Negotiation Law Blog

I recently reported with surprise the Second Appellate District's Burlage opinion in which it refused to vacate the trial court's vacation of a $1.5 million arbitration award based upon the arbitrator's rejection of evidence that the damages sought were not in fact suffered by claimants.

At the Federal Bar Association luncheon today I sat at attorney Wendy Lascher's table to hear the Dean of the new U.C. Law School at Irvine, Erwin Chemerinsky speak about the new Supreme Court term.  Wendy represented the losing party in Burlage and was awaiting word from the Court of Appeal on her Petition for Rehearing, which was granted this afternoon.

Here's the Petition for Rehearing; the Answer to the Petition and the Reply.

My further thoughts below, which are 180 degrees from my initial thoughts. (As a friend recently said to me "I said THAT? about THAT issue?  Did you hit the 'refresh' button?")

The question presented to the arbitrator was whether evidence of a post-escrow remedy was admissible in light of the (apparent) rule of law that damages should be measured as of the date escrow closed. Because the purchaser of the property purchased a lot line adjustment eliminating the encroachment subject of the arbitration two years after the close of escrow, the arbitrator excluded the evidence as irrelevant to the issue of damages. The trial court vacated the arbitration award under section 1286.2, subdivision (a)(5), "which requires vacation of an arbitration award when a party's rights are 'substantially prejudiced' by the arbitrator's refusal to hear 'evidence material to the controversy.'"  Two members of the three-member appellate panel affirmed.

When I spoke with attorney Lascher over lunch yesterday, she noted that questions such as "substantial prejudice" would require the trial court to review the entire record. Determining that substantial prejudice existed would also depend upon the application of the law to the facts. How, for instance, could there be "substantial prejudice" if the arbitrator was right about the law, i.e., that because the damages were required to be measured at the date escrow closed, evidence of a post-escrow cure were irrelevant. The appellate court opinion doesn't mention this issue, let alone resolve it.

Since the Court can't review the decision based upon the law or the findings of fact, the arbitrator could have permitted the evidence to be introduced and granted the identical relief.  Presto, the arbitration award would have been made bullet-proof. I understand from reading the rehearing briefs that the arbitrator knew the "facts" that the excluded evidence would have proven, so it's highly unlikely that permitting the facts to come into evidence would have changed the result.

The Lascher rehearing brief suggests that the Burlage holding would incentivize arbitrators to admit all proffered testimony and documents into evidence to insure their awards are not made subject to judicial review, thereby making arbitration lengthier and more burdensome. Lascher also suggests that there is little to disincentivize losing parties from seeking to vacate arbitration awards whenever any evidence is excluded at the arbitration. Both of these results would, she argues, further proceduralize and undermine the utility of arbitration as an alternative to litigation.

She may well convince me that my own initial analysis of the case was wrong. We'll see whether the Court of Appeal rethinks this one. In any event, I believe we can expect to see this one before the California Supreme Court at day's end.

Let me begin with a radical proposition the expression of which my colleagues assure me will doom my mediation career. 

Ready?

Attorneys and their clients do not know what type of mediation is best for them any more than they know how to cure their own cancer.

I've been told that "the market has spoken and it wants evaluative mediators."   I'm sure the cancer "market" would also like to speak to its physicians.  If I had malignant melanoma, I'd love to find a doctor able to cure it with rational argument, hard-ball tactics, and position-based negotiation.  Surely he can convince my cancer that it's wrong and cannot win the battle simply by replicating itself over and over again.  If he's such a good doctor, why can't he convince my adversary that it's just not right?!

You say the physician has specialized knowledge and experience in cancer treatment and knows better than I what will be the most efficient and effective medical protocol? Is my reasoning faulty?  Do litigators know how to "treat" their conflict resolution problem with evaluative mediation because they've experience success with it?  Maybe.  But how do they know?  Are they aware whether they "left money on the table" or paid more than the other guy was willing to accept?  Who might be in possession of that extremely valuable information? 

Uhhhhhhhhhhhhh, the mediator????

Let's talk to the social scientists about why people might prefer evaluation followed by a mediator's proposal.  According to a recent Fast Company article, Why Your Gut is More Ethical Than Your Brain, people would rather put their fate in the hands of someone they’ve been told is a rational decision maker when an "emotional" decision-maker would have delivered a better result.  The article at issue doesn't answer the question "why" but I have an educated guess.   We trust reason and distrust our "gut."   That's what we were taught in my scientific generation and we continue to trust these initial teachings even as science moves forward to prove that our feelings + our subconscious ("intuition") almost always make a better decision than our rational thought processes, which are generally simply rationalizations for what our "gut" decided without "us."  

So what's the take-away here? 

It is indisputable that one of the primary purposes of a settlement negotiation is the attempt to value an eventuality that cannot be predicted - the outcome of litigation.  But value it we must -- at least within some reasonable range -- considering the thousands (perhaps tens of thousands) of variables in play -- the settled or unsettled state of "the law"; the ability of each party to make their narrative coherent at worst and compelling at best; the location of the court where the matter will be decided - downtown Los Angeles; Santa Monica; or San Francisco -- cities with very different "deciders"; the ability of each party to withstand the economic burdens imposed by the litigation; the capacity for one party's counsel to "bury" the other's; the veracity of the witnesses; the historic record for victory or defeat for this type of case in that type of industry; the personality, politics, or idiosyncrasies of the Judge; and, even the time of year during which the case is to be tried, not to mention the skill and experience of counsel for each side.

To these uncertainties we must add the cognitive biases to which we are all vulnerable no matter how "rational" and scientifically-minded we are.  These cognitive "tendencies" include our inclination to seek out and believe "facts" that support our position and to avoid, ignore or discount those that do not (confirmation bias); our tendency to discount as unworkable, without merit or downright evil suggestions our opponent forwards (reactive devaluation); our capacity to create patterns and narratives where none exist (clustering illusion); and, our unfortunate weakness of buying our own B.S. (self-serving bias) to name just a very few. (See Diane Levin's recent post on these and other cognitive errors here)

Despite the difficulty inherent in evaluating the merits of one's own case (and of the mediator's attempt to value each side's chance of victory based upon no admissible evidence and the untrustworthy nature of both party's factual narrative and legal analysis) a mediator helping litigants and their attorneys settle a case must be capable of asking pointed questions that will counteract the parties' biases to some degree and help them understand the truly unpredictable nature of a law suit's resolution.

All of that being said, anyone who believes that this evaluative process is at the heart of a good mediation needs to spend some time with better mediators.  A truly brilliant mediator (and I am not here counting myself among them) helps the parties move beyond the very narrow issues raised by the litigation and past the spoils to be won or lost there.  A gifted mediator is able to help the parties ascertain their own as well as their negotiation partner's true preferences, desires and needs; to open the bargaining session up to include every item of value the parties have to exchange; and, to locate and resolve, for each party, the experience of injustice that brought them to the difficult and pricey decision to hire outside litigation counsel in the first place.

What we litigators tend to forget in the heat of our battles to win the discovery motion; prevail on our request for a pre-judgment attachment; procure the testimony we need for the silver-stake motion for summary judgment; or, write the winning Petition for Writ of Mandate or appellate brief, is that our clients want to make a savvy, sophisticated and durable business deal that leaves them feeling (yes, feeling) that the settlement reached does not constitute a gross miscarriage of justice.

That's the view from this side of the mediation table after five-years of full-time neutral practice and twenty-five of litigation and mediation advocacy.

Like the trial lawyer facing a jury, a skillful mediator facing counsel and clients must provide both the most educated and honest rationale for his or her valuation of a party's chances at trial; the most empathic response to the clients' many expressions of anger at the injustice of it all; and the facilitation of a commercial negotiation in which making the best business deal is of far more importance than proving one's "case" right.

Do choose a mediator able to open up the hood of your opponent's case (and your own); to kick the tires; and, to note the rusted places under the thin coat of a recent paint job.  If, however, "valuation" is the best your mediator can do, you need to raise the bar for excellence and experience the satisfaction you feel when your client says, "great job!  It's a good settlement and a fair one as well." 

Yes, I am on this panel.

The American Arbitration Association (AAA), the world’s leading provider of conflict management and dispute resolution services, has unveiled new services for parties involved in business-to-business, business-to-consumer, and employer-employee disputes. AAA’s Non-Binding Dispute Resolution Services provide an appropriate alternative to pre-dispute binding options.

The non-binding suite of services includes both AAA’s traditional mediation services and a new non-binding arbitration service. Non-binding arbitration can be particularly attractive to parties who want to put their case together to see its merit and foster settlement. Even if a full settlement is not reached, non-binding arbitration can help parties reduce their issues in dispute and prepare them better to resolve remaining issues. In addition, AAA staff facilitators stand ready to aid parties in selecting the settlement options most appropriate for their needs and the circumstances at hand.

“Today, more than ever, it is critical for parties to resolve disagreements in a cost-effective and timely manner, all the while protecting valuable relationships. With AAA’s Non-Binding Dispute Resolution Services, those who avail themselves of our services can rest assured that they have the resources and flexibility they need to handle potential disputes,” said William K. Slate II, President and Chief Executive Officer of the AAA.

As part of the non-binding suite of services, new sets of Non-Binding Arbitration Rules have been created for business and consumer disputes as well as for employment disputes. A new resource, titled a Guide to Drafting Non-Binding Arbitration and Mediation Contract Clauses, has also been created to assist in writing these new clauses into contracts. 

The AAA’s Non-Binding Dispute Resolution Services offer smart, effective solutions that provide:

• Viable contractual alternatives to binding options like litigation
• The chance to preserve relationships with partners and customers
•  Streamlined process and low costs

Non-Binding Suite of Services in Detail

Mediation enables parties to arrive at a settlement solution of their own making with the assistance of a neutral facilitator. This process can be valuable when the parties are willing to be flexible in their positions, when time and other resources are precious and when parties seek to have greater control over the outcomes.

Non-binding arbitration provides the parties with a hearing on documents or an informal hearing on the dispute’s merits but without the finality of a binding decision. Non-binding arbitration can be especially valuable for less complex business-to-business, business-to-consumer or employer-employee disputes where the parties may be too far apart in their viewpoints to mediate or in need of an evaluation of their respective positions.

The AAA has a panel of arbitrators ready to serve on non-binding business, consumer, and employment arbitrations. The panelists are distinguished by their level and breadth of experience in arbitration, the law and their industry knowledge, which ranges from technology, insurance, and consumer products to financial services, healthcare, ERISA, pension and benefits matters, and more. The panel of arbitrators also includes former federal and state judges and attorneys experienced in personal injury, and handling general civil disputes.

To view information on the AAA Non-Binding Dispute Resolution Services fees, please view the following links:

For Business and Consumers http://www.adr.org/si.asp?id=5682

For Employers and Employees http://www.adr.org/si.asp?id=5681

To find more information on these innovative non-binding solutions, go to: http://www.adr.org.

About the American Arbitration Association

The global leader in conflict management since 1926, the American Arbitration Association is a not-for-profit, public service organization committed to the resolution of disputes through the use of arbitration, mediation, conciliation, negotiation, democratic elections and other voluntary procedures. In 2007, nearly 128,000 cases were filed with the Association in a full range of matters including commercial, construction, labor, employment, insurance, international and claims program disputes. Through 30 offices in the United States, Ireland, Mexico, and Singapore, the AAA provides a forum for the hearing of disputes, rules and procedures and a roster of impartial experts to resolve cases.

Don't Let the Mediator Bully the Parties from Six Ways to Insure Your Construction Mediation Will Fail over at the Construction Law Musings Blog.

A mediator who is bullying you or your client to settle simply hasn’t gotten the knack of asking questions and creating opportunities. She’s still too used to wielding power. If it’s important enough to spend your day mediating, it’s important enough to tell the mediator that you do not want her bullying any of the parties.

I was co-mediating the final day of a construction dispute with twenty-five to thirty parties when my colleague lost his cool. By two in the morning, a single sub-contractor was holding all parties hostage to his refusal to settle even though he was alone in having achieved all but complete victory – the Plaintiff having agreed to exchange mutual releases to settle with him. Nevertheless, the sub adamantly refused to give up his right to bring a malicious prosecution action against the Plaintiff.

“He needs a woman’s touch,” my co-mediator suggested.

Male or female, someone needed to learn why this single defendant had become so intractable. A bit of questioning revealed that early in the litigation, the sub’s attorney had inadvisably assured his client that he could win a malicious prosecution suit. Counsel was not about to back down now, particularly after he’d been harangued by my colleague in front of his client. I was all but certain the sub had no intention of spending further money litigating the case. Why was he clinging to his right to sue? The three of us talked for 45-minutes while the rest of the parties waited. I don’t know what it was in that conversation that revealed the problem to me. I only know that at some point I realized that the sub could not justify the money he’d paid his counsel unless he emerged from the litigation victorious.

“You know,” I finally said, “you’re the only defendant who actually won here.”

“How do you figure that?” asked the sub, eyeing me with suspicion.

“Everyone else, no matter how unlikely their potential liability, had to pay the Plaintiffs to be released from the case. Your attorney is the only attorney who negotiated a settlement for nothing. He won!

And the case promptly (and finally) settled.

Remember that settlement is not about power or authority. It’s about influence and you cannot influence another human being by bullying him. You can only influence him by asking questions, listening carefully to the answers, and responding to the need he is expressing. Not only will hectoring fail to produce the desired result, it will usually trap the bullied party into a position he has no actual desire to maintain. Restrain the pitbulls and release the attentive questioners. Theirs is the Kingdom of Resolution.

From the Business Conflict Blog comes bad news from the U.K., Mediator as Witness, Just When You Thought it Was Safe (excerpt below):

John Richardson, that worthy and thoughtful New York mediator, has brought to our attention a decision by Hon. Mr. Justice Ramsey of the Royal Courts of Justice in England that seems to render unenforceable the commonplace contractual provisions immunizing mediators from testifying as to the conduct of the mediation.

In Farm Assist Limited vs. DEFRA, dated May 19, 2009, claimant sought to set aside a settlement agreement obtained after a mediation that took place in 2003, on the ground that it was entered into under economic duress. Defendant requested that the mediator, Jane Andrewartha, be compelled to give evidence as to what happened at the mediation. Claimant did not object. The court ordered that, in the first instance, she produce her files and, eventually, that she give a witness statement.

If you take the time to read the opinion, you'll see that the confidentiality protections at risk here do not arise solely from the parties' contract, but also from the case law.  Not good news for U.K. mediation practice.

Hat tip for the head's up to Jeff Gordon, he of the Software Licensing Handbook who is in my twitter network (@negot8or) (follow him!)

Because the vast majority of my litigation and mediation clients were and are corporate entities or highly successful entrepreneurs, executives or managers, I was and am rarely in a position to coerce a client into doing something it didn't want to do. 

As a mediator, however, I hear stories.  

Some of the stories I hear are told by disgruntled individuals who feel as if they were coerced by their own counsel into settling their litigation during a mediation.  Others have reported that they felt ganged up on by their attorney and the mediator.  Some have complained that they were unduly pressured to stay in the mediation process long after they were too tired or hungry to think clearly. 

These stories are troubling to any mediator who values the good reputation of the mediation process itself.  They should also disturb attorney mediation advocates.

Is it below the standard of care for an attorney to subtly (or not so subtly) pressure his or her client to settle litigation?  Under certain circumstances, I think it is.  Here's the bad news.  If a litigant is unhappy with the outcome of mediation, he or she is far more likely to bring a complaint (or lawsuit) against his or her own attorney.

In a 2006 article in the Ohio  Journal on Dispute Resolution TAKE IT OR LEAVE IT. LUMP IT OR GRIEVE IT: DESIGNING MEDIATOR COMPLAINT SYSTEMS THAT PROTECT MEDIATORS, UNHAPPY PARTIES, ATTORNEYS, COURTS, THE PROCESS, AND THE FIELD  Paula M. Young, Assistant Professor at the Appalachian School of Law cites Mel Rubin on "settle and sue" cases which Rubin suggests are on the rise among clients unhappy with the outcome of a mediation.  Rubin "also suggests that if a client is unhappy with the outcome of mediation, he or she is more likely to sue his or her attorney for malpractice. Id.

What might actionable attorney mediation malpractice look like?  Young cites the example of one woman who told the following story:

I refused to sign several times. My attorney then began yelling at me to “shut-up and sign the damn thing” I wasn't allowed to leave until it was signed . . . . The words, “NO I can't sign this,” fell on deaf ears. I was so unfamiliar with the process of it all and what it meant and what the outcome entailed.

Young has a systemic solution for problems like these:  procedural "justice" during the mediation itself and grievance procedures for dissatisfied litigants.  She writes:

To the extent the procedural justice research indicates that parties who perceive they have received procedural justice in mediation also perceive that the negotiated outcome in mediation is fair, we would expect that these parties are not likely to later sue their attorneys for malpractice. Even when the client has little trust in his or her attorney, a mediation process that enhances procedural justice allows the party to assess directly whether he or she feels exploited or mistreated in the process.

Even if the mediation process itself lacks procedural justice and the client accordingly remains dissatisfied and suspicious, a well-designed grievance system, emphasizing procedural justice from the client's perspective, may give the client the reassurances he or she needs. A client who suspects collusion between his or her lawyer and the neutral could seek the informed opinion of the regulatory body, without ever having to file a legal malpractice law suit.

Remember that we tend to stumble and fail when we're Hungry, Angry, Lonely (marginalized) or Tired (HALT) and so do our clients.  When I notice litigants flagging or attorneys losing their tempers, I suggest a walk around the block, a nutrition break (not eating more cookies) and, in extreme cases (someone becomes ill during the course of the session) reconvening at a later date.  Remember how powerful and all-knowing you appear to be to your clients and what a strange and frightening land the "justice system" is for those who are encountering it for the first time.  

There's no better defense to professional negligence actions that the quality of your relationship with your clients.  Keep channels of communication open.  Demand that your adversary and the mediator treat your client with respect.  At the first sign that a mediator is exercising undue influence on your client, say something, just as you would if opposing counsel were harassing your witness at a deposition.  Follow these dictates and you'll rarely if ever be worrying about calling your insurance carrier.
 

 I have no idea whatsoever what InvespConsulting is nor how it decides (really!) what the "ULTIMATE BLOG RANK" is.  But Settle It Now has never made the ABA Top 100 Legal Blogs despite its ABA listing as the most popular ADR Blog.  And that's a bummer because the ABA is my market, man!

We bloggers put a lot of work into these blogs - more work than could ever possibly be justified by ROI.  We do so because we love our work and want to share it with the world; because we like to learn from other bloggers and to share our insights with them; and because we're readers and writers and, frankly, geeks!

We also blog, I think, because we always wanted to be part of the "life of the mind" that University promised to be but never quite delivered because . . . heck! we were too young to appreciate it.  In my case, that meant cutting far too many classes to play PONG (yes PONG)

in the bar at The Surfer on the boardwalk at Pacific Beach just south of U.C. San Diego from which I graduated by, among other things, throwing myself on the mercy of my T.S. Eliot prof who permitted me to give him my final paper on "Burnt Norton" in the faculty dining room (thanks Jack!) as well as on Professor Lettau who let me out of the required upper division German Literature class after I flunked my translation mid-term on "Death in Venice" ("Never return to class," he said, "and I'll give you a B!")  

I'm temporizing.  Putting off what I'm about to say.  Here it is!

SETTLE IT NOW IS THE NUMBER ONE ULTIMATE RANKED CONFLICT RESOLUTION BLOG by this obscure company.  (they even gave me this prize:  !!)

Because I endeavor to provide value instead of endless self-promotion in this blog, I give you a recent interview with two of the legal blogging world's foremost authorities, Robert Ambrogi and Larry Bodine.  Excerpt below and full interview here (.pdf).

What are the most essential ingredients to a successful legal blog?

Ambrogi: The elements of success for a legal blog are theme, authority, consistency and voice.  By theme, I mean that the blog should have a distinct focus (a topic of law, location, element of practice, target clientele, etc.). By authority, I mean that the blogger should have command of the subject and write posts that reflect that. The best posts are those that combine knowledge and insight, so that the reader will learn something about the topic and also about what the blogger thinks of the topic.

By consistency, I mean just that. Daily is good but not essential. A blogger should strive to post a couple times a week at a minimum. Better to write fewer posts of higher quality than to post a steady stream of useless information.

By voice, I mean a recognizable style. For many bloggers, this comes with time. Write for a general audience and avoid the kind of stiffness and legalese common in other forms of legal writing.  [A]s with any form of marketing, [blogging] success is measured by the goals one hopes to reach. Traffic, for example, is not a measure of success if it is not coming from the blogger's potential clientele. At its simplest, success in blogging can be measured by the degree to which the blogger is able to achieve greater recognition and greater respect among those who constitute potential clients.

Bodine: Successful bloggers post frequently – once a day if possible. (I typically pre-write several days worth of posts, and time them to appear one day at a time). Successful bloggers are totally focused on their readers’ interests – they never stray off-topic and they keep out egocentric posts about being on vacation and what they saw on TV. Their content must be “unmissable” – it must make a difference in their reader’s lives. A successful blog always reflects the interests of its constituency.

As you can see, I've violated nearly all the rules but "voice" here, hoping my readers will forgive the occasional idle ramble through my stream of consciousness.

If you didn't already understand how to protect your mediated settlement agreement from challenge, you do now.

But wait a minute!  Is that what you want?  

What if your client entered into the agreement only because its opponent made a material misstatement of fact?  What if one of your co-defendants challenges your settlement agreement as not having been made in good faith, thus exposing your client to potential liability for indemnity or contribution?  Can you win the "good faith settlement" motion without the testimony of the participants in the mediation?  

In a comment on yesterday's post, Los Angeles mediator Joe Markowitz noted that:

Parties are entitled to walk out of a mediation with a whole range of outcomes, from a completed settlement agreement, to a term sheet, to an oral understanding, to a promise to think over the other side's last offer, to a promise to see the other side in court! As long as both sides understand what they are getting at the conclusion of the mediation session, there should be no basis for a malpractice claim for any of these outcomes. If the parties choose to use a term sheet with no language in it indicating that they have settled their case, they just need to understand that any party can renege on the deal after the mediation. In some cases, that may be what the parties want, to give them some time to think the whole thing over. 

Joe's comments put the emphasis in mediation advocacy back where it belongs -- on the fully informed assent of the parties and on the strategic plans of litigation counsel.  

So here's yet another way to commit legal malpractice as a mediation advocate:  don't fully understand the implications of mediation confidentiality on the final resolution of your client's dispute.  I'll just bullet point ways to protect yourself and your client below and ask others to chime in with their recommendations:

• if your client is relying upon the veracity of its opponent's representation in entering into the deal, write that representation into the agreement or deal points, i.e., "Party A and Party B both understand that Party A is entering into this agreement based upon the following representation/s: ....................................  "  Then you can include any other language that makes sense in the context of the agreement.  You can provide that Party B's production of documents confirming its representations to Party A is a condition precedent to Party A's obligations under the settlement agreement.  If your client simply needs protection down the line in the event FACT X proves to be untrue, you can include a liquidated damage clause in the agreement or provide for an expedited means of resolving any dispute resulting from the falsity of FACT X ; or, you could provide that the falsity of FACT X will render the settlement agreement null and void; 
• you could avoid the problems created by the strict enforcement of mediation confidentiality  by agreeing with your opponent (in writing!) that the neutral-facilitated settlement negotiation is not a mediation to be governed by Evidence Code section 1115 et seq. but a settlement conference governed by Evidence Code section 1152 et seq.  This option would be a useful one to a defendant who is settling the action separately from co-defendants who might bring a motion challenging the good faith of your settlement.  
• Less drastically, you could simply include in your settlement agreement a provision by which the parties agree that the mediation confidentiality protections as codified in section 1119 will not apply in the event a co-defendant challenges the good faith of the settlement.  Remember that the mediator is considered incompetent to testify so that your waiver of mediation confidentiality in the event testimony is needed to oppose a challenge to the good faith of your settlement may not permit the mediator to testify at the hearing (or to offer a declaration in opposition to the motion) as well he or she -- a neutral party -- shouldn't.

You're a litigator.  There are probably hundreds of ways to skin this particular cat.  The keys are knowing and understanding the law of mediation confidentiality and thinking through all of the implications it might have on your clients' rights or interests down the line.  That's what we litigators do and we shouldn't abandon those strategic considerations just because we believe we're settling this case for good and it will never come back to haunt us or our clients again.

Remember, you are in control of the process.  If you don't like mediation confidentiality, tailor a confidentiality agreement to suit your circumstances.  You will, of course, have to "sell" your proposal to your opponent.  The  best time to do that might well be at the end of the mediation rather than at its commencement.  By that time, your opponent is pretty darn committed to the resolution of the lawsuit.  His client is already planning on ways he can more profitably spend his time and money other than on further litigation, attorneys' fees, and court costs.  The plaintiff is, I guarantee you, already spending the settlement monies or planning the celebration back at the office and wondering whether this might lead to the promotion he or she has been waiting for.

Yet another way to commit legal malpractice (and how to avoid it) tomorrow!

That's not a summons and complaint for malpractice, is it?  Because of something you didn't know about ADR advocacy? 

C'mon!  ADR is all about avoiding litigation, not creating it, right?  The good news is that there hasn't yet been an ADR malpractice suit of note.  The bad news is, I see ADR negligence at least once a month and am holding my breath against the day lawsuits began a'poppin. 

To help you avoid ADR malpractice, here is just one of ten pitfalls to be covered in this series that can make you a malpractice magnet for disgruntled clients. 

1. write up a "term" sheet reflecting your mediated settlement agreement without including the "magic language" of Evidence Code section 1123
   1. absent this language, a party with buyer's remorse can resist the enforcement of a "term sheet" if he feels he was was coerced into signing it; entered into it based upon a misrepresentation of material fact made during the mediation; or, that it simply does not accurately reflect the terms the parties' orally agreed upon during the mediation
   2. use the magic language of Evidence Code section 1123 and your "term sheet" should be enforced and your client's bargaining partner precluded from introducing into evidence (pursuant to section 1119) any statement made by anyone during the course of the mediation, including allegedly coercive, misleading, or, fraudulent statements of fact allegedly inducing his consent.
   3. as Orange County mediator William J. Caplan points out in his lively 2005 article, The Quick Brown Lawyer Jumped Over the Mediation Traps, the "magic words" are “admissible,” “enforceable,” “binding,” and “subject to disclosure.”
   4. the cure (from Caplan again) is the following "belt and suspenders" clause:

The parties intend this Agreement to be admissible, binding and enforceable, and subject to disclosure within the meaning of those terms in California Evidence Code § 1123 (a), (b) and (c), and this Agreement is expressly not privileged from disclosure under California Evidence Code § 1119. In addition, if the formal Settlement and Mutual Release Agreement contemplated hereinabove is [e.g., not executed within ten (10) days of the date of this Agreement] this Agreement may be enforced by motion under California Civil Code § 664.6 and the court shall retain jurisdiction over this Agreement until performance in full of the settlement terms herein.

Below is an Orange County Superior Court form that satisfies the requirements of section 664.6 (providing an expedited enforcement mechanism for the settlement agreement) but which fails to recite all of the magic words including admissible, enforceable, and subject to disclosure.  So please don't trust any form other than your own!!  Even forms issued by the Courts. The fact that you are entitled to an expedited hearing under 664.6 to enforce your mediated settlement agreement does not mean that you will be permitted to enforce the agreement against your opponent's will.

SB-66 Stipulation For Settlement (CCP 664.6) - California

Of course the best way to avoid claims arising from buyer's remorse is to create a durable settlement that all parties will want to enforce.  That means avoiding agreements that your client enters into when he or she is hungry, angry, lonely (i.e., sidelined) or tired (HALT).  It also includes agreements that feel coerced by an overly aggressive mediator preying on the weaker of the two (or three or four) parties.  And yes, Virginia, there is always a more vulnerable party; all mediators recognize who that is; and, too many mediators make a beeline for that party's soft under-belly.

Another way to avoid challenges to the mediated settlement agreement include:

• bringing a fillable template settlement agreement (and these days, also a Stipulation for the Entry of Judgment in the event of default on a payment plan) that is a complete, final and binding agreement that contains the "magic language" of section 1123 that all parties execute before they leave the mediation session (no matter how tired everyone is and how much everybody wants to just go home and deal with the inevitable nit-picking over the relatively inconsequential terms of the agreement tomorrow). 
• not letting your fear that the "details" might blow up the "deal" you've spent so many hours negotiating.  You know how these deals go off the rails the following morning when your opponent begins to nit pick terms, often as a face-saving mechanism.  Let the mediator help you close the deal right there and now, assisting the parties in resolving the minor terms that can blow up in your face if left until tomorrow.

And speaking of tomorrow, I'll have Tip No. 2 for avoiding malpractice litigation arising from mediated settlement agreements.  Stay tuned!

For more posts on confidentiality in both California state and 9th Circuit district courts, click here.

Today's New York Times Op-Ed piece on "diplomatic engagement" (Terms of Engagement) as a strategy for "chang[ing] [Iran's] perception of its own interests and realistic options and, hence, to modify its policies and its behavior," offers good strategic negotiation lessons for mediators and mediation advocates alike.  As Crocker explains:

[E]ach case of engagement has common elements. Engagement is a process, not a destination. It involves exerting pressure, by raising questions and hypothetical possibilities, and by probing the other country’s assumptions and thinking. Above all, it involves testing how far the other country might be willing to go. Properly understood, the diplomacy of engagement means raising questions that the other country may wish to avoid or be politically unable to answer. It places the ball in the other country’s court.

Litigation is an extremely good way to "exert[] pressure," on your negotiation partner by burdening it with the costs of  waging the adversarial contest.  The litigation itself not only "rais[es] questions and hypothetical possibilities" but through the process of discovery, it also "probes [the opponent's] assumptions and thinking" and "test[s] how far [your opponent] might be willing to go" to achieve victory.

Parties disappointed with mediation and mediators are usually dissatisfied with the mediator's inability to engage in the final step of "engagement diplomacy" -- "raising questions that the [opponent] may use to avoid or be [positionally] unable to answer."  A good mediator is unafraid to raise those difficult questions with each side of a dispute.  But raising those difficult questions is not enough.  A good mediator must also be able to deliver bad news to the parties in such a way that the parties are able to hear it. 

If the goal of the negotiators -- the attorneys -- is to "change the[ir] [opponent's] perception of its own interests and realistic options and, hence, to modify its policies and its behavior," the negotiators and their clients must be prepared to:

• reveal to the mediator
  • hidden constraints preventing them from modifying their demand or offer; and,
  • hidden interests that must be served in order to justify any such modification
• candidly acknowledge (in separate caucus)
  • the weaknesses of their position; and,
  • any constraints on their client's willingness and ability to put their convictions to the test of a jury verdict or judgment by the court
• help the mediator help their clients understand that most litigation is based upon differing subjective experiences of the same "objective" series of events so that no one must admit that the other side is "right" and their own side is "wrong"

An example of the lengths to which people will go to be "right" is unfortunately provided to us today by the obituary of the first anti-abortion advocate to be shot and killed for his beliefs.  The slain activist spent years protesting outside the car dealership owned by Tony Young, who explained how the protests finally ended (from Slain Abortion Opponent Loved the Controversy)

Mr. Young said that after about three years of protesting outside his dealership, Mr. Pouillon came in and offered a truce. “ ‘Tony,’ ” Mr. Young said the exchange began, “if you would just agree that I’m right on my beliefs, I’ll stop.’

“I just told him, ‘Sure, Jim, you’re right,’ ” Mr. Young said, chuckling. After that, he said, Mr. Pouillon moved on.

Although few cases could so easily turn on the dime of a semi-sincere acknowledgement that the other side is "right," most attorneys would be surprised by how much value can be generated by acknowledging that the other side's version of the facts or the law is not crazy, evil, bizarre, intellectually dishonest or asserted in bad faith.  See The Biggest Lie in the Business:  It's Only About Money.  As I noted there:

The social scientists who study these things say that the way in which we respond to adversity "often reflects the fact that [our] prestige or status has been threatened more than the fact that [our] purchasing power has been diminished." Miller, Disrespect and the Experience of Injustice, Annual Review of Psychology (2002). In other words, the corporate C.E.O., like any other kid on the block, will retaliate when he feels he has been disrespected.

Conversely, research shows that business people are reluctant to recommend legal action if they believe that they and their company have been treated respectfully. 

By the same token that business people are reluctant to recommend legal action if they believe their company has been treated respectfully, they are often far more willing to settle litigation if they believe their positions have been heard and acknowledged as having been made in good faith.  For those headed toward settlement discussions or mediation, Crocker has good advice:

[B]y far the greatest risk of [diplomatic] engagement is that it may succeed.  If we succeed in changing the position of the other [side's] decision-makers, we then must decide whether we will take yes for an answer and reciprocate their moves with steps of our own.  If talk is fruitful, a negotiation will begin about taking reciprocal steps down a jointly defined road.  Engagement diplomacy forces us to make choices.

If litigators and their clients are aligned in the interest of settling litigation, they must prepare themselves to take "yes for an answer" by having in place a strategy of engagement that will permit them to reciprocate the other side's moves with steps of their own.  A good mediator should be capable of bringing all parties to the on-ramp of the road that counsel and their commercial clients are well-placed to and highly skilled at jointly defining.    

Powerlessness and silence go together; one of the first efforts made in any totalitarian takeover is to suppress the writers, the singers, the journalists, those who are the collective voice.   - Margaret Atwood

Every year, a town in Japan named Taiji kills 2300 dolphins and small whales.  This year, that slaughter was halted for a single day because of the activism of the man who trained Flipper for television, Rick O'Barry.  Here's his account of the making of The Cove.   

Below us, just across a two-fingered inlet, was the Killing Cove, where 2300 dolphins and small whales are butchered every year. [/*] It's the place Allison and Alex had infiltrated in 2002, managing to cut the nets and free some 15 dolphins before the two were assaulted by fishermen and arrested.  The killing here is part of a cetacean slaughter that is unregulated by the I[nternational] W[haling] C[ommission], which has no jurisdiction over the smallest whales.  The Japanese don't even have to pretend it's for scientific research.  The government issues permits to fishermen and over 22,000 dolphins, porpoises, pilot whales and false killer whales are killed annually along Japan's coasts.  The meat is sold to school lunch programs and grocery stores and is terrifically high in mercury.  Independent random tests have found the dolphin meat to contain three to 3500 times the levels deemed safe by the Japanese Government.

What did Flipper's trainer want to do?  He wanted to stop the slaughter.  Here's where the Harvard Negotiation article on power in negotiation comes in.  I'll let the authors of the Harvard article speak for themselves.

In order to understand [why the less powerful sometimes prevail against their more powerful bargaining partners] one needs to analyze power as more of a relational and perceptional concept. The relational dimension is captured in Dahl’s definition that “A has power over B to the extent that he can get B to do something B would not otherwise do." For example, most non-governmental organizations (NGOs) are less resourceful than the World Bank. Yet the Bank can enhance the legitimacy of its programs by including NGOs. Over time, participating NGOs could influence the Bank’s agendas to some extent.  Thus viewed, parties with asymmetric resources may well share a mutually dependent relationship.

 It is also worthwhile to note that power sometimes lies in the eye of the beholder. A party’s decisions may be shaped as much by its perception of the situation as by objective reality.  Zartman and Rubin, in studying power in negotiation, define it as “the perceived capacity of one side to produce an intended effect on another through a move that may involve the use of resources.[A]s Fisher and Ury have pointed out, the resources a party owns do not necessarily translate into effective negotiating power, which is much more context-specific. The authors cite the example of the US, which “is rich and has lots of nuclear bombs, but neither has been of much help in deterring terrorist actions or freeing hostages when they have been held in places like Beirut"

The common tactics under a power-based approach include coercion, intimidation, and using one’s status and resources to overpower opponents. 

One tactic omitted from the list of power-based tactics is one of the most compelling -- the strategy used by Martin Luther King, Jr., Ghandi and, yes, anti-abortion activists -- bearing witness and shaming.

There are many moments of shaming and bearing witness in The Cove --   the moment when activist O'Barry holds his iPhone before the eyes of the Japanese official who has just told him that cateceans are killed quickly, with surgical precision (you can see that moment in the trailer here).  There's the day O'Barry, who has been permanently barred from IWC's conferences, walks in with a flat screen television strapped to his chest and silently moves in front of each row of delegates, showing them the video of the slaughter in the Killing Cover.  And then, at movie's end, the wrenching scene of O'Barry standing in the middle of a crosswalk in Tokyo, that same flat screen  on his chest, silently bearing witness as thousands rush past him and a few, half a dozen perhaps, stop in their tracks to watch the footage of the fisherman in the Killing Cove that he and his team gathered at the risk of their freedom and perhaps their lives.

It appears that the slaughter was halted for only a day.  Here's O'Barry's account of that day  (excerpt below):

I vowed to be back in Taiji when the dolphin killing began. I’ve often been here alone, or accompanied by a few environmentalists. Sometimes, I was able to talk a major media organization into sending someone.

When I got off the bus at the Cove this afternoon, I was accompanied by my son Lincoln O’Barry’s film crew, a crew from Associated Press, Der Spiegel (the largest magazine in Germany), and the London Independent.

I was talking with the police, as the international journalists stood around listening, suddenly a camera crew arrived from Japan! And then another! And then still another!

You have to understand that this is SO IMPORTANT. These TV stations have REFUSED to cover the story in Taiji for years and years. NOW, for the first time, they have shown up, with cameras rolling.

The Cove movie led to the strong action by the city of Broome, Australia, in suspending the sister-city relationship with Taiji. So now, the Japanese media are sitting up and listening, for the first time.

[A]ll Japanese will soon know about the cover-up that has occurred by the government in refusing to stop mercury-contaminated dolphin meat from being sold to unsuspecting Japanese consumers and children.

But Taiji can change this image of shame, if they want to. I will be telling them that the town of Nantucket used to be the capitol of the whale killing industry in the US. Now, it uses its history of whaling combined with whale-watching to market tourism very successfully. Whales and dolphins are worth more alive than dead. Taiji can do this, too. But the killing has to stop.

Alas, the cessation of the killing lasted only a single day.

 Once shameful national behavior has been exposed (a contentious or power-based negotiation strategy) the weaker parties (people vs. governments) must build their negotiating strength through trust.  As Power and Trust in Negotiation and Decision Making asserts:

Identification-based trust is grounded in empathy with another person’s desires and intentions and leads one to “take on the other’s value because of the emotional connection between them.”  It often exists among friends. Fostering understanding and friendly ties may therefore be a step to engender identification-based trust. For example, Reagan and Gorbachev developed a cooperative relationship in the late 1980s partly because they had repeated face-to-face talks over the years.  Reagan also sought to cultivate a non-hostile atmosphere in these talks by appealing to common interests, actively diffusing tensions and using his sense of humor. Because friendship and liking tend to generate trust and assent – sometimes in a subconscious fashion – Cialdini observes that salespersons often befriend their customers before promoting their products. Trusting someone in certain situations may thus come with risks of manipulation or exploitation

In asymmetrical power relationships, the building of trust among activists is necessary for the formation of a grass-roots coalition capable of overwhelming more powerful parties (perceived economic and national interests as well as that most powerful of impasse creators:  the status quo) with passionate commitment to an idea and the hope that the idea can be made a reality.  

O'Barry's documentary is a call to action that asks us to respond to our "better angels."  If enough of us hear the call and respond, there is no power that can stop this movement to stop the killing. 

As Martin Luther King, Jr. once said, "the arc of history is long but it bends toward justice."

______________________

The Harvard Negotiation article is a gift from Don Philbin who directed his Facebook readers to  Power and Trust in Negotiation and Decision-Making:  A Critical Evaluation at the Harvard Negotiation.  If you have any interest whatsoever in the dispute resolution techniques of negotiation, arbitration or mediation and you're not following Don (whose Facebook page is here and whose tremendous LinkedIn Arbitration and Mediation Group is here and whose group blog Disputing is here) you're missing the Mother of All ADR Aggregators and your life is the poorer for it.

*/  There were reports that international pressure caused the suspension of the annual dolphin hunt but the linked article from the Japan Times suggests that it resumed on the second day of the season on September 2.

Welcome to the first issue of the Federal Bar Association’s ADR Section Newsletter, The Resolver.

(right, our fearless leader, Simeon H. Baum)

The subjects covered in this issue include the chaotic state of federal mediation confidentiality protections [by Phyllis G. Pollack]; the dangers of [mediator] class action fairness declarations [by Jay McCauley and Jeff Kichaven] and the difficulties inherent in applying federal conflict of interest laws developed with attorney advocates in mind to attorney neutrals and their law firms [by Robert J. Rose].

Though these issues are of critical importance to daily practice in our federal courts, very few advocates are aware that these problems exist, let alone how they might be fixed. The Resolver’s first mission is to make available to FBA members the highest level of scholarship and best practices in federal mediation and arbitration practice. The second—and perhaps the most important— mission of The Resolver, is to commence a robust and sophisticated conversation among federal lawyers, on the one hand, and district and circuit court mediators on the other, about the means by which we can more efficiently, effectively, and durably help our clients resolve their litigated disputes.

(from the Letter from the Editor by yours truly)

You'll also want to read the Message from the [ADR] Section Chair, Simeon H. Baum, whose energetic leadership is making the ADR Section of the Federal Bar Association a dynamic new force in the ADR field.

As Baum's message notes, we have great things in store for the work of the FBA's ADR Section. Simeon writes:

For those of you who are interested in what you encounter in The Resolver, we welcome you to participate actively in the FBA. Become a liaison to the section on behalf of your local chapter. If you have thoughts on pending or possible legislation that affects the dispute resolution field . . .  please feel free to share them with us—publish your piece in the next issue of The Resolver.

Or, reach out to the section and your chapter and look to put your cause at the forefront of the FBA’s legislative agenda. We can take advantage of Bruce Moyer and the FBA Governmental Relations Council to cultivate the best in the ADR field through national legislation, where appropriate.

If you have a CLE program on ADR that you would like to promote, please let us know through the ADR Section, and the section can collaborate with your local chapter [Board member Jeff Kichaven is the CLE Chair this year and you can reach him at the link above].

Along these lines, the section is hoping that FBA chapters will host fireside chats or roundtable discussions featuring the circuit mediator for that area [and local Board members will be reaching out to those chapters to initiate those roundtables.

These CLE events—perhaps accompanied by a breakfast, lunch, or cocktail reception—can provide an excellent opportunity not only to enhance the use of those ADR forums, but also to meet with likeminded neutrals and representatives.

With this first issue of The Resolver at hand—thanks to the efforts of editor Vickie Pynchon, our generous contributors, and FBA sections and divisions manager Adrienne Woolley  (awoolley@fedbar.org), we invite you to join us in the unending way of creative service to your clients, the bar, and society via the path of resolution.

The entire issue is here.

UPDATE:  There's a lively contract drafting discussion going on over at Ken Adams Blog (My Version of the Triple A Standard Arbitration Clause). To the many comments there -- most of which concern the important issue of clarity -- I would add the following:  it's a lazy lawyer who uses anyone's "standard" clause in any agreement.  Attorneys' fees provisions, integration clauses, venue and arbitration agreements and the like should be tailored to the disputes that are likely to arise in view of the most recent case law.  The decision discussed here was published on August 26 of this year.  Any arbitration clause that pre-dates that decision should be reviewed and revised to make it as air-tight as possible.

Since posting the holding of the recent Parada decision here yesterday, I've had further thoughts on the matter which I posted to both the AAA LinkedIn and the Commercial and Industry Arbitration LinkedIn Group sites.*/  I provide those thoughts here for anyone who represents businesses struggling to draft enforceable arbitration clauses and attorneys who oppose or are attempting to enforce them.

(above, lawyer on verge of bagging practice to mediate and arbitrate instead)

Follow the hilarious Charles Fincher at LawComix and on Twitter @CharlesFincher @BeatriceBitcher  @ RichardPrickman and @LawComix.

 The California Supreme and appellate courts HATE consumer/employee arbitration clauses. It's almost impossible to draft one that will pass their unconscionability standards -- even O'Melveny failed to get it right.

In this case the Court found the arbitration clause substantively unenforceable even though the Plaintiffs were "investors" and hence neither the "consumers" nor the "employees" for whom prohibitively expensive arbitration alone can render the clause unenforceable. This case does not extend the prohibitively expensive doctrine into non-consumer contracts, but instead uses the expense as one of the factors leading to the conclusion that the arbitration provisions are substantively unconscionable.

This creates a slippery slope for the Courts to import (implicitly rather than explicitly) the prohibitively expensive doctrine into its consideration of arbitration clause enforceability when the contract is "adhesive." For this reason, it wouldn't surprise me if the California Supreme Court de-published it.

This is one of those issues where the Courts' self-interest in clearing their dockets does not defeat a continuing strong bias against arbitration at the appellate level. Of course the appellate courts do not have to deal with the litigation as the trial courts do and the trial courts continue to somewhat reflexively grant motions to compel arbitration.

This leaves everyone who wishes to avoid the Court system and use arbitration to resolve commercial disputes in a position of uncertainty that the law of contracts is designed to prevent.

One solution - the one I suggest - is to use the AAA's expedited commercial procedures for contracts where the individuals signing are likely able to demonstrate an inability to pay for arbitration.

Note that the failure to attach the arbitration rules agreed upon was a factor in the Court's decision that the arbitration clauses were unenforceable. I doubt that any company proffering arbitration to customers attaches the often lengthy rules but they would be wise now to do so if they're operating in California.

The bottom line in California now? If the contract is non-negotiable (form; customer no opportunity to bargain) and the customer will be able to demonstrate an inability to pay AAA or JAMS fees, an expedited procedure should be offered in the arbitration agreement or the business enterprise should assume the cost of arbitration (with a prevailing party clause to recoup the expense should the commercial enterprise prevail). The governing rules should also be attached.

The point is to make the arbitration option as clear and transparent as possible and as inexpensive an option as Court would be. Even those who believe they can distinguish Parada from their own case should know it's in their best interest to adhere to the Parada guidelines or be forced to defend their arbitration clause in Court against strenuous opposition.

__________________

*/  I belong to two groups on LinkedIn that any attorney who arbitrates cases or who counsels clients to put arbitration clauses into their contracts should join.  They are the Greater AAA Connection, which describes itself as:

 a professional and social network of current and former employees, neutrals, and students of the AAAU from around the world. If you have an AAA connection, this might be your connection. Join in!

and the Commercial and Industry Arbitration Group, which describes its mission as:

the open discussion of issues and sharing of information concerning commercial and industry arbitration, mediation and other forms of alternative dispute resolution. Commercial and industry ADR is a broad topic and covers the spectrum from arbitrations and mediations arising out of general, commercial contracts through more specialized forms of dispute resolution used by various industries, including the reinsurance, maritime, telecommunications, securities, financial services, construction industries and others. We also consider labor and employment arbitration and mediation to be within this spectrum.