Dispute resolution among humans probably began with grunting and the strategic use of cudgels. How much real progress humankind has made since those halcyon days is debatable, but it is unarguable that the subject has become immensely more complex.
As lawyers who became such by being sworn in by a judge in a courtroom, we tend to view law as litigation. Too seldom do we view the practice of all law as a variety of paths to a common goal — obtaining the best possible result for the client. The routes to that goal are nearly infinite. At the extreme are agreement (contracts) and litigation (war). Too often do we forget the multitude of strategies that lie in between, often characterized as ADR.
ADR is not a magic potion, or inherently superior to any other legal process. It is merely different. It is important to appreciate that ADR is not an alternative to either litigation or negotiation, but is a collection of tools and strategies lying in between the two that can be employed to obtain a result. If war is diplomacy conducted by other means, litigation is negotiation by other means, but it is far from the only other means.
To utilize ADR successfully, one must do two things: first, one must view ADR creatively, analyzing the various options, and selecting the best approach for the situation, rather than slipping into the pattern of the most commonly used forms of ADR for every case; second, one must take charge of the process, analyzing the client’s business situation and objectives, selecting the means most likely to be successful in achieving the client’s objectives, and controlling the procedure.
An Incomplete Catalog of ADR Tools
It is easy to fall into the trap of passively accepting a court referral to mediation or to write a contract that requires arbitration. Mediation and arbitration are the two most common forms of ADR. But they are not the only forms, and they may not be the most effective in any particular situation. As attorneys, we routinely take charge of negotiations and, when we can wrest control from judges, litigation. To truly manage the resolution, we should also decide whether or not ADR will be helpful and, if so, what form of ADR will be most helpful and when.
Some commentators have defined 20 to 30 different forms of ADR, but generally the different forms of ADR fall into two categories, binding and non-binding. Non-binding ADR is essentially negotiation or mediation, which is assisted negotiation. Binding ADR involves some manner of adjudication. But normally binding types (arbitration) can be non-binding, or advisory, and normally non-binding types (mediation) can be made compulsory, or even binding (although it is arguably something more when a mediator actually imposes a result). Still, there are norms, and classification must start somewhere.
Almost universally employed in pre-litigation dispute resolution and in the context of litigation or other adversarial proceedings, negotiation is informal, limited by Rules of Evidence [Fed.R.Evid. 408] from admissibility for certain purposes , and subject to the determination of the parties.
1. Party to party negotiation
This may occur prior to filing an action or in the course of a lawsuit. Since no one is closer to the dispute than the parties themselves, they can frequently work out a resolution that is satisfactory to each of them.
2. Negotiation between counsel
The more common approach is for counsel to negotiate, with or without clients present. If clients are not actually present at the negotiations, counsel are in close communication with their clients, and negotiate with the clients’ business objectives firmly in mind. Settlement discussions between counsel are usually ongoing throughout the entire litigation process.
B. Neutral-Assisted Negotiation
There are many ways in which a neutral third party may assist in the resolution of a dispute. Certain forms of ADR, such as mediation or early neutral evaluation, are well established and have accepted practices and procedures, others are less well known, but the parties may agree on the assistance of a neutral in almost any capacity that may be necessary or helpful.
1. Court Supervised Settlement Conferences
These are settlement conferences presided over by the presiding judge, magistrate, or a special master. They are generally informal, fairly brief, and attended by counsel, and typically by the parties as well.
Court supervised settlement conferences can be very effective, especially at the stage in litigation where the issues and merits are fairly clear, necessary discovery has been obtained, and the pressures of an approaching trial date have made the litigants receptive to discussion. Otherwise, their effectiveness may be limited. Judges generally do not have the time or resources to work with the parties at length, nor the inclination nor background to suggest possible alternative ways to reach resolution. It is not the function of a court to examine with the parties what their objectives are. Mediators are trained to do this. A judge cannot meet and speak with the parties ex parte, as mediators do, without consent of the other parties, and many won’t do it at all. Few, if any, judges will give his or her opinion of a party’s position when a party or counsel has an unrealistic view of the case.
The most common form of formal ADR is mediation. Mediation is being used increasingly, as more and more courts across the country either mandate or strongly encourage its early implementation. Mediation is an assisted settlement conference at which all parties are present and represented by counsel. A major advantage of mediation is the parties’ ability to select the mediator. A mediator has no authority to adjudicate a dispute, but is present to assist the parties in mutually reaching a resolution. This is usually done by means of “caucuses” in which, after an initial joint meeting, the mediator separates the two parties and then works with each group separately in an attempt to bring them closer together in their settlement negotiations.
The United States District Courts for the Northern District of Illinois and Southern Districts of both Florida and New York are among the many courts whose local rules now include provisions for mediation. Although most of civil cases are resolved prior to trial in any event, one advantage of mediation is that it often results in earlier settlements. This can save the litigants a great deal of time, effort and money, and helps to prevent some of the more intangible negative side effects of litigation, such as disruption of the business, the risk to confidential business information, damage to business relationships, or negative press. The other major advantage to mediation is that it can achieve results litigation cannot – licensing arrangements being among the more common.
The selection of the right mediator is key to successful resolution of a dispute in mediation. The mediator must be an individual who is respected by both parties, knowledgeable enough to have credibility with the parties, and experienced enough to be able to suggest possible resolutions that the parties might not have considered. A big advantage of a successful mediation, is that the client makes the ultimate decision about how the matter is resolved, rather than having a decision imposed by someone else.
3. Michigan “Mediation”
This is a quasi-binding process in which a three-lawyer panel evaluates and establishes the value of a case and attempts to bring the parties to a resolution. If the parties are unable to resolve the dispute, they may accept the panel’s suggestion or go to trial.
4. Confidential Neutral
The parties submit their respective proposals to a third-party neutral, who, without relaying one side’s confidential offer to the other, informs the parties whether their positions are within a negotiable range. If the parties are within a certain range, they may seek the assistance of the neutral to narrow the gap, or may agree to split the difference.
5. Early Neutral Evaluation
Generally an informal oral presentation is made by both parties to an agreed neutral or panel of neutrals, who provide their evaluation of the case, or of such aspects of the case as they are requested to consider. Some Courts compel it, in which case, at least if it is done by a Judge or Magistrate who will hear the case if it does not settle, it tends to be more of a settlement conference.
6. Neutral Fact-finding
The parties agree on a neutral to determine certain factual issues, and decide in advance whether the determination of the fact finder will be binding or advisory.
7. Expert Fact-finding
The parties privately employ neutrals to render expert opinions, particularly on scientific, technical or legal issues.
8. Neutral Expert Fact-finding
Federal Rule of Evidence 706 provides for courts to appoint expert fact finders sua sponte, or on the motion of a party. The neutral expert can be called as a witness and subjected to cross examination.
9. Joint Fact-finding
The parties designate representatives to work cooperatively to respond to specific factual questions.
10. Multi-Party Coordinated Defense
A neutral facilitator is employed to assist multiple defendants to resolve disputes among themselves and to coordinate defense strategy.
Arbitration is one of the most traditional and best known forms of private dispute resolution. It is a voluntary, adjudicative process entered into by agreement of the parties – often by contract long in advance of any dispute. In arbitration, issues, generally as agreed by the parties, are submitted to an arbitrator or panel of arbitrators, also agreed upon by the parties, for resolution. There are a number of different forms of arbitration.
1. Binding Arbitration
The parties select a neutral third person or a panel, usually of three neutrals, to hear the dispute and to render a final decision as a judge would. This is analogous to a court determination, except that the parties are free to select their arbitrator or arbitrators, determine what rules shall apply, set their own time frames and make any other specific provisions they wish. The award is generally enforceable and not subject to appellate review except for corruption of the process.
2. Non-Binding Arbitration
The procedure is the same as with binding arbitration, but the parties agree that the decision of the arbitrator shall be advisory only. The determination may be the basis for a resolution of the dispute through negotiation or other means.
3. “Baseball” or “Final Offer” Arbitration
Each party submits a proposed money award to the arbitrator. At the conclusion of the arbitration, the arbitrator chooses one award without modification. This imposes limits on the Arbitrator’s discretion and provides an incentive for the parties to make reasonable proposals.
4. “Night Baseball” Arbitration
This is the same as “Baseball” arbitration, but the arbitrator first makes a decision without seeing the proposal of either side. The arbitrator then examines the proposals and awards the proposal of the party who came closest to the decision.
5. “Bounded” or “High-Low” Arbitration
The parties agree to a range within which the award must fall, without advising the arbitrator of the amount. The arbitrator then makes a determination, and the arbitrator’s amount is then conformed to fit within that range if necessary.
6. Incentive Arbitration
In the context of non-binding arbitration, the parties agree to a penalty if one of them rejects the arbitrator’s decision, resorts to litigation, and fails to recover a specified percentage or amount over the amount of the decision. The penalty may include the attorneys’ fees incurred in the litigation.
This is a proceeding in which the parties agree to participate in mediation, and to submit to arbitration any aspect of the dispute which is not resolved by the mediation.
Co-Med-Arb is a Med-Arb proceeding, but one in which different people preside over the mediation and arbitration portions of the process. This provides the advantage of being able to select the best person for each aspect of the proceeding, and the further advantage of inviting the fullest participation in each stage, as the parties may be assured that information disclosed in the context of mediation will not be known to the arbitrator.
For many years arbitration was viewed favorably, as a less expensive, more expeditious way of resolving disputes than litigation. In many industries, contracts were drafted, almost as a matter of course, with arbitration clauses. Now, however, one frequently hears the complaint that arbitration is nearly as expensive and as disruptive to clients as litigation, but without the safeguards of the Rules of Procedure or the right of appeal, or even any enforceable commitment to decide according to law. Some lawyers dislike the fact that there is no precedential value to an arbitrator’s decision; others view that as a virtue, considering some of the decisions. One of the most common criticisms is that arbitrators tend to seek compromise rather than making a decisive determination.
These criticisms are often well-founded, but arbitration has its strengths as well. There are instances in which arbitration can hold tremendous advantages over litigation. For one thing, most judges are generalists, and the judge selected to preside over any given dispute is purely the “luck of the draw”. With arbitration, the parties can select their “judges”, and in doing so, can select individuals who have specific expertise and backgrounds. This can lead to a much better understanding of the context of the dispute, common customs in the industry and, consequently, greater chance of a correct decision reached with less effort by the parties Another advantage is that with courts, the parties are at the mercy of the court’s calendar, not only for trials, but for motion practice and other pre-trial proceedings, while in arbitration, the parties have much more control over timing, including the option to set a deadline for the decision. Finally, it is not possible to control the scope of a judge’s determination. With an arbitrator or a panel of arbitrators, the parties are able to define the issues and have the arbitrators respond specifically to those issues, including providing advisory opinions and adjudication of matters that are otherwise outside the scope of a court’s authority.
Handled correctly, arbitration can allow the participants to set time deadlines for determinations, resolve discovery conflicts by telephone, on the spot (rare, but not totally unknown, in courts), set deadlines for decisions on motions, and streamline trial procedures. This, however, requires reasonableness and cooperation by counsel for all parties. Arbitration is even less well-suited than are courts for dealing with “Rambo” litigators, obstructionists and litigants of questionable sanity.
Certain agendas, such as “punishing” the other party by subjecting it to litigation, normally frustrate arbitration. If counsel has taken the case on a contingency basis, or for some other reason the plaintiff is looking for a high jury award based on sympathy; or if one party wants to delay resolution of the dispute for any reason, the parties will not likely agree upon arbitration. Voluntary arbitration may not be appropriate in a situation in which there is a wide disparity in resources, so that one side has decided to outspend the other or engage in a war of attrition; or if one side believes the other is not really serious and will quickly back down in the face of litigation; or if precedential value is significant. In the appropriate situation, however, arbitration may best meet the objectives of the client and obtain the best possible end result for the client.
D. Alternative Adjudicatory Proceedings
In addition to litigation and arbitration, there are other alternatives for the adjudication of disputes.
Each party presents its case before management-level business representatives of each of the parties. The business people have full settlement authority. After the case presentation, the representatives meet to negotiate a settlement. A neutral may or may not be present at either or both stages of the proceeding.
2. Court Minitrial
This is similar to the private minitrial, but is commonly conducted under the supervision of a judge, magistrate or special master. After the presentation, the parties meet to negotiate a settlement, generally with the help of the presiding neutral.
3. Private Judging (a/k/a “Rent-a-Judge.”)
The parties may hire a judge to hear and decide their dispute. This is sometimes a matter of pre-existing contract between the parties, sometimes by mutual agreement, or may be pursuant to statute. The decision may be binding or advisory, and the procedures for submitting evidence may be streamlined as well.
E. Dispute Resolution Techniques in a Non-Adversary Context
1. Meeting Facilitation
In situations, such as board meetings, conferences between joint venture participants, etc. in which there may be highly charged issues, extremely shy or extremely aggressive personalities, or other difficulties, a meeting facilitator can help keep the meeting to an agenda, deflect personal, or otherwise non-productive discussion and make certain everyone is heard and no one dominates the discussion.
2. Regulatory Negotiation
Within the context of a federal government agency’s rule-making function, this is an alternative to the usual formula of an agency’s issuance of regulations after a lengthy notice and comment period. Under this procedure, agency officials and affected private parties meet, with or without a neutral, and negotiate the language of proposed rules, which are then presented to the public for comment prior to final adoption.
Within an organization or an institution, an ombudsman is appointed to investigate complaints and either prevent disputes or assist in resolving disputes.
Generally used in large long-term projects such as major construction contracts and joint ventures. It is actually more a dispute prevention and management technique than a dispute resolution technique. The participants usually meet prior to the commencement of the project, to agree on objectives, methods of resolving disputes, division of labor, etc. and then during the project continue to meet to assure that these policies are followed.
The Right Approach at the Right Time
The Right Approach. Appendix II to this paper is an ADR Screen, prepared by the International Trademark Association (“INTA”) in connection with its ADR initiative. It provides a detailed checklist of considerations for analysis and for discussion with the client to determine whether and what type of ADR may be helpful in a given situation. Among the considerations should be:
o Attitude of counsel toward one another
o Attitude of parties to one another
o Familiarity of counsel with substantive law
o Familiarity with facts
o Approach of counsel to litigation
o Approach of parties to litigation
o Extra-legal considerations of parties
o Nature of dispute
o Relationship/past history of litigants
o Likelihood of further disputes arising in future
The Right Time. One of the keys to the effective use of ADR is timing. ADR can be used productively at any stage of a dispute. The key is to select the right form of ADR and employ it at the right time.
o Pre-litigation – ADR prior to filing a complaint, generally consists of negotiation, and possibly an exchange of cease and desist letters and responses.
o Including a draft complaint – Sometimes it helps to include a draft complaint, or even a courtesy copy of a complaint that has been filed, to help to define the issues and to convince the other side that your client is serious about the dispute.
o After filing – After filing a lawsuit, the issues between the parties are better defined and sometimes more readily resolved.
o After discovery – Sometimes it is necessary to obtain certain facts before the parties can address resolution, or even many issues, intelligently. Such a case is one in which the first user of the trademark has not been determined.
o After the entry or defeat of a motion for temporary restraining order or for preliminary injunction – At this point, the issues have considerably narrowed, the facts should be fairly clear, some legal guidance may have become “law of the case,” and both parties have suffered some of the “pain” of litigation. Sometimes they can be more ready to talk – or vow revenge.
o After any substantive determination by the court – This is, once again, a good stage to examine the possibility of settlement, particularly if the determination has been favorable to your client.
o After a final decision and before appeal – Do not assume at this stage that the case is over. This may be an excellent opportunity to discuss resolution. The trial court has made a decision, and the likelihood of success on appeal may be fairly apparent. A resolution at this point will bring an end to a process that could be ongoing for a considerable period of time, with a limited likelihood of success.
A Sampling of Judicial Requirements for ADR
A. Fed. R. Evid. 706 Court-Appointed Fact Finder
Federal Rule of Evidence 706 provides for courts to appoint expert fact finders sua sponte, or on the motion of a party. The neutral expert can be called as a witness and subjected to cross-examination.
B. Multi-Door Courthouse
In some jurisdictions, the courts are set up to screen disputes and to channel them directly to the most appropriate dispute-resolution mechanism.
C. Voluntary ADR – Chicago program Rule 5.10
On September 30, 1996, the Northern District of Illinois adopted a voluntary mediation program with respect to trademark cases. The program applies to all civil cases filed under the Lanham Act after January 6, 1997. At the earliest of the first scheduled conference, or 60 days after filing of the action, the parties are required to file a joint statement indicating whether they wish to participate in the voluntary mediation program and if not, the reasons why they do not wish to participate. The court maintains a list of qualified mediators for those litigants who wish to participate in mediation.
D. Duty to Confer and Certify
The United States District Court for the Northern District of California is among the courts which have a requirement that counsel confer with their clients and certify that they have done so. This requirement appears in Local Rule 16-6. The rule sets out four options for ADR:
- Settlement Conference with Magistrate Judge
- Early Neutral Evaluation
conducted by specialized panels of volunteer lawyers who contribute 4 hours toward attempting to resolve disputes
The rule requires counsel to discuss and consider the four options with their clients. Both counsel and the client must then sign a certification, which is filed with the court, that they have done so, and that they have read a brochure entitled Dispute Resolution Procedures in the Northern District of California, and considered whether the case may benefit from any of the ADR procedures discussed in the brochure. Strictly speaking, ADR is not required, but it is strongly encouraged under this rule
E. Compulsory ADR
Some courts require the use of ADR. An example is the United States District Court for the Southern District of Florida. Under Local Rule 16.2, virtually all civil litigation is referred by the court to mandatory mediation. Party attendance is required, as is the attendance of insurance representatives, the mediation must be scheduled within a set time frame, and the mediator is required to file a report to the court, within 5 days of the mediation, advising of the attendance of all required parties and the result of the mediation, whether settlement, impasse or continuance of discussions.
F. Judge Hosted Settlement Conference
Such a conference is generally scheduled by the court or instituted informally by the court at a time when the parties and/or counsel are before the court for a hearing or status conference. The participation, and the degree of pressure to settle, vary greatly from judge to judge.
OVERCOMING RESISTANCE TO ADR
A. Resistance by Client
1. Don’t talk in terms of ADR. If you have a client who thinks any offer to negotiate is a sign of weakness, the mere mention of ADR will be the kiss of death to the process, and it won’t do your standing with the client any good either.
Remember, ADR is not the objective, it is a tool. The objective is the best result for the client, and to get the best result for the client, you have to know what the client’s goals are. If economy is one of them, which it usually is, that always offers an opening. If judicial delay is crippling, that too may offer an opening. Beyond that, increasing the chances of the client’s achieving its goals is the basis for the best approach to the client. What is the client’s objective? What does the client want – or need — to achieve from the dispute resolution. Does the client have any conception of what litigation will entail in terms of anxiety and disruption of day-to-day routine? How important is it to you to have the value of precedent in this situation? Go through the analysis set out in the INTA ADR Screen at Appendix II.
Any client will appreciate the sensitivity to his, her or its business concerns and if the lawyer’s advice, whether it is for ADR, litigation or something else, is perceived as being based upon meeting the client’s best interests, it usually will be appreciated.
2. Speak candidly with the client. Once you have formulated your recommendation for serving the best interests of the client, carefully explain to the client what your reasoning is and why. Go through the analysis, and candidly share your views of the pros and cons with your client.
B. Resistance by Opposing Counsel
Assuming that you and your client are agreed that ADR in some form is the best means for meeting the client’s objectives, there still may be a problem with resistance by opposing counsel. This is a difficult problem, but often not insurmountable. The following are suggestions for how to obtain the participation, if not the whole-hearted cooperation, of opposing counsel.
1. Rule 706 Motion – Rule 706 Federal Rules of Evidence, provides for a court to appoint an expert witness to give testimony and be cross-examined. This may be done sua sponte , or on motion of a party. As with any motion, it may be opposed, but does not require the consent of opposing counsel.
2. Motion to Court for Referral to Mediation – Even in jurisdictions in which the rules doe not provide for mediation, a party may move the court for referral to mediation, setting out appropriate grounds for the request.
3. Motion to Court to appoint a General Master to preside at settlement conference – A court has the inherent power to consider and to grant such a motion.
4. Party to party contact – If all else fails, it is possible for the parties to speak directly to discuss options for resolution, including the use of ADR. Obviously, there are many instances in which this will not be advisable, particularly in cases in which there is a large disparity between the parties in status, standing, education, etc. However, in appropriate circumstances, it can be effective to have the parties meet and directly discuss their respective issues.
ADR, in a sense, encompasses any lawful means of dispute resolution other than litigation. In fact, it is a wide variety of procedures reaching from the lawyer’s most basic everyday task of negotiation to the courthouse steps. Just as great artists employ a number of media to achieve their desired artistic goals, lawyers most cognizant of their clients’ best interests stand ready to pursue any of numerous possible paths to their client’s goals, depending n which is the most promising in any particular situation. Most of these are loosely mislabeled ADR.
The possibilities are virtually endless, being limited only by legality, creativity and imagination. The best utilization of those possibilities, of course, requires wisdom. Creativity and wisdom can be learned, but not taught. Awareness, however, is a beginning, and that has been the goal of this exercise.