where the objective is truly to obtain a reasonable resolution of a pending dispute.
Factors, such as cost, objective and time consumption, deserve consideration. Obviously, the needs of the parties are the paramount consideration. The complexity of the case is an important factor. An attorney who fails to understand and evaluate the potential uses of ADR procedures in his litigation docket is not unlike Barney Fife, the deputy in the Andy Griffith show who only had one bullet for his gun.
Is it not wise, from the very inception of a dispute, for the advocate to recognize the potential for resolving the dispute from transactional to confrontational? Would it not be prudent for such procedures to be incorporated into their practice from the inception to the end. How much time and money could be saved by insurance companies if they regularly incorporated alternative dispute resolution procedures into their applications and policies? What would be lost by any of those actions, particularly where the procedure was non-binding and forfeited no rights to proceed with litigation, if the dispute could not be resolved by ADR?
Let us look into the future, with an open mind, in hope of finding a more perfect world, a place where disputes are resolved in less than one year and at an average cost of less than $10,000. What are the ingredients which will make this possible?
FACT FINDING. Assuming that our goal is to avoid and/or resolve disputes, there are a number of potential benefits to ADR. Let us assume that, prior to commencing the process of resolution, one needs information, either factual or technical. The process for gathering such information is generally referred to as fact finding. Through fact finding, one or more parties to a dispute may obtain a report from an impartial third party, either lay or expert, with which a determination may be better made as to what is an appropriate resolution of a dispute. Summary jury trials, mini-trials, non-binding arbitration, moderated settlement conferences and mediation are important methods of obtaining recommendations of that nature; and the needs of the attorney and client can be addressed, through the use of one or more of those procedures. Each of these allows the attorney to retain control of the process and of the case; however; each of these has a chance to resolving case.
NEGOTIATION. This is the process where two or more disputing parties confer, identify and discuss the issues, present facts and supporting data and attempt to arrive at a solution. In theory, a negotiated settlement provides the least invasive resolution of a dispute, since the parties settle their own dispute and retain maximum control over the process. This often works best following one of the fact finding processes. In addition, negotiation is often very effective following a determination by a third party neutral, such as an arbitrator, where the parties are made aware that, if they are unsuccessful in their negotiation, the matter will be finally determined by the arbitrator’s decision, which is lying before them on the table. This works for the same reason that many cases settle while the jury is out. The parties have the opportunity to present their case, yet they do not desire to give up control of their destiny.
MEDIATION. Since mediation is a process which provides for the intervention of a third party neutral, who assists the contesting parties to reach an acceptable settlement by injecting fear, reality, and doubt into the parties entrenched positions, this process has become very popular. It allows the parties to retain much of the control, while permitting them the luxury of hearing the other parties arguments and evidence without risk of a fact finding which contrary to their interests.
MED-ARB AND BINDING ARBITRATION. In both of these processes, a third party or parties reach a binding decision; and, as a result, control is taken from the participants. The difference is that, in the former, the mediator has usually had time to establish neutrality and the confidence of the parties prior to being given the ultimate decision making process. In arbitration, the third party and the participants know, from the inception, that the decision making power rests with the arbitrator. The former is often a spontaneous occurrence, where the exhausted parties come to the realization that the mediator, by virtue of the close relationship formed during the mediation, would be likely to be sufficiently fair and informed to reach a decision. A hybrid form of this is the “mediator’s proposal.”
As we are already seeing in major metropolitan counties like Harris and Dallas, the courts are virtually demanding that the parties will avail themselves of one or more ADR processes as a condition for receiving a trial settling. Knowing this to be the prevailing trend, doesn’t it make logical sense to go with the flow?
As I understand the laws of this State, there are basically four kinds of disputes which find their way into the civil court system:
- suits involving contractual disputes,
- suits involving torts,
- suits involving special statutory causes of action, and
- family disputes.
As we all know, many disputes may have more than one of those issues, somehow entangled with another.
In order to evaluate the benefits of proceeding toward some ADR procedure, as an avenue of resolution, or proceeding toward litigation, it is helpful to consider the expressed needs of the parties and the available resources that may be expended in resolving the dispute. One must recognize that, as an advocate for a particular party, one’s goal should be to obtain the expressed interests of his client; however, a good advocate recognizes that inflexibility, the inability to recognize different perceptions of a problem, and the refusal to eliminate extraneous issues that are not actually an indispensable part of the dispute, are ingredients for failure. Failure can be defined as a result which leaves the client unhappy. Over ninety percent of the parties, who have participated in litigation, leave the process feeling less than satisfied, which, of necessity, means that, at least, four out of every five winners in trial are unsatisfied.
As we all know, litigation is an expensive, time consuming and emotionally exhausting process. Even where parties have in-house lawyers, who are salaried, it is obvious that there are other and additional expenses, including court costs, deposition expenses, travel, experts, and the expenditure of administrative resources. Over ninety percent of the cases settle prior to trial. Is it not logical to proceed toward a resolution which will meet the needs of your client in the fastest possible and least expensive manner, as opposed to spending your client’s time and resources in a manner that will only be used if trial is necessary? If there are certain issues in dispute, can ADR be used to reach agreement on those issues?
Considering the comparative cost of various ADR procedures to the cost of litigation, mediation can be had for somewhere between free and $3,000 per day. Arbitration can be had for between $600 and as much as one wants to spend. Moderated settlement conferences are generally provided without charge. Mini-trials can be had for as little as $500 dollars, with the cost going upward from there, based primarily on the amount of an expert’s time which one uses. Summary jury trials can be conducted for less than $1,000 per day. With an average cost of about $1,500 per day. For ADR procedures other than moderated settlement conferences, one might need to consider which procedure will meet a particular set of needs. The average District Court trial to a jury will probably cost, at least, $30,000 in attorney fees and costs, from petition to judgement.
EARLY/WITH CONTROL. If you want some other lawyer, generally with experience in the area of your problem, to give you an advisory opinion as to verdict expectancy and what apparent problems are present, a moderated settlement conference is the vehicle. Since it is free and no binding decision is reached, there is little risk. This process may be utilized early in the case, even before litigation; and, through its use, parties will often reach settlement without the expense of discovery.
LATE/WITH CONTROL. If you want lay persons’ evaluation of the dispute, as it might be viewed by a jury, a summary jury trial might be the best choice. Issues which are of concern, particularly on damages, can often be evaluated effectively from this approach. Often times, this approach may be used prior to proceeding with damage discovery to avoid unnecessary expenses of proving up matters which may have little impact on a jury.
ANYTIME/WITH CONTROL. If you want the opinion of a non-attorney expert in the area of the dispute, primarily for the purpose of evaluating potential settlement alternatives where the relationship of the parties needs to be preserved, a mini-trial is the appropriate vehicle. This procedure can be utilized early in a dispute, with the savings of expense of discovery.
FINALITY WITHOUT CONTROL. If you want a decision to be reached, without the formal requirements of evidence and procedure, the best vehicle is arbitration; and, where the arbitration is non-binding, the decision can be a basis for negotiation, of a settlement, in the light of reality as determined by the arbitrator. This process works well in simple cases where little discovery will ever be necessary. Additionally, this process works well in complicated litigation, where materials which will be expensive to prove up formally.
FINALITY/WITH CONTROL Finally, if you want to reach your own decision, absent the pretenses and posturing which often accompanies litigation, through the facilitation of a neutral third party, mediation maybe the answer. The obvious advantage of mediation is that the parties construct their own resolution of the conflict, in a mutually acceptable manner, with the assistance of a neutral third party. Mediation works well, at any time after the actual damages may be demonstrated with some particularity.
As a litigator, my main objection to ADR was that I feared the loss of control of my client the case. I learned that, through arbitration, mediation, and moderated settlement conferences, I was able to show my client reality, without the risk that the client would conclude that I lack conviction for the client’s case. Toward the end of my career as a litigator I proceeded with discovery in two areas:
- that discovery which is necessary to make an effective presentation at my chosen ADR procedure, and failing there,
- that discovery which is necessary to meet my burden of proof, and persuasion in trial.
To do otherwise could be an inappropriate expenditure of the available resources and not in the best interest of my client.
Today, an attorney and his client should have knowledge of what ADR processes are available and how they work, so one might visualize which ADR procedure he will utilize prior to completely getting ready to go to trial