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Is Windows XP Unethical? Is Starbucks?

Tue, 2014-04-15 22:31

An interesting panel at the recent Spring Meeting of the ABA Business Law Section addressed questions of the ethical obligations of business lawyers in various hypothetical situations.  Chaired by Ellen Pansky, the panel included Jeff Kraus, Jacqueline Unger and Lois Mermelstein.

Hypo #1 A friend, Bob, tells attorney Anne that his business is in distress.  Later, Bob asks Anne for legal assistance and Anne recommends her firm’s bankruptcy department, whom Bob retains.  Later still, Anne tells another acquaintance, Charlie, of Bob’s company’s bankruptcy, of which Charlie had been unaware.  The panel agreed that a duty of confidentiality is created retroactively once the firm commenced representation of Bob.  But the fact that Bob commenced bankruptcy, if generally known, is not confidential; legal communications, not facts, are privileged.  No legal advice was revealed that was prohibited under Rule 1.1.  However, best practice would be not to reveal anything about a client’s affairs for which the firm is in service, rather than testing whether the matter revealed is already known.  This is particularly true because even the fact of the representation of Bob is itself confidential.  For example, if during the representation a client reveals she has a felony conviction, that fact (though on record) may not be revealed even after the representation is concluded.

Hypo #2:  Client Push negotiates an alternative fee arrangement with attorney Fair on a matter that was represented to be simple and straightforward.  In fact, client Push turns difficult, is dissatisfied with the outcome of the representation, posts a negative review on a web site, and refuses to pay the outstanding fee to attorney Fair.  The transaction is independently covered in the press in a manner favorable to Fair.  Attorney Fair responds to Push’s publicly posted  criticisms by truthfully quoting the favorable news article and truthfully saying that client Push still owed the fee.  Client Push files a grievance against the attorney.  The panel suggested that the client waived any privilege of confidentiality, and that the attorney is entitled to respond factually and in a restrained and narrow way to clarify the facts.  The attorney can certainly pursue fees, but may not introduce information regarding the representation outside the fee dispute.

Hypo #3:  An attorney using Microsoft XP on an older computer is now without Microsoft-supplied security updates.  Has she an ethical duty to switch to newer operating systems?  Ms. Mermelstein opined that only if that computer were never connected to the internet would a client’s confidences be appropriately protected.  The extent of the duty may be indistinct at this point, but it seems clear that lawyers must take steps to protect client confidences, and placing those confidences on an insecure data system is likely to be found inadequate.  If you are going to use technology, then you are charged with a duty to take reasonable steps to understand it and be assured of its adequacy before placing client confidences on it.

Hypo #4:  A lawyer sitting in Starbucks communicates to his office and edits files on his home office’s system using Starbucks’ Wi-Fi.  He also uses his cell phone to communicate with his office.  Has he breached his duty of confidentiality?  Some jurisdictions have imposed a duty on the lawyer to investigate the degree of security, mixed with concerns of whether the communication was urgent, whether the information was sensitive, and so on.  A question arises, however, whether adverse consequences have ensued from such use, or from the use of a cell phone in an airport, including phones’ identifying information that would place a lawyer in a certain location at a certain time.  There seems not (at this point at least) to be a duty to encrypt information sent on publicly accessible networks, but it is a field that necessarily is advancing.  One speaker said that her firm’s retainer agreement includes the client’s permission to use electronic communications in the course of representation.  And the duty of preventing being overheard when talking to a client on the phone is longstanding and persists.

Mediation and Substantive Justice — ABA DR V

Fri, 2014-04-11 21:47

Our final report from the 2014 Spring Meeting of the ABA Dispute Resolution Section addresses Ellen Waldman of Thomas Jefferson School of Law and Lola Akin Ojelabi of La Trobe University in Australia’s discussion of “Mediation Ethics and Substantive Justice: A View from Rawls’ Original Position.”

The question is whether mediation has anything to do with substantive justice.  Conventionally, mediators are trained to seek party agreement.  Some (but hardly all) mediators encourage the transformation of disputants into people who are somehow better or more capable of living with frustration.  The ideal among such a school of thought is that the mediator might serve as the impartial and neutral facilitator of others’ growth: self-determination, impartiality.  But even then, not of justice.

Indeed, nowhere in the ethical codes may one find the term “justice.”  In court, social ideas of fairness (as encapsulated in the law) govern outcomes; by contrast, outcomes in mediation are governed by perceived private benefit.  In that context, when we mediators observe a well-resourced and sophisticated defendant negotiating with a naïve and inexperienced claimant with an inadequate understanding of legal rights, do we do nothing?  Is it ever appropriate for a mediator to take steps in order to avoid an unjust outcome?  Or is our responsibility merely a procedural one – to ensure that everyone’s concerns are aired and their options are laid out?

 

Various ethical codes seldom mention substantive justice, but rather procedural justice – a fair process and a neutral facilitation.  In some cases (NMAS, IMI, EU Codes), mediators are permitted to assess fairness, legality or unconscionability of proposed agreement, and in some circumstances can withdraw.  But this is a kind of watchdog for enforceability — an obligation to ensure that agreements are not unlawful, and will be enforced.  In a way this means that the mediator is charged with the durability of the agreement.  But do the parties care about durability?  And is durability a euphemism for justice?  The speakers posed the question:  As economic and income inequality rises, power imbalances are more frequent and have greater consequences, thus imposing upon a facilitator some office of monitoring substantive, not just procedural, justice.

Enter John Rawls and the theory that justice is fairness.  If we need to constitute rules to guide an actor in society, we assume that all social stakeholders are equal at origin, and inequality (if any) develops later.  His two principles:  (1) each person has an equal right to basic liberties in a scheme equally available to others; and (2) inequalities are to be arranged so as to be to the greatest benefit of the least advantaged.  It is procedural justice through which fair and just outcomes are arrived.

The speakers outlined three “systems” that exemplify Rawls’ theory.  A “pure” system is gambling on a football game: every winner gets the same proportion of the amount betted as every other winner.  The “perfect” system is exemplified by a cake cut in equal portions according to the rule “you cut, I choose,” providing an incentive for – but not necessarily assuring — a high degree of fairness in the way the cake is actually cut.  An “imperfect” system is one that determined the outcome on the basis of interpreted facts – for example, a jury verdict at the end of criminal trial, a process by which there is no assurance of correct or fair outcomes.

The questions then are posed:  In which of these three categories does mediation fall? Isn’t the process of mediation susceptible to imperfections by virtue of error, subjectivity, and (most blatantly) power imbalance?  If fairness is what the parties ultimately decide it is, then the tether that is meant to relate the process of dispute resolution to notions of justice becomes frayed.  Irrespective of the procedure used, there are unfair outcomes, and there is nothing in the mediation procedure that inhibits the likelihood of those results.  Self-determination ceases to be a social virtue in an environment of power imbalance.

Say the presenters: “We are not asking mediators to become judges or impose their personal views on parties.  Neither are we asking mediators to steer parties to particular outcomes.”  But I think they are.  Justice as perceived by the small fish is different from justice as perceived by the large fish, and the presenters’ confidence that any of us can identify what is just and what is not is enviable.  And, in a diverse and pluralistic society, perhaps just a little bit dangerous?

Licensing Mediators — ABA DR IV

Fri, 2014-04-11 21:16

At the Miami ABA Dispute Resolution Conference, James Coban, Janice Fletcher, Art Hinshaw and Susan Yates addressed the provocative topic, “Cosmetologists Are Licensed, Why Aren’t Mediators?”

Ms. Yates, of Resolution Systems Institute, clarified some terms of art for the sake of the discussion.  “Credentialing” is the big umbrella, the widest term.  “Certification” is what a court does.  “Licensure” goes beyond courts and is similar to how doctors or lawyers professionally practice.  She noted in passing that 1500 hours of training are required to practice as a licensed cosmetologist in Illinois.

Art Hinshaw, of Arizona State University, related a story of an Arizona mediator who claimed (impossibly) to have mediated 3000 divorces over a period of 8 years.  He was a disbarred lawyer from Vermont who moved to Arizona, and held himself out as “Superior Court Trained.”  A female client seeking divorce mediation became emotionally attached to him.  He prepared and filed documents on her behalf with the court, at all times asking her for money.  After the (uncontested) divorce was granted he did not inform her of the facts, but rather demanded another $25,000 to “wrap up her case.”  She ended up paying him over $87,000 over a year.  This also went on with more than 30 other victims.  The Bar could do little – he was not a lawyer and not practicing as a lawyer, and suits for Unauthorized Practice of Law or other civil claims were only partially effective.  He was, however, charged with criminal fraud, convicted, and is in prison until 2024.

Hinshaw articulated strong public policy arguments for licensing:  protecting the public from bad mediators (meaning evil, not unskilled); getting information to the public to prevent their being duped; providing a standard of care for negligence claims against mediators; improving mediator quality by imposing a professionally responsible barrier to entry; and enhancing the credibility of licensed mediators.  He added that there is nothing “special” about mediators that should exempt them from a licensing requirement that is imposed on hundreds of other professions.

Jim Coben, who teaches at Hamline, argued against, citing his recent co-authored article in Dispute Resolution Magazine titled “There Ought Not to Be a Law.”  He first replied to Hinshaw’s story by saying that the law does not provide a remedy to every deserving claimant.  What are the unintended consequences of a legislative response to the sad story?  How would licensing affect the parties expenses?  Administrative expenses?  Process flexibility?  Party autonomy?  Public confidence in mediation?   In all cases the answer is unattractive.  Regulated monopolies impose higher costs on customers and regulators.  Parties’ choices are more restricted.  And consumption of services is lower.

So taking aside the single horror story, there is no evidence of harm.  No claims are brought for mediator malpractice, and damages from bad mediation are even more elusive.  Nor is there a distinction of lodged grievances among states that regulate mediators and states that don’t.  Indeed, in no state is there a big problem of asserted claims against mediators.  That is, there is no consumer-led demand for licensing mediators.  Defining the profession is itself difficult: the UMA’s definition would be rejected by a transformative mediator and is different from the EU Directive’s definition.  Finally, said Coben, “Often, those crying loudest for regulation are those whose vision of mediation isn’t selling well in the free market.”

Janice Fleischer, Director of the Florida Dispute Resolution Center, got Coben to concede that lawyers should be licensed, and noted that of the 97,000 lawyers in Florida only 0.4% are subject to grievances.  So just looking at whether people bring grievances is not how one should make a decision about professional licensing.  Florida mediators include both lawyers and non-lawyers, most of whom welcome credentialing licensure for marketing purposes.  In Florida a consumer can look up whether a mediator is certified, in what areas, and whether any sanctions have been levied against her.  Fleischer also noted that, in Florida, mediators giving evaluations constitute a “problem” that certification would address (evaluation being prohibited under Florida’s court-annexed rules).  This point did little to advance her argument in some quarters.

Indeed, that consequence alone is enough to turn my thumb down.  Parties in Florida who seek to learn from a retired judge the likely outcome or probable value of their dispute can’t get it without violating ethical rules?  I can’t believe it.  Maybe they do it, but call it something other than mediation.  “I’ve scheduled a giraffe on our case next Tuesday at 10:00.”

Moral Aspects of Mediation — ABA DR III

Wed, 2014-04-09 13:31

David Hoffman from the Boston Law Collaborative offered a program at the ABA Dispute Resolution Section Spring Meeting on “Mediator as Moral Witness: Right and Wrong.”  The question presented was: What happens when moral issues arise in the course of a mediation?  And, according to Hoffman, they always do.

Despite what we mediators are trained to anticipate, clients come to mediation charged not with frustrated interests, but with grievances that implicate their own experiences of right and wrong.  Disputes at their core have moral dimensions.  People involved in arguments consider themselves “right” and the other guy “wrong” — or worse.  And that sense of moral violation imbues the process itself.  Hoffman cited frequently-hear protestations from disputants in mediation: “We are arguing in good faith and they are just jerking us around.”  “They never had any right to terminate the contract.”  These are pleas to the mediator to vindicate their conduct.  They want to be acknowledged on some moral level and they examine us, as mediators, for signs that, in the eyes of the neutral observer, their behavior was correct.

Beneath the primary level of conflict — that they are owed the money, say — this is a secondary level of conflict – that they are negotiating appropriately and the other side is not.  The affirmation they seek is not from the adversary, but from the mediator.  So a critical role of a mediator — whether she seeks it or not — is as “moral listener”  The party expects that the mediator will acknowledge that the claimant has been heard; and, moreover, that their concern that the issue is about more than just them, and instead has social or moral dimension, has been heard.

Hoffman stated that most of us are passionately concerned with other people’s praise or blame.  Your ability to do deals with people is your “Social Capital,” the purchase we have on other’s moral trust.  And this is fundamentally implicated in facilitated negotiation.  It involves what is right, what is fair, as well as what is due and what is recoverable.

In Negotiation class, I often play the “Ultimatum game.”  Someone is given $100 on the condition that part of it is to be offered to someone else and, further, that that person accepts the offer.  If the second person refuses the offer, neither keeps the money.  Any offer, no matter how small, is rationally acceptable, because it is “found money” and leaves the recipient better off than she had been before the offer was made.  But in practice there is a level of niggardliness beyond which the offer is refused, because the offeree perceives that it violates some notion of fairness – some notion of having been humiliated or exploited, even where the money is free and there is no question of exploitation on any true meaning of the term.  There is also some facet of the game that is socially re-enforcing – that people who are too piggy should be told they have crossed some line, and it is worth a certain amount of money to be the person who delivers that message.  Whether or not I gain, it is important that the other loses.

Mediators witness this and other examples of moral behavior every day, but we don’t always develop a principled skill in dealing with it in a helpful way.   How do we respond when people shoot themselves in the foot because they are morally engaged, and reject economically rational outcomes?  In large part it is “rule-assertion.”  People who do not reciprocate, for example, lose social capital and, over time, find it more difficult to do deals.  Mediators are sometimes called upon to distract disputants from their moral indignation and concentrate on practical or secular concerns.  As an example of an extreme instance of moral neutrality, Hoffman cited “The Fugitive,” in which Tommy Lee Jones’ character continues to hear that the fugitive did not kill his wife, by replying, “I don’t care.”  The mediator’s job is to concentrate on resolution, not to affirm innocence.

One participant offered that, sometimes, when someone says “It’s not the money, it’s the principle of the thing,” they mean it.  Principles do drive behavior.  Perhaps the perfect role of the mediator is as a morally aware and empathetic listener.  Another participant said that, after several years of coming into the room with her own sense of morality, she eventually developed the ability to encourage parties to express their narrative privately, and ultimately in ways that the other party could hear – but never herself being personally engaged in subscribing to, or rejecting, the moral concern that drives the disputes.  It’s not “I don’t care” – it’s “Your story matters enough to be worth others’ listening to.”

Hoffman provided these answers of his own:  Stories have great power, and everyone’s portion of the truth is their reality.  Telling a story overrides the facts, and stories add moral dimension to the facts.  It is always possible for a mediator to validate an intention – “It sounds like you were doing the right thing.”  ”It sounds to me like you were operating as well as you could in a difficult situation.”  Said to the disputant, it may be heard as vindication.  Said in the presence of her adversary, it may lend insight and empathy.

Intentions are important; intentions are the things that implicate trust in the process of creating “social capital.”  Both disputants can be “good,” and a mediator can facilitate that discovery.

ODR Adds Arrows to the Quiver — ABA DR II

Sun, 2014-04-06 13:40

Continuing the series of reports from the ABA Dispute Resolution Section, Colin Rule, Ethan Katsh, Jeff Aresty and Daniel Rainey offered a panel on “Building an Online Justice System: ODR and the Courts.” 

Colin Rule said he was attracted not to the algorithmic powers of technology and the internet, but rather its promise to interact in, and facilitate, human-to-human communications. He spoke via Skype from Ohio, where he is working with courts to assist the resolution of cases. His company is working with other governments to assist the resolution of property tax assessments, tax challenges, and other high-volume, low-value streams of disputes. He noted that case management and problem diagnosis are strengths of technology, quite apart from resolution processes such as negotiation, mediation and arbitration. He said he’d innovated in devising platforms for online processes, but that the challenge now was to provide tools to community, corporate and government users so that they can build tools themselves. It is utilization of technology to leverage case management and other service provision, not replacing mediators in individual cases.

Dan Rainey differentiated between access to justice and access to courts or to judicial processes. For example, private justice through online arbitration addresses and satisfies the justice expectations of the parties in many instances. The National Mediation Board receives 5000 cases a year, and must maintain the level of services in a restricted budgetary environment. It has to do with better ways to handle information, and better communication channels. The Board’s web site has a “knowledge store” that is easily accessed and features a searchable data base of decades of arbitration awards. This data assists parties in drafting arbitration documents, and be informed on the outcome of similar claims. The goal is to permit anyone who can do research in the Board’s office, to do that work anywhere. An example of communication channels is the “Arbitrator Workspace,” a single portal for arbitrators to manage cases. Traditional arbitrations are still conducted, but are far more informed. Submissions and awards can be made online, and synchronous technology like web video platforms that allow hearings to be held without travel. As a result, the Board is handling more cases for less money. About 30% of hearings are being done online, and 100% of awards are submitted online.

Jeff Aresty noted that, as long as law is jurisdictionally based, the law itself will pose obstacles to access to justice in a multi-jurisdictional world. By way of example of “non-jurisdictional” thinking, a billion users of EBay all agree to a single usage agreement, abide by it, and enjoy the protection of a voluntarily policed marketplace. So, he suggests, the Rule of Law in cyberspace can benefit business, sociopolitical and individual interests, only as long as they collaborate. He proposed a paradigm shift away from dispute resolution and into preventive law, where digital identities, online contractual rights, and an ability not only to identify but to predict disputes and create a “digital multi-door courthouse” to address them at a very early stage. Using the concept of “dispute resolution” and attaching the word “online” in front of it is an inadequate understanding of the implications of collaborative economies and leverages human-to-human communications.

The skepticism I have about ODR is differently seated than many others’.  Supplying disputants with accurate data in a timely way often has little to do with dispute resolution.  People do not make dispute resolution decisions based on data, or even on perceived advantage.  Disputes are laden with emotional and moral attributes, and decision-making in the field of conflict is prone to familiar psychological errors such as cognitive barriers and professional overconfidence that do not appear as decisively in other aspects of management such as interest rate hedging or inventory control.  Conflict is sloppier and, when accepted for what it is, defies pure reason.  So once again, we find that ODR is a blessing in small-value large-volume claims, but more problematic in matters in which someone has something at stakre that they regard as both material and implicating the “rightness” their own behavior.

Planned Early Resolution — ABA DR I

Sun, 2014-04-06 13:20

This is the first of a series of posts on panels presented at the 16th ABA Dispute Resolution Section Annual Meeting, in Miami, Florida, April 2-5, 2014.

John Lande, Kurt Dettman, Phil Armstrong and Deborah Masucci gave a panel on early planned dispute resolution.  The goal of the integrated approach is “to satisfy the parties’ interests at the earliest appropriate time.”

Collaboratively among counsel and client, an Early Case Assessment is made, and a determination is made when to negotiation, use mediators and experts as needed.  Lande talked about “escaping lawyers’ prison of fear” of departing from conventional case management approaches.  In particular, he refers to the fear of initiating the suggestion of negotiation, of losing clients’ confidence, and of losing income from working the case.  These can be managed by routinely and predictably using PEDR, explaining the proposed strategy to the client, and negotiating a fee enhancement for early resolution.

Phil Armstrong and Debbie Masucci addressed how these management principles are applied in the corporate environment.  Masucci, formerly of AIG, noted the role of the claims professional, whose job is to settle the case.  It is necessary to acknowledge the diverging interests of the insured and the insurer, particularly where the self-insured retention might settle the case.  There are also primary, excess and coverage issues that drive parties’ negotiating strategies into potentially divergent interests.   Insurance companies should be using PEDR with greater effectiveness than other industries, according to Masucci.

Armstrong, formerly of Atlanta-based Georgia-Pacific, reported that his former employer would receive 250-300 lawsuits per year.  Businesspeople would resolve informal business disputes every day, but if formal litigation were threatened, the process ceased to be a business problem to be solved, but a war to be won; business people would be instructed not only to cease seeking a business solution, but indeed affirmatively not to talk to the other side.  This practice wasted money and compromised relationships.  The dispute always settled, but only after nearly all transaction costs had been incurred.  An ADR program was initiated in 1995-96, one part of which was to invite counterparties to meet with business people to resolve the problem.  Discussions took place early, and if they were unsuccessful a mediator was brought it.  Problem-solving became the goal.  Nevertheless, the approach was unevenly applied and litigation practice continued.  Armstrong was unable to have an integrated management system accepted.  Adoption of such an integrated method across the company would require education, support of the C-suite, and a culture change.  Hiring an outside law firm and asking to be kept posted is an indication of lack of managerial control.

PEDR has a web site with resources such as a User Guide; power point presentations for business and legal audiences; a podcast produced for the ABA Litigation Section.

Toro’s program was cited as a success story of the use of PEDR.  By contrast, AAA’s Sandy mediation program was less successful because many cases were sent to mediation too early, before claims adjusters had reported and critical information needed to resolve the case was at hand.  An audience member cited the medical school policy of “disclose and offer,” resolving matters that could otherwise evolve into medical malpractice suits.

Imagining the Perfect Environment for Mediation

Tue, 2014-04-01 11:58

THE EXERCISE:  Imagine a market with fully successful commercial mediation.  (Its success is measured by the breadth of take-up by commercial disputants and the infrequency of litigated cases involving business disputes.)  What are its attributes?  What conditions gave rise to this broadly-accepted use of mediation as a day-to-day method of doing business?

Put otherwise, who are the stakeholders in the business dispute resolution process and how are their interests satisfactorily addressed by the mediation of commercial disputes?

COURTS:  Courts in the jurisdiction we’re imagining contribute to the broad use of commercial mediation in two ways:  Their commercial irrationality and their powers of coercion.

In the first instance, obtaining an outcome from a court in this jurisdiction is expensive, prolonged, uncertain, antagonistic, and subject to appeal prior to finality (a process that has its own costs, delays and uncertainties).  Outcomes from this court are restricted to damages recognized by the law of the jurisdiction — usually only money — and do not address certain remedial necessities that progressive commercial relationships dictate.  The delay is commercially irrational and the cumulative cost is prohibitive for all but the largest commercial claims.  Thus, no rational business is comfortable managing its disputes relying on this institution.

In the second instance, these courts are empowered to require litigants to mediate certain types of disputes.  Motivated in part by a desire to provide early voluntary resolution of disputes that, historically, end up being resolved, and also in part by a concern to preserve their own resources in order to provide appropriate attention to disputes that require it, the court in our hypothetical jurisdiction has adopted a “presumptive mediation” rule pursuant to which litigants filing certain types of claims may expect that, barring a motion to be exempted, they will participate in a mediation regarding their claim.

(The obverse is that, in a jurisdiction where the courts are easily accessible, outcomes are prompt and reliable, and judges are reluctant to “outsource” dispute resolution, it is unlikely that mediation will take hold.)

BUSINESS MANAGERS:  Within the management of the commercial entities doing business in this jurisdiction, there is a manager charged with handling the portfolios of disputes in which the company is engaged.  At any one time, these may include disputes with employees, competitors, government regulators, suppliers, customers, communities, or contracting parties.  This person may or may not be an attorney, but is certainly a skilled and trained manager.  The charge of this manager is to handle the portfolio in a way that avoids expense, maximizes return, and avoids long-term contingent liabilities (i.e., the same goals of any other profit center of the business).  Thus, in this jurisdiction, business conflicts have been de-mystified, impersonalized, and recognized as manageable contingencies similar to hedging against fluctuating currency values and interest rates, or maintaining just-in-time inventory controls.

ATTORNEYS:  Attorneys in this jurisdiction may be divided into two groups:  Those who are busy and those who are not.  Those in the first category are economically incentivized to devise early and favorable dispute outcomes for their clients.  Indeed, they are retained pursuant to engagement terms that are “front-loaded,” with premiums awarded for early resolution of disputes and penalties for failure to hit target goals.  These arrangements yield value to both the lawyer and her client, and both constantly seek methods to provoke early and meaningful negotiated resolution of claims. The attorney successfully engaging in these processes gets a satisfied client, an early and boosted fee, and the opportunity to turn to the next case on similar terms and with identically promising outcomes.

Those in the second category don’t have a “next case” to turn to and may be reluctant to obtain early resolution, foregoing the fees associated with old-fashioned document exchange, depositions, motion practice, and other features of litigation.  These lawyers are motivated to settle the case eventually, but as late in the litigation as possible. In this jurisdiction, however, their practice is regulated.  The bar associations, in conjunction with the courts, have promulgated certain ethical rules that require, among other things:

(i) that all lawyers must advise clients of alternatives to litigation, including the courts’ presumptive mediation program;

(ii) that all clients must be handed an approved pamphlet explaining the nature of mediation, as well as its costs and benefits; and

(iii) that all lawyers must prepare and submit to the client and the court, prior to the first conference with the judge, a litigation budget.  The budget, which is confidential, must set forth estimated costs (a) for a motion to dismiss the case; (b) through discovery to a motion for summary judgment; and (c) through trial.

These ethics rules are designed to empower clients to make informed decisions about whether to proceed with litigation without investigating early and voluntary mediation.

MEDIATOR COMMUNITY: In our ideal conditions, the forces of the service market that arose from the initial growth of mediation has yielded a group of skilled (and expensive and in-demand) business mediators and acceptable (and more affordable and more available) business mediators.  These professionals enjoy the legal protections of privilege and confidentiality pursuant to court rule and legislation.  Fees, styles, selection and qualifications are market-driven and there are no barriers to market entry.  Some mediators are attorneys trained in dispute resolution and can assist disputants to assess the likely outcome and costs of litigation in the event the mediation process fails.  Some are people of deep business management experience and can assist disputants in identifying their business interests and probe how an outcome can be framed that addresses those interests.  Some combine those attributes.  Incompetent mediators (like incompetent plumbers, lawyers and teachers) left the market as it matured and assumed the characteristics of any well-developed service industry.

BUSINESS ORGANIZATIONS:  The purpose of a Chamber of Commerce is to protect the interests of its members and to advocate policies that promote healthy and growing businesses.  The Chamber of Commerce of this jurisdiction has recognized that the belligerence, uncertainty and economic waste associated with business-to-business litigation hampers overall commercial growth.  It has therefore elevated the use of business mediation to the level of a requirement, like paying dues.  Mediation is obligatory:  Any member of the Chamber who is in a dispute with another member, and who refuses to mediate the dispute upon demand, is expelled from membership.

The same rule applies to industry-specific business organizations.  The Insurance Roundtable, the Retail Association, the Healthcare Provider Association, and all other affinity groups have identical rules.  Their mission is to promote growth in their respective fields and to address hindrances to that growth, and they all recognize that inter-company conflicts are such hindrances.

CONCLUSION:  The implications of this portrait are perhaps a bit unsettling.  What is the role of coercion, whether by courts or by business associations?  Are we comfortable with the notion that efficient justice hinders the growth of private dispute resolution?  And where is the “real” “brave new world” — the one in which conflicts are identified early, just as smoke is identified in a building, and resources are brought to bear to extinguish them creatively before they destroy their surroundings?

Energy Sector Mediation

Sat, 2014-03-22 14:58

While meeting in Houston, how can mediators not assemble a program on “Energy Mediation in the Energy Capital”?  Pierre-Jerome Abric, General Counsel Litigation to the French company AREVA, moderated a panel including Murray Fogler, a trial lawyer in Houston; Dick Watt, an attorney/mediator from Houston; and Raymond Albericht, Vice President, Litigation, at Enterprise Products Operating Company in Houston.  Thus we heard from two providers of mediation and two users.

Mr. Albericht distinguished energy mediation on two grounds – first, the selection of the mediator involves more topic-specific criteria.  Second, the mediation process takes place among long-term players in a comparatively small world, and disputes should be resolved without “burning bridges.”  That said, noted Mr. Watt, the mediation process itself is not unique in the energy field.  Mr. Fogler’s sole criterion for selecting the mediator is that the other side is comfortable with the selection and finds her credible.  He has no problem with his adversary’s deciding who will mediate.  “I just want to make sure they will listen to what the mediator has to say.”

Mr. Watt emphasized that, in mediation, he does not want to spend time explaining a gas contract or the regulatory framework; he would hope the mediator would already know that and can focus on the specific problem.  Mr. Fogler, on the other hand, wants someone with life experience and sagacity because, in his experience, the dynamics of a mediation succeed or fail through human interaction, not because of the pressure of legal concerns.  Mr. Albrecht reported that his executives often seek non-attorneys, such as oil and gas engineers, as mediators.

Mr. Watt values the willingness of a mediator to point out legal weaknesses of a position.  He expects a mediator to press a party on the procedural or substantive weakness in their argument that counsel, either intentionally or unintentionally, has failed to convey to the client.  The audience noted that this enters into an area of nuance – while everyone appreciates the mediator’s correcting the adversary’s misapprehension of the law, one is less sanguine when the mediator inserts a view that is different from the advice one has given to her own client.  And there is always the risk of being perceived as offering legal advice.

International Views of Mediator Ethics

Sat, 2014-03-22 12:19

In Houston, UIA World Mediation Forum Co-President Thierry Garby moderated a panel on mediator ethics.  Speakers included Claude Amar, President of the French Academy of Mediators; Trey Bergman of Houston; Jim Lawrence of the University of Houston Law Center; and Patrick van Leynseele of Dal & Veldekens, Brussels.

The opening issue was power imbalance.  What role does the mediator assume when unfairness, fraud, lack of information, legal incompetence or failure of due diligence results in a proposed resolution that is incontestably unfair?  In the United States, judges do not correct poor lawyering, and arguments that are not raised are not ruled upon.  Judicial practice in civil countries like France is entirely different.  Is there an obligation of a mediator to point out that value opportunities (such as claims on an excess insurance policy) are ignored?  Conflicts of interest that arise from the party representative being hired by an insurance company were also raised.  Mr. Bergman suggested that “living in the question” might be an approach: Rather than stating something, asking “What would happen if…?”  The technique raises the issue without the mediator’s losing credibility or trust, or appearing to advocate.

Mediation compensation raises other issues.  The example is two mediations:  One involving several million and the other a few thousand dollars.  The mediator’s compensation is constant even though her value – as measured by the benefit to disputants — varies greatly.  Is there any problem with the parties agreeing to a “satisfaction fee” given as a bonus by either or both parties at the end of the mediation?  Were the mediator to agree on such terms, with the knowledge and agreement of all parties, would the mediation be conducted differently?  What if the fee were payable only if the matter settled at or soon after the mediation?  And would a third party be interested in learning that, in the past, the mediator received a success fee from the adversary in a previous matter?  And would accepting such fees redound poorly in the long-term growth of the practice?

Limits of confidentiality:  A party offers a building in satisfaction of a claim.  The party tells the mediator that the building is environmentally unsound, but instructs him not to inform the other party.  Should the mediator facilitate, or even allow, fraud?  Or is it the responsibility of the other party to do sufficient due diligence to get assurance of the value of the offered property, or else live with the consequences of failing to do so?  What is the “best practice” approach for the mediator who presides over a resolution that may be unenforceable, or even unlawful?

ADR From the Perspective of the Bench

Sat, 2014-03-22 09:16

The UIA World Mediation Forum in Houston has generated the usual mixture of stimulation and camaraderie.  The first panel concerned “Mediation: The Judicial Perspective Here and Abroad.”

Aleš Zalar, former Minister of Justice of Slovenia and currently President of the European Centre for Dispute Resolution of Ljubljana, moderated the panel, and speakers included Judge Robert Schaffer of Texas, retired Judge Michele Weil-Guthmann of Paris, and Judge John Woolridge of Texas.

Judge Weil-Guthmann was trained as a mediator at WIPO in Geneva and was so impressed by it that she left the bench to become a full-time mediator.  Judge Woolridge does mediations and arbitrations while sitting on the bench.  Judge Schaffer came to mediation in 1991, soon after the Texas legislation authorizing court-mandated mediation was enacted.   He pursued both his private practice and mediation until ascending to the bench.  That experience served useful to him in his judicial efforts to resolve cases.

Zalar proposed that judges are key players in encouraging mediation in any country.  He termed it the “justice model,” in which mediation is an extension of the services it provides to litigants and also influences the quality of the mediations offered.  This compares to the “market model,” by which litigants themselves drive mediation and encourage the courts to support the effort.  Judge Shaffer noted that every case filed cannot be tried, so a way must be found to resolve them by other means.  The Texas ADR statute was aimed at this goal: It is a “market model” that relies on private providers to supply the services.  Zalar asked whether pressure placed on litigants to mediate may frustrate their legitimate expectations for “a day in court.”  Shaffer characterized the mediation process as empowering, rather than delimiting, disputant’s self-determination.

Judge Woolridge said that judges are responsible for managing disputes and moving them forward expeditiously, in the exercise of justice.  So there are benchmarks for moving the case to be ready for trial, and an ADR date is part of that process.  He gets 90 new cases a month (about 1,500 active cases are on each judge’s docket) and must dispose of at least the same number.  He encourages not only mediation, but mini-trials, summary trials and non-binding arbitration.  Judge Shaffer emphasized the necessity of persuading judges in order for mediation to take a broad hold in other jurisdictions.

Ms. Weil-Guthmann said that, in Europe, judges are less eager to relinquish control over disputes because (at least in part) they perceive that they are responsible to society to resolve disputes in accordance with the law.  They are loyal to the tradition of justice and, in particular, do not want to impose additional private costs to the process.  Nevertheless, it is broadly acknowledged that all filed cases cannot be tried, and that some other means must be found in order for the courts to work.  Judges in Europe need further training to understand the benefits of mediation to the litigants as well as to the courts, as well as assurance of mediation of high quality, attainable cost, and reliable ethics.

Judge Woolridge reminded the group that, in a law school setting, litigation is a right, but in the real world litigation is a costly burden.  Most cases that don’t settle early nevertheless settle later, and the expense incurred in the meanwhile is often a social waste.  (Zalar noted that, in his country, costs are not a factor and the benefits of mediation are seldom cost-savings, but rather certainty, control of outcome, and reduction of delay.)

This introduced an interesting quandary – the Texas judges experience a high rate of settlement when mediation is ordered, while in France the settlement rate is much lower.  Is the difference the familiarity of lawyers and litigants to the process?  Judge Schaffer noted “Nobody in Texas asks what a mediation is.”

It is noteworthy that opposite outcomes are justified by similar concerns.  Advocates of court-mandated mediation cite the interest of the courts in assuring that litigants have a reasonable opportunity to gain satisfactory results, and that judges reserve their time for the cases that must be tried.  So, too, do those reluctant to establish nonjudicial court-annexed mediation programs:  They rely on principles of the right of litigants to have access to the courts, and the courts’ responsibility to ensure that the institution is not subverted or avoided as a socially responsible dispute resolution institution.

Mandatory Mediation Initiative at the Bankruptcy Court for the District of New Jersey

Thu, 2014-03-20 18:32

At a recent meeting of the Dispute Resolution Committee of the ABA Business Law Section, a new mandatory mediation initiative was presented that may be unique in scale in structure.

Judge Michael Kaplan of the US Bankruptcy Court for the District of New Jersey explained the program, along with consultants Suzanne McSorley and Laura Kaster.  Judge Kaplan described certain rule changes for the court, pursuant to which all adversary proceedings or contested matters initiated after May 1, 2014, will presumptively be ordered to mediation.  A panel of about 55 has been assembled as mediators for this purpose – established neutrals who are being trained in the principles of bankruptcy law and bankruptcy specialists who are being trained in the skills of mediation.

Each judge has about 200 such matters on the docket at any one time.  Judge Kaplan explained that, in the past, litigants have been urged to try mediation, but the results of that voluntary program were “dismal.”  In his view, non-mandatory, non-presumptive programs have not been successful.  Ms. Kaster and Ms. McSorley assisted the court in devising a presumptive program that abandoned the old panel and started anew.

Contested matters will be ordered to mediation as soon as answers are filed.  Parties will be free to select a mediator from the panel (or from elsewhere) and an assignment will be made by the court only if the parties cannot agree.  Mediators will charge their normal rates, but be expected to handle at least one pro bono matter each year.  The hope is that the process will assist litigants to “get a sense of their case” before investing substantial resources in it.  The presumption of mediation will not obtain in pro se cases, in cases seeking equitable relief, and in matters initiated by the U.S. Trustee.

Ms. McSorley and Ms. Kaster emphasized that the pool of mediators was purposely limited in order to ensure a very high level of quality and also so that the mediators on the panel would gain experience through many assignments per year.  They noted that mandatory mediation is often a “gateway” experience for attorneys and litigants, and the quality of that experience needs to be high.

The new program may be unprecedented.  Delaware has a mediation program but it is more narrow in scope.  Other state and federal courts have programs but mediators are expected to serve without compensation for some or all of the mediation.  Judge Kaplan saw no need for that – the mediation program, over all, will save litigants money rather than add to expenses.  One Committee member noted that the exception for pro se cases was prudent, inasmuch as unrepresented debtors frequently seek legal advice, placing a mediator in a potentially awkward position.

It will be interesting to learn how the program rolls out.

Three Upcoming ADR Conferences

Wed, 2014-03-19 17:49

The next few weeks are more than usually packed with high-quality convenings.  The World Mediation Forum will meet in Houston on March 21-22; the ABA Dispute Resolution Section will meet in Miami April 2-5; and the Business Law Section of the ABA (and its Dispute Resolution Committee) will hold its Spring Meeting in Los Angeles April 10-12.

The UIA World Mediation Forum is a unique body and I try never to miss their meetings, held every nine months.  After events recently held in Lisbon, Athens, Prague and Zagreb, it is a welcome change that they are meeting in Houston, Texas, hosted by mediator and raconteur extraordinaire Jeff Abrams.  Co-Presidents Thierry Garby (France) and Colin Wall (Hong Kong) have  lined up a pretty impressive group of speakers, including Aleš Zalar from Ljubljana, Patrick van Leynseele from Brussels, Judge Robert Schaffer from Harris County Texas, Clyde Lea from Conono Phillips, Irena Vanenkova from IMI, and Claude Amar from Paris.  I am eager to learn perspectives from outside the United States legal system and traditions, and the World Mediation Forum is one of my favorite sources.  Plus I talked my old friend Bill Hall into speaking on a panel about his experiences mediating as a franchisee of Dairy Queen (“We call Dairy Queens Texas stop signs!”).

Try to describe the ABA Dispute Resolution Section’s Spring Meeting and you quickly run out of superlatives.  The only drawback of that event is that you miss too much.  Registration is still open at http://abadr.conferencespot.org/.  New Mexico former Governor Bill Richardson — our most effective emissary to North Korea since Dennis Rodman — will give a plenary address and pretty much everybody in the ADR world will be there.  I will be presenting the community/human rights films that won the 2012 CEDR Award, along with New Jersey mediator Laura Kaster and University of Arkansas Professor Uche Ewelukwa.  I also have a ticket to the Marlins game Friday night!

The very next week the big guns of business law assemble in Los Angeles for the big event of the Business Law Section’s year.  The Dispute Resolution Committee will feature two offerings:  AAA General Counsel Eric Tuchmann explaining the revisions to the AAA Commercial Arbitration Rules, and a group of deal lawyers explaining why transactional attorneys are so well suited to problem-solving in disputes.  They include Joan Sterns Johnsen, Jim Freund Richard Hall and Richard Lutringer.  With that kind of fire power, we hope many of the folks in the Section who don’t think of their practice as including ADR might pop in and think again.  (And, yup, I have Dodgers tickets for the Tigers game that Wednesday.)

 

 

ADR Regulation Proposals Before the US Congress

Wed, 2014-02-19 15:18

At a recent meeting of the Council of the ABA Dispute Resolution Section, R. Larson Frisby of the ABA Governmental Affairs Office gave a very useful summary of certain legislation currently before Congress that could have an impact on arbitration, mediation and other forms of ADR in the U.S.  With his kind permission I note some of his report here.

 

Dodd-Frank:  The Wall Street Reform and Consumer Protection Act, signed into law in July 2010, authorizes the Securities and Exchange Commission to issue rules prohibiting or regulating the arbitration of investor disputes involving securities.  However, it requires the Consumer Financial Protection Bureau to study the use of pre-dispute arbitration practices in consumer cases.  In April 2013, 37 Democratic Senators sent a letter to the SEC urging that mandatory arbitration of securities disputes be prohibited, but at this time there is little indication that much fundamental change will happen in the near future.  By contrast, the CFPB released in December 2013 “Arbitration Study Preliminary Results” whose “nature and tone” have led many commentators to predict that CFPB may eventually propose rules that preserve the right of consumers to participate in class action arbitrations or require opt-out provisions in pre-dispute consumer “agreements.”

Arbitration Fairness Act:  This bill (H.R. 1844 and S. 878), which would invalidate all pre-dispute arbitration agreements involving employment, consumer, antitrust or civil rights claims, has been floating around for many Congressional Sessions.  The current version proposes amendments to the Federal Arbitration Act and excludes from its scope franchise disputes.  It is not expected to advance.

Securities Arbitration:  A bill (H.R. 2998) has been introduced that would discourage the use of arbitration to resolve securities or investment disputes by amending the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940.  It was referred to the House Financial Services Committee and no further action has been taken.

Labor and Employment:  By contrast to the various arbitration bills seeking to restrict the practice, H.R. 169 would require mediation of issues between an employer and a newly-certified employee representative in the event of initial impasse; if the mediation is unsuccessful they would transfer the matter to FMCS for mandatory and binding arbitration.  A proposed amendment to an immigration law would mandate mediation as a condition precedent to a guest worker’s filing a claim against an employer for damages.  Neither bill is expected to advance.

Ombudsman Legislation:  Proposals have been advanced for the creation of an Ombudsman for Immigration Related Concerns (S. 744 and H.R. 15); a Federal Financial Institutions Examination Council Ombudsman (H.R. 1553); a Federal Air Marshall Service Ombudsman (H.R. 64); a Transportation Security Administration Ombudsman (H.R. 84); and a State Home Care Ombudsman (S. 998).  With the exception of S. 744, none of these bills is progressing and no further action has been taken.

Copies of the legislation identified above can be obtained by clicking here.

Multidoor Courthouse on a Global Scale

Mon, 2014-02-03 19:06

A young, vibrant and alive mentor once taught me that it costs no more to dream big than to dream little.  And Michael Leathes is dreaming big.

With IMI Chair Deborah Masucci, Michael has recently proposed a “Global Pound Conference.”  Referring to the 1976 conference at which Prof. Frank Sander shared his vision of a “multidoor courthouse,” Masucci and Leathes are calling for an event to “shake ADR out of its slumber” and “kick-start” mediation on a global scale.

 

And when Masucci and Leathes say global, they mean global:

Placing cross-border dispute resolution at the center of attention would help maintain focus on issues that are widespread internationally rather than on those of a local or national nature that may have little relevance elsewhere.  Since we live in the Internet Age, such an event can include diverse voices by leveraging massive stakeholder crowd-sourcing on a global scale, led by some 15 or more physical gatherings in different countries.  On a single day, or perhaps two days, across 20 time zones, starting in Australasia and Japan and ending in the Americas, the GPC could instantaneously identify the prevailing needs of disputants, the positives and shortcomings of the status quo, debate the options for creating change, and end with a collective action plan that secures stakeholder buy-in.  That would replace what Dean Pound described as tinkering with inspiration.

The format of the sessions and the nature of participation would be radically different from anything that has been staged previously in the dispute resolution field, or in any other field, nationally or internationally.  There would be a common format, addressing common issues in cross-border dispute resolution, but with the flexibility to embrace local and regional issues and cultural considerations.

The event would be interlinked by live webinar to registered participants worldwide, some choosing to gather in smaller, ad hoc groups.  Delegates attending the 15 or so locations in person would each have devices enabled for use in sessions so that they could be asked to vote on propositions, some of them spontaneous, and to offer remarks and comments that could be instantly clustered and projected onto a shared screen as well as the individual screens of participants everywhere.  Those participating by live Internet feed would be able to vote electronically if they have registered for that capability, and contribute comments onto the collective screens.  In a matter of seconds, thousands of informed opinions could be electronically harvested, segmented by stakeholder group, geography, culture and other categories, assembled by subject matter and agglomerated into mass opinions portrayed in numbers and graphs.

The proponents are aiming at Spring 2015, and envision the involvement of business end-users and academics as well as lawyer gate-keepers and ADR service providers.  They want change, and they advocate providing inspired change through a new 21st-Century method of convening.

I’m in!

ABA Dispute Resolution Section Spring Meeting Announced

Thu, 2014-01-30 16:10

I have been importuned by the ABA Dispute Resolution Section to remind readers of its upcoming Spring Meeting in Miami,Florida on April 2-5, 2014.  And who better to be importuned by?  It is a great organization and the Spring Meeting has been “the place to see and be seen” since it started in 1999.  The announcement follows.

ABA Section of Dispute Resolution Spring Conference | April 2-5,2014 | Miami, FL

Join the ABA Section of Dispute Resolution in Miami for programs presented by leading ADR professionals, practitioners, and academic faculty that will address core topics and cutting-edge issues in ADR. Hear keynote plenary speeches from Judge Rosemary Barkett and Governor Bill Richardson. In addition to the plenaries, there will be more than 80 concurrent CLE programs to choose from. Earn up to one years’ worth of CLE credit. Visit the web site for details about programs scheduling, presenters, session descriptions, and hotel and travel: www.ambar.org/spring2014. Take advantage of the early bird registration rates today! The early bird rate ends February 14th.

 

IBA Guidelines on Party Representation in International Arbitration

Tue, 2014-01-21 12:53

The International Bar Association has been responsible for several definitive guidelines to assist practitioners in international arbitration.  These include the 2010 Guide for Drafting International Arbitration Agreements, the 2010 Rules for Taking of Evidence, and the 2004 Guide on Conflicts of Interest.  To this we now add  the IBA Guidelines on Party Representation in International Arbitration, adopted by the IBA Council on May 25, 2013.

Arbitration Committee Co-Chairs Alexis Mourre and Eduardo Zuleta explain these Guidelines in the November 2013 issue of Dispute Resolution International.  They explain that, as Guidelines, they are contractual in nature and apply only when the parties have agreed and where the arbitrators wish to rely upon then (having determined that they have the authority to rule on matters of party representation).

Among the situations addressed are (a) where the panel has been constituted and a party representative is subsequently appointed who creates a conflict with one of the tribunal; (b) where a party representative attempts to communicate with an arbitrator concerning the arbitration ex parte; (c) the duties of party representatives to the tribunal with respect to assertions made in submissions; (d) the responsibilities of party representatives with respect to documents and information in her possession or in the possession of her client; (e) the relationship between counsel and witnesses or experts, “specifically with the issue of witness preparation;” and (f) potential remedies for counsel misconduct.

Of particular interest to me was the treatment of counsel’s “preparation” of witnesses, a process that is fully accepted in American litigation but frowned upon elsewhere.  Guideline 20 provides:  ”A Party Representative may assist Witnesses in the preparation of Witness Statements and Experts in the preparation of Expert Reports.”  Guidelines 21 and 22 articulate the concerns regarding the practice by providing that “A Party Representative should seek to ensure that a Witness Statement reflects the Witness’s own account of relevant facts, events and circumstances [and that] an Expert Report reflects the Expert’s own analysis and opinion.”

From time to time one dreams up “the old days” without regard to the caution that nostalgia ain’t what it used to be.  But am I right that the “old days” of international arbitration practice  included a reliance on documents rather than witnesses, cross-examination of live witnesses without coaching by counsel; and reports of joint experts rather than reliance on vying experts whose conclusions simply restate the arguments of the party that hired them?  These attributes seem to have fallen away (if in fact they ever really existed in the first place) in favor of American-style litigation practices.  The fact that they now appear in such a consensus-styled and authoritative document as the IBA Guidelines leads me to acknowledge that, in all human endeavor, one must not hold too tightly to either the past or the present.

Deal Lawyers – Post Scriptum

Tue, 2014-01-21 12:08

Michael Leathes, a founder of the International Mediation Institute and former in-house counsel of high accomplishment, has written to correct our immediately prior post:

Regarding the penultimate para, actually there are examples of deal mediations out there.  In fact, we have a little section on the IMI portal devoted to this (http://www.imimediation.org/deal-mediation).  I have done it myself, several times, and also wrote a role-play scenario called Global Warming featuring a deal mediation which was used at a UIA programme in 2007  (http://www.imimediation.org/cache/downloads/62ip21mriuww0k0cgogcsckk/Global%20Warming%20Roleplay-2.pdf)

I am correcting the post to reflect this more accurate information, but thought it deserved its own posting.  When one hears directly from the mouth of a horse, one should let others know.

What Deal Lawyers and Dispute Lawyers Can Learn From Each Other

Thu, 2014-01-09 10:12

It sometime sometimes seems that the community of business lawyers is divided into two broad tribes:  The lawyers who handle the deals, and the lawyers who handle what happens when the deals fall apart.  Unfortunately, these two tribes too seldom mix.  They don’t go to the same ABA meetings, their spouses don’t dine together, their kids are on different soccer teams.

Yet each has skills that the other would benefit greatly from developing.  Deal lawyers have an approach to problems that litigators would do well to adopt.  And litigators use tools that deal lawyers (and their clients) would benefit from.

Deal lawyers are problem-solvers.  They see the whole picture.  Clients who engage them intend to make money by coming to an agreement that benefits them at the same time that it addresses the expectation of their counterparty.  There is little on the table except the business, the money, the deal.  Each deal lawyer is there to negotiate terms that will benefit the client, make sense to the counterparty, and get the deal done.

By contrast, litigators are gladiators.  Their job is to “win.”  They often don’t see (more accurately, they are not entrusted with) the whole picture.  Their clients intend to see justice done, and to extract their vengeance, by making the other party wish it had never been born.  There is little in the arsenal except bombs, and success is measured not by money, but by blood.  The lawyer isn’t there to make money, or even to save money, but to kill.

This is true despite everyone’s acknowledgement that we don’t try litigated cases any more.  More than 98% of filed cases are terminated by means other than a verdict at trial.  They are withdrawn, they are dismissed, or (in the case of many business disputes) they are settled on mutually satisfactory terms that include stipulated dismissal, mutual releases of all claims, and either agreed-upon payment or reformation of the terms of the original deal.

Clients are, presumably, satisfied with the work of the lawyers who put the deal together through negotiation.  Therefore it would, presumably, be advantageous to those clients if those same lawyers negotiated a solution to the problem that gave rise to the litigation – a solution that ended the litigated claim, provided for payment and/or reformation of the deal, and a speedy return to business.  The mind-set of the transactional lawyer – that the client’s business is best served by negotiated deals – is highly valued in dispute resolution, and it is a pity that more transactional lawyers are not involved in resolving business disputes.

Conversely, deal lawyers perceive the negotiation process as a one-on-one game.  They have a high regard for their own negotiation skills, and the suggestion that value might be added through the intervention of a neutral facilitator is not just meaningless – it is insulting.  Deal lawyers want control, they want a clear field for strategy, and they want no interference or meddling.  They certainly don’t want to suggest to a client that they are inadequate to close this deal themselves, and need a go-between.

By contrast, many litigators are highly attuned to the utility of mediation in devising an optimal negotiated outcome.  Adding a skilled middleman in settlement negotiations can reduce transaction costs and add value in multiple ways.  Mediators can assist lawyers in helping their clients to prioritize their goals, and distinguish between critical terms and those that are less important.  Mediators can help to “bundle” deals, linking a “give” and a “take” in order to create trades that are of minimum cost and maximum value to both parties.  Mediators can coach parties and counsel in negotiation strategies.  Mediators can add rigor to the valuation process through decision trees or discounted present value analysis of outcomes.  Mediators can assist parties to recognize cognitive barriers in their own or their adversaries’’ assessments, and provoke “reality testing” of positions or tactics.  Mediators can develop “most favorable,” “least favorable,” and “most likely” scenarios that can have a decisive impact on the value of the claim.  Mediators can urge clients to develop best alternatives in the event that settlement negotiations fail.  Mediators can push disputants through impasse.

All of these skills have a place at the deal negotiation table, yet I am unaware of a single instance in the negotiation literature where a deal mediation has actually taken place.  Michael Leathes, a founder of the International Mediation Institute, notes however that there are examples of deal mediations out there.  In fact, IMI’s portal features a section on deal mediation and Michael reports that, not only has he served as a deal mediator himself, but he has authored a role-play scenario called Global Warming that is available for use without further permission.

The added cost of introducing deal mediation is negligible, and the risks are nonexistent.  Indeed, it has been argued that deals achieved through direct negotiation are necessarily less economically efficient than deals that are mediated, simply because no party in a direct negotiation will reveal its underlying interest, and therefore that interest will not be thoroughly addressed in the final terms.  One must chalk it up to a mixture of ignorance and lack of imagination.  And then there’s hubris.

Deals would be more robust if a skilled, confidential mediator were included.  Disputes would be briefer, and end on better commercial terms with fewer transaction costs, if the lawyers who handled them approached them as solvable problems rather than cases.

It’s time for the two tribes to start eating together.