Negotiation Law Blog

Still riffing off of Geoff Sharp's Money Mediation #1 (where's two big guy?)

I keep telling friends that the following formula is descriptive, not prescriptive, and yet, I don't think I really know what I'm talking about.  

The formula?  In a pure distributive bargain, the case will settle half-way in between the first two reasonable offers.

The belief?  I believe the key phrase here is "reasonable," which is not surprising since the entire practice of the law seems to be precariously balanced atop that single word.

The observation?  For the past three and one-half years of mediation practice I have performed this math equation (I know it's only arithmetic) at the moment I believe the first two reasonable offers have been put on the table.  Often I'll go back to earlier offers -- ones I considered unreasonable.  I generally find that the arithmetic works there too.  Add the offer and the counter.  Divide by two.

I do sometimes say "you seem to be heading toward $X" when the parties are claiming impasse and I'm not buying it.  They seem surprised that I somehow know what they're thinking.

(twilight zone music here)

The Question.   What's the deal with this little formula, taught to me as holy writ by the Mediating the Litigated case people. 

Is it some sort of golden mean or cognitive bias (aha! woke you up Michael Webster in Canada!) 

If any of the following people were to give an answer to this question, I'd be deliriously happy, which just goes to show you just how much I'm procrastinating writing chapter three:

Diane Levin

Geoff Sharp (the "coalface" perspective)

Anyone at Indisputably.

Richard Rueben (who in any event owes me a phone call) at U. of Mo. (my social psych guru)

(photo:  Inside H Block 4 by Still Burning)

Want an angry tax attorney serving as the arbitrator on your personal injury case?  Then head on down to Arizona where the Ninth Circuit has just held that he can be forced  by State law to serve as your neutral for $75 per day -- all without violating the U.S. Constitution.

The indentured tax attorney?  Mark V. Scheehle, to whom you might throw a little tax planning work out of collegial fellow feeling.

The facts below.  Link to Scheehle v. Justices of the Supreme Court here.

Arizona law requires that each superior court, by rule of court, provide for the arbitration of cases in which the amount in controversy does not exceed $65,000. Ariz. Rev. Stat. § 12- 133. At the time this action was filed, the Local Rules of Practice for the Superior Court of Maricopa County required that all attorneys who reside in the county and have been active members of the Arizona Bar for five years serve as arbitrators.

Attorneys who served as arbitrators under the Appointment System were paid a flat fee of $75 for each day in which they actually conducted an arbitration hearing.  

Scheehle has been a member of the Arizona Bar since 1981, and a certified tax specialist since 1988. In September 1996, Scheehle was appointed as the arbitrator in a motor vehicle personal injury action. He served as an arbitrator and submitted a report to the Maricopa Superior Court in December 1997.

In July 1997, Scheehle was appointed as the arbitrator in a second motor vehicle personal injury suit and accepted the appointment. In October 1997, while still serving as the arbitrator in the second action, Scheehle was appointed as the arbitrator in a third personal injury action.

Scheehle decided to challenge the authority of the Arizona courts to require that he serve as an arbitrator. He returned the file to the Presiding Arbitration Judge of the Maricopa County Superior Court with a letter declining to serve as an arbitrator. He also expressed his unwillingness to serve as an arbitrator in any subsequent case, and his belief that the Appointment System was unconstitutional and violated Arizona law.

The judge responded by holding a telephone conference at which Scheehle placed his objections on the record. The judge further encouraged Scheehle to apply for relief for good cause shown from the particular assignment, but Scheehle declined, choosing to challenge the Appointment System as a whole.

Scheehle was allowed to file a brief in support of his position. In January 1998, the Presiding Arbitration Judge entered an order rejecting Scheehle’s arguments and imposing a $900 sanction on Scheehle for refusing the arbitrator appointment.

Service!!

Thanks to Joe Provenza of Can I Have That With!!  for dropping by yesterday's post and leaving a comment and for hipping us to the Mental Blocks that prevent every negotiator and negotiation advocate from distinguishing the conflict resolution forest from the money trees.  Joe comments upon and quotes Steve Pavlina's post “2 Mental Blocks to Making Money” with the good news that we should be thinking about people, not money.

(photo Adam and Eve on a Raft by Duane Romanell)

“…By focusing on trying to get money, you’re missing the point. The point is to provide value to others. This means serving people in a way they aren’t already being served, in a manner that aligns with your unique creative self-expression. Share what only you can share. Express what only you can express in the way that only you can express it…

…Try to look past your own needs and recognize there’s a pretty interesting world around you. Through your actions you can have an impact on it, for better or worse. Think about how you can provide something that people want or need in a way they aren’t already being served, something that will make a positive difference. Then act on it.”

"Focus entirely on the customer," echoes Provenza "and then act upon it."

 A bias for action is tantamount. Too often we spend our energy preparing to act, yet take no action. We have the resources all about us, however we do not use them.

Focus on the customer and acting upon that focus is the only way to break through Mental Blocks!

(photo:  The Choices by Robert La Londe-Berg)

All things being equal -- or, more to the point -- most things being impossible to equalize -- your clients' satisfaction with the settlement you negotiate is going to depend upon something other than the absolute number attained. 

In fact, the social scientists who study these things have told us that people tend to be more satisfied with the outcome of negotiations in which the following occur:

1. the other side makes numerous concessions (even if they are small or inconsequential);
2. the outcome achieved is as good or better than similar outcomes obtained by colleagues or competitors (i.e., a 10% raise in salary tends to be viewed favorably if one's co-workers receive 7% raises and unfavorably if one's co-workers receive 12% raises);
3. the negotiator does better than he hoped to (without regard to whether the expected outcome is "good" or "bad" based upon objective factors);  
4. the negotiator feels that the process by which the outcome was reached was "fair and reasonable"; and,
5. the negotiator does not believe that his will was overridden by a stronger negotiator on the other side.

For the academically minded, see e.g. Disconnecting Outcomes and Evaluations: the Role of Negotiator Focus here and Voice, Control and Belonging:  the Double-Edged Sword of Procedural Fairness here.

Now, from the "Pride and Preferences" post at The Proper Study of Mankind (hat tip to TEDBlog's post How Toddlers (and Monkeys) Make Choices) we learn that the social scientists down the lane have once again proven that which our own experience has already told us -- that we routinely justify the choices we make by discounting, devaluing or demonizing the unchosen option and telling ourselves that we had always favored the chosen one.    

What's new about this relatively commonplace insight is that it is at work not only in sophisticated bargainers, but also in human toddlers and our primate friends the capuchin monkeys.  

How do we apply this "choice preference" insight to client satisfaction with settlement outcomes? 

It's not hard to do. 

Whatever a client's reservations about the course a negotiation session takes, by the end of the day they've made dozens of small decisions among (potentially) equally attractive or unattractive choices.  Add to the negotiation mix the fact that we tend to value choices that were made only after great difficulty and the "satisfaction outcome" is nearly guaranteed.

Even without coaching by you or assurances given by the mediator, your client should be pretty satisfied with any negotiation outcome by the end of the day.  If not, only a little negotiation post-mortem back-patting should be necessary to focus your client on the difficulty of your mutual  achievement and on your joint superior wisdom in settling at the time and for the number you both did.  

We're not suggesting being disingenuous here.  Most cases can profitably settle in a fairly wide range.  So long as you've done a thorough cost-risk analysis with your client and have a firm bottom line you've agreed not to alter, most settlements of risky and unpredictable litigation are the smartest decision you and your client can make at any stage of the proceedings.

Year-end's coming and with it the time to close the book on many cases that are becoming more problematic with time.

Clear these troublesome pieces of litigation away and both you and your client will have much to celebrate in 2008.

I kicked off the Thanksgiving  holiday season last evening by having an argument with my friend and neighbor the rocket scientist about extraordinary rendition and the effect of immigrant workers on the economy. 

I knew I'd lost all sense of perspective around midnight as I continued searching for and emailing Tony articles that proved me right, while Mr. Thrifty snored softly beside me, intermittently awakening to say "I thought you said you were going to go to sleep?"

Embarrassing, but true.

Tomorrow, tens of millions of people will be sitting down to Thanksgiving dinner with friends and family they haven't discussed politics, sex or religion with for at least one full year.     

For those of you who find you just can't help yourself, I provide the following resources. 

First, I give you Ben Stein's Top Ten Tips for Having a Business Conversation -- appropriately entitled "How Not to Ruin Your Life." They will serve you at the Thanksgiving table every bit as well as they will save you from self-destruction at your next firm retreat.  

If you simply cannot avoid a political conversation this Thanksgiving, do yourself a favor by taking a brief look at the Public Conversations Projects' Eleven Ideas for Making a Hard Conversation Work before the relatives arrive. 

Finally, as much for myself as my for readers, I give you my own personal top six tips for Thanksgiving Day conversation.    

1.  Before diving in to a spirited dialogue about the use of fetuses for stem cell research with your second helping of mashed potatoes, ask yourself whether you are emotionally ready to resist the strong pull to hit your conversational partner over the head with a turkey leg.  If not, open your mouth only to say something kind or grateful or to shove another helping of stuffing into it.  

2.    If you just can't help yourself from responding to Aunt Gertrude's (somewhat drunken) assertion that "torture is too good for the terrorists at Guantanamo," any of the following will do.

Can I pour you another drink?

Uuh huh, uh huh, uh huh

go on

tell me more

how do you feel about that?

I couldn't have said it better myself; do let me call you a taxi.

3.  For the academically minded,

I have a couple of dozen articles on that issue.  If you'll give me your email address, I'll pass them along to you.

4.  For the cousin from Alabama, 

I'd love to get Rush Limbaugh's point of view on that -- please do drop See I Told You So  by the house before you leave for Montgomery tomorrow.

5.  Avoid stereotyping people from Montgomery, Alabama.

6.  As the Public Conversations Project advises,

Thinking before speaking is a good idea.

Have a great Thanksgiving and remember --Ben Franklin thought the National Bird should be a turkey! 

Think twice. 

Then think again and offer Aunt Gertrude another piece of pumpkin pie.

(Other law blog thanksgiving posts here (New York Personal Injury Lawyer); Thanksgiving for New DMCA Exceptions from InfoLaw, Thanksgiving for Law Reviews? from PrawfsBlawg; a Holiday Brain Book Guide from the Neuroethics & Law Blog;  the WSJ Law Blog's advice for NYC Thanksgiving tourists; and, Future Law's Ten Reasons to Be Thankful there were No Lawyers on the Mayflower.)

In her recent post Supreme Court Orders Additional Briefing in Hall Street, Moritz Law School Professor Professor Sarah Cole at Indisputably Dot Org worries that the Supreme Court might punt the issue squarely placed before it in Hall & Associates -- whether parties to an arbitration agreement may expand judicial review of arbitration awards -- and decide the issue on a narrow common law ground, thus creating more, rather than less, uncertainty for parties wishing to design the best conflict resolution vehicle for their particular dispute. 

(sorry for the run-on sentence grammarians)

The heart of Professor Cole's concerns is quoted below.  The questions from the Supreme Court giving rise to those concerns may be found in the linked post above.

(our earlier posts on the case -- which we referred to as the "Mattel" -- are here and here)

It may be that the[ Court is] considering whether substantive judicial review provisions contained in an agreement among parties transforms what the parties think is arbitration into a procedure governed by common law (contract law) rather than the FAA.

If that is the case, then the question becomes whether parties can ask courts to review their contracts on grounds that courts normally don’t use to review contracts. Then, the district court judge would have to look at whether he or she had authority to grant the parties’ request — in past cases, courts have used their inherent authority to grant or deny such non-traditional requests.

But, because courts’ inherent authority is discretionary, courts might reject the parties’ requests. That level of uncertainty might doom these kinds of agreements.

Gini Nelson is the founder and author of the Engaging Conflicts Blog.  Gini  received her law degree from George Washington University Law School in 1983 after teaching Social Problems at the University of Kansas while completing her MA in sociology.

Gini's practice  includes mediation and settlement facilitation.

Gini, who posted her response to my request for comments on mediation ethics on her own blog here, did so before I noticed and after I make a few edits here.  Any flaws in this version must therefore be laid at my door. 

Gini's pure unmolested thinking can be found here.  Gini's slightly edited thoughts (for style only) are in italics below.

As a starting point, I echo the physicians' ancient ethical code as First, do no harm.

When we look at short lists of ethical obligations, this bedrock principle appears to undergird all of them -- most of which emphasize client determination and transparency. This list should be short and it should be clear.

The obligation to do no harm, however, must be distinguished from the aspirational goal of "doing good."  

I am concerned about the blurring of lines between the two.

Is it our ethical duty, for instance, to advance the field of mediation, as much as we might aspire to do so?

Let's Take Pro Bono Services as an Example of an Aspirational Goal

I, for one, oppose mandatory "pro bono" services, whether the professionals being hauled into servitude are mediators, lawyers, physicians, accountants or interior decorators (as much as the world would benefit were it as aesthetically pleasing as, say, every shop window in Paris).

At least in New Mexico, however, we are not ethically required to provide pro bono services.  We are only asked to aspire to provide them.

This professional aspirational goal leaves it up to the individual attorney to consider what she can afford in terms of time, money and energy when considering whether to provide her services for free.  Despite the clarity with which this principle is expressed in New Mexico's Code of Professional Responsibility, I've sat in meetings with a combination of practicing attorneys, practicing mediators, state bar staff, court staff, and a judge where everyone was in complete accord on a mediator's ethical obligation to provide pro bono services.

Why the Problem?

When the people responsible for establishing and implementing court-annexed mediation programs misunderstand an aspiration as an ethical obligation, they feel free to incorporate mandatory pro bono mediation services in those programs.  In New Mexico, most state and city, government and judicial ADR programs require their mediators to provide their services free of charge. 

I understand the budgetary constraints these programs work with.  At the same time, I believe a confusion of the professional aspiration to "do good" with the ethical obligation to "do no harm" provides principled justification for program designers to expect mediators to work for free.

This, of course, harms the solo practitioner who can seldom afford to provide the same scale of pro bono services that larger or richer offices can handle.  Perhpas more importantly, it constitutes a continuing harm on the entire mediation field by demeaning the value of its practitioners' services.

This confusion also perhaps helps fuel some of the intolerance of other forms of practice that Diane writes about here.

Diane Levin of the Award-Winning Online Guide to Mediation and the World Directory of ADR Blogs and principal of Partnering Solutions responds to our request for comment on the Rules of Ethics governing the work of mediators as follows:  

The JAMS standards that you link to are similar but not identical to the standards of conduct promulgated by numerous other organizations and professional associations for mediators. As a practitioner in Massachusetts, I adhere to a combination of several standards that apply to my work.

Sources of Ethical Standards for Mediators

First, there are the Model Standards of Conduct for Mediators approved and adopted by the American Arbitration Association, the American Bar Association, and the Association for Conflict Resolution in 2005. 

In brief, they include self-determination by parties; impartiality of the neutral; avoidance of conflicts of interest; competence of the neutral; confidentiality; responsibility for the quality of the process; truthfulness in advertising and solicitation; accuracy of information regarding fees and other charges; and, the advancement of mediation practice.

Responsibility to Improve the Profession

That last duty I'd like to underscore, since it's one that I increasingly see mediators ignore or, worse, spurn. It calls upon mediators to advance the practice of mediation by, among other things, fostering diversity, mentoring new mediators, and -- here's the important one:

A mediator should demonstrate respect for differing points of view within the field, seek to learn from other mediators and work together with other mediators to improve the profession and better serve people in conflict.

(Emphasis mine.)

To me that means not only respecting the various models of mediation practice that abound, but to resist the temptation to label some mediators as superior or inferior to other mediators on the basis of practice area or profession of origin. We've got to stop putting each other down, folks.

Uniform Rules of Dispute Resolution

I also mediate within the Massachusetts courts which require neutrals to observe the Uniform Rules on Dispute Resolution.  Rule 9 of the Uniform Rules spells out a mediator's ethical duties which include impartiality; freedom from conflicts of interest; informed consent; disclosure of fees; confidentiality; truthfulness in advertising and solicitation; responsibility to non-participating third parties (children in a divorce case, for example, or the public and public safety in a dispute involving a public construction project); and, requirements for withdrawal.

Some points to note about these rules.

Rule 9(c), Informed Consent, prohibits mediators from providing legal advice and coercing the parties to settle.

I think this is critical, since the prohibition on providing legal advice underscores that the mediator's role is to facilitate negotiation and decision-making, not to serve as advocate. I also agree with its prohibition on coercion, which strips the parties of the power and the right to make their own decisions free from pressure by the mediator or the agenda of the court -- both of which may have an interest in obtaining the settlement of as many cases as possible.

This places the needs of the parties front and center, not as mere afterthought.

In addition, I'm a member of the Massachusetts Council for Family Mediation, which has its own rules of conduct for its members, which resemble but are not identical to the rules discussed above.

These rules require mediators to clarify for parties the difference between mediation and other processes such as litigation, arbitration, negotiation through lawyers, and therapy; and that they encourage parties to seek professional advice such as legal, financial, therapeutic, or marriage counseling.

A substantial number of my family mediation clients are not represented by counsel. Because it's easy for unrepresented parties to be confused about the mediator's role, I take great care to emphasize that my role is to mediate -- and that I will not be their lawyer, will not and cannot represent them, and will not provide legal advice -- and take care to explain the difference between a mediator and a lawyer. I would do this even if the Massachusetts Rules of Professional Conduct, Rule 2.4, "Lawyer Serving as Third Party Neutral", didn't require me to do it.

All of these various bodies of ethical rules and duties guide my conduct at the mediation table, Vickie.

But there's another ethical duty that I honor.

I don't think you'll find it formally recorded in our professional canon, but it's this: connect with other mediators.

I am fortunate to have a network of trusted friends and colleagues (and of course bloggers) in the mediation profession to whom I turn when an ethical dilemma confronts me. We need each other.

It's one reason why ABA Section on Dispute Resolution's Model Standards of Conduct Standard IX, Advancement of Mediation Practice, resonates so strongly with me. Not only do we benefit as individuals, but we benefit collectively when we work together to improve our practice.

At the close of yesterday's seminar on mediation ethics for lawyers, I was asked what ethical standards guided my own practice.  Other than "neutrality" and maintaining confidences, I'm sorry to say that the question caught me short.

As promised to teleseminar participants, I provide JAMS suggested Mediator Ethics below together with a link to the JAMS article explaining each ethical standard here.

GUIDELINES

I. A MEDIATOR SHOULD ENSURE THAT ALL PARTIES ARE INFORMED ABOUT THE MEDIATOR'S ROLE AND NATURE OF THE MEDIATION PROCESS, AND THAT ALL PARTIES UNDERSTAND THE TERMS OF SETTLEMENT. 

II. A MEDIATOR SHOULD PROTECT THE VOLUNTARY PARTICIPATION OF EACH PARTY. 

III. A MEDIATOR SHOULD BE COMPETENT TO MEDIATE THE PARTICULAR MATTER. 

IV. A MEDIATOR SHOULD MAINTAIN THE CONFIDENTIALITY OF THE PROCESS. 

V. A MEDIATOR SHOULD CONDUCT THE PROCESS IMPARTIALLY. 

VI. A MEDIATOR SHOULD REFRAIN FROM PROVIDING LEGAL ADVICE.

VII. A MEDIATOR SHOULD WITHDRAW UNDER CERTAIN CIRCUMSTANCES.

VIII. A MEDIATOR SHOULD AVOID MARKETING THAT IS MISLEADING AND SHOULD NOT GUARANTEE RESULTS.

[(c) copyright JAMS 2003.  For more info from JAMS, visit www.jamsadr.com or call 1.800.352.5267]

I ask my mediation blog buddies Geoff Sharp, Diane Levin, Paula Lowhon, Phyllis Pollack, Jan Schau, Gini Nelson, all of the generous academics at Indisputably, and Chris Annunziata for additions to the list or comments about it.

(image links to ABC News article on New York's own recent lawsuit against Merck)

In his provocative Los Angeles Times article Vioxx deal may cause pain, staff writer Daniel Costello asks whether the contingent settlement agreement we've written about here, here and here raises an ethical dilemma for Plaintiffs' attorneys.

(and for a well-informed and thorough analysis of the settlement, see the Mass Tort Litigation Blog article on the issue here)

As Costello reports: 

The highly unusual agreement not only requires 85% of plaintiffs to agree before it can be finalized but also might unduly force some claimants to settle or risk losing their lawyer.

That's because the deal includes highly unusual restrictions on plaintiffs' lawyers. The settlement requires them to recommend the deal to all of their clients or none. In addition, lawyers must stop representing any clients who turn it down as long as they don't violate ethics rules.

The agreement was hammered out by Merck and a committee of top trial lawyers who represent Vioxx claimants. Lawyers for both sides said it was a good deal because it provided immediate and fair compensation instead of lengthy trials with uncertain outcomes. Merck requested the all-or-nothing conditions because it feared lawyers would settle weaker cases and cherry-pick stronger ones for trial and possible higher payouts.

Stephen Gillers, a professor of ethics at NYU School of Law, wins the compelling legal metaphor of the year award for suggesting that

Clients are not inventory that lawyers can just shed when they become inconvenient. It's forbidden.

Local trial attorney Tom Girardi, however, who took at least one 'bellwether' Vioxx case to a jury verdict before Assistant Supervising Complex Court Judge Victoria Chaney in Los Angeles earlier this year, notes that it is 

always the clients' decision to accept a settlement or not, and lawyers aren't going to do anything that's unethical [and that] those considering [whether to accept the offer] should know these are not easy cases to try in court.

So is a Mass Tort Injustice on the Horizon?  Not Likely. 

The law -- and the contract between attorney and client -- gives both the right to withdraw from the attorney-client relationship for any or no reason.  Generally, however, the relationship continues unless the same type of "irreconcilable differences" that permit husband and wife to divorce, arise between counsel and client.    

One of the most common reasons for the dissolution of the attorney-client relationship is a disagreement over settlement.  The attorney is not, of course, the client's indentured servant and the client is neither chattel nor "inventory."   

If the attorney believes the client has been offered a settlement that is a better alternative to further litigation and trial, he would dishonor his ethical obligation if he didn't say so.  If the client disagrees and their difference of opinion cannot be resolved, they separate.  

The only ethical requirements on the part of the attorney in this circumstance are:  (1)  not to abandon the client or separate at a time when it would cause harm, i.e., bowing out on the eve of trial; and, (2) not putting the attorney's own interests above those of the client.

This is where that pesky contingency fee comes in. 

Any attorney who has a one-third to fifty percent financial interest in a settlement reached or judgment entered in his client's case will often appear to have a financial interest that conflicts with his client's.  This apparent conflict, however, is actually more of a guard against unnecessary litigation than the defense lawyers' practice of charging their clients an hourly fee. 

A contingency attorney lives or dies by his ability to assess the risk of victory or loss and maximize the value of the threat of further litigation and trial to the defendant.  

When the contingency fee intersects with mass tort practice, however, common daily  practice is writ so large that the tension between attorney and client that accompanies all personal injury litigation can be made to look like injustice -- clients as inventory and attorneys as self-serving monsters.

Let's Talk About the Risks in the Real World

Tom Girardi, after trying a brilliant case to the jury in Judge Chaney's courtroom, lost to Merck.  In closing, Merck's attorney argued to the jury that Tom's client was "all in" based upon his testimony about the number of Vioxx tablets he'd taken. 

Clients, however, just like any other fallible human beings, "forget" or dissemble.  Whatever the Plaintiff's "true" recollection, the pharmacy records proved otherwise.  He had not only not taken the number of Vioxx tablets prescribed -- his recollection of how many he took was not even close.  

Can the Vioxx attorneys predict victory?  No.  Can Merck?  Nope.  Did both sides take their best shot at trying a couple of dozen cases at enormous expense.  I think so.

Is there an ethical problem here?  Not likely. These are some of the best personal injury trial attorneys in the country.  And they don't get that reputation by settling their clients' claims for less than they're worth.  

(right:  Belushi as Brando as Vito Corleone)

Even if you don't practice in New Jersey, take a look at Make an Offer Your Adversary Can't Refuse from an August issue of the New Jersey Law Journal written by Gibbons Law Firm attorneys Paul F. Cullum III and Jason R. Tuvel. 

Here in California, we call an "offer for judgment" a "998." 

"Have you served a 998?" is a question I often ask the parties during mediation when we appear to be reaching impasse.  The usual answer is "we haven't done enough discovery" or "we've been waiting for the mediation [to fail] before serving it."  

As Cullum and Tuvel correctly note, it's a mistake not to use this hammer as early in the litigation as possible.  I'll add to their excellent advice that it's very good to serve the offer prior to mediation -- not after. 

It's ammunition I can add to the "parade of horribles" for the other side.

Apparently, there's a new decision in New Jersey called Palmer that clarifies the previously open question whether you could serve multiple offers of judgment during the course of the litigation.  I must admit that I don't know the answer to the question here in California (readers?) but provide you with the Practice Tip of the Week from Cullum and Tuvel.

Nice article guys. Thanks for adding to the collective wisdom.  

The Palmer decision provides tremendous guidance to both attorneys and litigants with respect to case management and strategy. For example, if an attorney has not had the opportunity to complete discovery, but has analyzed the case enough to make an informative estimate on damages, an attorney can advise his client to file and serve an offer of judgment as soon as possible to get an early trigger date for fee-shifting purposes under the Rule.

Thereafter, once discovery has concluded or been more thoroughly explored, a subsequent offer(s) can be made that is more likely to invoke a settlement.

In the alternative, a subsequent offer may have only slightly modified a prior offer, and therefore the offeror will stand a good chance of collecting fees on the earlier offer which will cover more of the offeror’s expenses because it has never exinguished in lieu of the Palmer decision.

Good strategy that should be applied for tactical advantage in any jurisdiction that permits it.

And a hearty congratulations to the Gibbons Law Firm for joining the AmLaw 200 for the first time in June of this year!

 Here's the power point for the first session of today's "Settle to Win" Seminar and the notes I used to give the talk. 

Because these materials are the basis for a speech and not the speech itself, they may be a bit confusing.  I'm providing them for those who attended the seminar.  If you didn't, please understand that not everything discussed appears in these materials.  

The entire day of speakers (a pretty high powered group) will soon be available in audio from the Pincus CLE company here.

. . . with the usual groveling thanks to charles fincher of lawcomix for the generous giving of permission to use his brilliant and hilarious cartoons . . . . 

. . . to be fair, the final round contestants were all ridiculously well-prepared, articulate, bright, thorough and just generally the kind of young people you'd hoped would one day be in charge of the world . . .

. . . it's just that the ABA rules apparently require them to be very very very very very NICE . . . .  

(right:  Julia Louis-Dreyfus on the picket line)

When we first wrote about the writers' strike and the active picketing just down the street here at Paramount on Santa Monica and CBS on Beverly Boulevard, we asked our friend Jim Stott for comment.

Because Jim's excellent comment was buried in small type in our "comments" section, I give it its due here by bringing it up into a post of its own.  

(for "live" WGA Strike Blogging from the Los Angeles Times, click here)

After noting that his own comments are not "in any way intended to minimize, diminish or otherwise criticize the hard efforts of the writers, producers or federal mediator's efforts to reach agreement in this ongoing dispute," Jim opines as follows:

Often, both parties become "blinded by the sparks" associated with their lack of progress at the bargaining table. In those situations, a psychological phenomenon occurs wherein parties start start to blame the 'other side' through personal attacks; one against the other. As this practice grows, the underlying issues that really need to be discussed are subsumed by the superficial and surface diatribes.

Obviously - to the outsider - settlement can only be reached when the parties focus on the substantive and underlying issues as a mutual and common problem. Often, both sides fail to realize that a problem for one contingent group is ultimately a problem for all contingents. If force, i.e., a work stoppage or lock-out is used as a means for getting the 'other side' to soften their positions, the latent residual feeling caused by such an action is often long-lasting and will materially damage the ongoing relationship between all stakeholders involved.

In practice and theory, writers need work provided by the producers, just as producers need the work-product of the writers. In negotiations, it is this symbiotic internal relationship that is most important. Long after the work stoppage has been resolved, the latent and labile underlying emotional distrust and dissatisfaction will continue; often for years.

The federal mediator assigned to this particular case is exceptionally well qualified. He is a colleague and friend. I have no doubt that his professional services provided in this situation were of the highest quality.

Rarely however, even with the presence of a mediator, negotiations break down and reach impasse. Intractable parties are often the stock-in-trade for federal mediators. It not at all unusual to hear the warring factions self-diagnose their positions as being "miles apart." On rare occasions though, parties are so far apart that their tangential distances and differences, when measured in cost and dollars can be significant.

It would appear that producers and writers are faced with unanticipated outcomes associated with the expotential growth of the broadband internet capacity and online streaming video and audio. On the one hand, producers may see this as a marketing and distribution opportunity, by which they will increase audience participation and marketshare. While at the same time however, writers may see this exploding media as one in which their recognition, compensation and earning potential has been and will be diluted and otherwise diminished.

These complex negotiations are never easy and are often rocky. The challenge to all the stakeholders is to continue the conversation and continue to make progress, albeit ever-so-slowly. Even if their conversations are not face-to-face, but done through an intermediary; they are critically important.

As long as all dialogue has stopped, there virtually is no chance the impasse will self-resolve; thus the stand off will continue indefinitely. This is precisely what happened in the Caterpillar work stoppage which lasted over five years. All communication stopped. Distrust on both sides grew expotentially. Replacement workers were hired. All the while, the union pickets were outside the plant, locked out, while the plant production continued to grow.

While this is an extreme case in labor management relationships, it is my hope that productive conversations, clandestine and off the record or not, continue. This is the only way in which this dispute will resolve without inflicting extensive and long-lasting damage to all stakeholders.

Currently, Jim Stott is a Principal and Senior Consultant with Stott & Associates of Gig Harbor, Washington. Until recently, he was Assistant Director at the Straus Institute for Dispute Resolution, Pepperdine University School of Law.

Prior to joining Straus, Jim spent nearly six years as a Commissioner with the Federal Mediation and Conciliation Service (FMCS) in Los Angeles and Washington, D.C., where he provided collective bargaining mediation and negotiation consultation services to federal agencies, private and public sector employers, and labor unions.

Jim was also instrumental in the design and development of joint labor/management committee problem solving protocols used by Los Angeles Dodgers, Southwest Airlines, Toyota, Kaiser Permanente, Boeing and Walt Disney Studios.

In his professional and academic career, Jim mediated more then 1,500 disputes. The majority of these conflicts were associated with employment, labor/management or collective bargaining issues. Jim has also provided pro-active and pre-emptive conflict management design systems. In his teaching and coaching capacity, he has taught mediation protocols and processes to over 1,500 students in academic settings, court programs, international labor unions as well as management/employer groups including CUE.

Jim holds a Bachelor of Science Degree in Business and Management from University of Redlands, as well as a Masters Degree in Dispute Resolution from Pepperdine University School of Law.

THANKS FOR THE GOOD THOUGHTS JIM!! 

WE MISS YOU DOWN HERE IN SOUTHERN CALIFORNIA!!

(photo:  Vioxx back in the day . . . . )

We were just talking the other day at the IP ADR Blog about the power of contingent agreements to settle lawsuits in connection with the recent Verizon/Vonage settlement here.

Now its the turn of another BIG "V" LAWSUIT -- Merck's Vioxx litigation -- to benefit itself with the largest drug settlement ever but only in the event 85% of all 26,600 litigants agree to drop their cases.

Here's an except and link to the MSNBC article on the settlement:  

TRENTON, N.J. - Merck & Co. said Friday it will pay $4.85 billion to end thousands of lawsuits over its painkiller Vioxx in what is believed to be the largest drug settlement ever.

The deal becomes binding only if 85 percent of all plaintiffs in about 26,600 lawsuits agree to drop their cases. It was finalized in the early morning hours after attorneys for Merck and the plaintiffs met with three of the four judges overseeing nearly all Vioxx claims.

Merck faced personal injury lawsuits representing 47,000 plaintiffs, and about 265 potential class action cases, filed by people or family members who claimed the drug proved fatal or injured its users. The agreement covers cases filed in both federal and state courts.

See the Wall Street Journal Law Blog's coverage More on Vioxx:  Mass Torts in a World of Settlement here and check out Merck Vioxx by the Numbers for the trial "box scores," cost of litigation and the like that make this settlement a "win" for Vioxx.

According to Merck's press release here, a fund will be created and Plaintiffs injured as a result of taking the drug will be entitled to recompense under the following contingencies:

To qualify, claimants will have to pass three gates:

• an injury gate requiring objective, medical proof of MI or ischemic stroke (as defined in the agreement),
• a duration gate based on documented receipt of at least 30 VIOXX pills, and
• a proximity gate requiring receipt of pills in sufficient number and proximity to the event to support a presumption of ingestion of VIOXX within 14 days before the claimed injury. 

Individual cases will be examined by administrators of the resolution process to determine qualification based on objective, documented facts provided by claimants, including records sufficient for a scientific evaluation of independent risk factors.

Neither stroke claims that are hemorrhagic in nature nor transient ischemic attacks will qualify.

Law firms on the federal and state Plaintiffs' Steering Committees and firms that have tried cases in the coordinated proceedings must recommend enrollment in the program to 100 percent of their clients who allege either MI or ischemic stroke. 

The parties agree to seek court orders from the four coordination judges requiring plaintiffs' attorneys to promptly register all of their VIOXX claims, whether filed or tolled, and to identify the alleged injury - in order to establish the universe of all existing claims in the United States.

Participation conditions: payment obligations under the agreement will be triggered only if, by March 1, 2008 (subject to extension by Merck), the following number of plaintiffs enroll in the settlement process

• 85 percent or more of all currently pending and tolled MI claims,
• 85 percent or more of all currently pending and tolled ischemic stroke claims
• 85 percent or more of all eligible claims involving a death; and
• 85 percent or more of all eligible claims alleging more than 12 months of use.
  

My question:  how much of the nearly $5 billion settlement fund does Merck actually project will be paid to Plaintiffs able to jump through all three hoops and what happens to sums remaining in the fund if they are not all expended to compensate Plaintiffs?

Readers?

(photo:  Reading the tea leaves by Joel Carranza)

In Judiciary's Role in Arbitration Weighed, AP reports on the tea leaves that lawyers and business people will be reading for the next several months as we await the Supreme Court's ruling on this issue --  may the parties to an arbitration agreement contract for  judicial review of any resulting arbitration award.  

While asking my arbitration expert posse Jay McCauley, Les Weinstein, Eric van Ginkel and Jack McCrory to please weigh in here, I'll provide you with my semi-tutored two cents.

Because the central policy issue supporting arbitration under the Federal Arbitration Act is to allow contracting parties to control their own destiny, I'd wager the Supremes will permit them to do what they want to do here, i.e., allow federal courts to review any arbitration award the parties want them to.

Here are the tea leaves: 

• Chief Justice John Roberts suggested expanded judicial review is appropriate, noting the two sides negotiated an agreement with court review as an option. But Roberts also questioned whether federal law allows the expanded review the agreement between Mattel and the property owner calls for.
• Justices Anthony Kennedy and John Paul Stevens pointed to court review as a tool that can be used in business disputes to encourage the use of arbitration. 
• Justice Ruth Bader Ginsburg suggested the property owner is seeking more latitude than the law allows for judicial review of arbitration cases.
• Justice David Souter told the lawyer representing Hall Street Associates that "you want to get rid of" the section of the arbitration law that specifies limited circumstances under which courts can step in and overrule an arbitrator's decision. 
  
  The case is Hall Street v. Mattel, 06-989. 

For a thorough analysis of the issues raised, see  Hall Street:  Contract vs. Statute at Ross' Arbitration blog.

By the way, I get alerted to articles like this on a daily basis here -- Laywers U.S.A.  It's been my best and easiest source for breaking legal news for quite some time now and it appears in my in-box on a daily basis.  For curmedugeons like Mr. Thrifty who say they don't have time to read ANYTHING online, it takes about 60 seconds to scan the news items.  Then one second to delete if there's nothing there of interest to you.  I highly recommend it and give a long belated "thanks" here to the people at Lawyers U.S.A.

(disclaimer, right:  this is not the sky; photo by NilsGeyland)

Check out C.C. Holland's Law.com article Mind the Ethics of Online Networking about ethical problems that might arise if you use Linkedin, Facebook and the like to build your legal or neutral practice. 

If you're risk averse, Holland and lawyers she interviews advise caution.  

First, Why Do Those of Us Who Use Social Networking Sites or (Gasp!) Blogs, Take the Risks. 

Holland identifes a handful of internet lawyer pioneers, including your faithful blogger.

Colin Coleman, a business attorney in Needham, Mass., uses the networking site LinkedIn to build professional relationships and make introductions. Beverly Hills, Calif.-based Victoria Pynchon, who recently launched a commercial-litigation mediation practice, likes the way Facebook mimics a neighborhood and allows people to get to know her. And Southern California entertainment lawyer Richard Jefferson maintains a MySpace page to ensure his clients consider him cutting-edge.

While their focuses are different, all three attorneys share one trait: They've recognized the value of these social-networking sites to help support and expand their businesses.

Early adopter attorneys are clearly at the forefront of a new networking movement. At the same time, these pioneers are blazing ethics trails into previously uncharted territory.

Gee, I Didn't Feel as if I Was "Blazing Ethics Trails into Uncharted Territory."

O.K., I sound a little bit like a jerk when I'm quoted as saying

I'm a pretty ethical person and I'm not risk averse -- that's why you buy malpractice insurance.  I don't let fears of liability keep me from doing anything."

Particularly when it's followed by Holland's comment that "most standard malpractice policies would not cover an ethical or disciplinary violation regarding an advertisement or communication to potential clients."

I'd meant to conclude that remark with advice given me long ago:  that good relationships with your clients is the best guard against malpractice.  Even so, as Holland correctly notes, if I'm violating ethical rules, neither good client relations nor malpractice insurance will protect me.

And what I don't know can hurt me.  From Holland's article I learn that:

the LinkedIn site . . . testimonials -- e.g., "Jane is a fabulous attorney who really knows her stuff" . . . [run afoul of] . . . the California rules governing advertising and solicitation [unless the testimonial-carrying page] contains an express disclaimer. 

My LinkedIn testimonials are primarily from attorneys for whom I've provided mediation services.  Though of course they all differ, each offer the opinion that I'm a pretty darn good mediator.  Here are a couple of edited examples:

I have had the pleasure of using Ms. Pynchon on several high dollar (and some low dollar) mediation sessions. While the amounts in controversy varied, her results were always great. Did she mediate a settlement in every case - no (but she's come pretty close with a 90% track record).  .  . . Overall, for my tough cases, I always call Vick[ie] first [because] I know that Vick[ie] can find a way to reach compromise when others will give up or run out of creative options. . . . July 13, 2007

Top qualities: Great Results, Expert, Creative  Tappan Zee
hired Victoria as a Attorney in 2005, and hired Victoria more than once

Ms. Pynchon is a brilliant mediator. Not only does she have a natural talent for mediation, but she is committed to improving her skills through hard work and study . . . which translate into the ability to quickly analyze the facts and law of a case and then be able to talk to the attorneys and the parties knowledgeably. I recommend Ms. Pynchon without reservation.”

Top qualities: Great Results, Expert, Creative Lilys Mccoy
hired Victoria as a Mediation in 2005, and hired Victoria more than once

So I should disclaim these by saying, for instance, that although these lawyers thought I did a great job "results might vary and side-effects could include nausea, dizziness, upset stomach and  irritation"? 

I don't mean to make light of the issue, but I've never found disclaimers of any sort of much use to anyone.  And other than Tappan's comment that I generally resolved about 90% of his cases, these are all opinions as to quality, not representations of fact. 

Still, I do have a disclaimer on this blog, warning my readers that:  

This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. 

I suppose that's all I really have to say on my Linked In and FaceBook pages and I guess I'd better do so.  Today, in fact.

But d'you think I really need to say that the photo on those sites is two years old when I was twenty pounds lighter?

(right, new blogger and health care mediator Richard J. Webb)

I was just in the hospital with a friend the other day, standing next to her bed while the "physician in charge of Motion Picture Blue Cross" was copping an attitude in response to her request to see the x-ray of her comminuted multiple ankle fracture.

"Why are you insulted?" she was asking when I entered the room.

My friend was trying to understand why the hospital wanted her moved to a skilled nursing facility before it moved her (and her morphine drip) back to the hospital for surgery. .  

Her physician had already told us that he wouldn't advise moving her but that "Motion Picture Blue Cross" was insisting that her hospital stay be terminated.  Immediately.  I'd been unable to convince him that his patient was seeking medical, not coverage advice.  He looked 15 (o.k., I grow old) and sounded cowed by the carrier.

"My husband sues insurance carriers and I represent them so we've got the carrier angle covered," I'd told him.  "So please just give us your medical advice."

So I'd just been saying that hospitals "desperately need conflict resolution training!"

And voila!!  The HealthCare Neutral ADR Blog appears in the blogging universe care of LexBlog  and fellow Straus Institute trained mediator Richard J. Webb, a New Jersey health care neutral. 

Here's what Richard says of his blog.  

With this post, I start my first blog and what I think is the only blog site devoted to the topic of alternative dispute resolution in the healthcare industry. As stated above on the masthead, I intend to blog at the intersection of ADR and healthcare law.

Welcome to the neighborhood Richard!  If Diane Levin's welcome wagon hasn't yet appeared at your front door, you're in for a delightful surprise very soon from the award-winning Online Guide to Mediation.  Diane's the O.G. of the mediation 'hood.  

Also bringing a list of local eateries, schools, dry cleaning shops and political functionaries will be my ADR blog-posse Geoff Sharp of Mediator Blah Blah; Tammy Lenski of Mediator Tech; Paula Lawhon of San Francisco Mediation Blog; Stephanie West Allen of Brains on Purpose (conflict resolution and neuroscience); Dina Lynch of ADR PracticeBuilder; Gini Nelson of Engaging Conflicts; Kristina Haymes of Mediation Marketing Tips; Christopher Annunziata of the CKA Mediation Blog; and everyone on Mediate.com's "Featured Blogs" page.

We're all looking forward to getting to know you and to learn much much more about health care ADR.  And if  you're ever in town, I know a nice little hospital that could use your help!

A couple of days ago I said I don't want to know your bottom line because I cannot guarantee it will not effect my own neutrality. 

Listen, here's the toughest part of being a mediator -- making a conscious effort not to pursue the weakest party for the purpose of settling the litigation. 

You tell me your bottom line and you throw temptation in my path, temptation that I'd rather avoid.  Keep your counsel on this one with any mediator. 

We're neutral.  We're not saints.

That's Rule No. One.

What's Rule No. Two?

The second reason for not telling your mediator your bottom line is to avoid letting any number influence you and your own client.  

The single best predictor of the outcome of a negotiation is how much money you believe the other side has to settle the case.  (skip the statistics in this article on the effect on negotiation outcomes of the first five minutes of a negotiation session and go directly to the Conclusion section on page 13)

Depending upon the size of your case or the passion of your commitment to a particular client, you've already spent a few sleep-interrupted nights trying to figure out just what in the heck the other side is thinking.

The other side has also spent a few daytime hours sending you overt or covert smoke signals for the purpose of influencing your estimate of their ability to settle the case anywhere near a dollar figure you'd be willing to settle it for.

Because of our "blind spot" to biases you may well have already formed an impression of what the other side will pay that influences you without your knowing it.  You concretize (get stuck in) that blind spot if you commit to any number before the day of the negotiation.    

Though you should know your BATNA (basics here) to avoid accepting a bad deal in the heat of the moment, I'd recommend you have at least two or three reasonable numbers with principled reasons for deploying them.  Then you can rock and roll to the music that gets played on the day of the settlement negotiation -- a session that often brings surprises that benefit you, i.e., a negotiating partner more eager to settle than you'd anticipated for instance.  

If you bring a single hard and fast bottom line number with you to the day of the negotiation, you may well narrow your window of opportunities based upon the other side's intentional or unintentional signals concerning their willingness to pay something between $X and $Y.  

It's not rocket science, but it is an art.

(right:  Bueno de Mesquita's "Logic of Political Survival")

Because I am always looking for the most efficient and effective means of resolving disputes, I am often drawn to what's new in social science.  Political science too often goes under my radar, as does mathematics -- the number one reason people go to law school -- because they can't do math.

The book at right was brought to my attention by this highlighted text in Good Magazine: 

In the foreboding world view of rational choice, everyone is a raging dirtbag.

What made me decide to introduce my readers to the father of "rational choice" theory, Bruce Bueno de Mesquita, however, was the application of his theory to international political problems such as the reduction of conflict between Israel and Palestine (quoted below).   

I'll have to admit that his claim to "produce a settlement [in litigation] that is 40 percent better than what the attorneys think is the best that can be achieved” -- also caught my attention.  Of such smaller conflicts is my attention consumed by.

So, I give you a little Bueno de Mesquita from Good Magazine's article The New Nostradamus

In my view, it is a mistake to look for [peacemaking] strategies that build mutual trust [between the Israelis and the Palestinians] because it ain’t going to happen. Neither side has any reason to trust the other, for good reason. . . . 

Land for peace is an inherently flawed concept because it has a fundamental commitment problem. If I give you land on your promise of peace in the future, after you have the land, as the Israelis well know, it is very costly to take it back if you renege. You have an incentive to say, ‘You made a good step, it’s a gesture in the right direction, but I thought you were giving me more than this. I can’t give you peace just for this, it’s not enough.’

Conversely, if we have peace for land—you disarm, put down your weapons, and get rid of the threats to me and I will then give you the land—the reverse is true: I have no commitment to follow through. Once you’ve laid down your weapons, you have no threat. 

The "rational" solution?

 In a peaceful world, what do the Palestinians anticipate will be their main source of economic viability? Tourism. This is what their own documents say. And, of course, the Israelis make a lot of money from tourism, and that revenue is very easy to track. As a starting point requiring no trust, no mutual cooperation, I would suggest that all tourist revenue be [divided by] a fixed formula based on the current population of the region, which is roughly 40 percent Palestinian, 60 percent Israeli. The money would go automatically to each side. Now, when there is violence, tourists don’t come. So the tourist revenue is automatically responsive to the level of violence on either side for both sides. You have an accounting firm that both sides agree to, you let the U.N. do it, whatever. It’s completely self-enforcing, it requires no cooperation except the initial agreement by the Israelis that they are going to turn this part of the revenue over, on a fixed formula based on population, to some international agency, and that’s that.

It actually gets much more controversial and interesting than this -- the "kicker" to the headline in Good Magazine reads:

Can a fringe branch of mathematics forecast the future? A special adviser to the CIA, Fortune 500 companies, and the U.S. Department of Defense certainly thinks so

If that intrigues you, you'll want to read the entire article here.