Thanks to the SCOTUS Blog for the following resources on the upcoming Kagan hearings.  Follow SCOTUS Blog all week for commentary. 

Why should negotiators be interested in the composition of the Supreme Court?  Because the freedom to negotiate requires a strong rule of law culture.  And because everything we negotiate assumes the enforcement of certain agreements and non-enforcement of others, of particular interest to negotiators and ADR practitioners - arbitration agreements. 

SCOTUS whitepapers below:

Diversity Hiring

Abortion

Diversity on the Court

Gays in the Military

Corporate Rights (Citizen's United)

Conservatives

Executive Power

Kagan's Qualifications to Serve

Thanks to Timothy R. Hughes - @vaconstruction in my twitter network - for the head's up.

Here's the entire text of the triple A's announcement (h/t to Disputing here)

The American Arbitration Association® Calls For Reform of Debt Collection Arbitration

Largest Arbitration Services Provider Will Decline to Administer Consumer Debt Arbitrations until Fairness Standards are Established

New York, NY– (July 23, 2009) – The American Arbitration Association (AAA), the world’s largest conflict management and dispute resolution services organization, today recommended in a House subcommittee hearing that the process surrounding consumer debt collection arbitration needs major reform and recommended a national policy committee to identify and research solutions. AAA said it will not administer any consumer debt collection programs until those solutions are determined.

AAA senior vice president Richard Naimark told the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee that the AAA “has not administered significant numbers of debt collection arbitrations relative to some other organizations,” and has not handled any since June after it concluded a single high-volume program. However, he said that AAA had independently reviewed areas of the process and concluded that it had some weaknesses. As a result of that review, it is evident to the AAA that “a series of important fairness and due process concerns must be addressed and resolved before we will proceed with the administration of any consumer debt collection programs.” According to Mr. Naimark, areas needing attention from the national policy committee include consumer notification, arbitrator neutrality, pleading and evidentiary standards, respondents’ defenses and counterclaims, and arbitrator training and recruitment.

“AAA has been working with the Domestic Policy Subcommittee to review potential improvements in consumer debt collection arbitration procedures for some time. We believe that arbitration can play a major role in consumer debt collection disputes. A national policy committee dedicated to meaningful reform can enhance an array of due process elements so that there is deeper fairness and transparency. Consumers deserve an alternative to litigation, but they also need to be able to trust that option. Our goal will be to achieve that trust,” Mr. Naimark said after the hearing.

“We have been studying this issue for some time. We made our decision to impose a moratorium on administering consumer debt arbitration independently and not at the behest of any outside entity as has been claimed. We commend the Domestic Policy Subcommittee for its initiatives to protect consumers in debt collection cases, and we will continue to work with it willingly and enthusiastically,” Mr. Naimark said.

The State of Minnesota filed a lawsuit against National Arbitration Forum, a leading arbitration provider, claiming that NAF is a front for debt collectors and their law firms and not an independent arbitration service.  Here’s a copy of the complaint–it’s long–for anyone who is interested.

For Sugarman's full post, click here.

Though the National Arbitration Forum focuses on the arbitration of disputes, it also administers mediations.  For information on its mediation services, click here.

I have three things to say about this.  First. The country's supposed financial geniuses are unable to pay their debts and are facing bankruptcy.  You are not alone.  Second.  There's nothing to be ashamed of, though there is something to be learned from this painful experience.  I know.  I was there during the recession of the early '90s.  Third.  You are not without remedy.  Take a look at "How to Negotiate with Your Creditors" at Entrepreneur Magazine this week.

Tips to help you negotiate with a creditor or collection agency:

• If you make a request that is denied for whatever reason, ask to speak with a supervisor.

• Don’t agree to pay more than you can afford when negotiating. Know in advance what your financial situation really is, then work within those confines. The last thing you want to do is negotiate a settlement or payment plan that you can’t adhere to.

• During your negotiating process, figure out what the creditor is willing to accept as a settlement. What’s their absolute bottom line? If you’re looking for a settlement, offering between 50 and 70 percent of what’s owed, either as a lump sum payment or through a payment plan, isn’t unreasonable. Achieving this settlement might take several rounds of negotiation, however.

• Avoid becoming intimidated by the person you’re negotiating with, even if they make threats about lawsuits.

• Most successful negotiations require several rounds going back and forth with offers and counter offers. The process could take days or weeks.

• If you can afford to settle an account by paying one lump sum (as opposed to using a payment plan), you’ll have more negotiating leverage.

• The person you’re negotiating with does this for a living and is a trained professional when it comes to debt collections. For them to use legal terminology during a conversation or in writing is a common tactic to confuse or intimidate you. Listen carefully to what’s being said and make sure you understand exactly what you’re committing to. Consult with a lawyer or credit counselor if you have questions.

• Make sure everything you ultimately agree to is put in writing, signed, and dated by both parties.

What to Negotiate for When Dealing with Creditors, Lenders, or Collection Agencies

• a lower interest rate

• the interest accrued to be waived

• the late fees, penalties, and/or legal fees to be waived

• the loan to be extended or restructured, allowing you to skip one or more payments with no penalty

• a payment plan that would allow you to pay off the amount currently owed, but with no added interest or fees added in the future

• a settlement that would include a significantly lower balance due (such as 50 to 75 percent of the total)

• favorable reporting to the credit reporting agencies or the removal of negative information from your credit report pertaining that to that account

Jason R. Rich is the bestselling author of more than 37 books including The Complete Book of Dirty Little Secrets: Money-Saving Strategies the Credit Bureaus Won’t Tell You, available from Entrepreneur Press. His books cover a wide range of topics, including computers, e-commerce, personal finance, career-related topics, and travel and entertainment. He also contributes regularly to major daily newspapers, including the New York Daily News, as well as national magazines and popular websites.

Mediation and non-binding arbitration are processes that offer parties opportunities to settle their disputes. Pursuing settlement helps clients to reduce the total cost of conflict management in their organizations, provides flexibility and protects valuable relationships with partners
and customers.

The American Arbitration Association®’s (AAA) Non-Binding Dispute Resolution Services for Businesses and Consumers is a suite of settlement services and solutions that include:

• Mediation

• Non-Binding Arbitration

• Non-Binding Arbitration and Mediation Contract Clauses Guide

An important element of the suite is access to AAA staff facilitators who stand ready to aid parties in selecting the settlement options most appropriate for their needs and the circumstances at hand. To reach a facilitator, simply select the “Contact Us” option below to send an email requesting information
and assistance.

Here are the consumer procedures.  You can also find these rules on the commercial dispute resolution page here.  And here's a .pdf download of dispute resolution clauses geared toward the business and consumer dispute resolution services provided by the AAA.

Democratic Party control could ban mandatory arbitration, expert says

11/17/08

Jan Dennis, Business & Law Editor
217-333-0568; jdennis@illinois.edu

Click photo to enlarge Photo by L. Brian Stauffer Michael LeRoy, a professor of law and of labor and employment relations, says Democratic Party control in Washington could restore lawsuits as an option for workers and consumers now forced to settle disputes through mandatory arbitration that gives employers and businesses an unfair edge.

CHAMPAIGN, Ill. — Democratic Party control in Washington could restore lawsuits as an option for workers and consumers now forced to settle disputes through mandatory arbitration that gives employers and businesses an unfair edge, a University of Illinois labor law expert says.

Michael LeRoy predicts a bill sponsored by Democrats that would bar companies from imposing arbitration will likely be approved next year when Democrats take over the White House and add to their majorities in Congress.

The measure, introduced last year but stalled by the prospect of a Bush administration veto, would halt a shift that has grown since a 1991 U.S. Supreme Court ruling allowing firms to require arbitration rather than courts to resolve disputes, he said.

For full article click here.

Here's the summary of the bill courtesy of the Consumerist:

Arbitration Fairness Act of 2007 - Declares that no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of: (1) an employment, consumer, or franchise dispute, or (2) a dispute arising under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power.

Declares, further, that the validity or enforceability of an agreement to arbitrate shall be determined by a court, under federal law, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement.

Exempts arbitration provisions in collective bargaining agreements from this Act.

As Hunt writes, 

The standard residential purchase contract in California is produced by the California Association of Realtors® (CAR). It contains two sections that are easy to overlook or to take as “boilerplate”, but that can be very important if things go awry between the parties. One of those sections deals with attorney fees, providing that, in the event of any proceeding between buyer and seller, the prevailing party shall be entitled to attorney fees and costs from the non-prevailing party. The attorney fee section contains an exception, however, and that exception is spelled out in the portion of the contract referring to mediation. There it is said that, if either party initiates an action “without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees… .” [my emphasis] /*

When Mr. Thrifty and I purchased our house in '02, we were presented with one of these form contracts.  I'm a lazy form contract signator myself.  Negotiation training or not, I generally assume these contracts are "take it or leave it" and I sign them accordingly.  /**

Not Mr. Thrifty.

"What's the procedure?"  I recall him pressing our real estate agent.    "When is the demand for mediation supposed to be made and how are the parties supposed to conduct it and what happens if the parties can't reach agreement on the mediator to conduct the process?"

He was having none of it. 

"I'm crossing it out," he said, as blue ink flowed over the mediation provision and our agent let out of small gasp of dismay.

By that time, everyone was so "bought in" to the sale, that Mr. Thrifty's effort to strike  the form language prevailed.  No mediation necessary in this household!

Beware of Form Contract Language

As Bob Hunt explains, the Lange Court gave the back of its hand to the contention that it was "too difficult" to make the required demand for mediation.  

“If the [sellers] could be found and served with a lawsuit by mail, they could have been sent a mediation demand by mail[,]” [held the Court]  All that the plaintiff had to do was attempt to mediate before he filed suit; and he didn't. Quoting a related case, the court noted that the mediation provision “means what it says and will be enforced.” 

Though it's not surprising to find bare bones ADR provisions in industry form contracts -- bones so bear that their meaning must be litigated -- defeating the purpose of the summary proceedings provided for -- it is surprising to find attorneys continuing to paste form contract language into their client's negotiated agreements.  This is particularly troublesome when what's at stake -- the attorneys' fees -- makes the difference between bringing litigation or not or settling litigation or not.

If it's worth putting a clause into your contract, it's worth spending the time to imagine what might happen if circumstances triggering that clause arise.  If you're practicing in a firm with both transactional and litigation attorneys, I highly recommend that the wordsmiths run the "standard" ADR, attorney fee, choice of law, and venue provisions by the litigators who have undoubtedly already tested these provisions in the fire of conflict.  You won't be sorry you did.       

_______________________

*/  The case -- Lange v. Schilling -- was originally ordered not not to be published.  Had that Order stood, the case would not create precedent under California law.  As the reader of the linked opinion can see, however, it was subsequently ordered published and can be cited as authority. 

**/  The form contract language at issue reads as follows:

Buyer and Seller agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action. . . . If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.

Los Angeles Times article here and the opinion itself here.

UPDATE:  For coverage of this case within the industry see The National Underwriter post here.

We conclude that the Washington State Supreme Court’s decision in Scott v. Cingular Wireless, 161 P.3d 1000 (Wash. 2007), establishes that T-Mobile’s arbitration provision is substantively unconscionable and unenforceable under Washington state law, and that there is no federal preemption in light of our decision in Shroyer v. New Cingular Wireless Servs., Inc., 498 F.3d 976 (9th Cir. 2007).

Now the New York Times tells us why.  After World War II, we had a virtual monopoly on consumer goods.  Our negotiation skills took a hike in the woods and never returned.

Anyone who wants to save a few bucks on the purchase of consumer goods without the assistance of a professional negotiator should read today's New York Times article -- For Champions of Haggling, No Price Tag is Sacred.  Advice by Herb Cohen, author of the best seller “You Can Negotiate Anything” below. 

• Make sure it is worth your time. Generally that means only bargain on big-ticket items.
• Don’t fall in love with anything you’re trying to buy — you should care, but not too much.
• Do your homework on comparable prices.
• Offer cash rather than a credit card.
• Remember — you have the power. Money talks, but money can also walk.
  
  Also, keep in mind that the more time a sales representative has invested in a sale, the more he will want to give you a bargain. Mr. Cohen gives the example of trying on three or four suits and deciding on the fifth one.
  
  “They bring in the tailor and the salesman is gleefully writing up the bill. Then I turn to the salesman and say, ‘What kind of tie will you throw in for free?’ ”
  
  It works for free shirts, too.
  

If you come out guns blazing, the other side is probably going to respond in kind. Which means that you’re setting the stage for an aggressive negotiation and will be fighting for things along the way. On the other hand, too soft, and you’ll give up everything. This is where some of the experts obviously advise differently. One camp says “play stupid” and seek what you can get through self-depreciating behavior. Another camp (pardon the pun, but it’s actually Jim Camp) says that you should always “Start with No” as a way to encourage discussion.

The net result of Strategic Thinking is an ability to not only see what your path could be, but to also see where your opponent is going to move. For if you play a win-win strategy against someone with a win-lose strategy, who do you think is most likely going to lose? If you’ve considered your various options and thought Strategically, you’ll know how to respond.

Strategic Planning:  Negotiation "Style"

Though Gordon talks about planning ones negotiating style ("hard" or "soft") I always lead with a style that is "hard on the terms and soft on the people."  As a matter of negotiation "style" I also

• name my concessions and demand reciprocity
• cooperate until I encounter non-cooperation, at which point I retaliate but forgive quickly when cooperation results  
• take principled negotiation positions, i.e., always give a reason for my bargaining position and always demand the same from my negotiation partner
• make the first offer, having in mind making 3 to 5 concessions to reach my "bottom line" or "reservation price."

I also recognize and attempt to guard against my weaknesses which are:

• impatience; and,
• discomfort when the negotiation appears to be but rarely has actually has reached impasse

Strategic Planning:  Setting Ones Reservation Price; Planning  the Number and Timing of Concessions; and Deciding Which Information Will Be Strategically Deployed 

My own pre-game strategic planning primarily consists of setting my "reservation price" (the number I will not go below); projecting the planned timing and number of concessions; and, deciding on the nature and timing of information disclosures that I believe will enhance my bargaining position.  I also make a decision, in a case like this, whether I wish to aggregate or divide the several items subject of the bargain.

So What Was the Actual Plan?

We were lucky to have both several items to negotiate and several preferences for each negotiated item.  What were they?

1. the television itself;
2. the $100 HD cable;
3. the furniture on which to place the television; and,
4. sales tax, which for reasons I'm not entirely clear about, sales people generally are happy to "cut" as part of any retail purchase.

We decided that I would be the primary negotiator with Mr. Thrifty as my back up. 

I knew there was a lot of "fat" in the furniture.  The purported "retail" price for the "wood veneer" television stand was $598, "reduced" to a "sales" price of $398.  Having checked online prices for this piece if furniture, I knew that at least one online store claimed that its "retail price" was $349 --  $50 more than the Ken Crane's claimed "sale" price and that we could purchase it online for $285, $110 less than the store was offering.  

Though we were unable to obtain comparables for the Toshiba -- tagged at $2598 -- we knew we could buy a comparable Samsung for $2300 over at Fry's Electronics in Burbank. 

Mr. Thrifty and I decided that our reservation price (or bottom line) was $3,000.00 for all of the items listed above, which would be $366 less than "retail."

Although I firmly believe we could have negotiated a deal at that price, we concluded the deal $150 short of our "reservation price."  I'll explain why that happened when we cover time management and perception of power in our final post on negotiating consumer purchases.

Is there any negotiation more frustrating than the one you conduct on the telephone with people who won't give you their last names, have no "authority" to do or say anything that deviates from their script and who you are finally connected to only after enduring the "go ahead, try to choose the right numeral to fit your problem" automated phone system.

I'll include some of these conversations in the series on negotiating the purchase of the flat-screen T.V. 

This post, however, is an emergency act of mercy for anyone who is upgrading their DirecTV non-HD DVR service to either Dish or DirecTV HD-DVR system.

Information Gathering Cut Short

After at least one full hour of searching online, I found this clear, easily understood, linked resource entitled My Dish Network vs Direct TV Experience.  This advice page links to a side-by-side comparison of the HD-TV-DVR "deals" being offered by satellite providers here at the DigitalTVDojo Daily Deal Monitor.   The "Deal Monitor" links to the "secret" web deals that you will not be offered on the telephone or the internet unless you find them. 

But that's not all. 

Gathering Information about the Dish Service

Preface:  After the Dish representative dodged the following question four times, I gave her one last chance, telling her she would lose my potential business unless she answered it.  She didn't.  I called DirecTV for the second time that day.

The question:  will you provide me with a 5 LND dish free with the HD service?

What the question means:  I have no idea.  My rocket scientist neighbor told me that's what I needed.

Back to DirecTV

If you, like us, are existing DirecTV customers, you cannot get the "deal" linked above online.  If you sign in to your account (or create an existing user account) the only "deal" available to you is to pay $299 for a new HD DVR (which you understand you are leasing, not purchasing).

Here's who you have to call to get the same deal being offered to new customers:  The Customer Retention Department.

How do you get there?  Press 0 even though you're not given this option, which may not directly connect you to a human operator, but will lead you to one more quickly than any other means I tried.

How I Got to the Customer Retention Department

I spent a lot of time appealing to DirecTV's "higher value" of customer service and its interest in retaining customers.  I said the words "Dish" alot.  I said, you're not a monopoly and you have the power to lose a customer today.  That sort of thing.

But all this effort bought me was access to the Holy Customer Retention Department. 

So don't bother negotiating your way there.  Just ask to be directly connected.

The Deal the Customer Retention Department Will Give the Existing Customer

(please let me know if you do better -- Thad Employee # U2179 represented to me "as a matter of fact" that this was absoutely the best deal any existing customer could get on an HD-TV DVR upgrade.  I'm hoping no one proves to me that Thad misrepresented the available deals because I'd like to continue to believe that when directly asked this question, my negotiating partner will either say -- I cannot guarantee that -- or tell me the truth.  I'll provide a link for misrepresentations during negotiations and negotiation ethics later).

Here it is: DirecTV will:

1. provide you with an HD-DVR for $199
2. it will install the needed 5 LNB dish
3. though the cost of HD service is an additional $9.99/month, DirecTV will waive that fee for the first year ("that's a $120 value" says Thad)
4. free installation
5. free handling and shipping

That's it.  Happy shopping and thanks to all the selfless TV service bloggers who helped along the way.

I have long complained that high definition television is the triumph of form over the "content" our 500-plus channels deliver to us. 

Nevertheless, the February 2009 deadline to go digital is, more or less, looming.  Not to mention the fact that today is our first wedding anniversary and the seventh day of Hanukkah.  Christmas is just around the corner.   

That confluence of events provided the rationale, the justification for me and Mr. Thrifty to finally bite the H.D.T.V. bullet and negotiate the purchase of technology that would likely cost us more than each of us paid for our first automobiles.

Before putting your non-bargaining toes in consumer negotiations, you might want to take a peek at the U.K Telegraph article The art of being a winning negotiator, our knowledge of which we owe to Diane Levin at the Online Guide. 

There's not a lot that's new in the Telegraph's report of a five-day Oxford negotiation program for seasoned professionals -- first "identify what you want, what the other side is likely to want, what you can discover from the public media [and then] build relationships with the other party, picking up intelligence which couldn't be gathered in advance such as his personality, mood, style of negotiating, constraints."

What struck me as noteworthy was the article's expressed surprise that people 'at the top of their game' professionally would feel the need for a course in negotiation.  

This is not news to someone like me who realized on my first day of mediation training that I'd been negotiating the settlement of litigation for 25 years as crudely as Cullen, director of the Oxford Programme, said sophisticated business people tend to do. They "negotiat[e] fairly crudely," he said, and "hadn't realised how they could do it so much better."  

As I sit at home today waiting for delivery of the TV at the top of this post, I'm going to take my readers on a step-by-step guide to buying the high-end technological gee-gaw of your choice this holiday season.  Or, because we don't watch television all that much, the mid-market Flat Screen High Definition LCD T.V., with accessories and furniture.  

High-market, mid-market or low-end, one negotiation is as easy or tough as another depending upon your negotiation skills.  And to tell you the absolute truth -- those lawsuits with the least in controversy are generally the most difficult to negotiate.  

But I digress. 

Step No. 1:  Preparation, next.

I have Christina Doucet at the National Arbitration Forum to thank for summarizing some of the most recent statistical literature available on differences between procedure, cost, duration, outcome and party satisfaction of litigated and arbitrated consumer and employee disputes.

Time and Cost Differences Between Arbitration and Litigation

• Employment claims take 650 to 720 days to be resolved in court, according to the National Center for State Courts. 
• The median time to resolve an employee dispute by arbitration is 104 days 
• the median cost of resolving employment disputes by arbitration is $870.

Sources: Consumer and Employment Arbitration in California: A Review of Website Data Posted Pursuant to Section 1281.96 of the Code of Civil Procedure California Dispute Resolution Institute, August 2004 http://www.mediate.com/cdri/cdri_print_Aug_6.pdf   and Examining the Work of State Courts, (1999-2000) National Center for State Courts http://www.ncsconline.org/D_Research/csp/1999-2000_Files/1999-2000_Tort-Contract_Section.pdf

Outcome Differences Between Arbitration and Litigation:  Arbitration & litigation final awards are essentially the same as court judgments

• median monetary awards for successful claimants are greater in arbitration than in court—$100,000 in arbitration compared with $95,554 in court.

http://www.workrights.org/current/cd_arbitration.html; Comparing Litigation and Arbitration of Employment Disputes: Do Plaintiffs Better Vindicate Their Rights In Litigation? Michael Delikat & Morris M. Kleiner American Bar Association Litigation Section Conflict Management Vol. 6, Issue 3;  Winter 2003 http://www.insurancejournal.com/pdf/InsuranceTimes_20030429_39125.pdf

• The “win-rate” for employees is at least as favorable as an individual’s win-rate through a lawsuit 
• In contract disputes, individuals who sue businesses win 55% of the time in both court trials and in arbitration and some researchers have found that employees win more often in arbitration than in court.

Sources: 2004 Employment Arbitration: What Does the Data Show? The National Workrights Institute Article reviewed on workrights.org site on November 15, 2004 http://www.workrights.org/current/cd_arbitration.html

Do the Parties Believe they've had their "Day in Court"?

• only 2.8% of contract cases ever reach trial in state court.
• more than 40% of cases brought before the National Arbitration Forum are resolved through an arbitration proceeding.

Sources: Examining the Work of State Courts, (1999-2000) National Center for State Courts; Outcomes of Arbitration : An Empirical Study of Consumer Lending Cases Ernst & Young, Quantitative Economics and Statistics Practice Publication forthcoming December 2004

Other Research Sources

The Truth About ADR: Do Arbitration and Mediation Really work? by Michael T. Burr Corporate Legal Times - February 2004 -  survey of general counsel and other high-ranking in-house counsel from both public and private companies in October and November of 2003.

• 59.3% surveyed indicated arbitration was less expensive, 
• 78% indicated arbitration led to a faster recovery
• 83% indicated arbitration was either equally fair or fairer than the traditional adjudication process.

Survey on Arbitration

ABA Section of Litigation Task Force on ADR Effectiveness American Bar Association - August 2003 -- http://www.abanet.org/litigation/taskforces/adr/surveyreport.pdf

• 78% of those surveyed said that arbitration was timelier than litigation, and 
• 56% said that arbitration was more cost effective than litigation.

Legal Dispute Study Roper ASW: Survey for the Institute for Advanced Dispute Resolution April 2003 http://www.adrinstitute.org/adri-lds2.pdf

• Updating a study conducted in 1999, this study revisits Americans’ awareness, knowledge, attitudes and experiences regarding arbitration as an option for resolving disputes.
  • 64% of respondents would choose arbitration over a lawsuit in disputes involving monetary relief. 
  • 67% of respondents felt that lawsuits take too long, 
  • one-third or some 32% said that lawsuits cost too much.

Costs and Value of Arbitration

Lisa Brener World Arbitration and Mediation Report - April 2003 14 No. 4 World Arbitration & Mediation Report 111 (2003)

In a 1990 survey,

• 100% of respondents found arbitration to be quicker than litigation. 
• 89% found that arbitration was less expensive than litigation. 
• only 17% of attorneys’ time was spent on discovery in an arbitral setting, compared to 45% in court 
• over half of the respondents believed arbitral awards were more equitable than the outcomes in litigation.

ADR Preference and Usage Surveys

Surveys and Ballots, Inc. surveys of: American Bar Association’s General Practice Solo and Small Firm (GPSolo) Division and Tort Trial and Insurance Practice (TIPS) Section members September 2005 http://www.abanet.org/tips/TIPS%20ADR%20Preference%20and%20Usage%20Report.pdf

The surveys assess the usage and preferences regarding negotiation, mediation and other forms of alternative dispute resolution (ADR). Respondents from both ABA member groups report an increasing support of ADR. Both groups view ADR usage as a necessity that will continue in the future, reiterating the growing trend in ADR.

Private Justice: Employment Arbitration and Civil Rights Lewis L. Maltby Columbia Human Rights Law Review, Fall 1998 30 Colum. Hum. Rts. L. Rev. 29 (1998)

• by lowering costs, private arbitration holds the potential for bringing justice to many to whom it is currently denied. 
• Employee-plaintiffs generally fare as well in arbitration as they do in court, even though most of the experiences they reflect took place before the establishment of the due process standards that currently exist. 
• In the future, the quality of justice employees receive in arbitrations under these standards should be even better.

And yet it's 4 a.m. before I realize I can't sleep because I've been mediating too long to seriously launch one side of any debate.  Everything and everyone has become so much more three-dimensional, multi-layered, and textured as a result of three full-time years of ADR practice.

So let me share the first of my non-scripted thoughts on the matter.   

I'm Unwilling to Prejudge the Court's, the Arbitrator's or the Jury's Biases.  

If you read yesterday's post, you'll recall that several of the anti-arbitration arguments were based upon the presumption that the arbitrator will more likely than not be biased in favor of the plaintiff because:  

1. Arbitrators have a vested interest in their case load persisting, whereas the courts are interested in purging their dockets, thus making early termination in court more likely than in arbitration.
2. Arbitrators' [presumed] self-interest in maintaining and expanding their own ADR practices encourages a "split the baby" mentality and reluctance to terminate the case short of a full hearing.
3. The "repeat" player bias will favor the Plaintiffs' bar who the arbitrator will see far more often than counsel for any particular employer.

Having spent  25+ years with attorneys, judges, mediators and arbitrators, I simply can't assume bias.  A few bad apples aside, the men and women of the legal profession are among the most ethically-minded of any professional or business people I have known -- by many, many, many degrees of magnitude. 

As litigators, worrying about our decision makers' biases is our job.  That's what we do for a living.  I've never much believed in forum shopping.  I continue to place my trust in evidence and persuasive argumentation and the power of a coherent narrative of events that makes sense and does not contain the seeds of its own destruction at its core. 

So, to start, I'm unwilling to assume the arbitration forum is biased in favor of either plaintiff or the defendant until I see evidence of that bias.

"But What About the Statistics in Yesterday's Post," You Ask.  They Showed a Radical Difference Between Rates of Plaintiff and Defense Victories in Arbitration and Judicial Forums.

Well, yes.  But I've also spent considerable time with statisticians in the course of my practice and, you know what they say, "lies, damned lies and statistics."

Maybe the 68% plaintiff "win" rate in arbitration compared with 30-something percent at trial can't be ascribed to the bias of the forum.  Maybe it results from plaintiffs' lawyers arbitrating only those cases which they believe they can win.  After all, our Courts didn't shift the cost of arbitration forum fees to employers all that long ago.  If we're going to assume anything, why not assume that when Plaintiffs' attorneys are required to pay for the forum, they pursue to final award only those cases which are pretty much sure-fire winners? 

I don't, obviously, have the answer to this question -- the empirical evidence; the control groups; the stuff that makes a statistical analysis convincing.  But until I do I'm unwilling to make a causal and, to my mind, cynical, connection between plaintiff-victory rates and arbitrator bias.  

If anyone possesses answers to these questions or more complete statistical studies, I'd sure like to see them.

For now, it's late.  Or early.

Say good-night Gracie.

"Good night Gracie."

(photo:  Employees Only by Michelle Thompson) 

While most of the arbitration news of the week is about the unfair advantage given to corporate "repeat players" in the arbitration of disputes, Senior Legal counsel for DHL counsels employers to abandon arbitration's ship and swim back into litigation's pacific waters.  

Though I'm the "pro" arbitration speaker with DHL in-house counsel Joshua Frank at this week's ALFA Labor & Employment Practice Group Seminar in Half Moon Bay, I don't have strong feelings one way or the other (preferring, as you can imagine, the negotiated, to the adjudicated, resolution).

Mr. Frank's reasons for suggesting that the Courts are a better forum for employers and arbitration better for employees?

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1. Arbitration's finality favors the employee because appellate judges have been "trending towards more favorable decisions for employers for several years."
2. While arbitration providers have a vested interest in their case load persisting, the courts are interested in purging their dockets, thus making early termination in court more likely.
3. Arbitrators' self-interest in maintaining and expanding their own ADR practices encourages a "split the baby" mentality and reluctance to terminate the case short of a full hearing.
4. Litigation is becoming faster and cheaper while arbitration becomes more procedurally encrusted and expensive, particularly in those states where the employer is  required to bear the entire expense of the arbitral forum.
5. Despite the Maryland Employment Lawyers' recent observation that "median to average jury verdicts in discrimination cases [have been reported to be] at least three times higher than the comparable mean and median arbitration awards," Plaintiffs actually do better overall in arbitration than in Court.
   • the evidence?  One study over a 12-year period showed that plaintiffs in employment disputes prevailed 38% of the time when the matter was adjudicated by a jury while plaintiff employees prevailed in 68% of the cases adjudicated by the AAA during the same time period.
6. Arbitration proceedings aren't "complex, intimidating and confusing enough" to deter "frivolous" claims by employees.
7. The "repeat" player bias will favor the Plaintiffs' bar who the arbitrator will see far more often than counsel for any particular employer.
8. Arbitration makes life too easy for plaintiffs' attorneys.
9. The risks of litigation are manageable, with only an estimated six to eight percent of employment cases going to trial.
10. Great lawyers (assuming, of course, that the defense is more likely to hire the great ones) do better in litigation than in arbitration.

The "pros" of arbitration?  I'm saving them for the conference but will blog on them when I return.

]]> http://www.negotiationlawblog.com/arbitration/fortune-500-gc-says-litigate-dont-arbitrate-employment-disputes/ http://www.negotiationlawblog.com/arbitration/fortune-500-gc-says-litigate-dont-arbitrate-employment-disputes/ ArbitrationConflict ResolutionConsumer ContractsLegal PracticeThe CourtsTruth Justice and the American Way Tue, 02 Oct 2007 10:56:47 -0800 Victoria Pynchon

(photo:  Lerach in action from SF Gate article on HP lawsuit)

We learn from today's New York Times that "securities lawyer William S. Lerach is expected to plead guilty today to a criminal conspiracy charge in connection with a[n alleged] class-action scheme involving his former firm, now known as Milberg Weiss . . . " 

I've heard Mr. Lerach speak on several occasions.  His  passionate defense of the rights of small investors has, it's true, earned him a great fortune.  I have never doubted, however, his integrity or the depth of his commitment to bring corporate wrongdoers to justice.  I'm certain that I am not alone in wishing him well.

I note that his plea agreement protects those who worked with and for him and does not require him to cooperate in the government's efforts to pursue others who have also worked for the benefit of the "little guy."  

As the Times reports:

Mr. Lerach, who has long been under investigation by federal authorities, is expected to enter his plea in United States District Court in Los Angeles. Under the plea deal, he faces one to two years in prison, and will also pay a significant fine . . . 

Mr. Lerach’s plea comes amid a seven-year investigation into whether he and other senior lawyers at Milberg Weiss conspired to pay kickbacks to individuals who agreed to serve as named plaintiffs in class-action lawsuits.

One person with knowledge of the plea deal said that Mr. Lerach would plead guilty to being aware of one such incident. . . . . 

For years, Mr. Lerach and his former firm aggressively filed class-action lawsuits, particularly in the securities area. Being the first to organize and file suits also put them in position to get a sizable share of any legal fees produced by the cases.

Mr. Lerach, who did not return a telephone call to his office, long championed the class-action system as an equalizer for small investors and other plaintiffs seeking redress of corporate wrongdoing. . . . .

Under the plea agreement, Mr. Lerach is not required to cooperate with the government in any further inquiries into the matter . . . The agreement terms, they said, also call for the law firm from which Mr. Lerach recently resigned, Coughlin Stoia Geller Rudman & Robbins, to face no liability or risk. . . . .

For the remainder of the article, click here.


 

]]> http://www.negotiationlawblog.com/conflict-resolution/settlement-of-the-week-consumer-securities-advocate-lerach-to-plead-guilty-under-brokered-deal/ http://www.negotiationlawblog.com/conflict-resolution/settlement-of-the-week-consumer-securities-advocate-lerach-to-plead-guilty-under-brokered-deal/ Conflict ResolutionConsumer ContractsDeal MakingFederal CourtLegal PracticeMoneyNegotiationSettlementThe Courts Tue, 18 Sep 2007 13:03:10 -0800 Victoria Pynchon (for our Canadian readers, our featured treatise is Litigating Conspiracy:  An Analysis of Competition Class Actions , Stephen G.A. Pitel, Ed.)

An excellent concise summary of Gentry v. Superior Court, where the California Supreme Court Questions Enforceability of Class Action Waiver on Public Policy Grounds is once again provided by the National Arbitration Forum, excerpt below.

By a 4-3 majority, the California Supreme Court reversed an order compelling arbitration and remanded the case to the trial court with instructions to use a multi-factor test in determining the enforceability of a class action waiver. The ultimate question for the trial court is whether class-wide proceedings would be “a significantly more effective practical means of vindicating the [statutory] rights” of the employees who belong to the putative class. Parties who prefer the simplicity of one-on-one arbitration should not be overly concerned by the majority holding because this decision has no application outside of the employment context.

For full text of NAF's summary, click here.

This pdf of the opinion comes to you courtesy of Jeffer Mangels Class Action Defense Blog with Jeffer's excellent case analysis from a defense perspective here.  

Another good and thorough analysis appears here.  Gentry v. Superior Court - California ruling on class action waiver in arbitration agreement.

 

]]> http://www.negotiationlawblog.com/arbitration/getting-your-class-action-waiver-past-the-california-supreme-court-remains-challenging/ http://www.negotiationlawblog.com/arbitration/getting-your-class-action-waiver-past-the-california-supreme-court-remains-challenging/ ADR UpdatesArbitrationConflict ResolutionConsumer ContractsThe Courts Fri, 14 Sep 2007 12:05:00 -0800 Victoria Pynchon

(pictured:  an overdressed 1985 Motorola Cell Phone from Bulletz of Knowledge post Dress the Elderly Cell Phone)

For the business, rather than a strictly legal, analysis of the recent Ninth Circuit and other California rulings on the unconscionability of consumer arbitration clauses, see the excerpt and link to Business Week's article on the issue below.

Cell-Phone Contract Disputes Heat Up -- Court rulings in California could lead to changes in dispute clauses in wireless contracts and fuel class actions against carriers by Olga Kharif 


Read almost any cell-phone contract and you'll discover that the longest passage deals with dispute resolution. While seemingly important matters like billing get only one paragraph, Verizon Wireless devotes six paragraphs to dispute resolution. At AT&T (T), the dispute section takes up 10 fat paragraphs and states: "You agree that, by entering into this Agreement, you and AT&T are each waiving the right to a trial by jury or to participate in a class action."

The small print keeps expanding in response to an influx of court cases—at least 10 of them in California over the past few years—questioning a wireless carrier's right to block consumers from suing or filing class-action claims. In late June a California appeals court reaffirmed a lower court's order that (T-Mobile USA) could not enforce a clause requiring arbitration of disputes with customers. And on Aug. 17, the U.S. Court of Appeals for the Ninth Circuit in California ruled that AT&T's prohibition against subscribers banding together in class actions, "is unconscionable, and, thus, unenforceable."

Click here for the remainder of the article.


]]> http://www.negotiationlawblog.com/adr-updates/comment-on-the-new-california-cell-phone-arbitration-rulings-from-business-week/ http://www.negotiationlawblog.com/adr-updates/comment-on-the-new-california-cell-phone-arbitration-rulings-from-business-week/ ADR UpdatesArbitrationConsumer ContractsThe CourtsTruth Justice and the American Way Tue, 21 Aug 2007 13:38:00 -0800 Victoria Pynchon