THE TRUTHS BEHIND MEDIATION

A. Introduction

Mediation is a part of what is known as "alternative dispute resolution."  In the context of this essay  "mediation" refers to a process where a neutral caucuses with the parties to a conflict and helps them reach a solution.a   There are several basic facts that most attorneys need to know in order to properly use and appreciate the various ADR mechanisms -- especially Mediation. The facts rest upon the essential natures of Mediation. The facts and the foundation of these natures are discussed in this article.

The essay explains the basic facts and then places them in context with the foundation.

B. The facts are that:

a) mediation works. Mediation resolves most tort type problems 85% of the time. It resolves TRO and similar issues about 98% of the time.

In a (June 16, 1992) substantial statistical base study, mediation settled issues at the following percentages:

Workers Compensation: 87% Contract Disputes: 87% Debt/Sworn Accounts: 87% Motor Vehicle Claims: 85% Other Personal Injury Claims: 77% Overall settlement rate: 83%1

Note that the stage of the litigation does not seem to make a significant difference in the settlement rates.2

Whether the mediation is consensual or manditory seems to make a 10% difference. 4

b) within limits, the quality of the mediator is not a significant factor in whether or not mediation works. Statistically, almost all mediators show about the same success rate. (83% for any mediator vs. 85% success for "professional" mediators per above cite).

However, see the next note, (c).

c) the quality of the mediator is a significant factor in how "successful" mediation is rated by the parties. Better mediators do not have significantly higher settlement rates -- but they do have significantly happier participants in mediation.  3

While I mediate, I also represent parties in mediation. As a partisan, I have represented parties in manyADR sessions. Interestingly enough, a "bad" mediator that resulted in my client receiving twice what the client expected (or should have expected) and also ended with my client being angry with the mediator and the process.

My worst "failed" ADR session (one featuring an opposing attorney who was using the session purely to abuse everyone) had one of the best mediators I have met and left all the clients very pleased with the experience. All in all, these examples (and others) from my own experience illustrate impressively just how much of a difference the mediator can make in terms of client satisfaction.

d) mediation works well in any area where the parties will invariably file suit and go to trial if the matter does not settle (e.g. typical tort claims such as auto accidents). It works poorly in areas where the cost of going to trial prevent a substantial number of claims from being filed (e.g. medical malpractice).

From a cost/benefit analysis, ADR methods can greatly reduce the cost of defending "standard" tort claims when used early in the litigation -- if the defendant need have no concern that quick settlement will increase the number of claims. Dental and Medical Malpractice are an excellent example of quick settlements increasing the number of claims.

The lead medical malpractice attorney for a large Texas referral oriented Plaintiff's firm published the economic analysis showing why they will not take a dental malpractice referral under any circumstances. An average recovery of $4,500.00 does not match well with an average expense of $7,500.00. Early ADR would reduce the average expense to $1,500 or so and completely change that equation.

e) mediation is a form of negotiation facilitation, not a tribunal. It works only where the parties are able to negotiate. (Conversely, binding arbitration works best where the parties need a tribunal because they have artificial -- generally emotional -- limits to their ability to negotiate).

Often parties will have emotional reasons they cannot mediate. The client who will not admit any fault or comparative negligence. The child who has lied to parents about the facts leading to the tort. The family who has lost a parent in a nursing home and cannot accept the value the law puts on their loss.

Many of these people will willingly submit to binding arbitration. I have taken two or three of these types of cases to arbitration (generally taking only part of an afternoon) when multiple mediation sessions failed.

f) mediation is often an effective form of discovery. It is not a good forum to pry secrets out of an opposing party, but it is an excellent place to find out or discover where the sticking points in negotiation are.

Other than a lucky hearing of an emotional outburst, it is often impossible to sift the wheat from the chaff in uncovering the blocks to resolution. While luck should not be disregarded, the times that a hidden sticking point has been disclosed to me in normal litigation are few compared with the almost routine uncovering of those points in mediation.

The reason for an additional 5% or so settlement of cases immediately following mediation can often be traced to the discovery factor. In discussing ADR with other attorneys, the need for an IME (independent medical exam), a third party appraisal, a reconsideration and an apology, and similar things, were all discovered in particular cases through ADR.

C. The two foundations to the essential nature of mediation are:

First, Mediation methods allow the advocates (usually attorneys) to compress the general back and forth necessary to negotiate a settlement. Instead of the back and forth taking months 4a, it takes hours.

Law Professor Gerald R. Williams, under Grant Number GS-42867 of the National Science Foundation, with support from the ABA and substantial numbers of attorneys and statistics, produced the most popular ABA approved Negotiations seminar for attorneys. Not surprisingly he established that all settlement arrives as the result of negotiation and that all negotiations go through stages. I would note that the timing of these stages, along with the development of the billable hour and modern discovery, has resulted in an expensive ritual,5 in which most attorneys are not mentally capable of moving through the stages of negotiation (nor do they properly develop their case) without engaging in (expensive) legal efforts.

However, attorneys, with good prefatory work by adjusters, (especially in-house or captive counsel), can use ADR methods to dramatically reduce the cost of moving through the stages of negotiation when a suit has been filed. In fact, as far as evaluating ADR procedures vis a vis attorneys, their true function is to move the attorneys through the ritual at a lower expense. The insurer trades off the occasional "mistake" (i.e. not discovering fraud or weaknesses through discovery) for lower over-all transaction costs.6

Second, Mediation methods allow the parties (including claimants and a insurance companies) to compress the emotional back and forth necessary to negotiate a settlement. Mediation often provides individuals catharsis not available by any other method short of participating in litigation and trial.

The need for catharsis is often overlooked and leads to deadlocks -- especially in what appears to be a "nuisance" case or one where the parties are excessively unreasonable.

I am not arguing whether or not the legal profession "should" be involved in providing catharsis. However, if catharsis has not been supplied and is necessary in order to resolve a legal matter, the use of ADR methods can be valuable.

This is important in today's atmosphere of litigation mills and formalized legal practice, because an ADR session may be the first and only time that a litigant is given the chance to tell their story completely and without hasty interruptions. ADR is generally better at letting a person "be heard" than a trial (where formal evidence considerations and judicial temperament basically forbid narratives).

D. Conclusion

For social and fashion reasons ADR has become the "trend of the hour." However, for financial and equitable reasons ADR appears to have staying power. In cutting through all the clutter that has accumulated about Mediation it is important to have a realistic understanding as to what Mediation is, how it works and what it can accomplish when reading, listening or studying ADR materials and guides.7

ADR -- especially consensual ADR -- does not so much resolve disputes as effectively facilitate expeditious negotiation. Used for that purpose it can save time, expense and good will. Understanding the facts, the bottom line is that Mediation is an effective and relatively inexpensive method of compressing the time and emotional responses that comprise negotiation.

Footnotes

a Mediation is much broader than "just" court-annexed mediation (see).  This essay focuses on the narrow context in order to focus on the type of mediation most often handled by a PADR.

1  Numbers from the Dallas Mediation Project.  Statistics on Mediation in the 101st District Court as of June 12, 1992 as condensed in Court Annexed Mediation (1993, State Bar of Texas MCLE).  Total number of cases mediated 981, total settled 818 (83%), settlement rate through private mediators, 85%.

2  The stage of litigation (early, middle, or just before trial) did not seem to make a statistical difference in the settlement rates.  The Dispute Resolution Revolution in Court Annexed Mediation, above.

3 In Houston, 36% of the mediators reported a settlement rate of 85%+, 37% reported a settlement rate of 75% to 85%, 16% a rate of 50% to 75% and 6% a settlement rate of 0% to 50%.  Houston's survey involved non-attorney mediators.  A.A. White Dispute Resolution Survey, reported in ADR in Houston by Judge Carolyn Clause Garcia (1993).

The post-session settlement rate was 75-85% for 33% of the mediators, and 45% of the mediators reported 25% or less post session settlement.  22% reported other possibilities.  Post session settlement is obviously an important factor in some mediations.

4 Lubbock's manditory, non-consensual program, summarized by Judge Thomas Cannon in ADR:  Success Stories in Lubbock (1993) had a success rate of about 75% or about 8% to 10% less than the consensual programs.

5 See A Lawyer's Handbook for Effective Negotiation and Settlement, Gerald R. Williams, at page 21 (the three stages of negotiation) and pages 47ff (Chapter 6.  Stages of the Negotiation Process).  See also Subchapter 6.a. Negotiation as a Ritual and Negotiation and Settlement in the 90s, New Dimensions for Lawyers, Gerald R. Williams, 86-88.

6 cf Emissary orInfantryman, July 1991, For the Defense, page 20ff.

7 See A Guide for AF Arbitrators and Mediators, Arbitration Forums, Inc. 1991, pages 8-9.

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