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TABLE OF CONTENTS
SCRIPT BEGINS HERE:
Thank you for that introduction. On behalf of myself and the *NAME
OF ORGANIZATION* I can say that I am glad to be with you today to talk about
Mediation and ADR methods.
Mediation is a form of ADR. ADR is the abbreviation for Alternative Dispute
Resolution. The term "ADR" covers all alternatives to judicial resolution
of conflicts. It has a long history.
At one time in England most conflicts were handled by someone (or a group of someones -- in a process called "the thing") trying to talk sense into the people in disagreement. This did not work well and the Norman kings replaced the things with law judges. This period in time is where we got the beginning of most of what we call the common law.
In the early days of the common law justice was swift, unpredictable and erratic. Parties either hired the best fighter they could find for a trial by combat or submitted their case to a judge for a trial at law. In either case, luck seems to have played a significant part in any outcome.
People who wanted to make business decisions did not like the risk involved and set up their own system -- the Law Merchant. This allowed businessmen to settle things without killing each other and without relying on unpredictable judges and juries.
The most common method used in the Law Merchant was Arbitration. In Arbitration the parties would present their case to an arbitrator who would make a decision -- just like a judge does in a bench trial.
An alternative to Arbitration was the summary jury trial where the parties used a private jury. They would get a decision just as a party did who went to a jury trial in a law court.
Both methods had the advantage of being more predictable and of being final. However, both methods generally resulted in a clear winner and a clear loser and both methods forced the parties to follow the result -- whether or not the parties agreed with the result. Often the Law Merchant ended both the conflict and the business relationship between the parties.
The problems of being forced into something led to non-binding arbitration and mini trials. In both of these forms the parties present their case and then receive the opinion of an outsider as to the value of their case -- an expensive version of calling in an outside appraiser.
The old fashioned historical alternative dispute resolution processes had
However, since in the Middle Ages the legal system was fast and inexpensive,
the alternative dispute resolution processes weren't used that much after
the kings got a handle on things and the legal system became more reliable.
As we all know, things have changed a great deal since the Middle Ages. Some things are much, much better, faster and cheaper. Unfortunately, that is not true of the law. Taking a case to trial has become time consuming and expensive.
Since trials became so expensive, Arbitration became dramatically less expensive than litigation. Certain segments of the business world, notably construction and securities, began to regularly use arbitration instead of the Courts.
Following construction and the British, some insurance companies also began to arbitrate intercompany disputes.
While this move back to arbitration was happening, the ancient method -- mediation -- also evolved.
Mediation used to involve the parties staring each other fact to face the entire time. Mediators discovered that the process worked better if the parties were separated after the opening statements.
Mediation used to involve the mediator jumping into the process with his or her opinion. The process seems to work better for those mediators who either never provide an opinion or who give one only at the very end of the mediation.
Mediation used to be public. Mediators discovered that the process worked much better if it was private and confidential.
Mediation used to be a single meeting process. Mediators discovered that the process works better with multiple caucuses.
What really happened was that through over a thousand years of trial and
error, mediators found a method that worked. In fact, the current method
of mediation now works so well that it is replacing arbitration in many
IV. CURRENT METHODS
The current method of mediation works as follows:
First, the parties meet together with the mediator. After the mediator has settled everyone in and introduced them to the process, each party makes an opening statement of position.
Second, the parties break into separate groups and caucus. The mediator meets with each party, helps them to review and analyze their case, and then takes offers and information back and forth between the parties.
Third, the parties work towards a solution -- generally never meeting
together again until it becomes time to sign a settlement agreement.
A close look at the old method of mediation and how mediation works today will show that mediation has changed almost every element in the process to one that works better.
Currently, large statistical studies of mediators shows that about 83% to 85% of all mediations are successful. In addition, about 5% to 10% of the mediations conducted do result in either a full or partial settlement within a short time following the mediation.
My own experience to the point of twenty mediations had two sessions that
did not result in a settlement. One of those settled four hours following
the end of the mediation session and one of those was recently tried in federal
VI. THE MECHANICS OF MEDIATION
A. THE DECISION TO MEDIATE
Mediation is appropriate in four situations:
First, when negotiations deadlock. That is, when both sides quit moving. This often happens when one side is irrational, when one side has not properly evaluated a case, or when a conflict of styles and personalities has created a deadlock.
In this situation, mediation is an opportunity to use a process that enforces rational thinking, a process that helps to educate the other side as to proper evaluation, and a process where the mediator steps in between the styles and personalities of the parties.
Second, mediation is appropriate when the legal process becomes expensive. Generally, for about the cost of conducting a deposition, mediation has an 85% chance of resolving a case. The decision to mediate is often made in order to reduce the expense associated with a case. It also reduces the risk associated with a case. Finally, because of the time/value weight that plaintiffs tend to put on a case, mediation often reduces the expected value of a case.
Third, when time pressures occur mediation can help resolve things sooner instead of later. With the judgment rate of interest at 10% per annum, and "real" interest rates between 4% and 5%, there can be some value in avoiding delay.
Finally, the decision to mediate implies that the party initiating mediation has something to gain by involving a neutral third party. Suggesting mediation, when done for the right reasons, should be a sign of belief in the value of the case.
The decision to mediate should be made whenever any of these four situations
B. MEDIATION BY CONSENT OR COURT REFERRAL
Parties get to a mediation session either by agreeing to mediate or by a court sending them to mediation. Most of my experience in mediation has come from sessions initiated by an insurance adjuster prior to the filing of a law suit. In all of those matters we handled the mediation by consent.
Once a law suit is filed, the parties can agree to mediation and obtain a
court order or the court can order mediation on its own initiative or on
the motion of any party.
C. PREPARATION, JOINT MEETING, CAUCUSES, CLOSING
Once the decision to mediate is made and the matter has been referred to a mediator, four things need to be done.
First, the parties need to prepare. The checklist in the handout goes over the steps a party takes to prepare for a mediation session.
Second, the parties meet at the mediation site. At the site the parties have a group session, often called the joint meeting. The notesheet in the handout goes over the matters to keep track of before, during and after the session.
Third, the parties go into caucuses. In these caucuses the parties privately reflect on the other side's opening statement, they reevaluate their case, they discuss proposals, and they authorize the mediator to transmit information and positions. The caucus is the place where parties can vent frustration, candidly discuss the issues and take time to reflect.
Fourth, the case either settles or deadlocks. Often what seems to
be a deadlock is really just a good time to rest and reconsider. A substantial
number of cases settle within 45 minutes to an hour after the parties both
think that they have reached a deadlock. After either settlement or deadlock,
the session then closes. If the mediation was Court ordered, the mediator
then reports to the Court only whether or not the case settled. No other
information about the mediation session is ever disclosed.
VII. REASONS MEDIATIONS FAIL
TOP TEN LIST
In the handout is a list. It is a list of the ten reasons mediations fail.
[go over list, relate to reality from humor].
VIII. AN ALTERNATIVE METHOD WOULD WORK BETTER
There are times when an alternative will work better than mediation.
ALTERNATIVES TO MEDIATION
There are four alternatives to mediation.
The first alternative is arbitration. In cases where there are substantial emotional barriers to settlement, especially in cases where there is not enough insurance coverage to cover all the claims, arbitration works where mediation will not. I have had extremely good experiences with arbitration used in the right situation.
The second alternative is a minitrial. In cases where there is a large amount of money at issue and where the parties have a wide gap in how they perceive a jury would treat the case, a minitrial can be conducted in order to show what a jury would actually do. In some specific situations, a minitrial can be very persuasive and worth the cost.
The third alternative is going forward to trial. A "real" trial. You can always walk away and go to trial, and in some cases you have to. Sometimes a declaratory judgment is necessary before serious negotiations can begin. At other times, one side has nothing to give. Thus, while federal courts have had good success with mediation in criminal matters, no one mediates whether or not to accept the death penalty. Variants of this problem occur quite often in business situations.
Finally, sometimes you do not need a mediator to have a settlement conference
and to make it work. While settlement conferences went out of fashion because
they failed so often, with the right case and the right people, it is possible
to make a settlement conference work.
IX. USING MEDIATION
The handout materials are provided to help you use mediation successfully. There are four steps.
First, pick appropriate cases for mediation. Look for cases where there is a deadlock, where suit has been filed or where your client has time pressures that would be helped by mediation.
Second, go into the process with open eyes. The "top ten" list in the handout materials really just covers being aware of what is really necessary to make the process work.
Third, use the provided checklist to make sure that you are ready for the process.
[to the extent that time allows, now review the checklist with the audience.]
Fourth, use the provided notesheet to keep in mind the controlling factors in a mediation.
[to the extent that time allows, now review the notesheet with the
X. QUESTIONS AND ANSWERS
Who are the local mediators?
-- your cover sheet lists the members of the *ORGANIZATION*. A descriptive index was mailed or delivered to most of your offices this summer and I can provide copies of it to any of you who need an updated copy.
How much does it cost to mediate a matter?
-- locally it costs about what a deposition costs. That is, it costs about $350.00 to $550.00 a side for a full day session. You've probably heard that it costs about two to three times that amount -- which is true in some places, but not here.
I'd like to learn more about mediation?
-- In the near future another member of the *ORGANIZATION* will be covering more on the topic for you. The Council also has materials.
I'd like to learn more about negotiation processes?
-- Gladly. There is also a seminar available on that topic.
This Website is by Stephen R.
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