I know, opposing a law that seeks to prevent workplace bullying is like criticizing mom and apple pie. Still. More workplace litigation??? And why isn't the existing cause of action for the intentional infliction of emotional distress a perfectly good alternative for anyone who's truly "severely" damaged by "outrageous" conduct that goes beyond the bounds of human civility?
One of the great benefits of posting on this topic over at Forbes.com is the number of comments it generates. Not because it insures "hits" but because it engages a far larger community in a constructive multilogue on an issue of genuine and important public interest. Here's an excerpt:
According to the Journal, the law would "allow workers who've been physically, psychologically or economically abused while on the job to file charges against their employers in civil court."
Economically abused????? The mind boggles.
The bill defines "bullying" broadly as the "repeated use of derogatory remarks, insults and epithets" that the (mythical and chronically overly sensitive) "reasonable person" would "find threatening, intimidating or humiliating."
Let's give this proposal a second thought, particularly in the context of legal practice. We lawyers do endeavor to "keep calm and carry on." We have been known, however, to push ourselves and to be pushed past our tempers' limits. We're human. We're under a lot of pressure. And we're fallible.
Thanks Roger! This didn't just make my day; it made my year!
Plaintiff’s Motion to Compel Acceptance of Lunch Invitation
The Court has rarely seen a motion with more merit. The motion will be granted.
The Court has searched in vain in the Arizona Rules of Civil Procedure and cases, as well as the leading treatises on federal and Arizona procedure, to find specific support for Plaintiff’s motion. Finding none, the Court concludes that motions of this type are so clearly within the inherent powers of the Court and have been so routinely granted that they are non-controversial and require no precedential support.
The writers support the concept. Conversation has been called “the socializing instrument par excellence” (Jose Ortega y Gasset, Invertebrate Spain) and “one of the greatest pleasures in life” (Somerset Maugham, The Moon and Sixpence). John Dryden referred to“Sweet discourse, the banquet of the mind” (The Flower and the Leaf).
Plaintiff’s counsel extended a lunch invitation to Defendant’s counsel “to have a discussion regarding discovery and other matters.” Plaintiff’s counsel offered to “pay for lunch.” Defendant’s counsel failed to respond until the motion was filed.
Defendant’s counsel distrusts Plaintiff’s counsel’s motives and fears that Plaintiff’s counsel’s purpose is to persuade Defendant’s counsel of the lack of merit in the defense case.
The Court has no doubt of Defendant’s counsel’s ability to withstand Plaintiff’s counsel’s blandishments and to respond sally for sally and barb for barb. Defendant’s counsel now makes what may be an illusory acceptance of Plaintiff’s counsel’s invitation by saying, “We would love to have lunch at Ruth’s Chris with/on . . .” Plaintiff’s counsel. 1
1 Everyone knows that Ruth’s Chris, while open for dinner, is not open for lunch. This is a matter of which the Court may take judicial notice.
Read on by clicking on the .pdf above.
And how could I resist adding the "will you go to lunch!" scene from David Mamet's Glengarry Glen Ross.
The not so secret opinion among mediators is that attorneys make settlement more difficult. Just as lawyers are heard to say that "litigation would be great if it just weren't for the clients" (a "problem" only class action plaintiffs' lawyers have actually resolved), mediators tend to say "mediation would great if it weren't for the lawyers."
Esteeming the rule of law in America as I do (especially in the recent era of its greatest peril) I have never seen lawyers as a problem in facilitating settlement of the lawsuits they have been eating, drinking, sleeping and, dating for years longer than I've spent reading their briefs and engaging in some pre-mediation telephone discussions.
I can't say lawyers are a problem because: (1) they're my job; and, (2) they're "my people" in the "tribal" sense. A few bad apples aside, lawyers are among the hardest working, most ethical, creative, multi-talented professionals I know. And they are pretty much solely responsible for fighting the battle, on every common weekday, to preserve the rule of law as a bulwark against tyranny on the right and anarchy on the left.
Let's start with this particularly widespread canard from the article:
Attorneys may delay the settlement of a dispute through mediation for financial reasons. For example, the payment of professional fees on the basis of hours worked could motivate the attorney to delay the settlement of the dispute to increase the number of hours billed to the client (citations omitted). Such non financial reasons as a desire to build or preserve a reputation for “hardball negotiating” in highly publicized cases could also motivate an attorney to delay settlement of the dispute [which the authors don't mention often results in a far better outcome for the client]. In addition, attorneys’ (or their clients’) commitment to or belief in their case based on questions of justice or other principles [which are worth, in my opinion, greater attention that purely monetary outcomes] could also delay settlement until “defending the principle becomes too costly” (citation omitted). Finally, attorneys may wish to justify both their role and their fees with unnecessary interactions./1
Are we mendacious, self-serving, parasites of the "justice system," feathering our own comfortable nests as we attempt to preserve the "outdated" notion that the justice system is capable of delivering justice? I don't believe so, but let's not get all anecdotal about these questions when we have cold, hard statistics within reach. What were the results of this study on the way in which attorneys might "get in the way of" a successful mediation?
Here's the bottom line assessment (please read the article yourself to draw your own conclusions).
The empirical data we collected in this study indicate that the presence of an attorney in a mediation does not significantly affect the settlement rate, the time needed to reach an agreement, the perceived fairness of the process, the parties’ level of satisfaction with the agreement, or the parties’ level of trust that the agreement will be honored. These results indicate that attorneys have much less impact than is claimed by those mediators who do not welcome their involvement in the mediation process.
Nevertheless, the results also demonstrate that the presence of an attorney does affect mediation outcomes in at least two ways: by reducing the parties’ level of satisfaction with the mediator’s performance and by reducing the level of reconciliation between parties.
So the Myth Busters of this study conclude that attorneys:
don't "significantly affect the settlement rate" /2
don't significantly affect "the perceived fairness of the process";
don't significantly affect "the parties' level of satisfaction with the agreement; and,
don't significantly affect the "parties' level of trust that the agreement will be honored."
This is the subjective viewpoint of the litigants, mind you, in a dynamic where the mediator often openly attributes the success of the mediation to the clients' attorney - an observation which is more deeply true than most mediators would care to admit with all their white horse hi-ho silver, magic bullet off-to the-rescue enthusiasm.
What did litigants report to the authors of this article? They indicated that attorneys adversely affected mediation outcomes in two ways: (1) they reduced the parties' "level of satisfaction with the mediator's performance"; and, (2) they "reduced the level of reconciliation between the parties."
Of all of the purported effects of attorneys' presence at mediation - without whom, it must be noted, the parties would not likely be induced to sit down and mediate at all -- the only significant perceived difference is the failure of the mediation process to reconcile the parties - something in which the legal system has little to no interest.
Please read the article for proposed solutions to the reconciliation issue. As to the remainder of the study's findings, I have this to say:
whenever two or more people are gathered together, the dynamics of the group more profoundly affect the outcome than do the contributions of any individual member of the group. Our "reality," especially as it appears in a group setting, is "co-created." See the New York Times must-read article on the Psychology of Terrorism and Retail Marketing at Google Books (the latter noting that because people live in a social world which is co-created in social interaction with others . . . . [they] can be thought of as both products and producers of the social world." Id. at 218.)
try as you may, you will never be able to untangle the threads that create the intricate tapestry of a settlement; every member contributes something invaluable without which the precise result could not possibly have been achieved.
who is therefore responsible for the good and who responsible for the purportedly bad results of mediation? That's easy: EVERYONE IS.
That being the case, we are all responsible for our outcomes - whether our contribution is "negative," i.e., resisting settlement, for instance, or "positive," i.e., problem solving the reasons given by Mr. Negative that the case simply can't settle on terms acceptable to all. Remember your University philosophy class? Thesis, Antithesis, Synthesis. We need people willing to state the negative to problem solve it positively. The relationships cause the outcome, not one member of a group unless that member is a tyrant with loyal troops at his command.
If you'll allow me a literary reference that justifies my own collegiate career and says far more eloquently than I ever could why we're all accountable, I first give you one of my favorite authors, Paul Auster (who you may remember as the screenwriter of the movie Smoke).
The world can never be assumed to exist. It comes into being only in the act of moving towards it. Ese est percipii. Nothing can be taken for granted: we do not find ourselves in the midst of an already established world, we do not, as if by preordained birthright, automatically take possession of our surroundings. Each moment,each thing, must be earned, wrested away from the confusion of inert matter, by a steadiness of gaze, a purity of perception so intense that the effort, in itself, takes on the value of a religious act. The slate has been wiped clean. It is up to [us] to write [our] own book.Paul Auster,The Decisive MomentfromThe Art of Hunger.
The second excerpt I will leave for your thoughtful consideration is by the greatest scholar of comparative religions to ever inhabit the planet - Joseph Campbell (skip the intro with the new age music).
Schopenhauer, in his splendid essay called "On an Apparent Intention in the Fate of the Individual," points out that when you reach an advanced age and look back over your lifetime, it can seem to have had a consistent order and plan, as though composed by some novelist. Events that when they occurred had seemed accidental and of little moment turn out to have been indispensable factors in the composition of a consistent plot. So who composed that plot? Schopenhauer suggests that just as your dreams are composed by an aspect of yourself of which your consciousness is unaware, so, too, your whole life is composed by the will within you. And just as people whom you will have met apparently by mere chance became leading agents in the structuring of your life, so, too, will you have served unknowingly as an agent, giving meaning to the lives of others, The whole thing gears together like one big symphony, with everything unconsciously structuring everything else. And Schopenhauer concludes that it is as though our lives were the features of the one great dream of a single dreamer in which all the dream characters dream, too; so that everything links to everything else, moved by the one will to life which is the universal will in nature.
It’s a magnificent idea – an idea that appears in India in the mythic image of the Net of Indra, which is a net of gems, where at every crossing of one thread over another there is a gem reflecting all the other reflective gems. Everything arises in mutual relation to everything else, so you can’t blame anybody for anything. It is even as though there were a single intention behind it all, which always makes some kind of sense, though none of us knows what the sense might be, or has lived the life that he quite intended.
Lawyers, mediators, clients, experts, consultants, legal assistants, and, yes, even your spouse with whom you consulted before today's mediation, every one of them is part of the "net of gems, where at every crossing of one thread over another there is a gem reflecting all the other reflective gems [so that] [e]verything arises in mutual relation to everything else, so you can't blame anybody for anything" and, by the way, we can't credit credit nor bear all the responsibility for anything. We are all capable. We are all accountable. And we all contribute something to the whole.
So we can stop pretending to be better than we are now. We can all put down the burden and shame of our own entirely human fallibility; the myth that we ever do anything without the contribution of others; and, the pretense that we don't behave as badly, or as well, as other people do. We're part of the team. We're in it together. Isn't that good news for the New Year?
And to give you a treat from having gotten this far, a scene that is all about seeing, from Paul Auster's Smoke.
1/ I'd be interested, of course, in what the authors consider to be "unnecessary interactions."
2/ This is a particularly interesting finding since mediators have also been found not to improve the settlement rate but only greater party satisfaction in several studies.
Don Philbin, the author of this must-read article (click on the image for the .pdf) on the reasons you walk away from negotiations fearing you've either left money on the table or paid too much for what you receive in exchange, is an attorney-mediator, negotiation consultant and trainer, and arbitrator.
Don is listed in The Best Lawyers in America (Dispute Resolution), The Best Lawyers in San Antonio, and the Bar Register of Preeminent Lawyers.
Don's ADR Toolbox where this article can also be found is an indispensable resource for all attorneys negotiating the settlement of a lawsuit or a business deal (wait a minute! the negotiation of a settlement is a business deal!)
And, it's not inconsequential that Don is one of the nicest guys I know. If you're going to spend a day or a week or a month with a mediator or an arbitrator, you deserve not only the brightest, most wise and best prepared arbitrator or mediator, you also deserve to have a little fun in the process because . . . you know . . . the money simply isn't worth the unhappiness that comes when dealing with . . . . the other sort too often.
Because Doug, Lee Jay and I spent the entire day yesterday talking about legal rights and remedies as well as legal procedure in the context of negotiating the resolution of litigation, I was once again engaged in the soul-searching that always accompanies situations challenging my loyalty to the adversarial/rights-remedies business and stimulates my enthusiasm for the interest-based, consensus building, collaborative, problem solving negotiated resolution business.
Before giving you an excerpt that should tempt you to download the article and put it on your nightstand, I want to say this: I work on the razor's edge of my lifetime career-investment in the adversarial system, on the one hand, and my new'ish passion for collaborative, interest-based negotiated resolutions to disputes, on the other. I spent 25 years as a warrior who rightfully took advantage of my adversary's weaknesses. I was not a problem solver. I was engaged in a fight to the death on a pre-determined field with rules in which I believed for causes I knew to be just. As a result, I approach all alternatives to the adversarial process with a litigator's skepticism, wariness and world-wearyness. There is no kumbya in me. It is only my intellectual curiosity that survived the beating my heart took from the world-weary, cynical, grizzled old defense attorneys who taught me how to practice law (as adversaries testing my mettle) in Sacramento thirty years ago.
Sic transit gloria mundi.
The engine that drives litigation's morality tale is that conflict resolution is a contest between parties, one of whom necessarily represents good and the other necessarily represents bad. As a result, litigation seeks to designate who has committed moral transgressions by breaching legal norms (or, from the perspective of the defendant, who wrongfully accuses others of having done so).
The Story of Mediation subverts these norms by transforming this familiar morality tale into a story of collaboration. This subversion begins through how mediation conceives of conflict itself. Implicit in the Story of Litigation is that conflict represents a breach of the norms of conduct, thereby ripping the social fabric in some way large or small. In contrast, in mediation, conflict is a norm of conduct, a necessary byproduct of humans having distinct experiences and personalities and needs. Conflict is thus not necessarily a disruption of the moral order, and, indeed, can sometimes be productive.
Mediation's normalization of conflict, however, cannot eliminate what appears to be a deep-seated human need to understand experience in terms of struggles and strivings. Humans have great difficulty perceiving events as generated by causes beyond our control - what Amsterdam and Bruner evocatively describe as an inability to see events as "One Damn Thing After Another." We must instead "shape them into strivings and adversities, contests and rewards, vanquishings and setbacks."
The meta-narrative of litigation maps these "strivings" and "vanquishings" onto the struggle of one party against another and enlists the aid of the court to vindicate justice on behalf of the wronged party. In contrast, the meta-narrative of mediation seeks to map these "strivings" and "vanquishings" onto a collaborative struggle to resolve conflict. This narrative casts all participants as players in a process - collaboration - that is focused on reaching the common goal of successfully resolving or transforming a dispute. This story has moral entailments because collaboration is accepted as a social and moral good. Unlike litigation, however, this story does not generate a binary moral universe that divides the good from the bad, but, rather, a universe that values collaborative striving to achieve common ground and resolution.
This story places mediators in a role that is very different from the role played by decision-makers in litigation. Rather than being heroes of moral vindication to whom wronged parties appeal for justice, mediators promote and model collaborative striving to overcome conflict. This plays out in many accepted techniques in mediation. Mediators, for example, often seek "commitment" from participants to the process of mediation, although mediators are careful not to extend this commitment to a commitment to agree. This commitment to process is a proxy for a commitment to collaborate to seek to resolve conflict, thus incrementally moving participants away from contested litigation and towards collaborative problem solving. Similarly, mediators often "reframe" participants' statements in order to emphasize "common ground." This is also an effort to move parties away from a morally charged contest and into collaboration. Finally, mediators encourage and model collaboration through a positive message of optimism and progress towards resolution, even when (or, perhaps, especially when) impasse appears likely.
Moreover, mediation approaches the narrative movement from Efforts to Restoration of Steady State in a very different way than litigation. Whether the Steady State is Restored or Transformed constitutes what I have earlier characterized as a "fork in the road" in the Austere Definition of Narrative. The very language through which litigants seek redress of grievances - to "be made whole," "to pay your debt society" (with its implication that payment of the debt would return the ledger to balance), even the word "remedy" - implies Restoration. In contrast, mediation tends to reject Restoration as a state to which the parties (and society as whole) should or even can return. Rather, mediation seeks Transformation on the part of all disputants so that conflict is resolved. It does so by embracing the notion that perceptions of the world (including perceptions of the actions of others) are unstable, thus enabling parties to appreciate alternative perspectives as a way to promote resolution of conflict. Mediation, therefore, does embody a plot that adheres to the narrative movement described by the Austere Definition, albeit in ways that are utterly alien to the morality tale of the story of litigation. The story of mediation can be characterized as follows:
Steady State: Whatever Each Party Views as Pre-Conflict
Trouble: Whatever Each Party Views as Constituting Conflict
Efforts: Collaborative Striving To Overcome Conflict as Modeled and Promoted by Mediator
Transformation of Steady State: A New Relationship Among Parties
I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application. I further agree, in the event that I am hired by the company, that all disputes that cannot be resolved by informal internal resolution which might arise out of my employment with the company, whether during or after that employment, will be submitted to binding arbitration. I agree that such arbitration shall be conducted under the rules of the American Arbitration Association. This application contains the entire agreement between the parties with regard to dispute resolution, and there are no other agreements as to dispute resolution, either oral or written.
This decision is made more interesting by the recent Parada decision (.pdf) (covered here and here) where the drafter's failure to attach the JAMS arbitration rules cited in the agreement was one of the reasons the Court concluded the arbitration clause was substantively unconscionable. I think it's safe to say at this point in the development of California law on these issues that it's not malpractice for an attorney to fail to draft an enforceable arbitration clause. But as the opinions multiply, you can be sure some employer will be looking around for someone to name its legal counsel as the source of his discontent, blame its law firm for having to bear the expense of litigation, and claim damages as a result.
The best protection for drafters of arbitration clauses (particularly in California where the Courts remain suspicious of adhesion arbitration contracts) is to be familiar with all the case law on the topic in the last five years; to avoid any provision the Courts have used to tip the "sliding scale" in favor of non-enforcement and include those provisions which favorably incline the courts to enforce the clauses.
Patrick Deane of Nestlé is senior counsel to the largest food company in the world, and the disputes he runs into involve distributors, retailers, suppliers and consumers in every part of the globe. His ideal mediator combines logic and intuition; a concern for detail; and the knack of an epatheic listener. He noted that commercial disputes — even financial ones — are seldom dry, but instead involve personalities, risk of loss of face, and other human attributes just as much as more personal claims do. The question of subject-matter expertise was of little importance to Deane, compared to these essential qualities in a mediator who must be expert in a process that, at heart, is aimed at cost effectiveness. “A lack of industry expertise has never caused a failure of the mediation process.
Here's my opinion (as if you didn't already know). As Colin Powell says, the most important knowledge to have in international negotiations is the other guy's decision cycle. I imagine the great predictor, the political scientist and Hoover Institute Fellow Bruce Bueno de Mesquitas would say something along the same lines (see TED lecture below). See also the NYT piece, Can Game Theory Predict When Iran Will Get the Bomb?
What is the "other guy's" decision cycle? It is comprised of every interest he must satisfy and every person he is accountable to for the foreseeable (and probable unintended) consequences of that decision. Personal injury attorneys turned mediators are well acquainted with the decision cycles of both Plaintiff and Defense counsel as well as with the interests, needs, and desires of injured Plaintiffs, on the one hand, and insurance adjusters and their supervisors on the other. Employment attorneys turned mediators are also deeply knowledgeable about the decision cycles of counsel on both sides of the table (one usually specializing in employees and the other in employers) as well as with the interests, needs and desires of terminated, demoted, or harassed employees on the one hand and of employers - both large and small - who often feel as if the Plaintiff is little better than a highway robber. Judges turned mediators are better acquainted than anyone else of the decision cycles of juries -- a jury verdict being the alternative to a negotiated resolution.
You knew I'd come to my own "specialty" knowledge. Some of it is industry specific -- insurance and financial institutions, for instance, and the garment, manufacturing, health care, commercial real estate, construction, and technology industries. Though my experience in these fields adds some value to my commercial mediation practice, what I'm most skilled at is knowing the decision cycles of commercial litigators and their business clients. I understand, for instance, the clients' reporting relationships; the metrics against which their performance and that of their corporate superiors are measured; the impact of SEC reporting requirements in "bet the company" litigation; and, the effect settlements in nine or ten figures might have on upcoming plans for mergers or acquisitions.
I can read a financial statement.
At a minimum, I can ask the questions necessary to obtain the knowledge required to ascertain the interests that must be satisfied by both parties to transform the litigation into an opportunity to make a business deal. And I know how to make the commercial clients happy with their attorneys' final resolution of the business problem burdened with the justice issue that brought the case into court in the first instance.
I am also schooled in the "field" of conflict resolution. I understand at depth the cognitive biases -- universal tendencies in the way we think -- that inhibit rational decision making. I know how conflict escalates and, more importantly, how it can be deescalated. I understand the role emotion plays in decision making (particularly the emotion most common among business litigation clients - anger); the gentle (and not so gentle) art of persuasion and, perhaps most importantly, the optimal negotiation strategies and tactics for the business problem at hand.
And, I know in the knuckles of my spine what keeps commercial litigators awake at night, worrying about the next strategic, tactical, legal or extra-legal move to make; how to explain to the client that the case has suddenly gone south; and, how to deliver that bad news to the client in a way he or she can hear it and successfully report it to the GC, the CEO, the Board of Directors or e ven the shareholders.
I know this sounds like a lot of boastful self-promotion (it is). Please don't take my word for it. Anyone charged with finding, retaining and hiring a mediator to assist the parties in resolving a piece of hard-fought, sophisticated, complex commercial litigation would do well to check with his or her peers on any mediator's boastful self-appraisals.
This is what I recall of mediator-hunting, however. I'd send out a list to my colleagues. I'd invariably get back opinions that were all over the board. He/she is great with clients but usually ends up splitting the baby in half. He/she talks too much and listens too little. He/she marginalized the client and made me look bad. He/she charges $15,000 per day and is one of the go-to mediators for this type of case but I was unimpressed, as was the client. This guy/gal can settle anything. Brilliant. Magical.
So what's a beleaguered litigator to do? Ask people you respect both inside and outside your law firm. Ask how the mediator handles the "process dimensions" of the mediation. Does he/she simply carry numbers and rationales back and forth between separate caucus rooms. Can she give bad news to both sides. Can he go beyond positional, zero-sum bargaining and into interest-based negotiated resolutions? Is the client happy with the result and with the process? After you've done this basic research, call the mediator yourself and ask him/her about the way in which she/he might handle the mediation of the particular matter you need to have resolved. You should not only have the best information possible in making your choice, you should get a fair amount of terrific free advice and external brain-storming along the way.
I really just meant to cite the Business Conflict Blog and get back to revising The ABC's of Conflict Resolution - my second draft due on October 30.
So what's my answer to the question whether the mediator should have industry knowledge? That answer lies, as most legal problems do, in the gray zone. Industry knowledge helps. But every commercial litigator knows that we can learn any industry if we have a basic understanding of how commercial enterprises work. That's what I know -- commercial litigation -- and it is the reason I don't mediate personal injury or employment disputes with anyone below the rank of senior executive. I don't know the right questions to ask and I don't know -- at depth -- the parties' or counsel's decision cycles.
My own personal 200-year present spans the life of my maternal grandparents who were nine years old in 1909, and that of my step-children’s children, who (assuming they procreate on a reasonable schedule) should be ninety-five'ish in 2109.
My imagined grandchildren,  born sometime between today and 2014, will not be strangers to any of my grandfather’s technologies. Despite the advent of compact fluorescent light bulbs, the early lives of my step-children's children will likely pass under the glow of the same incandescent lights that brightened granddad’s one-room school house. They will be transported to school in cars with internal combustion engines, learn the same alphabet from the same cardboard and paper books (as well as from the "e" variety)  and play many of the same games he did – hop scotch, jump rope and ring-around the rosy.
Change will etch itself into the lives of my grandchildren as surely as it did my own, my parents' and my grandparents'. Hybrids will give way to fully electric (and perhaps hemp-powered) vehicles (effective or defective) and though electricity will continue to be generated by hydroelectric dams, wind farms and nuclear power plants, some new and unimaginable source of power will surely push back the nights of my grand children's children. 
Law, politics, society and culture also exist in the 200-year present of conflict resolution. In my personal 200-year span, the law seems to have changed the most profoundly. Was it the law first and culture later? Or do they weave our future together?
The first U.S. woman lawyer, Myra Bradwell, was admitted to practice a mere ten years before my grandmother was born. Mrs. Bradwell’s legal career was the subject of one of the sorriest U.S. Supreme Court decisions ever handed down, in which the Court opined,
The civil law as well as nature itself, has always recognized a wide difference in the respective spheres and destinies of man and woman. Man is, or should be, woman’s protector and defender. The natural and proper timidity and delicacy which belongs to the female sex evidently unfits it for many of the occupations of civil life. The constitution of the family organization, which is founded in the divine ordinance, as well as in the nature of things, indicates the domestic sphere as that which properly belongs to the domain and functions of womanhood. The harmony, not to say the identity, of interests and views which belong, or should belong, to the family institution is repugnant to the idea for a woman adopting a distinct and independent career from that of her husband … for these reasons I think that the laws of Illinois now complained of are not obnoxious to the charge of any abridging any of the privileges and immunities of cities of the United States.
My grandparents', parents' and step-children's 20th Century was dominated by genocide on a scale and a technological precision unimaginable to our earlier forebears. Mid-century brought with it the threat of nuclear annihilation but also liberated millions of people enslaved by colonialism. We cured polio in my own lifetime with both "dead" and "live" vaccines (neither of them counterfeit) - a singular moment in scientific history during which no one took ownership of the cure and no one tried to stop others from seeking another, a problem Patently O addressed this week in Reverse Payments.
Whether god or satan, heaven or hell, war or peace "won" the twentieth century, the world's greatest peace-making body was created during it -- the United Nations. And here in the U.S., the “living room war,” Viet Nam, coupled with the largest generation of adolescents ever to grace American society, ended the forcible induction of young men into the military. 
With the recent discovery of our earliest ancestor, Ardi, our biological and social lives exist in a 4.4 million year now. Our physical bodies “evolve” in the womb along the same lines as did our species and, once born, we carry with us our earliest organs.  Most critical of these to conflict escalation and avoidance is our “fight-flight” mechanism – the amygdala. And the most pertinent biological agents to promote the collaborative resolution of conflict are our “mirror neurons” which
provide a powerful biological foundation for the evolution of culture . . . absorb[ing] it directly, with each generation teaching the next by social sharing, imitation and observation.
How we’ve manage to survive despite our tendency to misread one another’s actions, intentions and emotions, is often the subject of those who advise us how to choose and move juries -- here -- Anne Reed at Deliberations (explaining why "they" don't see things like "we" do here); and, the Jury Room (explaining why pain hurts more intensely when we believe it's been intentionally inflicted here).
The Most Effective Conflict Resolution Technology is the Oldest
One of our true original gangsters, Al Capone, is reported to have said that “you can get much further with a kind word and a gun than you can with a kind word alone” and one of our greatest Presidents, Theodore Roosevelt said “speak softly and carry a big stick.”
As Robert Wright, author of The Moral Animal explained, had Tit for Tat been tossed into the game with 50 steadfast non-cooperators, there would have been a 49-way tie for first place. But none of the players' programs failed to cooperate in at least some circumstances, leaving Tit for Tat the clear victor. According to Wright, humans, like the programs in Axelrod's competition, are evolutionarily “designed” to cooperate under at least some circumstances. The engine and benefit of cooperation is present in our neurochemistry. When scientists observed the brain activity of volunteers playing the Prisoner’s Dilemma game, for instance, they found that the participants' “reward circuits” were activated and their impulsive "me first" circuits inhibited when they cooperated. Cooperation, retaliation, forgiveness and a return to cooperation. Tit for Tat.
We don't "dis" lawyers here at the Negotiation Blog. We simply remind ourselves that our primary purpose is the promotion of justice, with a stable societal order closely behind. Most people don't understand, for instance, that Shakespeare's famous the first thing we do, let's kill all the lawyerswas not an insult. In King Henry IV, Act IV, Scene II, Shakespeare's sentiment was not his own, but that of a revolutionary who wished to destroy the social order.
The historic "present" of laws and lawyers is in the thousands, not simply the hundreds, of years. Hammurabi (make of his choice for the memorialization of his laws what you will) was the sixth king of Babylon, remembered for creating -- in his own name (and likeness?) - the first written and systematic legal code.
For the wrongful killing of another, for instance, the victim’s kin were paid according to the social status of the deceased party. Thus the ‘man price’ for killing a peasant was 200 shillings and that for a nobleman 1200 shillings. Payments were not, however, tailored to the loss, but fixed according to types of affront, a distinction we continue to make when we punish intentional torts more severely than negligent ones. >
Lawyers, litigators and trial lawyers are too often demonized by the ADR community as if you could get someone to sit down to negotiate without first pointing the gun of litigation at their heads; I salute you (and myself, for that matter!) for bringing us all to the bargaining table. See Steve Mehta's recent post at Mediation Matters, Factors When Peace Makes Sense for a note that touches upon the symbiotic relationship between litigation and mediation, litigators and mediators.
I shouldn't cite single legal blogs twice, but I cannot resist this quote of Scott Greenfield's on another pundit's view of the future lawyers have in store for them, i.e.,
shucking oysters for a living if we don't accept a future of lawyers being piece workers in factories, sending our work off to Bangalore in pdf files and complementing people on their choice of forms at Legal Zoom.
Which came first? Public civil trials or private arbitrations? You’ll be surprised, I’ll wager, to hear that arbitration was one of the earliest forms of dispute resolution, practiced by the juris consults of the Roman Empire. Roman arbitration predates the adversarial system of common law by more than a thousand years. 
Ah, the glory of Rome! The juris consulti were (like too many mediators) amateurs who dabbled in dispute resolution, raising the question whether they (and we) should be certified or regulated as Diane Levin asks at The Mediation Channel this week. The Roman hobbyists gave legal opinions (responsa) to all comers (a practice known as publice respondere). They also served the needs of Roman judges and governors would routinely consult with advisory panels of jurisconsults before rendering decisions. Thus, the Romans – god bless them! - were the first to have a class of people who spent their days thinking about legal problems (an activity some readers will recall Ralph Nader calling "mental gymnastics in an iron cage").
It was Buckminster Fuller who famously opined that the "significant problems we face cannot be solved at the same level of thinking we were at when we created them." If you keep this aphorism in mind for the remainder of this post, you'll likely have some extraordinarily innovative comments to make in the comment section below.
As the Law Guru wiki reminds us, we can trace the adversarial system to the "medieval mode of trial by combat, in which some litigants were allowed a champion to represent them." We owe our present day adversarialism, however, to the common law's use of the jury - the power of argumentation replacing the power of the sword.
The Act abolishing the infamous Star Chamber in 1641 also granted every "freeman" the right to trial by "lawful judgment of his peers" or by the "law of the land" before the Crown could "take or imprison" him or "disseis[e] [him] of his freehold or liberties, or free customs." Nor could he any longer be "outlawed or exciled or otherwise destroyed." Nor could the King "pass upon him or condemn him."
English colonies like our own adopted the jury trial system and we, of course, enshrined that system in the Fifth, Sixth, and Seventh Amendments. Whether this 17th century dispute resolution technology can be fine-tuned to keep abreast of 21st century dispute creation technology (particularly in the quickly moving area of intellectual property) remains one of the pressing questions of legal and ADR policy and practice, particularly in a week in which a Superior Court verbally punished the lawyers before it for filing The Most Oppressive Motion Ever Presented (see the Laconic Law Blog). The motion?
Defendants['] . . . motion for summary judgment/summary adjudication, seeking adjudication of 44 issues, most of which were not proper subjects of adjudication. Defendants’ separate statement was 196 pages long, setting forth hundreds of facts, many of them not material—as defendants’ own papers conceded. And the moving papers concluded with a request for judicial notice of 174 pages. All told, defendants’ moving papers were 1056 pages.
Mediator, author and activist, Ken Cloke, suggests that interest-based resolutions to conflict must replace power and rights based resolutions if we expect to create a future in which justice prevails. As Ken wrote in Conflict Revolution:
Approaching evil and injustice from an interest-based perspective means listening to the deeper truths that gave rise to them, extending compassion even to those who were responsible for evils or injustices, and seeking not merely to replace one evil or injustice with another, but to reduce their attractiveness by designing outcomes, processes, and relationships that encourage adversaries to work collaboratively to satisfy their interests.
Evil and injustice can therefore be considered byproducts of reliance on power or rights, and failures or refusals to learn and evolve.
All political systems generate chronic conflicts that reveal their internal weaknesses, external pressures, and demands for evolutionary change. Power- and rights-based systems are adversarial and unstable, and therefore avoid, deny, resist, and defend themselves against change. As a result, they suppress conflicts or treat them as purely interpersonal, leaving insiders less informed and able to adapt, and outsiders feeling they were treated unjustly and contemplating evil in response.
As pressures to change increase, these systems must either adapt, or turn reactionary and take a punitive, retaliatory attitude toward those seeking to promote change, delaying their own evolution. Only interest-based systems are fully able to seek out their weaknesses, proactively evolve, transform conflicts into sources of learning, and celebrate those who brought them to their attention.
These are the words I leave with the readers of Blawg Review #234 because they are the ones that informed my personal and professional transformation from a legal career based on rights and remedies to one based upon interests and consensus.
Whatever my own personal 200-year present was, is and will be, it is pointed in the direction of peace with justice, with an enormous and probably unwarranted optimism best expressed by the man after whom my law school was named: Martin Luther King, Jr. - the arc of history is long, but it bends toward justice.
Blawg Review has information about next week's host, and instructions how to get your blawg posts reviewed in upcoming issues. Next week's host, Counsel to Counsel, will devote its round-up of the week's best legal posts to the Great Recession.
 Earlier scientific theory posited that each human embryo (see Embryo Mix-Up at the Proud Parenting Blog) passes through a progression of abbreviated stages that resemble the main evolutionary stages of its ancestors, i.e., that the fertilized egg starts as a single cell (just like our first living evolutionary ancestor); as the egg repeatedly divides it develops into an embryo with a segmented arrangement (the “worm” stage); these segments develop into vertebrae, muscles and something that sort of looks like gills (the “fish” stage); limb buds develop with paddle-like hands and feet, and there appears to be a “tail” (the “amphibian” stage); and, by the eighth week of development, most organs are nearly complete, the limbs develop fingers and toes, and the “tail” disappears (the human stage). It turns out that this one-to-one correlation was too simplistic, but it remains safe to say that our biological development still passes through several stages that “recapitulate” the evolution of our species.
 The amygdala is a region of the brain that permits the formation and storage of memories associated with emotional events. It permits us to “read” the emotional responses of our fellows and is thought to facilitated our ability to form relationships and live and work in groups. It is also the source of our “fight or flight” response to danger.
Studies show that some mirror neurons fire when a person reaches for a glass or watches someone else reach for a glass; others fire when the person puts the glass down and still others fire when the person reaches for a toothbrush and so on. They respond when someone kicks a ball, sees a ball being kicked, hears a ball being kicked and says or hears the word "kick."
“When you see me perform an action - such as picking up a baseball - you automatically simulate the action in your own brain,” said Dr. Marco Iacoboni, a neuroscientist at the University of California, Los Angeles, who studies mirror neurons. ”Circuits in your brain, which we do not yet entirely understand, inhibit you from moving while you simulate,” he said. ”But you understand my action because you have in your brain a template for that action based on your own movements. “
 Looking toward the future, the Neuroethics and the Law Blog predicts that in the “experiential future, we will have better technologies to measure physical pain, pain relief, and emotional distress. These technologies should not only change tort law and related compensation schemes but should also change our assessments of criminal blameworthiness and punishment severity” here.
The adversarial system of medical negligence fails to satisfy the main aims of tort law, those being equitable compensation of plaintiffs, correction of mistakes and deterrence of negligence. Instead doctors experience litigation as a punishment and, in order to avoid exposure to the system, have resorted not to corrective or educational measures but to defensive medicine, a practice which the evidence indicates both decreases patient autonomy and increases iatrogenic injury.
(Iatrogenic, by the way, is a fancy term for “we have know idea whatsoever what the source of this ailment is). Chris is looking for comments so run on over there if you’ve been thinking about medical malpractice litigation during the marathon American health care debates.
From preparation to closing, some of L.A.'s most prominent mediators reveal the secrets of getting the best deal available for your clients.
Read former CAALA Trial Lawyer of the year Sandy Gage's article on Getting the Best Results in Mediation and AIM founder, mediator and trainer Lee Jay Berman'sTwelve Ways to Make Your Mediator Work Harder for You.
My ADR Services, Inc. colleagues Jan Schau, Michael Diliberto, Joan Kessler (the brains behind the entire issue!) and Leonard Levy round out the issue with Telling Lies, Telling Secrets (Schau); Opening Offers: Who's on First (Diliberto); The Defense Reveals Mistakes that Could Cost Your Client Money; and Kessler's incisive executive summary of them all.
Oh, yes, I'm here too with one of my mediation narratives, We Tell Ourselves Stories in Order to Live.
The online Advocate can be read like a magazine, complete with turning pages. It's a pretty cool online journal format in addition to being a great contribution to the growing literature on best mediation practices.
Dive in! The water is warm and the natives are friendly.
As every mediation advocate must know by now, the California Supreme Court has locked down mediation confidences from attack at every turn. There can be no implied waiver of Evidence Code section 1119's protections and you cannot be estopped to assert it (Simmons v. Ghaderi) (.pdf of the opinion here).
Your client may have been coerced into signing off on the agreement; may not have understood what she was signing; or her assent could have been induced by your opponent's material misrepresentations of fact. Your client's insurance carrier may be guilty of actionable bad faith during the course of the mediation. Too bad. The mediation proceeding is given greater protection than given to penitents in a confessional.
But you can inadvertently expressly waive the protections of mediation confidentiality if you've carelessly crafted your own confidentiality agreement.
California's Second District Court of Appeal held in Thottam (.pdf of opinion here) that a party's confidentiality agreement did just that -- waived the protection -- permitting one party to introduce an otherwise inadmissible draft agreement into evidence for the purpose of enforcing an otherwise unenforceable mediated settlement agreement.
As the Court in Thottam held, Section 1123(c)'s requirement that all parties to a mediated settlement agreement "expressly agree in writing . . . to its disclosure," may be satisfied by terms contained in a writing other than the alleged settlement agreement itself, including a writing executed before a settlement agreement has purportedly been entered into. Because the "draft agreement" at issue in Thottam did not contain 1123's "magic" enforcement language and because the term sheet drawn up during the mediation was not sufficiently certain to enforce in any event, one party to the subject probate proceeding objected to its introduction into evidence and to the admission of testimony concerning otherwise confidential statements made during the mediation.
Had there been no confidentiality agreement, the issue would have been controlled by Evidence Code sections 1115 et seq.; the "agreement" would have been excluded from evidence as non-compliant with section 1123; and, no evidence of statements made during the mediation would have been admitted into evidence.
Here's the danger of drafting your own confidentiality agreements in an attempt to expand the scope of mediation confidentiality.
According to the appellate court opinion, because the parties expanded the scope of confidentiality beyond that provided by the statute, the exception to the protection ("except as may be necessary to enforce any agreements from the Meeting") was broader than the enforcement exception contained in section 1123. As one blogger cogently put it at the time, "the big print giveth and the small print taketh away."
I think it's safe to say that this result was pretty much completely unpredictable and that it was within the standard of care for counsel to expand the protections contained in section 1119 (for an example of the problems created by its relatively narrow confines, see mediator Debra Healy'scomments and my response about the scope of mediation confidentiality in an earlier post in this series).
Post-Thottam, however, counsel must be extremely careful in drafting confidentiality agreements lest they inadvertently take away the protections the legislature created and the Supreme Court has so assiduously enforced.
In short, don't get fancy. Just stick with the language of section 1119
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?
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.
write up a "term" sheet reflecting your mediated settlement agreement without including the "magic language" of Evidence Code section 1123
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
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.
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.
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.
(right, the ultimate in lame reason giving: the dog ate my homework!)
To reinforce anchoring and framing effects of first offers and offer-characterization, always state the reason you are valuing the item to be traded in the manner you are.“I’m offering to pay you $20,000 in exchange for a dismissal because (choose one or more):(a) I impeached your witness with interrogatory answers in the deposition; (b) the only case law in your favor has been questioned by the Supreme Court and hasn’t been cited since 1972; (c) your expert witness went to Ralph’s School of Law and mine went to Harvard; (d) recent jury verdicts for the theft of trade secrets of this nature have been less than the cost of doing the first round of discovery; and, (e) anything else you have.
In experiments on reason giving, researchers have found that people are far more likely to accommodate others if a reason is given even if the reason makes no sense whatsoever.In one such experiment, students were asked to cut into a line at Kinkos.One group was instructed to give no reason; another to give a good reason ("I’m late for class”) and another to give an irrational reason (“because I want to”). Those who provided no rationale were, not surprisingly, the least successful. Only sixty percent of them were allowed to "cut" into the line. Those who presented a logical rationale got what they wanted an extraordinary 94% of the time.But here's the truly remarkable part. Those students who presented a meaningless rationale such as, "I want to cut in line because I need to," racked up a ninety-three percent success rate, only one percent less than their logical peers.
Every new offer or demand provides another opportunity to influence your adversary about the value (or lack thereof) in the subject matter of the lawsuit.
There's nothing litigators do better than rationalize, justify, explain, elaborate, rebut, support, and opine. Don't leave those excellent tools at home when it comes time to negotiate the resolution of your lawsuit.
Someone recently told me that you can't argue with a story, only with a position or another argument. That's why narrative is such a powerful impasse breaker and why asking diagnostic questions, which elicit stories rather than arguments, so often bridges gaps between the parties that yawn as wide as the Grand Canyon That's why I'm listing Asking Diagnostic Questions as the second most powerful means of breaking negotiation impasses.
Diagnostic questions are those that reveal your bargaining partners’ desires, fears, preferences and needs. Though your bargaining partner will never reveal its true bottom line, it may well acknowledge that it places a far lesser or higher value on the subject of litigation – real property, for instance -- than you do. And though your adversary will never acknowledge the rectitude, nor even often the good faith, of your legal or factual position, she may easily disclose that she needs the money she seeks to infuse capital into her business, to pay back debts, to put her children through college or to acquire much-needed catastrophic health insurance.
You may also find that your bargaining partner is willing to disclose whether he is risk averse or risk courting and whether his predictions for the future of an enterprise – yours perhaps – are more optimistic or pessimistic than your own. Once you learn what your opponent wants, needs and prefers, you can commence – or reconvene – a negotiation that is more tailored to your adversary’s desires; one that will increase the number and value of items both of you have to exchange with one another.
Just a few examples from my own practice:
a case concerning the repayment of over-paid health insurance benefits to physicians settled at a number the defendant said she would never pay when the Plaintiff revealed the existence of an agreement between it and a board member that no one else who was overpaid would get a better deal than he had.
a case concerning the dissolution of a partnership settled when I asked Partner A what his valuation of the enterprise's inventory was in a case to dissolve the partnership. Because he placed a far lower value on that inventory than did Partner B, Partner B (who planned to continue in the import-export business) was happy to accept A's valuation, offering to purchase it from him on the spot (and agreeing to a lower valuation of the good will of the partnership business than he'd earlier been prepared to acknowledge).
a property damage case settled when I asked the Plaintiff, in separate caucus, what he planned to do with the proceeds of the settlement. The defendant, who "knew someone in the business," was able to obtain the item Plaintiff wanted at a lower cost than Plaintiff could have procured it, bridging the gap between the parties' negotiating positions.
a patent infringement case settled when I asked the Plaintiffs what they were afraid would happen if they agreed to give the alleged infringer a license to manufacture and market the allegedly infringing product. Plaintiffs said they believed the market would "get really hot" in three years time, allowing the infringer to make a killing on their technology. When I asked the defendant what he thought about Plaintiffs' suspicions, he said he planned to phase the product out of his product line within three years. I suggested that the defendant agree to a graduated royalty which would require him to pay an unusually high percentage of its sales during the years Plaintiffs were convinced he'd be selling "their" product and at a time when Defendant swore he would not.
In a lemon law case, I asked the Plaintiffs to tell the mobile home manufacturer to explain why they'd purchased the $200,000 vehicle in the first place. Plaintiff's answer so undermined the defendant's "buyer's remorse" theory of the case that the matter settled quickly thereafter.
I asked a perplexed defendant why the Plaintiff had chosen to sue it out of the entire universe of Plaintiff's competitors. Defendant quickly responded: "because we have better people, more talent and potentially better technology. Plaintiff wants to remove us from the market" I thereafter brokered a deal involving a joint venture between the two companies using company A's talent and company B's far larger distribution network.
As you can see from these few examples, diagnostic questions break impasse on "pure money" cases, as well as in those where the parties more or less obviously have something other than money to trade. Once again, it is critical to remember that no one wants money but everyone wants something that money can buy. Ask the ultimate reporter question about your negotiating partner's fears, desires, wants and needs -- WHY? -- and you will see impasse dissolving before your very eyes.
With apologies to "staying on topic" purists, I give my Lit Major readers the literary passage that comes to mind whenever I think too long about asking questions:
try to love the questions themselves as if they were locked rooms or books written in a very foreign language. Don't search for the answers, which could not be given to you now, because you would not be able to live them. And the point is to live everything. Live the questions now. Perhaps then, someday far in the future, you will gradually, without even noticing it, live your way into the answer.
I begin a series today on what I believe are the five most effective ways to break impasse. This morning's impasse-breaker will aid business people negotiating the settlement of a commercial dispute the most because it requires the generation of hitherto unseen business advantages to sweeten the pot.
Transform the dispute into an opportunity to make a business deal
Google’s CEO Eric Schmidt famously said that “litigation is just a business negotiation being conducted in the Courts.” If you look at litigated disputes in that light, the settlement option landscape immediately broadens. There are only certain remedies available in court or arbitration and those remedies may not be exactly what the parties are looking for.
If we remember that money is simply the means to obtain something else the parties desire – better distribution networks; insurance against future calamity; the security of knowing one’s intellectual property has not fallen in a competitor’s hands; health care; a college fund; even the acknowledgement that we have heard and understand our opponent’s point of view – we can add value to our negotiations before attempting to distribute it in a way that seems fair and just under the circumstances.
Often more important than finding commonalities between bargaining partners is locating those items that the parties value differently. A dollar may just be a dollar, but one company’s inventory, trade secrets or present pool of talent will seldom be worth the same in our competitor’s hands as it is in ours. In some cases our assets may be more valuable to another than they are to us, in which case we can choose the higher value as the central rationale for our proposal, remembering that where value is uncertain, the first party to put a price tag on it will “anchor” the bargaining range in his favor throughout the course of the negotiation.
Therefore, a savvy negotiator searches for both common and divergent interests in an attempt to put as many different options on the bargaining table as possible. Generating such options can melt impasse over hard “bottom line” dollar and legal position conflicts and transform a distributive negotiation session ("what I lose, you win and what you lose I win") into a business opportunity that will leave both parties better off than they could have imagined.
I cannot recommend John DeGroote's Settlement Perspectives blog too highly or too often. This week he praises CPR's new Early Case Assessment Guidelines. Praise from John is hard to come by. I join in his comments below and suggest that all my readers click on the link below for his excellent commentary.
The International Institute for Conflict Prevention & Resolution, known also as the CPR Institute, has recently published CPR’s Early Case Assessment ; Guidelines (2009), which are designed to “set forth a process designed to help businesses decide early on how to manage disputes, including identifying key business concerns, assessing risks and costs, and making an informed choice or recommendation on how to handle the dispute.” They certainly meet their objectives.
Although a California Court may properly sanction a non-party insurance carrier who possesses the authority to settle litigation for its failure to participate in a mandatory settlement conference, there is no statutory (nor inherent) authority given the Court to sanction the carrier or a party for its purported failure to negotiate in "good faith." As the Court in Vidrio v. Hernandez(2d DCA) explained today:
In sum, even were we to agree with the trial court's assessment of the conduct of counsel and the [insurance] adjuster, the failure to increase a settlement offer or to otherwise participate meaningfully in settlement negotiations violates no rule of court and is not a proper basis for an award of sanctions.11 (See, e.g., Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1424 [“[w]e eschew any notion that a court may effectively force an unwilling party to settle by raising the specter of a post hoc determination that failure to do so will be evidence of failure to participate in good faith”]; Sigala v. Anaheim City School Dist., supra, 15 Cal.App.4th at p. 669 [“„[a] court may not compel a litigant to settle a case, but it may direct him to engage personally in settlement negotiations, provided the conditions for such negotiations are otherwise reasonable‟”].) [Defendant] filed an appropriate settlement conference statement; her lawyer and Mercury [the insurance carrier] attended the conference and participated in it. While the trial court‟s frustration at the parties‟ lack of movement is understandable, no more was required.
In particular, the Court of Appeal, held that the Court was not at liberty to "judge" whether the defendant and its carrier "should have" offered more than had previously been offered at a mediation either because the case was "worth" more or because the offer was so low in light of the attorneys fees and costs that would likely be incurred at trial.
I believe most mediators would approve of this ruling, even though it applies only to settlement conferences and not to mediations, the latter of which is protected from the Court's inquiry by Evidence Code section 1119. Whether or not a mediator, a settlement judge, a party or a trial judge believes a defendant "should" offer more or a plaintiff "should" accept less by way of settlement, should not form the basis of an award of sanctions. Not only would such a rule decrease citizens' trust and respect for the Courts, whose job it presumably is toprovide a forum in which litigated disputes may be tried, such a rule would impermissibly chill the parties' Constitutional right to a jury trial.
As every lawyer knows and most students of high school geometry must learn in mastering "proofs," the answer often comes first, the rationale later. I used to say, "I'm a litigator, I can rationalize anything." As a mediator, my rationalizations have turned from the way in which facts can be shoe-horned into causes of action or affirmative defenses to the way in which harm arising from a dispute (including, most assuredly, the moral harm of injustice) can be monetized.
Now David Brooks in the New York Times (which appears to have disabled the "copy" function/1) tells us that philosophy has been sacrificed on the alter of emotion in his column The End of Philosophy.
As Brooks explains, reasoning comes after moral judgment and "is often guided by the emotions that preceded it." The good news is that those emotions are not merely competitive. Brooks again:
Like bees, humans have long lived or died based on their ability to divide labor, help each other, and stand together in the face of common threats. Many of our moral emotions and intuitions reflect that history. We don't just care about our individual rights, or even the rights of other individuals. We also care about loyalty, respect, traditions, religions. We are all the descendents of successful cooperators.
My mediation experience teaches me that the "soft" arts of influence, empathy, community-building, and prejudice reduction, are as important (and often more important) to the successful (i.e., satisfying) resolution of a lawsuit than our prized ability to parse the evidence, rationalize away the bad and privilege the good to sell our "proof" to judge or jury.
Most importantly, I find that when attorneys' clients leave a mediation with the belief that a certain rough justice has been obtained, they are more satisfied with the outcome, and with their attorneys' representation of their interests, than they might have been had they left with 10% more change jingling in their pockets.
The experts who study mediation tell us that "neutrals" don't make the difference between settling or not settling. The cases will settle with or without us. The difference mediators make is not settlement, but client satisfaction. Satisfied clients are an absolute necessity for a successful legal practice at any time. In these hard times, legal practices may fail in the absence of resolutions addressing the justice issues your client sought out a lawyer to resolve in the first place.
Money is the instrument. But justice is the issue.
Challenges to good faith settlements that cut off the rights of non-settling defendants to seek indemnification and contribution from settling defendants are nearly always doomed to failure. Trial courts are understandably eager to clear their dockets and there's no docket-clean-up pitcher like the first defendant to settle. Deny the motion and bring a settled defendant and his trial-ready resources back in to the litigation when the first defendant-domino has just successfully toppled over? Not likely, my friend. Not in the trial court at any rate.
These motions are so difficult to oppose that I've seen a target defendant threaten a marginal player (my client) with sanctions just for challenging the target's very low six-figure settlement in an eight-figure antitrust action.
Best quotation: "The hospital contends that the physicians‟ $200,000 settlement -- representing 2 percent of plaintiffs‟ $10 million damages estimate -- was so far out of the “ballpark” it was not even in the parking lot." With a first runner-up to "If section 877.6 is to serve the ends of justice, it must prevent a party from purchasing protection from its indemnification obligation at bargain-basement prices."
The Court of Appeal relied upon the following "facts" in finding that the trial court abused its considerable discretion in granting a good faith motion to defendant physicians in light of defendant hospital's opposition.
payment of $200,000 in settlement for a $10 million claim, which the appellate court found to be "wholly disproportionate." As the Court opined "[e]ven a slight probability of liability on [the settling doctor's] part would warrant a contribution more significant than 2 percent."
the "evidence" supporting the court's finding that the settling physician's probable fault was "not de minimis," which appears to have been based upon Plaintiff's attorney's fault analysis (not generally known for its unbiased nature) and the physicians' counsel's candid (?) suggestion that his clients' contribution to a global settlement might be in the range of $1.5 million;
the availability of $2 million in coverage, which "militated against a good faith determination" because the settlement constituted only 10% of available policy limits [carrier alert here!];
the non-settling Hospital's contention that the physicians and their attorneys engaged in "bad faith tactics" during two mediation sessions -- a factor the appellate court acknowledged it was barred by mediation confidentiality from considering -- but which it neatly avoided by concentrating on post-mediation negotiations; /*
the timing of the physicians' settlement offer, which suggested to the appellate court that their "reason for entering into the settlement with plaintiffs was to cut off the hospital's . . . right to indemnity from the physicians" (I thought that was a legitimate reason to settle litigation but see the Court's citation to Mattco Forge, stating that when a defendant “enters into a disproportionately low settlement with the plaintiff solely to obtain immunity from the cross-complaint, the inference that the settlement was not made in good faith is difficult to avoid.” Mattco, supra (emphasis added); and,
a consideration I've never seen defeat a good faith motion before - that a settlment "dictated by the tactical advantage of removing a deep-pocket defendant . . . is not made in 'good faith' consideration of the relevant liability of all parties. . . ." (leading to the question whether we're now required to consider the interests of clients other than our own in entering into a settlement agreement on a contested claim)
If this case isn't depublished (an unfortunate California practice) or taken up for review, it will bear re-reading and deeper thinking about the stategy and tactics of breaking away from the mob to cut a separate deal beneficial to one's own client without "consider[ing] . . the relevant liability of all parties . . . "
*/ This is a good place to note the importance of either indicating in the parties' post-mediation written negotiations that the mediation is continuing (hence the communications remain absolutely protected) or that the mediation has concluded (hence bringing those post-mediation settlement negotiations outside the scope of the strictly enforced mediation confidentiality restrictions).
Effective July 1, 2008, Connecticut established a mediation program for foreclosures. Statistics available for the latest period ending November 30 2008 reveal some interesting detail. Mediators are working diligently to rescue residential homes from the auctioneer. However, the program is missing important components.
In the period of July 1st to November 30th, there were 9,917 foreclosures filed in the state, an average of 450 cases per week. In that period, mediators successfully negotiated 519 cases so that homeowners got to remain in their homes. This is just slightly over 5% of all cases filed. Only 380 cases or 3.83% resulted in a modification of the mortgage terms. Despite the hard work of Connecticut’s mediators, the state’s residents are not being protected from foreclosure.
PROVIDENCE, R.I. (WPRI) - In an effort to protect families from foreclosure, Providence Mayor David Cicilline unveiled two ordinances Monday morning during a news conference in the city's Olneyville neighborhood.
A proposed state law, that would have provided similar requirements, failed in the General Assembly last year. Rhode Island Housing Executive Director Richard Godfrey applauded Providence for stepping in to provide that protection.
The second proposal, Foreclosure Mediation Ordinance , would require financial institutions and property owners to engage in mediation with a HUD-approved counselor before moving ahead with a foreclosure.
"We have a court adjunct mediation program," said Schmenk. "The worst thing people can do is do nothing. The best thing is to get an answer filed on their behalf and open up a discussion with the mortgage holder to avoid it going to the foreclosure sale. Often times they can get something worked out with the lending institution short of losing their home."
When a foreclosed home goes up for auction bids start at two-thirds of the property's appraised value.
"Most time the lenders are holding significantly more than that in debt," said Schmenk. "We've noticed in a number of cases things get worked out and they are able to enter into some kind of accommodation that works for lender and mortgage borrower."
Schmenk encourages individuals facing foreclosure to take part in mediation programs.
There was a mediation just last week in Defiance County, said Cheryl Timbrook of the common pleas court. Overall, she said that they haven't had many requests for mediation so far.
Sonnenberg said Henry County has had a mediation program available for foreclosure for a year. She said there has been an increase in requests for mediation since the court started sending out information about the program as well as how to file an answer to the foreclosure summons received by defendants.
"I don't think many people knew about it before," she said.
Chris DelFavero, mediation coordinator for the state's Northwest Ohio Court Mediation Services, said he's seen an increase in individuals asking for foreclosure mediation. Northwest Ohio Court Mediation Services covers Henry, Defiance, Fulton, Paulding, Williams and Putnam counties. The program started last spring.
"With the help of the (Ohio) Supreme Court we established a process for referrals through the (county) clerk's offices," said DelFavero, who added that referrals started to pick up this summer. "Last month I had the most referrals since we started. I had 11 referred this past month. We started with just two or three a month, and now we have two a week."
DelFavero said that many cases involve jumps in interest rates, causing payments to increase or individuals who have seen a decrease in pay.
"Those are the cases we hopefully can resolve and come up with a repayment plan or refinance their rates," he said. "The general problem in the industry was the subprime rates. Some of it is the economy, with people losing their overtime. Sometimes loans are given based on people making $40,000 and then they lose their overtime so now they are making $30,000. They are working, but may have fallen four to five months behind. The lender usually will work with them."
Because these parties couldn't agree on what year it is, however, no one balks at my suggestion that we write up the entire deal -- settlement agreement with mutual general releases; the Stipulation for the Entry of Judgment; and, the proposed Stipulated Judgment itself.
The first problem is everyone's failure to bring a form Settlement Agreement and Mutual Release, let alone one that included enforceable terms for the entry of a Stipulated Judgment in event of default.
ADVICE??? Carry these documents on a "flash" or "jump" drive whenever you're going to a settlement conference or mediation. Heck, carry them with you to the first day of trial where you might be startled to learn that your adversary is prepared to settle the case right now!
Fortunately, I had access to my own files which contained detailed forms for everything we needed, forms I offered to counsel as guides. I did so only with the express understanding that I did not recommend my own forms as adequate, complete or enforceable.
I'm just the mediator, not the legal representative of the deal in loco parentis.
It's a good thing we made the effort to fully document the deal because it threatened to fall apart over all of the following terms:
the dismissal of ancillary proceedings
forbearance from inducing future actions by non-parties
liquidated damage clauses for the breach of certain critical deal points
indemnification for future actions if induced by certain of the parties
Each of these items required separate negotiation and compromise and as to each I helped the parties calculate the degree of possible misbehavior by their adversaries and the protections that might "fit" the probable harm. I do not believe the parties would have been able to resolve these terms (as well as others too confidential to mention) without third party assistance. One was so difficult to predict both the series of possible events and potential remedies that we provided for arbitration of that term alone in the event of alleged default.
When we all finally left the building at one in the morning, we had fully completed paperwork, signed by all parties in hand.
And yes, I was the only one present who could type.
The anger, suspicion and ill will that has characterized the first eight hours of this mutli-party, eight-figure antitrust mediation is about to heightened as I deliver Defendants' terms: they will pay the settlement agreed upon in six equal yearly installments over three full years without any security to back it up.
Are you wondering what your mediator is thinking at times like this?
That "thought" is momentary, however, like the cry you squelch when the trial judge does something like, say, grant the other side's motion to disqualify your expert witness during the second week of trial.
I don't have a plan, but I do have ideas. Just as my suggestion that we use a bracketed offer to break impasse had eventually done just that, I'm already thinking of ways that the parties' most intractable and conflicting positions might move them toward agreement.
"They can wait," defense counsel is saying, "or they can try the case in February and see if they can collect it," to which a principal adds, "this puts them on our side for a change. If we make the money we believe we can, they'll benefit too."
"I thought you said you knew you could," I say, laying groundwork for the contingency ahead.
"Yes, absolutely. We know we can."
Back in the Plaintiffs' caucus room, the parties and their counsel aren't simply angry; they're flabbergasted.
"They sand-bagged us," says Plaintiffs' counsel. "We'll report this to the Judge. They didn't come here in good faith. They're deliberately wasting our time."
After some calming discussion about why the cash-poor defense would deliberately pay their own attorney and one-half of my daily fee in bad faith . . . a question to which no answer ever eventuated . . . Plaintiffs and their counsel begin to confidently predict the defense's inability to make a single installment payment. Plaintiffs believe the defendants have resources - secreted away somewhere - but will never use them to settle this case.
When the temperature of the room has diminished to that of the sun's surface rather than its core, I ask about the possibility of a stipulated judgment in the event of default.
"In a sum you hope the jury will award you at trial," I proffer. "If you're right; if they have no intention, nor any ability, to pay even the first installment, you'll be in the same position on default that you'd be in if you prevailed at trial. And if they're capable of paying, they're much more likely to do so if the alternative is a mutl-million dollar judgment against them."
Though the total sum of the Stipulated Judgment is the main topic of discussion over the following two hours, the parties' insistent conflicting predictions for the future make it all but inevitable they will eventually reach agreement. If the defense never pays, the Plaintiffs will have their judgment more or less immediately, without the burden of proving it up. And if the defendants are good for their word that they can service the "debt" the settlement agreement creates, they never have to worry about this potential judgment becoming a reality.
Often, a major obstacle to reaching negotiated agreements concerns negotiators' beliefs about some future event or outcome. Impasses often result from conflicting beliefs that are difficult to surmount, especially when each side is confident about the accuracy of his or her prediction and consequently uspicious of the other side's forecasts. Often, compromise is not a viable solution, and each party may be reluctant to change his or her point of view.
Fortunately, contingent contracts can provide a way out of the mire. With a contingency . . . differences of opinion among negotiators concerning future events do not have to be bridged; they become the core of the agreement. . . . [Parties] can bet on the future rather than argue about it.
Here, the agreement calling for a Stipulated Judgment of sufficient size to deter default, allowed the parties to:
bet on rather than argue about their different forecasts for the future;
It's 8 p.m. and you've just spent nine straight hours negotiating the settlement of complex commercial litigation with multiple parties that was filed before George Bush first took office. The case has been up on appeal twice and is now scheudled for trial in February. All defendants but the final three standing have settled. Three of the principals have flown in from out of state and two of the attorneys have driven a few hundred miles to Los Angeles from their home towns.
"Let's just write up the deal points," says Lawyer No. 1, yawning. "We can write up the full agreement over the long weekend."
Lawyer No. 2 turns to me and says "Judicate West has a form, right? Let's use that."
IT IS HEREBY STIPULATED by and between the parties through the respective counsel or representative of each that the above-referenced case has been settled according to the terms memorialized herein below. This document is binding on the parties and is admissible in court pursuant to Evidence code section 1123 and enforceable by motion of any party hereto pursuant to CCP section 664.6.
In order to facilitate the above specified terms of settlement, the parties further agree that on or before the day of they will execute or change the following:
Settlement / Release Agreement Prepared by _____plaintiff_____defendant
Request for Dismissal Prepared by _____plaintiff_____defendant
All relevant parties must sign below. Copies are acceptable in lieu of originals.
I know. You didn't expect the case to settle. At least that's what I've been hearing you all tell me since hour one of the mediation. But now we're in hour nine and the basic deal points have been reached. It's January 15. Trial is in 30 days. You have all the parties present and the mediator who has by now sussed out the BS; developed a good working relationship with all sides of the dispute; knows how hard the parties worked to get here; and, is unlikely to let the "devil" in the details sink the settlement ship.
FORUM (FORUM & FOCUS) • Jan. 08, 2009 Every Case Is a Winding Road
By Victoria Pynchon
I have a confession to make. I am about to become embroiled in litigation. Though I preach the religion of negotiated resolution, I've nevertheless hired litigation counsel to assert my rights and pursue my remedies.
This is one of those moments when the rubber of our ideology meets the road of personal circumstance, the moment we are called upon to decide to walk our talk or take the more familiar road.
For more than 30 years - first as paralegal, then as a law student and finally as a commercial litigator - I'd been swimming in the waters of legal rights and remedies. The adversarial ocean had become so familiar a habitat that it rarely occurred to me that I was under the surface. One day toward the end of my first year of mediation practice, a much more experienced friend hooked me by the cheek and threw me on the deck of his ship, where I was gasping for air.
He'd asked me to co-mediate a will contest without the benefit on my clergy - lawyers with experience in the field. The "fish out of water" conversation that ensued went something like this:
Joe Mediator: "The family doesn't want to hire a lawyer. They just want to mediate."
Vickie: "But I know absolutely nothing about wills, trusts and estates. The parties need to talk to a lawyer first to learn their rights and remedies."
Joe: "You still don't get it, do you?"
Vickie: "Get what?"
Joe: "It's not about rights and remedies. It's about interests."
Vickie: "But how can they evaluate their interests without knowing their rights and remedies?"
Joe: "Because they're not interested in what the law says - they want to do what they believe is right for them as a family under the circumstances."
These people wanted to resolve a legal dispute without knowing their legal rights? Were they nuts? I understood "interests" - they were all the rage in ADR circles - the desires, fears and needs of the parties that drove them to take legal positions. Sometimes those interests were non-economic - the need for revenge, the desire to be personally accountable, the fear of failure, the hope for forgiveness and reconciliation. Others, though economic, could not be remedied by way of damages - better access to foreign markets, for instance, or wider distribution chains; the acquisition of better manufacturing processes; or, the retention of executives with "pull" in Washington. But all of those matters were secondary to legal rights and remedies, weren't they? You had to know what your rights were.
Trial court lacked authority to review discretionary, prehearing order by arbitrator, who imposed stay on arbitration of dispute concerning uninsured motorist policy until plaintiff--who was driving on work-related business in company car provided by employer when rear ended--pursued workers’ compensation benefits in light of Insurance Code Sec. 11580.2.
Nothing irritates a court more than doing unnecessary work because counsel fails to comply with the local rules. Here in Huschke v. Slater, the Court was sufficiently put out to order that the attorney "personally" pay the sanctions ("don't even think about asking your client to pay, buster!") and to order the opinion published for all the world to see.
Like that pesky appeal where the Court called my client a "school yard bully" for failing to stipulate to the genuine nature of the insurance policies at issue (and no I am not providing a link to that one). Ordered it published too. Grrrrrrrr.
I'm filing this one under "Advice to Young Lawyers" in the hope that they do not have to learn how to ignite the appellate court's wrath the hard way.
Still active is Molski's case in the Eastern District of California which was recently permitted to go forward by the same Ninth Circuit Court of Appeal. As the Ninth Circuit explained the factual background of Mr. Molski's "serial litigation,"
[Plaintiff] Molski and his lawyer Thomas Frankovich (“Frankovich”) were purportedly in the business of tracking down public accommodations with ADA violations and extorting settlements out of them. On cross examination, Molski acknowledged that: he did not complain to any of [the defendant's] employees about his access problems; he had filed 374 similar ADA lawsuits as of October 8, 2004; Frankovich had filed 232 of the 374 lawsuits; even more lawsuits had been filed since that date; Molski and Frankovich averaged $4,000 for each case that settled; Molski did not pay any fees to Frankovich; Molski maintained no employment besides prosecuting ADA cases, despite his possession of a law degree; Molski’s projected annual income from settlements was $800,000;2 Molski executed blank verification forms for Frankovich to submit with responses to interrogatories; they had also filed lawsuits against two other restaurants owned by Cable’s; they had filed a lawsuit against a nearby restaurant; and Sarantschin obtained up to 95% of his income from Frankovich’s firm for performing investigations for ADA lawsuits.
Despite these apparently damning facts, in its 2007 affirmance of the vexatious litigant finding, the Ninth Circuit noted some of the reasons why Molski and his lawyer could not be condemned for their pursuit of serial ADA litigation. The ADA, noted the Court,
does not permit private plaintiffs to seek damages, and limits the relief they may seek to injunctions and attorneys’ fees. We recognize that the unavailability of damages reduces or removes the incentive for most disabled persons who are injured by inaccessible places of public accommodation to bring suit under the ADA. See Samuel R. Bagenstos, The Perversity of Limited Civil Rights Remedies: The Case of “Abusive” ADA Litigation, 54 U.C.L.A. L. Rev. 1, 5 (2006).
As a result, most ADA suits are brought by a small number of private plaintiffs who view themselves as champions of the disabled. District courts should not condemn such serial litigation as vexatious as a matter of course. See De Long, 912 F.2d at 1148 n.3. For the ADA to yield its promise of equal access for the disabled, it may indeed be necessary and desirable for committed individ- uals to bring serial litigation advancing the time when public accommodations will be compliant with the ADA.
But as important as this goal is to disabled individuals and to the public, serial litigation can become vexatious when, as here, a large number of nearly-identical complaints contain factual allegations that are contrived, exaggerated, and defy common sense. False or grossly exaggerated claims of injury, especially when made with the intent to coerce settlement, are at odds with our system of justice, and Molski’s history of litigation warrants the need for a pre-filing review of his claims. We acknowledge that Molski’s numerous suits were probably meritorious in part—many of the establishments he sued were likely not in compliance with the ADA.
On the other hand, the district court had ample basis to conclude that Molski trumped up his claims of injury. The district court could permissibly conclude that Molski used these lawsuits and their false and exaggerated allegations as a harassing device to extract cash settlements from the targeted defendants because of their noncompliance with the ADA. In light of these conflicting considerations and the relevant standard of review, we cannot say that the district court abused its discretion in declaring Molski a vexatious litigant and in imposing a pre-filing order against him.
In other words, when the legislature puts the enforcement of the ADA in the hands of disabled individuals without permitting them to recover damages, you can't blame private attorneys for working the market created for the private enforcement of public laws even if you can blame them for the manner in which the market is worked.
So what does this have to do with the settlement of litigation and, in particular ADA Litigation?
Because these accessibility cases always cost more to defend than to settle and because they're often indefensible, the rational business decision is simply to settle the darn things.
No one, however, wants to be extorted. And in the few ADA cases I've mediated, it's the principled refusal to pay money at the point of a gun that interferes with a business establishment's willingness to do the economically "rational" thing rather than, say, try it; appeal it to the Ninth Circuit; and, pursue it to the Supreme Court of the United States.
For those representing defendants who are feeling extorted, I offer my own (previously posted) ADA mediated settlement story below.
I have recently been asked by several lawyers to write a few posts on mediation and negotiation terminology not only because some attorneys are unfamiliar with these terms, but also because different mediators and negotiators use them to mean different things.
Mediators, lawyers and negotiators who read this post are invited to add, correct, object, or suggest further refinements and to add their thoughts on further strategic and tactical uses and perils of the impasse-busters we discuss today - the bracketed offer and the mediator's proposal.
And because my readers may find this post as dry as bones, I once again offer the X-rated "Negotiation Table" as pretty #%$@ true and funny (think Ari Gold).
Bracketed Offer: Party A makes an offer to bargain in the zone he wishes to see the negotiation move to. This is often used when neither party wishes to step up to the line of probable impasse and it can also be used to re-anchor the bargaining zone. Quite simply, Party A offers to bargain in the range of, say, $2 million and $3 million. He offers to put $2 million on the table if party B is willing to put $3 million on the table, i.e., "I'll offer to pay you $2 million if you'll offer to accept $3 million to dismiss your suit."
If party B does not accept the bracket, party A will not be "stuck" with having actually placed $2 million on the table when the next exchange of offers and counter-offers begins.
Responding to a Bracketed Offer: Party B can: 1. respond with a counter-bracket, i.e., I'll make an offer to accept $3.5 million in settlement if you'll put $2.5 million on the table; or, 2. refuse the bracket and ask for an unbracketed counter.
The basics: the mediator chooses a number for the parties, making an "offer" to settle for, say $2.3 million which the parties are free to accept or reject. It is a double-blind "offer." If either party rejects the "offer" neither party knows whether the other accepted or rejected. Acceptances are communicated only if both parties accept, in which case they have a deal.
The circumstances: The parties should seek a mediator's proposal only when they have reached a hard impasse. A hard impasse exists when both parties have actually put their true bottom line on the table or their next to the bottom line and they see no hope of it closing the deal.
The purpose: Both parties believe they could convince their principal to accept a deal that is more than they wanted to pay or less than they wanted to accept, but they cannot convince their principals to put $X on the table or accept $Y. They hope to use the authority of the mediator to sell the deal to their principals. If they are the principals, they are willing to settle for a number lower or greater than planned but not willing to close the bargaining session having made such a concession, which would have the effect of setting the floor or establishing the ceiling of all future bargaining sessions.
The Mediator's number: I do not know whether there is a general practice among mediators about how they choose the number proffered. When parties ask me to make a mediator's proposal (I rarely recommend one in the first instance) I explain my practice as follows: When I make a proposal I am not acting as a non-binding arbitrator or early neutral evaluator. In other words, my proposal is not a reflection of the value of the case. The number I propose will be a number that I believe the Plaintiff is likely to accept and the Defendant is likely to pay.
In rare instances, the parties wish to continue bargaining in the event a mediator's proposal is not accepted by both parties. I have permitted this in a few circumstances after explaining to the negotiating parties that it often causes resentment on the other side because they feel as if the party who wishes to continue negotiating is unfairly attempting to use the mediator's number as a new bench-mark from which to bargain.
I highly recommend against continued bargaining after the rejection of a mediator's proposal on the day of the mediation. It should serve as a hard stop because the parties respond to it as an ultimatum. That's part of its power. Take it or leave it.
Just as you would not continue bargaining after indicating that you were putting your last dollar on the table, you should not continue bargaining (during that session) after the mediator has, in effect, put both parties' anticipated bottom lines on the table for them.
First she's all about the election and now she's back to post-mid-Century America's gender wars? Say it ain't so, Vickie!
These are just statistics from an extremely limited sample that tells more about this particular program in this particular place concerning the particular types of cases being mediated than they are about the relative abilities of male and female mediators.
I'm unaware, however, of any controlled studies on gender differences in mediation results. I do know that there's a gender imbalance in the profession and have had panel administrators acknowledge on the QT that even when they're choosing mediators or settlement officers pro bono lawyers tend to choose men most of the time.
So for women struggling in the profession, here's your moment of zen.
Examining the graphical representation of mediator gender and settlement rates, one can see that there are male mediators who settle cases at higher than average rates, as well as female mediators who settle cases are lower than average rates. Nevertheless, it appears that most of the popular mediators who settle cases at higher than average rates are women, while the majority of popular mediators who settle cases at lower than average rates are men.
Some may object to this “battle of the sexes” analysis on the grounds that men and women should be treated as equals. Based on our data, however, male and female mediators are not statistically equal with respect to the rate at which they settle cases. Whether this “good” or “bad” is more a matter of philosophy than statistics.
In her book In a Different Voice, Carol Gilligan described how men and women think about moral conflicts differently. Her research suggests that men tend to consider conflict in terms of rights while women generally view conflicts in terms of dynamic relationships. Accordingly, a “female” approach to conflict resolution may be better suited to the process of facilitating mediated settlements than a “male” approach to conflict.
When I think of my own experience as a neutral for the past four years and compare it to my experience as an attorney in the first four years of my practice 1980-1984, I can only say that it is somewhat similar.
What made the difference in the years that followed? Women flooding the profession. As women litigators and bench officers begin to retire, I suspect that we'll begin to see greater use of women neutrals. And no, I do not believe that the paucity of women on commercial mediation panels nor what I believe to be their greater struggle to build a thriving practice there is based upon conscious sexism.
Like the tendency to prefer judges over attorney mediators (a preference I believe to be waning) I believe that the sub-conscious preference for male over female mediators arises from a continuing misunderstanding among members of the bar about what settles cases. Too many attorneys continue to believe that they need a mediator who can overpower the will of their adversary. And if you're looking for raw power (particularly the power of authority) in American commerce and law, you will naturally choose the judge over the attorney and the man over the woman.
I haven't written about this in the past because it is a topic that tends to divide people and it is not my intention to start a tiny gender war in the tiny world of mediation.
But when these statistics started pouring into my in-box, I couldn't ignore the topic any longer.
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[T]he fact that the settlement was reached during mediation to which Evidence Code section 1119 applies does not eliminate the court’s obligation to evaluate the terms of the settlement and to ensure that they are fair, adequate and reasonable. If some relevant information is subject to a privilege that the court must respect, other data must be provided that will enable the court to make an independent assessment of the adequacy of the settlement terms.
[T]he fact that communications were made during the mediation and writings prepared for use in the mediation that are inadmissible and not subject to compulsory production does not mean that the underlying data, not otherwise privileged, is also immune from production. (Evid. Code, § 1120 [“Evidence otherwise admissible or subject to discovery outside of a mediation . . . shall not be or become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation . . .]; Rojas v. Superior Court (2004) 33 Cal.4th 407, 417; Wimsatt v. Superior Court(2007) 152 Cal.App.4th 137, 157-158.)
Foot Locker’s payroll records, for example, if relevant to the quantification of the claims being settled, are subject to discovery and may be introduced in opposition to the settlement even if they were disclosed to class counsel during the mediation, and even if class counsel was shown only a summary or analysis of those records that is not itself subject to production because prepared for use in the mediation.
* * *
Following the opportunity for limited discovery, the trial court should redetermine whether the proposed settlement is fair, adequate and reasonable. The court may and undoubtedly should continue to place reliance on the competence and integrity of counsel, the involvement of a qualified mediator, and the paucity of objectors to the settlement. But the court must also receive and consider enough information about the nature and magnitude of the claims being settled, as well as the impediments to recovery, to make an independent assessment of the reasonableness of the terms to which the parties have agreed.
We do not suggest that the court should attempt to decide the merits of the case or to substitute its evaluation of the most appropriate settlement for that of the attorneys. However, as the court does when it approves a settlement as in good faith under Code of Civil Procedure section 877.6, the court must at least satisfy itself that the class settlement is within the “ballpark” of reasonableness. (See Tech-Bilt, Inc. v. Woodward-Clyde & Associates (1985) 38 Cal.3d 488, 499-500.)
While the court is not to try the case, it is “ ‘called upon to consider and weigh the nature of the claim, the possible defenses, the situation of the parties, and the exercise of business judgment in determining whether the proposed settlement is reasonable.’ ” (City of Detroit v. Grinnell Corp., supra, 495 F.2d at p. 462, italics added.) This the court cannot do if it is not provided with basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise.
By remanding we do not suggest that the proposed settlement ultimately may not pass muster. We hold only that the trial court may not finally approve the settlement agreement until provided with sufficient information to assure itself that the terms of the agreement are indeed fair, adequate and reasonable.
This is a week-long intensive program for new and/or experienced attorneys who need to learn/brush up on their basic trial skills. If you can take the time, your entire practice will benefit from the experience.
Civil Procedure Sec. 998--which permits a defendant to shift costs to plaintiff if plaintiff rejects a settlement offer and then fails to obtain a more favorable judgment--does not eliminate substantive requirements for awarding attorney fees to a prevailing Fair Employment and Housing Act defendant; prevailing defendant in FEHA action is only entitled to recover fees if plaintiff rejects defendant's settlement offer, fails to obtain a more favorable judgment, and plaintiff's action was without any legal or factual foundation. Mangano v. Verity, Inc.
Why was this an echt academic moment? Because the course I was taking from Joe -- "Ideologies of Mediation" -- had, before that moment, been suggesting that all ideologies interfere with durable, party-satisfying resolutions. Now it seemed the problem wasn't with ideology itself but with the wrong ideology. Hmmm, felt like law school. Forget Pennoyer v. Neff. It's all about this Buckeye case with the exploding boiler.
At the time, my litigator husband was skeptical of all mediators and all mediation techniques. We took a long walk down a Malibu beach after one of Joe's classes while I tormented him with questions about ways in which mediators could help him settle the case he was then working on -- the World Trade Center insurance coverage litigation.
If you wonder why I'm such a joint session fanatic, it's due largely to Joe's and Baruch's teaching as well as my own experience mediating community disputes locally -- the only place true transformative mediation is practiced. Engage the people with the problem and you're more than half way home. You just have to be capable of getting the lawyers to trust you enough to give up just a tiny bit of control to help the process happen.
As another mentor -- Richard Millen -- taught me, people don't have legal problems, "people have people problems" which are burdened with justice issues.
Choose your mediator wisesly, collaborate with him/her and you will not only settle the case, but emerge with a client who got what he/she/it hired you for -- to resolve the commercial problem and the justice issue that called for the retention of a lawyer in the first place.
California Federal Court: Insured Plaintiff Can Seek Treble Punitive Damages For Insurer’s Alleged Bad Faith
The U.S. District Court for the Central District of California recently denied a motion to strike and allowed a plaintiff to pursue treble punitive damages against his insurer for the insurer’s alleged bad faith. Novick v. UNUM Life Insurance Co. of America, C.A. No. 08-02830-DDP-PJW (Aug. 7, 2008).
The insurer issued a long term disability benefits policy to the plaintiff in 1976, providing benefits should the plaintiff become totally disabled due to an accident sustained during the course of his career as a surgeon. In June 1992, the plaintiff filed a disability claim with his insurer after sustaining a spinal injury that allegedly prevented him from performing surgery. The insurer initially paid benefits to the plaintiff, but discontinued making the benefits payments on January 18, 2007. Shortly thereafter, the plaintiff filed suit against its insurer alleging breach of contact and breach of the covenant of good faith and fair dealing.
In his complaint, plaintiff seeks punitive damages pursuant to California Civil Code §3294, which allows an award of punitive damages for conduct that constitutes malice, fraud or oppression. The plaintiff also seeks treble punitive damages pursuant to California Civil Code §3345, which provides for an award of treble damages “in actions brought by, on behalf of, or for the benefit of senior citizens or disabled persons . . . to redress unfair and deceptive acts or practices or unfair methods of competition . . . [when] a trier of fact is authorized by statute to impose either a fine, or a civil penalty or other penalty, or any other remedy for the purpose or effect of which is to punish or deter . . . .”
The insurer argued that §3345 does not provide for the trebling of damages for insurance bad faith claims. The court reviewed the legislative intent behind the statute and determined that the legislature did not intend for the statute to be limited to actions that specifically mention unfair business practices. The court noted that, as bad faith claims redress unfair practices, §3345 applies to insurance bad faith claims. Accordingly, as the plaintiff alleges that the insurer acted in bad faith, the court held that the plaintiff is entitled to pursue his request for treble punitive damages.
Now we just need a blogging claims adjuster and we can bring peace to the Middle East.
Below are John's impressive credentials. We meant to meet for a "quick" cup of coffee. We talked negotiation strategy and tactics for nearly three hours.
As I review websites I often wonder about the experiences of the authors and the biases they bring, so I feel I should disclose mine for those who want to know more. I have been fortunate to work with two “hands on” in-house legal teams, with settlement negotiations handled primarily by employed lawyers rather than their law firms. I am also lucky to have practiced in law firms with true trial lawyers who generated genuine negotiating leverage whether settlement was their objective or not. Through these experiences I have settled cases threatened, pending or mediated in about 20 states - from Montana to Florida and from New Hampshire to California - and have managed the resolution of disputes around the world. Working with and against some very good lawyers and employing some of the truly legendary mediators, I feel fortunate to have seen a real cross-section of styles and approaches. In almost all of these cases I have had the opportunity to work behind closed doors with the people who really decide when cases settle - CEOs, CFOs, General Counsel, COOs, individual plaintiffs, insurers, board members, auditors, and more.
First, I note that much of Professor Murray's article focuses on arbitration agreements that are forced down the throats of consumers -- an injustice that is so far removed from one that might arise in a mediated settlement conference that I'd like to address it separately on another day.
Second, I am not without criticism of court-annexed mediation practices -- those criticisms populate this blog in great number. Nor am I naive or inexperienced enough to pretend that mediators do not effect party decisions even when they are represented by attorneys who are presumably mediation- and mediator-savvy.
Nevertheless, re-reading Professor Murray's criticisms of mediation this morning, I am once again stuck by the number of untested assumptions upon which he bases his pretty radical suggestion that mediated settlement agreements be vetted by judicial officers. The major and minor premises of Professor Murray's accusation that mediation corrupts justice include the following:
there is only one set of "powerful repeat players" -- insurance companies -- who choose and use the services of mediators;
the other set of repeat players -- plaintiffs' personal injury and employment counsel -- are more or less universally poorly equipped to either influence the mediator or to protect their clients from mediator bias;
the easily influenced plaintiffs' bar, if not protected from mediator bias, will counsel their clients to voluntarily enter into sub-optimal settlement agreements that favor the interests of insurance carriers over those of their own clients';
there is such a thing as an "objectively bad settlement" that a judicial officer would be equipped to detect and remedy;
money paid to a "neutral" is the only pernicious influence on dispute outcome, as opposed to, say, racial, nationality, gender, and/or any other socio-economic differences between a judicial officer and a litigant or between the jury and a litigant; and,
judicial officers are not subject to the influence of the repeat attorney-players who appear before them and socialize with them at Bar Association and other events.
Of all of the assumptions requiring testing before we impose a supervisory judiciary upon mediators, the premise that an objective, measureably "reasonable" settlement of any dispute exists is the one that most requires addressing.
Because I could write a book on this topic, let me just highlight some of the factors that would make third-party vetting of mediated settlement agreements difficult to impossible.
money is not the only reason people file suit nor the only basis for their decision to settle it;
whether the litigation at issue is a $2500 slip and fall action between a local grocery store and its customer; or a billion dollar insurance coverage dispute between an insurance carrier and an oil company, the people and commercial players involved are at least as -- if not more -- concerned with injustices that the law does not address as they are with those that it can address;
though mediated settlement agreements are partially based upon the cost of further litigation and trial, on the one hand, and the probability of victory times the potential jury verdict on the other hand, they are also based on party needs, desires and fears that have nothing whatsoever to do with legal causes of action such as:
a corporation's fear that it will not be able to overcome jury bias against commercial enterprises, particularly if that enterprise is engaged in providing liability and/or property damage insurance to its customers;
the fear of individuals that they will not be able to overcome jury bias against any marker of their marginalization from the dominant culture such as color, gender, nationality, sexuality or religion;
the desire that one's opponent acknowledge responsibility for the role he/she/it played in the events giving rise to the dispute and for the actions taken to resolve it, many of which further inflame the parties' experience of injustice;
party desires for revenge; and,
party tendencies to "read" and "spin" the dispute in a way that is favorable to him/her/it in all particulars -- misperceptions that are often corrected in the course of joint sessions between the parties who actually experienced the injury-causing event.
Examples of ways in which parties are able to resolve conflict in the context of their highly individual interests rather than the little buckets of rights and remedies into which we pour the facts of their dispute?
a physician gives his consent to settle a malpractice action when he realizes that the Plaintiff is not attempting to "hold him up" but genuinely experienced the breast examination he gave her as an assault;
the creditor agrees to settle for pennies on the dollar when convinced by evidence proffered during a confidential mediation session that the debtor would be bankrupted by any payment in excess of the offer (evidence not discoverable in litigation because it is not "relevant" to the causes of action alleged);
garment manufacturers settle acrimonious copyright infringement litigation after their counsel allow them to have a confidential mediation conversation which cannot be used in court against them during which they learn that they have more in common -- and more ways to advantage one another economically -- than they have to fight about;
a claims adjuster is brought to tears -- and seeks greater settlement authority -- by a father's frank confession in a confidential mediation conversation of the guilt he carries for the loss of his child in an automobile accident caused by the high speed blow-out of an allegedly defective tire; and,
family members not only settle their lawsuit but reconcile after years of self-imposed exile when they realize the "family" asset they've been fighting over is worth less to them than their love for one another.
What I'd like Professor Murray and everyone who reads his article to understand is that we all share this justice problem. The adjudication system is not working well for the people it was designed to serve. The ADR options we've put in place to smooth out the rough edges of 18th century adversarial theory and practice are themselves insufficient to efficiently and fairly resolve 21st century conflicts.
That's why I'm calling for a LegalTED Conference. And if Professor Murray will forgive the snippiness of yesterday's post, I'd like him to be one of the members of the Steering Committee.
(while we're walking down memory lane anyway, "Have It Your Way" from 1976)
When I ask litigators why they don't choose arbitration over litigation before unpredictable judges in a crowded court, their answer invariably is "because I can't appeal the ruling." We cling to appellate review even though we appeal fewer cases than we try -- which is a very small percentage of our case load as it is.
Not surprising, however, we litigators, as Max Kennerly recently noted, tend to be risk-averse, not risk-embracing (h/t Blawg Review # 174). To give up that one last chance for our client to be vindicated and for us to be triumphant is generally just too much for us.
Now we can have our arbitration cake and and follow it up with appellate ice cream. Yesterday, the California Supreme Court in Cable Connection, Inc. v. DirecTV held that arbitrating parties' agreement to seek appellate review of legal errors is enforceable in California State Courts despite its uneforceability in federal court. As the Supreme Court explained:
However, the high court went on to say that federal law does not preclude “more searching review based on authority outside the [federal] statute,” including “state statutory or common law.” (Id. at p. __ [128 S.Ct. at p. 1406].) In Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 (Moncharsh), this court reviewed the history of the California Arbitration Act (CAA; Code Civ. Proc., § 1280 et seq.).
The California rule is that the parties may obtain judicial review of the merits by express agreement. There is a statutory as well as a contractual basis for this rule; one of the grounds for review of an arbitration award is that “[t]he arbitrators exceeded their powers.” (§§ 1286.2, subd. (a)(4), 1286.6, subd. (b).)
Here, the parties agreed that “[t]he arbitrators shall not have the power to commit errors of law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error.” This contract provision is enforceable under state law, and we reverse the contrary ruling of the Court of Appeal.
If You Know the Case Law, Litigation Doesn't Have to be Robotic
By Victoria Pynchon
Here in California, there's no stronger rule of confidentiality than that applied to a mediation. It cannot be impliedly waived like most privileges, including the near-sacred attorney-client privilege. Simmons v. Ghaderi, 2008 DJDAR 11107. You cannot be estopped from relying on it. Eisendrath v. Superior Court, 109 Cal.App.4th 351 (2003). And if you want your mediated settlement agreement enforced, you must strictly comply with the requirements of Evidence Code Section 1123. Fair v. Bakhtiari, 40 Cal.4th 189 (2006).
Insurance policy-holder counsel Kirk Pasich of Dickstein Shapiro has criticized nearly all recent interpretations of mediation confidentiality by the California Supreme Court on the ground that they permit insurance carriers to use mediation proceedings to engage in acts of bad faith.
"Why should a carrier get a license to act in bad faith in mediation," Pasich asked, adding, "Cases settled, and still settle, in mandatory settlement conferences without that same shield. I don't think a process should exist that encourages, rather than discourages, a party from acting in bad faith."
If you do not understand the differences between settlement conferences and mediations, you are not alone. My informal surveys indicate that litigators believe there's no difference whatsoever between the two and few mediators are able to distinguish between them despite their training in the field. Nor have California's courts been of any real assistance.
What's in a name? Here, plenty. The application of California's Rules of Evidence to mediations has such significant potential economic consequences that mediator and litigator malpractice actions are surely looming on the horizon.
What type of misbehavior can occur in a mediation? Here are just a few examples: One party can make a misrepresentation of material fact on which the other relies in entering into a settlement agreement; as Pasich notes, an insurance carrier can act in bad faith; one mediating party could tortiously interfere with a third party's contract or prospective economic advantage; or the mediating parties can enter into a collusive settlement agreement, depriving the settling parties' co-defendants from learning facts necessary to challenge the settlement in a "good faith" hearing.
Even if all parties have expressed complete agreement during the mediation, which they then memorialize in a term sheet, absent strict compliance with the requirements of Evidence Code Section 1123, no evidence probative of that agreement will be admissible in a California court.
If the mediating parties are engaged in a settlement conference, none of this potentially bad behavior would be protected.
Given the potentially significant adverse economic consequences that can flow from a mediation, California's courts have clarified the differences between the two procedures, right?
I believe in Unicorns and Max doesn't so I've promised to keep my eyes open for appearances of that storied creature. Previously, I have reported the Unicorn's appearance here (community mediation; potential lawsuit, no lawyers); here (litigation + lawyers who send the parties to community mediation); and, here (litigation + lawyers + clients who seek mediation without lawyers to resolve dispute).
The parties to a lawsuit do not have intertwined interests: they have directly adverse interests. Unless there's some possibility of a future relationship, the defendant doesn't want to resolve the conflict: they want the plaintiff to drop their frivolous claim. In their mind, their best alternative to a negotiated agreement ("BATNA") is for the plaintiff to crawl in a hole and die.
[My Comment: the "intertwined interests" all parties to litigation have is the litigation itself with its attendant cost, delay, and, uncertainty, not to mention the discomfort "ordinary" people experience when plunged into the foreign environment occupied by attorneys with their strange "causes of action" and "affirmative defenses," their demurrers and JNOV's; their res ipsas and, most importantly, their view that only facts pertaining to a "cause of action" or "affirmative defense" are relevant to the injustice suffered by their clients.]
[T]he plaintiff usually prefers imposing a conflict on the defendant (who the plaintiff believes cast the first stone) in pursuit of justice, an imposition they will only relieve for at least "full" compensation. . . .
The problem is that most parties don't consider their claims to be assets; the problem isn't that there's emotional baggage around the economic understanding, it's that the parties interpret their dispute as fundamentally non-economic.
[My Comment: I've said before that all litigation is "fundamentally non-economic" -- it's about justice. Though Max is one of the few practicing litigators who agrees with me, he does not believe in the existence of my solution -- a settlement conference or mediation conducted in joint session].
Hence a Mediation Unicorn with litigation and attorneys prior to any meaningful discovery.
I'm talking to a plastic surgeon whose artistry not only went unappreciated, but which gave rise to a lawsuit for battery and malpractice.
The plaintiff is a model and an actor. The surgery, she claims, left permanent scaring on her nose. Her opening demand is $500,000. I am trying to persuade the physician, his attorney, and the claims adjuster, not to walk out. The plaintiff's deposition has been taken and the doctor's is scheduled for the following week. No experts have been retained.
The parties have made the rare effort to settle the case early in the litigation.
This is what the defense thinks about the opening demand in response to their good faith participation in an early mediation:
%&*#%*#%@& and %&^@(% and *&$)*#!
I am suggesting to the defense in separate caucus that they allow me to conduct a joint session in which the parties can talk about the surgery, the scarring and their post-surgical communications. I explain that the Plaintiff is more angry than acquisitive. She believes that the doctor disrespected her when she complained about the scarring.
He denied that I had a scar. He was rude and dismissive. He disrespected me. He had no bedside manner.
She is one of the few personal injury plaintiffs who comes right out and says what so many plantiffs feel.
I want him to suffer. My attorney says he has to report any settlement in excess of $30,000 to the Medical Board. I want to make him do that. I want him to suffer as I have. It's not about the money. It's about accountability. I want him to be accountable.
The parties resist a joint session and we spend two hours negotiating in the strato- and nano-spheres. $10,000. $490,000. $12,500. $475,000.
"We're getting nowhere," says Plaintiffs counsel. "Tell them we're leaving."
"The case will never settle. This is a waste of time for my doctor and my claims examiner. Tell them we're leaving. The case will never settle. It simply won't settle. The case cannot settle."
Click Your Heels Three Times and Say "There's No Place Like Home."
Attorneys are fond of saying that all mediators do is "keep them in the room." They might be right, but the difference is the room I keep them in. It's a mediation room, not a conference room or a deposition room or a courtroom. It's a room in which I ask the doctor if the feeling he has is something akin to a fish being hooked, pulled up out of the water and thrown onto the deck of someone's boat, gasping. He cracks a smile for the first time that morning.
It's a room in which I say there must have been a miscommunication, a misunderstanding. It's a room in which I say to the defense that the Plaintiff feels angry and disrespected. It's a room in which I caution the Plaintiff that the physician is from a different culture than her own -- one where a doctor does not express empathy but only certainty in his skill and expertise.
The claims adjuster asks me if I'd been able to see the Plaintiff's scar from where I was sitting -- across a conference room table. I admit that I could not. I acknowledge what is patent in the defense room -- the Plaintiff is blindingly beautiful. A jury is unlikely to award her much in the way of damages. I have said as much to the Plaintiff. But she is angry and wants a pound of flesh.
I have another mediation in the afternoon. I tell the defense we have fifteen more minutes. The claims adjuster keeps repeating "the case will not settle, the case will not settle, the case will not settle." I take this to mean that the defense very much wants to settle the case.
"If someone repeats something over and over again," my mentor Ken Cloke taught me, "that is the key to the resolution." While that might be so, I haven't yet found a way to use that key to open any door. But it is not really my case to settle. It's my job to keep them in the room.
"I Want to See the Scar," says the claims examiner.
I wish I could take credit for the following but I cannot. The Plaintiff's attorney says "why don't they go to the ladies room where my client can show Ms. Y the scar and together they can look at it."
I hear the click of the Unicorn's hooves in the hallway. The plaintiff's attorney is male. I don't believe he knows what he's suggesting. He wants to send two women into one of the safest and most congenial, soul-bonding rooms in all of God's creation -- the women's room.
I know the case will settle.
We are finally in joint session. The claims examiner says, "I want to tell you that I now see the scar. I'm sorry I denied it. We'd like to offer you $X to settle the case."
Did $X settle the case? No. But $X + $Y settled the case ten minutes later.
And just around the corner, you could see the shadow of the settlement unicorn rear up on its hind legs in celebration.
DE FACTO couples disputing about property after splitting up, and siblings fighting over their parents' wills, are increasingly using mediation rather than dragging their battles through the court system.
The latest figures show that NSW Supreme Court registrars had done as many mediations in the first half of this year as they had done in total last year as people realised they could sort out their disputes on their own terms, in privacy, rather than in front of a judge, the Attorney-General, John Hatzistergos, said.
Most disputes were resolved without going any further, freeing up courts and judges for other matters, he said. "It is very encouraging that so far this year 59 per cent of the mediation sessions have concluded with the litigants resolving their dispute," Mr Hatzistergos said.
Before further discussing the problems created by the Thottam holding,I'm providing a "brief" of the case about which I ranted and raved earlier here today.
A mediation confidentiality agreement entered into by the parties in Thottam provided that “all matters discussed, agreed to, admitted to, or resulting from ... [the mediation meeting]...
"shall be kept confidential and not disclosed to any outside person . . . ;
"shall not be used in any current or future litigation between us (except as may be necessary to enforce any agreements resulting from the Meeting), and,
"shall be considered privileged and, as a settlement conference, non-admissible under the California Evidence Code in any current or future litigation between us.”
One of the parties contended that a chart drawn up and signed by the parties during the mediation,
was sufficiently certain to be enforced according to its terms; and,
was admissble into evidence under section 1123(c) despite its failure to satisfy any of 1123(c)'s requirements.
Evidence Code section 1123(c) provides that a "written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure . . . if
"the agreement is signed by the settling parties and any of the following conditions are satisfied . . .
"(c) all parties to the agreement expressly agree in writing . . . to its disclosure."Id. (emphasis added).
PROCEEDINGS IN THE TRIAL COURT
Without finding that the settlement "chart" constituted a "written settlement agreement" under section 1123, the Thottam trial court required one of the parties to testify about otherwise confidential mediation communications because the Confidentiality Agreement required the disclosure of mediation confidences "necessary to enforce any agreements resulting from the [mediation.]"
Apparently before Elizabeth could testify, the civil action to enforce the alleged settlement agreement was consolidated with other proceedings in the Probate Court,
at the trial of the consolidated matters, the Probate Judge refused to accept the settlement chart into evidence because it did not comply with the provisions of section 1123(c).
THE APPELLATE DECISION
the appellate court reversed the Probate Court's decision.
Section 1123(c)'s requirement that all parties to a mediated settlement agreement "expressly agree in writing . . . to its disclosure,"
may be satisfied by terms contained in a writing other than the alleged settlement agreement itself; and,
may be satisfied by terms contained in a writing executed before any alleged settlement agreement has purportedly been entered into.
Here, the Confidentiality Agreement satisfied those requirements; and,
The skeletal written settlement chart was enforceable because its material terms were, or could be made, certain.
Because the proceeding in which Appellant attempted to introduce the alleged settlement agreement was an action "to enforce what he claims is a settlement agreement reached in mediation," and,
the parties carved out of the Confidentiality Agreement any discussions that were "necessary to enforce any agreements resulting from the [mediation]"
the Confidentiality Agreement satisfied the requirements of section 1123(c); and,
the skeletal Settlement Chart was therefore admissible in evidence under that subsection.
This opinion threatens to blow a hole in sections 1119 and 1123 large enough to obliterate their protections -- protections thathave been repeatedly enforced to the letter of the law by the Supreme Court in its fairly recent Fair v. Bahktiariopinion -- holding that parties to a mediated settlement agreement must include in it an express provision that they intend to be bound thereby -- and Simmons v. Ghaderi in which the Court held that parties cannot impliedly waive confidentiality nor be estopped from asserting it.
Most Confidentiality Agreements I've seen (and used) naturally carve out an exception for the enforcement of a settlement agreement. If you sign such an agreement after Thottam, you risk the enforcement of a non-1123-compliant "settlement agreement" and risk being required to disclose otherwise confidential mediation communications on the sole ground that one of the parties alleges that the opposition entered into an enforceable settlement agreement during the mediation.
Were I attempting to resist the disclosure of mediation confidences my adversary claimed should be fair game under Thottam, I'd contend that the Thottam Confidentiality agreement, and hence its carve-out, was unusually broad and that the Court's holding should therefore be read narrowly and limited to its facts.
As California lawyers know, the Second Appellate District has jurisdiction over matters litigated in the Los Angeles Superior Court. It is therefore particularly important to take a look at the impact this decision might have upon matters mediated by the neutrals on that Court's pro bono or party pay panels. All such parties are required to sign a Confidentiality Agreement that protects from disclosure all mediation-related "written" and "oral communication[s] made by any party, attorney, neutral, or other participant in any ADR session" except "written settlement agreement[s] reached as a result of this ADR proceeding in an action to enforce that settlement."
Under Thottam, a colorable argument could be made that the mandatory Superior Court Agreement's confidentiality "carve-out" should be treated as either:
an express agreement by the parties to waive confidentiality for the purpose of enforcing "written settlement agreement[s]" even if they do not satisfy the requirements of section 1123(c); and/or,
a part of the alleged settlement agreement so that the two agreements together (confidentiality carve-out + non-compliant settlement agreement) satisfy the requirements of section 1123(c).
What to do? Don't sign any Confidentiality agreement that could possibly be interpreted in a manner similar to the one subject of Thottam unless you want to risk the disclosure of mediation confidences arising from a writing that does not comply with section 1123(c).
You can certainly refuse to sign the Superior Court's agreement in light of the Thottam holding. I don't know as a matter of Court policy whether that limits parties' ability to use the Court's pro bono or party pay mediators.
I'd have to say that this case puts confidences made in mediation sessions controlled by the Superior Court's Confidentiality Agreement at risk whenever one party is contending that the other entered into an agreement pursuant to a signed term sheet.
it turns upon the interpretation of one ambiguous sentence in the parties' confidentiality agreement which I'm almost certain was not meant to create an exception to (or satisfy the requirements of) Evidence Code section 1123(c)
it shows a remarkable persistence in the trial and appellate courts of the desire to enforce term sheets in non-compliance with the Evidence Code, privileging finality over the the parties' reasonable expectations that all the proclamations about confidentiality will be honored.
it creates uncertainty in the law, making it difficult for attorneys to guide their clients before, during and after mediation proceedings.
This is a ripe area for malpractice actions -- binding parties to agreements they later claim were not reached. The Supreme Court keeps saying -- we mean what we say (Simmons v. Ghaderi) -- no exceptions to the requirements of 1123(c). Nevertheless, the trial and appellate courts find enforcing skeletal mediation term sheets (this one was a chart) nearly irrisistable. They just can't seem to get their minds around the idea that the point of mediation -- a non-legal process -- is to create a durable agreement that the parties all want to enforce.
If a mediated agreement were a consumer contract, there'd be a cooling down period during which the "buyers" could re-think a decision made in the heat of the moment with mediators and attorneys leaning on them to settle or else . . . . you know . . . whatever the parade of horribles is.
I'm not suggesting that mediators and attorneys know they are abusing the power of their position and authority to "persuade" the parties to accept a settlement that leaves the taste of injustice in their mouths. We just sometimes forget how much power we possess and how overwhelming our importuning can feel to someone unfamiliar with the legal system. Think about how helpless you feel trying to communicate with someone who speaks another language.
I've observed mediations in which the mediator -- repeatedly and, it can only be said, deliberately -- abuses his or her authority to gain the consent of parties who are clearly not comfortable with settling their case on the terms proposed and are certainly not satisified with the "deal."
Keep 'em in the room; wear them out; highlight their fears; diminish their hopes and then, when they're at their weakest, put a pen in their hand, ask them to sign and then elevate that signed agreement above all else because what we're after here is efficiency, brother, not justice -- a term too many mediators feel forced to put in quotes. "Justice." As if it could possibly be anything other than a cynical joke.
OK. I misused this post to rant.
I'm going to come back and "brief" this case for you next, highlighting the traps for the unwary and commenting on the form agreement used by the Los Angeles Superior Court ADR panel -- a form that is now mandatory.
HEAD'S UP FOR THE NEXT POST NEW LAW STUDENTS -- THIS IS WHY IT'S IMPORTANT TO LEARN HOW TO DE-CONSTRUCT A LEGAL DECISION AND TEASE OUT THE HOLDING FROM THE RATIONALE, THE RULES AND THE DICTA.
This Met News report, accurate as it is, doesn't do justice to the traps and troubles lurking here.
Evidence Code Sec. 1123(c)'s exception to mediation confidentiality--providing that a written settlement agreement prepared in mediation is not made inadmissible or protected from disclosure if signed by parties, and all parties expressly agree in writing to disclosure--applied in appellant's civil action to enforce chart prepared during mediation and signed by all parties which appellant claimed was a settlement agreement because estate beneficiaries, in agreement to mediate dispute over distribution of assets, agreed all matters discussed or agreed to in mediation would be kept confidential and not used in any litigation among them "except as may be necessary to enforce any agreements resulting from" mediation, and because chart--setting forth material terms which were sufficiently certain to provide a basis for determining what obligations to which parties had agreed--was a "settlement agreement."
Estate of Thottam - filed August 13, 2008, Second District, Div. Four Cite as 2008 SOS 4917
This is how you know I'm still as much a lawyer as I am a mediator.
The answer is yes and no.
But you can help change the "no" to a yes.
That's the hope part.
Here's the dispiriting part --The answer will not become "yes" if the parties continue to primarily engage in position-based distributive bargaining sessions in separate caucuses.
My own professional experience (and the behavioral research of which I'm aware) suggests that Mr. Kennerly's Unicorn will only come into a room in which an interest-based negotiation is taking place, one in which there is at least one joint session among the baragaining parties.
But first a story.
This very morning I failed to settle a very small case that is poised to become a very big case with cross-actions for legal malpractice and malicious prosecution.
The delta between the Plaintiff's final demand and the defendant's final offer?
And I offered to throw in half the delta myself by making a contribution to the presidential candidate/s of the parties' choice. Shock value.
The parties' failure to achieve settlement couldn't have been about money could it?
Why not? Because it was economically irrational not to settle. Which is not unusual. Because there is no rational economic man.Because we are incapable of making a decision in the absence of emotion. /**
Although some economic decisions are made outside a social context, they are a minority. Social dynamics, many economists believe, are at the core of economic decision making—that is, decision-making about resource acquisition and expense allocation. What I decide affects you, what you decide affects me, and, even more to the point, I care how I fare economically compared with how you fare.
I send a client a bill for $15,000. He pays $9,000, refusing to pay the additional six because he believes I didn't earn it or that I did my job badly or that I didn't communicate to him all of the items I would naturually include in my bill. There is a written agreement but no attorney fee clause. It will cost me at least $3,000 in attorney fees to collect the six. My client offers to pay me half of what is owed.
Do you have the hypothetical in mind? What would the rational economic man do?
The rational economic man would take the $3,000 because he cannot do better at trial.
Did rational economic man appear at the mediation this morning? Of course not. Because he is a Unicorn! He doesn't make decisions based upon numeric calculations or emotionless cost-benefit analyses -- which is why I knew the parties would not accept my gap-closing political contribution suggestion (whew!)
Why Rational Economic Man is a Unicorn
In a social-economic experiment known as the Ultimatum Game, many researchers have found that when one party offered less than half the money subject of the game, "the other player often rejected it, even though by doing so he end[ed] up with nothing." Id. Dugatkin describes the results of one research project involving this Ultimatum Game as follows:
Alan Sanfey, Ph.D., and his colleagues at Princeton University examined the Ultimatum Game with 19 subjects in the role of responder and . . . observe[d] their brain activity. They found that when unfair offers (deﬁned as those of less than half the resource) were made, responders often rejected them. As they did so, the area of their brains associated with negative emotional states (in this case, the bilateral anterior insula), rather than those associated with complex cognition (in this case, the dorsolateral prefrontal cortex) were most active. The more the offer deviated from fair, the more active was the bilateral anterior insula when such an offer was rejected. Anger at being treated unfairly by other players appeared to override rational economic reasoning. In the minority of cases when the offer was accepted, the dorsolateral prefrontal cortex was most active.
We, like the capuchin monkeys mentioned yesterday, will deprive ourselves of thousands, tens of thousands, even millions of dollars if we believe the compensation being offered is so little related to our value or our loss that it seems unfair. We will not pay money at the point of a gun nor accept money offered to us by villains or cheapskates.
Mediation, Money and Justice
In today's semi-hypothetical mediation, the $3,000 offered felt too unfair to the plaintiff and the hypothetical $6,000 demanded felt too unjust to the defendant for the parties to reach a rational economic deal. The parties' potential to achieve settlement was also seriously undermined by the degree of anger they expressed toward one another and the way in which they had villified one another - "rich deadbeat" on one side and "dishonest fiduciary" on the other.
I am neither magician nor miracle worker. Nor am I in the social work or therapy business. I do, however, know that when parties to a lawsuit are hopping mad and believe that the opposition behaved immorally, money is unlikely to change hands.
In an effort to defuse the anger and de-demonize the parties, I held two joint sessions -- one that was not coached and one that was. Then I separated the parties for the purpose of conducting a distributive bargaining session (she offered x; he counters with y, etc.)
In both the joint session and in the separate caucuses, I strove to humanize the parties for one another; attempted to reframe their behavior in a less villianous light; and, assisted them in conducting as rational a cost-benefit analysis as possible. I also helped the parties reality test their beliefs about the likely outcome at trial and to evaluate the likelihood that the strength of their feelings today would translate into a hearty appetite for further, higher-stakes litigation two years down the line.
So What Can You Do?
I would love to deliver a stirring tale of a heroic mediator helping parties settle their dispute in the early stages before the threatened action and cross-actions were even filed. But I can't. This is more art than science and compared to my 25 years of experience as a litigator, I'm still a little green as a mediator after four years of full-time neutral practice.
Let me just say this. Mediating settlements in the early stages works more often than it fails, particularly if you do one or more of the following:
hire a mediator who can rock and roll with the process rather than one who is a one-trick pony -- head-banger, or evaluator, or prophet of doom; peacemaker, or rabble-rouser or King of the Distributive Bargain -- your mediator should be able to play all or any of these roles as the situation demands;
if you're angry and if you have villified opposing counsel or the opposition party, take a deep breath, sit down at your computer and write down the best, the mid- and the worst-case scenarios (I know you've done it already; but take a fresh look again right before the settlement conference)
share these evaluations with your client
if a trustworthy mediator with whom you've worked before suggests that it would be useful in joint session for your client to express his irritation, disappointment, anger or any other feeling that might interfere with his ability to make a rational decision, don't reject it out of hand
help your client de-demonize the opposition, reminding him that the "other side" is human and therefore fallible and is rarely downright evil
remind your client that many disputes that seem to arise from malicious conduct actually stem from faulty communication
know your bottom line and stick to it unless you genuinely learn something that makes you see the entire dispute in a different light, remembering that "a foolish consistency is the hobgoblin of little minds"
despite everything I've now said about litigants behaving irrationally, as I've written elsewhere in greater detail, Harvard negotiation gurus Deepak Malhotra and Max H. Bazerman suggest that negotiators too often confuse hidden interests and constraints with irrationality. The mistakes and solutions when this is the case?
Mistake No. 1: They are Not Irrational; They Have Hidden Interests -- find out what they are and you may well be able to resolve the dispute and settle the litigation without putting any more money on the table or making any further concessions;
Mistake No. 2: They are Not Irrational; They Have Hidden Constraints -- keep one ear to the ground for hidden constraints, explore them with the mediator, opposing counsel or the opposing party; often those constraints can be problem-solved away;
Mistake No. 3: They are Not Irrational; They Are Uninformed -- listen and respond; respond and listen. You will find that EACH of you is uninformed about something that will likely make a genuine difference in the manner in which the litigation is resolved.
If your opponent cannot or will not see reason, there's always the joy of just trying the darn thing.
Max Kennerly over at Litigation and Trial has graciously and profusely responded to our call for comments about the road-blocks to achieving optimal negotiated resolutions to litigated disputes.
Because Max and I are straining toward the same goal every litigant does when the burdens of a lawsuit begin to outweigh its anticipated benefits, I'm going to include my readers in the conversation.
Our Interests are Adverse, Not Mutual or Intertwined
Max suggests that the hypothetical "business school" negotiated resolution doesn't provide litigators with much guidance in resolving litigated disputes because the buyer-seller-mutual-or-intertwined-interest template cannot be comfortably laid over a conflict between parties whose interests are entirely adverse. As Max explains:
The parties to a lawsuit do not have intertwined interests: they have directly adverse interests. Unless there's some possibility of a future relationship, the defendant doesn't want to resolve the conflict: they want the plaintiff to drop their frivolous claim. In their mind, their best alternative to a negotiated agreement ("BATNA") is for the plaintiff to crawl in a hole and die.
Same with the plaintiff. Unlike buyers and sellers, who usually don't get much joy out of their 'conflict' as a conflict, the plaintiff usually prefers imposing a conflict on the defendant (who the plaintiff believes cast the first stone) in pursuit of justice, an imposition they will only relieve for at least "full" compensation.
The problem is that most parties don't consider their claims to be assets; the problem isn't that there's emotional baggage around the economic understanding, it's that the parties interpret their dispute as fundamentally non-economic.
Before moving on to adverse/intertwined/mutual interests, I want to emphasize that what the parties "interpret . . . as fundamentally non-economic" is the key to the settlement of litigated disputes -- not a roadblock.
Nor can the feelings that accompany litigation be called "emotional baggage" unless we interpret the desire for justice as pathology.
People seek out lawyers rather than therapists to resolve the emotional issues that accompany conflict -- because they believe themselves to be victims of injustice and lawyers are in the justice business. Our clients have not simply suffered an injury (tripped over their own feet) but have a wrong (stumbled over a trip wire placed in their path by a malicious or careless actor). We can explain until we're blue in the face that money is the only remedy the law can provide. Our clients will continue to seek justice and will not easily settle for money alone.
"The Unicorn Settlement"
Max asks that I acquaint him with the Unicorn -- the state "where two hostile parties on the verge of a lawsuit get lawyers, almost file suit, and then, through deft representation, settle their differences peacefully and move on" Unicorns. Excluding business disputes where the parties have an existing and potentially mutually beneficial on-going relationship, this type of settlement, says Max, is a myth. He explains:
I entered the law expecting The Unicorn to be rare but real; by this point, I have been trained by defense lawyers not to bother to check for it. I still usually do, throwing out what I think is a perfectly reasonable offer early on, which is routinely ignored or dismissed by a letter that gratuitously refers to my claims as baseless, frivolous, or made in bad faith.
So that's my biggest question to you: how do you suggest I get defendants, prior to the courthouse steps, to even enter the mindset that there's a valid claim and mediation / settlement should be considered? Reframed in words closer to your post: what can I do to (a) get the joint session to happen and (b) ensure everyone's in the right mindset?
The Conditions in Which Unicorns Flourish
When I started practice -- in 1980 -- I did so in a small community -- Sacramento -- where everyone was a "repeat player" with everyone else. Perhaps more importantly, you could file a suit in year one and try it to a jury in year two. Not only defense counsel, but insurance adjusters, knew which plaintiffs' attorneys would try cases and which would not. They also knew which ones could persuade a jury to bring back a hefty award.
Though I only handled personal injury litigation for my first two years of practice (after which I changed firms and moved on to commercial litigation) I saw dozens of "unicorns" in my first few months of practice. As the junior-most attorney in a small P.I. practice, I settled hundreds of cases without ever filing a lawsuit -- on the telephone with insurance adjusters. (A really, really good reason to leave PI practice, but that's another story).
I settled these cases in the world of "three times specials" at a time when and in a place where everyone knew one another and used a common metric to evaluate potential liability and damages. In that environment, Unicorns flourished.
Unicorn Hunting in the 21st Century
Max isn't asking me to shoot ducks in a barrell here. He's asking me to deliver the holy grail of mediation -- how to convene an early settlement conference in which the parties (and their attorneys) are united in a desire to settle litigation without protracted discovery or pre-trial procedural wrangling.
I hate to keep leaving my readers on the edge of a satisfactory resolution, but I DO have work to do and will return to this -- and Max's further observations -- soon, really soon. Stay tuned. And join the conversation by leaving your own comments here.
most . . . plaintiffs who decided to pass up a settlement offer and went to trial ended up getting less money than if they had taken that offer . . .
Plaintiffs, however, are not the only ones who made the "wrong" decision -- defendants were mistaken in 24% of the cases. Defense errors, however, were far more costly.
getting it wrong cost plaintiffs . . . about $43,000 . . . For defendants, who were less often wrong about going to trial, the cost was . . . . $1.1 million.
What to do?
It's no answer to say " take the last best settlement offer," though one party or the other will 80 to 90 percent of the time and often on the courthouse steps, i.e., at the point of a gun when decision-making is at its most flawed.
Nor, I must concede, is the answer simply mediation, which is, after all, pretty much a pig in a poke. Why? Because mediation practice ranges all the way from
to a mediator who knows only how to repeat "trial is expensive and the result uncertain"
to a settlement officer who does nothing more than shuttle numbers back and forth between two rooms
to a "transformative" mediator who allows the parties free reign to "vent" their "feelings" without helping them get a grip on the very real and serious consequences of the negotiated resolution that has been proposed to them.
A friend of mine who is a psychoanalyst once told me that patients get better in therapy despite their analysts' "technique." It's the relationship that's curative, she told me. A patient in need will find the water of healing in the desert of a therapist's theory. If the same can be said of mediation -- that it's the relationship that's curative -- the question that naturally arises is whose relationship?
fundamental attribution error -- the tendency to over-emphasize personality-based explanations for behaviors observed in others while under-emphasizing the role and power of situational influences and reversing this error when the behavior at issue is our own.
Just-world phenomenon — the tendency for people to believe that the world is "just" and therefore people "get what they deserve"
We get so stuck in our positions that we fail to ask diagnostic questions that have been proven to result in significantly better negotiated outcomes for both parties.
My friend Judge Alexander Williams -- the soon to retire full-time settlement Judge in the downtown Los Angeles Superior Court -- has the following poster hanging in his jury room.
The surface is what the lawyers know.
The depth and breath; the texture and particularity; the details of the dispute and the desire for justice that exists on both sides, is known only to the litigants. And they haven't (and won't) tell you what they know or want.
Why you should never leave a mediation or settlement conference without letting a skilled mediator facilitate a joint session in which the litigants can explore their joint interests and conflicting goals will be the subject of my next post.
"What happens," asks Katz, "when a mediator is accused of breaking mediation confidentiality, the thing many mediators say is essential to their craft?"
The answer: probably nothing.
As Katz reports, the Simmons v. Ghaderi opinion that made mediation confidentiality iron-clad, arose from a mediation in which the neutral provided a sworn declaration to the Court reciting "details about [his attempt] to persuade Ghaderi to sign her consent," among other things.
Ron Kelly, an architect of the state's confidentiality statutes, opined that the Declaration filed by the mediator in the Simmons case breached "Evidence Code Section 1121, which forbids mediators, in most instances, from reporting to the courts anything that takes place in their mediations." Kelly concluded by saying,
If you were going to go after a mediator for malpractice, it seems like an open-and-shut case of violating the law would be a good start, don't you think?
Yes I do. Yet local attorneys and mediators seem unconcerned. Lucie Baron of ADR Services told Katz thather panel of neutrals had no policy on the matter because the mediators -- after all -- are attorneys and independent contractors to boot. They don't, she noted, ask her for legal advice.
Not a bad call on Baron's part. But what about the neutrals?
Their lack of attention to the spectre of "open-and-shut" malpractice litigation is perplexing. Though the Simmons mediator could colorably claim that the law of confidentiality was unsettled at the time he submitted his declaration -- or that the factual scenario before him permitted the disclosures made -- in a post-Simmons environment, neutrals cannot be so sanguine. Any disclosure of any communications during a mediation by the neutral would likely be actionable so long as it caused one of the litigants appreciable harm.
When someone is unhappy with a result -- as too many litigants of mediated settlements are /* -- they search the field for people to blame.
So far, mediators haven't been among the potential culprits.
I wouldn't count on that situation lasting much longer.
There's been some salacious commentary (such as WAC's Like a Vixen) about Blawg Review # 171. I just want to say to anyone who missed the sexual revolution -- on either side of the generation gap -- we're sorry to have started it all. We just never really left high school.
We've also heard some complaints that the most recent Blawg Review is just too darn long. In honor of our sister blog and those attorneys who are still billing 2400 hours/year, we give you the IP Executive Summary of the Virgin Blawg Review #171 below.
My late mother, aleha ha-shalom, told me repeatedly that I had a religious obligation to learn every day, and I have honored her memory by doing exactly that. Learning also involves changing how you think about things; it doesn't only mean reinforcing the existing views you already have. In this respect, Second Circuit Judge Pierre Leval once said that the best way to know you have a mind is to change it, and I have tried to live by that wisdom too. There are positions I have taken in the past I no longer hold, and some that I continue to hold. I have tried to be honest with myself: if you are not genuinely honest with yourself, you can't learn, and if you worry about what others think of you, you will be living their version of your life and not yours.
Other IP bloggers have, of course, reflected on Patry's Final Blog Words here and here.
The IP Dispute of the Week, of course, is Hasbro's suit against Rajat and Jayant Agarwalla for their Facebook hit Scrabulous. Scrabble itself was invented during the Depression by Alfred Mosher Butts, an out-of-work architect. How did he do it? As the New York Times explained in its review of Steve Fastis book, Word Freak (Zo. Qi. Doh. Hoo. Qursh)Scrabble's inventor assumed that the game would work best if the game letters "appear[ed] in the same frequency as in the language itself." So he
counted letters in The New York Times, The New York Herald Tribune and The Saturday Evening Post to calculate letter frequencies for various word lengths. Playing the game with his wife, Nina, and experimenting as he went along, Butts carefully worked out the size of the playing grid (225 squares, or 15 by 15), the number of tiles (100), point values for the letters, the placement of double- and triple-score squares, the distribution of vowels and consonants, and so on.
If Player 1 opens with "fringe" (double word) for 24 points; Player 2 follows by slapping an "i" on the triple word score followed by an "n" for "infringe" and 33 points; and, Player 1 responds with "ment" for 19 points, the combined score for "infringement" is 75 points. Our readers can do the math and moves on "trademark" and copyright."
"a new studio tactic [is] not to prevent piracy, but to delay it . . . Warner Bros. executives said [they] prevent[ed] camcorded copies of the reported $180-million [Dark Knight] film from reaching Internet file-sharing sites for about 38 hours. Although that doesn't sound like much progress, it was enough time to keep bootleg DVDs off the streets as the film racked up a record-breaking $158.4 million on opening weekend. . . The success of an anti-piracy campaign is measured in the number of hours it buys before the digital dam breaks.'"
Next week, the Blawg Review will be hosted by the Ohio Employer's Law Blog which we expect will be far more respectful of BR's readers' political, religious and sexual sensitivities than this one was. Thanks for letting us play. And a very, very, very good night!
Check out Underdog's Blog post Practicing non-anger if you're feeling stressed and cranky. Because there's a riot of unruly pre-school children residing inside of me, I too center myself as often as possible by remembering that everything is internconnected. Here's what DUI attorney Jon Katz does to keep himself from boiling over.
One approach I try to use in staying consistently calm and not angry is in focusing on how everyone ultimately is interconnected. Those who reach such a view from a deeply-held religious perspective -- which I do not, still remaining an agnostic who is into Judaism and Buddhism nonetheless -- might have an easier time sticking to the view than I do.
In any event, the more we see that we are interconnected, the less we will be tempted to cause disharmony to others and the more we will want to help everyone rise as we rise, and not to try to pull them into a ditch even if we find ourselves in one.
I was just telling Mr. Thrifty over the dinner dishes that my life as a litigator got far far better when one of my biggest and most enduring pieces of litigation was assigned to Judge Carolyn Kuhl over at the Complex Court here in Los Angeles. She set such an even-tempered example that opposing counsel and I aspired to live up to it. We wanted to please her. Everything got better after that.
That led me to think about the way Judges' ill tempers effects their dockets. The Judge bats the attorneys around the courtroom like cat toys and they begin to behave like caged animals on an electrified grid. The attorneys behave badly and that irritates the Judge who demeans and belittles them. The attorneys then demean and belittle each other and everyone is trapped in the vicious cycle.
Maybe if Judges realized that they have this effect on attorneys, they'd adjust their own attitudes and see the attorney wrangling before them chill out a little.
I will, however, provide the appellate court's comment on human fallability -- a recognition we all need to carry into any settlement conference or mediation with us. Vast conspiracies are the rare one-off. As Al Gore once said -- we think we can evacuate the planet but not New Orleans? It's our human capacity for error coupled with our human tendency to search the field for someone to blame that accounts for most unresolved conflict. Here's the local Met News article on the opinion and the appellate opinion itself (from our own Second District here in Los Angeles):
"The jury system is fundamentally human, which is both a strength and a weakness. . . . Jurors are not automatons. They are imbued with human frailities as well as virtues. If the system is to function at all, we must tolerate a certain amount of imperfection short of actual bias. To demand theoretical perfection from every juror during the course of a trial is unrealistic."
Assuming your client insists on orally memorializing the settlement reached in mediation, you must comply strictly with Evidence Code Sections 1118 and 1124. An oral agreement reached during a mediation can be proven and enforced only if (1) its terms are recited to a court reporter or recorded by a sound device in the presence of all parties and the mediator, (2) the parties expressly agree to those terms on the record, (3) the recording is reduced to writing and signed within 72 hours of its recordation and (4) all parties to the agreement expressly agree in a writing, in the sound recording or in the reported record that the signed written transcript may be disclosed.
Th[e] procedure for enforcing an oral settlement is so technical and cumbersome . . . (counsel and mediators rarely have court reporters standing by or tape recorders in their breast pockets), that we recommend against it.
We instead suggest that the parties document all settlements in writing, even if the writing contains only skeletal deal terms and even if someone has to begin drafting it at 2 a.m. The agreement should provide that the parties intend it to be enforceable or binding and that all parties expressly agree in writing to its disclosure. . . . If an action is pending between the parties, the memorandum of understanding should be made enforceable under Code of Civil Procedure Section 664.6.
See also the Supreme Court's decision in Fair v. Bhaktiari, interpreting the phrase "words to that effect" in section 1123(b) as requiring a written mediated settlement agreement to "directly express the parties’ agreement to be bound by the document they sign."
Almost right will not do. You must strictly comply with these provisions or your mediated settlement agreement will not be enforceable.
“Because litigators rarely win or lose cases, they derive job satisfaction by recasting minor discovery disputes as titanic struggles. Younger lawyers, convinced that their future careers may hinge on how tough they seem while conducting discovery, may conclude that it is more important to look and sound ferocious than to act co-operatively, even if all that huffing and puffing does not help (and sometimes harms) their cases. While unpleasant at first, nastiness, like chewing tobacco, becomes a habit… Without guidance as to appropriate conduct from their elders, either at the firm or at the bench, it is easy for young lawyers not only to stay mired in contumacious, morally immature conduct, but to actually enjoy it.” D Yablon, “Stupid Lawyer Tricks: An Essay on Discovery Abuse” (1996) 96 Columbia Law Rev 1618.
Noting the benefits of appellate mediation and the desirability of participants attending in person, a California appellate court warned insurers in Campagnone v. Enjoyable Pools & Spas that even the potential of coverage requires a representative with full settlement authority to attend court-ordered appellate mediations in person, unless excused in writing by the mediator. Further, the court warned parties and counsel that they may also face sanctions if they fail to notify insurers with potential coverage about appellate mediations. The court noted that California’s strict mediation confidentiality provisions prevent mediators from disclosing whether anyone fails to attend, but that an aggrieved party may do so in seeking sanctions from the court. The court withheld sanctions in this case only because no previous opinion had spelled out these requirements, even though the insurer was only liable for amounts in excess of $3 million and the judgment in the trial court was $2.4 million.
And thanks to arbitrator and mediator extraordinaire Deborah Rothman for passing this along to me. (speaking of gender politics, Deborah graduated with the first class of women to be admitted to Yale University)
This just in from the Met News for California practitioners.
Where minor entered a settlement agreement with a third party tortfeasor by and through a guardian ad litem, and court made an allocation of the medical expenses portion of the settlement in the order approving plaintiff’s compromise, trial court did not err in rejecting plaintiff's later motion to reduce the amount of Medi-Cal lien against settlement proceeds by the same percentage that the settlement bore to the overall value of plaintiff’s case.
Question: how do you determine the "overall value" of the plaintiff's case in order to reduce the lien by the same percentage that the settlement bears to that value? Declaration by the Plaintiff's attorney? Anyone who's actually read this case, do let my readers know!
Before you run over to Gini's site to read Lande's excellent post or his great article, I'd like to simply bullet-point some observations based upon my four-years of full-time mediation and arbitration practice.
when I co-arbitrate with some of the best commercial arbitrators in the business -- these are Ivy League lawyers with many decades of experience representing Fortune 50 Companies in AmLaw 100 Law Firms, the ultimate decision changes many times during the course of deliberations and almost always could go either way.
having spent a considerable time in the Los Angeles Complex Court as an experienced commercial litigator "externing" for credit to earn my LL.M in '06, I can tell you that the deliberations in chambers of these highly respected jurists is not much different that those in which I have engaged when sitting on an arbitration panel
The take away? No matter who is hearing your case, your chances of winning are 50-50. Flip a coin. Think this doesn't apply to you? I have arbitrated cases being handled by the top ten law firms in the country. I have seen those same type of firms litigate and try cases in the Complex Court. It's 50-50 friends.
Below -- observations on how you and your mediator can be "happy together." (And the Turtles from 1967 so that you can have a little musical accompaniment to this post)
Observations of End-Game Litigation from a Mediator's and Settlement Consultant's Perspective.
Despite years of inquiry and the review of millions of documents, sophisticated parties (Fortune 50) represented by dynamite law firms (AmLaw 50) haven't yet learned the most fundamental information about the following matters -- most of which are more important to the settlement of the case than the cost-detriment-benefit-position-driven-chance-of-victory settlement posture:
what are the hidden interests that your opponent must satisfy before accepting a settlement that is below the number he once told his client should never under any circumstances be accepted?
what are the hidden constraints upon your opponent's authority that must be removed before he can pay more money than he once told his client should never under any circumstances be paid?
why was this litigation initiated in the first instance?
who gave the litigation the "green light"?
what are the probable consequences to the continued financial security of the person who gave the litigation the "green light" in the first place or who has authorized the defense bills for the last 5, 10, or 15 years?
is the person who green-lighted the litigation in the first place still employed by your client?
what are the probable consequences to the financial well-being of the corporation who must pay more than it wishes to pay or accept less than it wishes to recover?
Who is the most frightened person in the room, i.e., whose hide might be sacrificed if the litigation settles for more/less than predicted, or, often worse, actually goes to trial.
There are so many of these settlement-driving and -inhibiting questions that only my own personal time contraints -- I must start my day's work -- make me stop listing them.
Let me conclude with this however. Never underestimate your client's reluctance to settle the case on terms that seem unjust to it. This is the most important function a mediator can play on the day of settlement -- explaining justice issues to the clients and helping the clients de-demonize their opponent -- which occurs most easily in JOINT SESSION yet which most litigators would rather have their teeth drilled than attend.
O.K. I can't conclude without saying this. If you have the courage to try a case, you possess the cajones to participate in at least one joint session to help the parties come to terms with the justice issues -- which are often driven by the conclusion, affirmed over and over again in the course of the litigation, that their opponent is an evil, mendacious, grasping, greedy, malicious, duplicious lying liar with his pants on fire.
This is almost never true. The parties on both sides almost always possess equal parts of good and bad, just like the rest of us.
Let your parties re-adjust their perception of "the enemy" in joint session. I can almost guarantee you that a conversation will ensue in which the parties spontaneously tell each other what interests they really need to satisfy to settle and what constraints they are really working under. And I don't guarantee a lot of things.
Why can't I do this for the parties?
Because often neither side will disclose these matters to me because they don't trust that I won't use that information to help settle the case and because the parties won't believe what I say about their opposition in the first place (obviously, they've pulled the wool over my eyes).
"How do you know he's not lying?" is a question mediators are asked on a regular basis. My answer is "I have no idea." But if you let your client talk to the opposition -- with any constraints, restrictions and control you wish to retain -- which I can orchestrate for you -- your client will be able to elicit the details that give any story a ring of truth (or falsity) while at the same time watching the body language that constitutes between 60 and 80% of all communication.
Would you try a case without 80% of the information you need? Of course not! And yet you're content to avoid a joint session when that session could provide you with between 60 and 80% more information than you had when you arrived on the morning of the mediation or settlement conference?
Suspend your disbelief in the mediator ("who-will-do-anything-to-settle-the-case") for just a couple of minutes. Remember that we're in possession of confidential information we cannot divulge to you.
Take our lead. And if you don't trust us to do so, for heaven's sake find a mediator you can trust!
I take these criticisms very very seriously, repeating throughout any mediation session my opening assertion that my role is to present the parties with choices and to faciliate a settlement if they believe it may be better alternative to continued litigation, not to hustle them away from their right to a jury trial.
I would be far more successful in being "neutral" about proceeding to a jury trial if there were an easier, less costly, and speedier way to bring a dispute before a jury. We have, lamentably, permitted our cherished rule of law to become so procedurally encrusted that it sometimes seems like no option at all -- at least not an option available to all but the wealthy or those represented by lawyers willing to accept a contingent fee.
All of this troubles me. I invite comment at the same time that I provide the thoughts of some of our greatest statesmen and jurists about the right to trial by jury.
"There was not a member of the Constitutional Convention who had the least objection to what is contended for by the advocates for a Bill of Rights and trial by jury." (1788)
"Representative government and trial by jury are the heart and lungs of liberty. Without them we have no other fortification against being ridden like horses, fleeced like sheep, worked like cattle and fed and clothed like swine and hounds." (1774)
"I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution." (1788)
"Trial by jury is part of that bright constellation which has gone before us and guided our steps through an age of revolution and reformation." (1801)
"The wisdom of our sages and the blood of our heroes has been devoted to the attainment of trial by jury. It should be the creed of our political faith." (1801)
"Trial by jury in civil cases is as essential to secure the liberty of the people as any one of the pre-existent rights of nature." (1789)
John Quincy Adams
"The struggle for American independence was for chartered rights, for English liberties, for trial by jury, habeas corpus and Magna Carta." (1839)
Patrick Henry of Virginia [Patriot who said "Give me liberty or give me death!"]
"Trial by jury is the best appendage of freedom by which our ancestors have secured their lives and property. I hope we shall never be induced to part with that excellent mode of trial." (1788)
"The friends and adversaries of the plan of the convention, if they agree in nothing else, concur at least in the value they set upon the trial by jury; the former regard it as a valuable safeguard to liberty; the latter represent it as the very palladium of free government." (1788)
"The protection of life and property, habeas corpus, trial by jury, the right of an open trial, these are principles of public liberty existing in the best form in the republican institutions of this country." (1848)
Judge Stephen Reinhardt
"Our constitutional right to trial by jury does not turn on the political mood of the moment, the outcome of cost/benefit analyses or the results of economic or fiscal calculations. There is no price tag on the continued existence of the civil jury system, or any other constitutionally-provided right." (1986)
"Trial by jury is the best institution calculated for the preservation of liberty and the administration of justice that was ever devised by the wit of man." (1762)
Judge William Bryant [First African-American federal district court judge in D.C]
"If it weren't for lawyers, I'd still be three-fifths of a man." (2004)
Justice William O. Douglas
"The Massachusetts Body of Liberties was a new Magna Carta. It contained many of the seeds of the civil liberties which today distinguish us from the totalitarian systems, including the right to trial by jury." (1954)
Justice Hugo Black
"Our duty to preserve the Seventh Amendment is a matter of high Constitutional importance. The founders of our country thought that trial by civil jury was an essential bulwark of civil liberty and it must be scrupulously safeguarded." (1939, 1943)
Justice Ward Hunt
"Twelve jurors know more of the common affairs of life than does one man, and they can draw wiser and safer conclusions than a single judge." (1873)
The cost of a thing is the amount of life that you must exchange for it -- now or in the long run (Thoreau)
if you have an on-going relationship -- even as limited as a note payable -- squeezing the last nickel out of the deal may impair your bargaining partner's ability to perform
what goes up, must come down, i.e., squeezing out the last nickel creates enemies who none of us can afford when times are good, let alone when times are bad
taking advantage of another's weaknesses tears at the social fabric
it makes us all more watchful and less productive
it doesn't actually feel good to line your pockets with the misery of others
sometimes the downtrodden rise up -- every couple of centuries or so, creating an entirely new order -- the generous man and woman will not be on the wrong side of that revolution
global warming -- think about it -- the order will change as will the countries who will be asking for favors
you reap what you sow (I'm pretty sure I learned this in Sunday School)
social relations do not exist "out there" -- they are co-created by one person's relationship with every other person -- the society you inhabit is the one you create -- if you don't want your neighbor taking your last dime, don't take his
collaborative effort results in greater progress than individual activity -- if you decrease trust, you impede advancement in business, the arts and science
Readers! Can I count on you to give us all more reasons?
Here I am again hectoring litigators about their obligations to determine whether or not their clients have insurance, to decide whether that insurance might cover the claim or suit against them; and, make a timely demand for coverage, particularly under E& O claims made policies.
Professionals and business people hesitate before tendering "claims" to their insurance carrier because the no. 1 response to conflict is denial. This is particularly true where a professional's or business person's competence has been called into question. You don't want to admit that you might have committed malpractice to yourself let alone to your insurance carrier.
This is a particular problem for professionals because Errors and Omissions insurance generally requires claims to be both made and reported during the policy period. Often, litigators don't see clients until after they've been sued and clients generally don't get sued unless there's a previous demand letter (i.e., a claim).
So what's the very first thing litigation counsel must do? Get a copy of the E&O policy and the first demand letter. Tender the defense and indemnity of the action to the carrier immediately.
You might get a little fudge room by reporting the claim when suit is filed, but if your insured doesn't report the claim in its application for coverage the following year, the carrier will deny coverage on the ground of non-disclosure.
Come to think of it -- transactional attorneys should remind their clients of their obligations to report claims when made, no matter how feeble the claim may look. Take a look at yesterday's ruling on what constitutes a claim with thanks to the Met News for the summary and LACBA for the daily email summaries.
Where policy defined a "claim" as a written demand for civil damages or other relief commenced by the insured’s receipt of such demand, a letter from a third-party claimant’s attorney to insured informing insured that the third-party claimant had been subjected to discrimination and received a right-to-sue letter and suggesting a settlement constituted a claim. Although the letter did not expressly demand payment or refer to any specific amount, the meaning was clear that, absent some form of negotiated compensation, the claimant would sue. Where policy stated that all claims arising from the same events or series of related facts could be deemed a single claim, and third-party claimant filed litigation authorized by the right-to-sue notice mentioned in the letter, the lawsuit was part of the same claim as the letter under the policy. Where insured did not notify insurer of the claim until after the lawsuit was filed, insurer’s notification was untimely, and insurer was not required to tender a defense.
I get stuck in position-based negotiations as well. It remains a challenge for me, after 25 years of litigation practice, not to be sucked into the attorneys' arguments about why they are right. To help all of us in the mediation room . . .
[h]ere is a list of 8 questions you can ask yourself when you suddenly realize that you have to prepare for a negotiation. Use these to generate quick preparation for any negotiation.
1. What are my intended outcomes and interests?
This is about having your goal in mind but also about thinking about the bigger picture at the same time - if you're goal is to get to work on time, speeding to get there might seem like the right choice until the cop pulls you over.
2. What are their possible interests and outcomes?
Look at the negotiaion from their point of view. What do they really want from this?
3. What are some of the options of agreement?
Where are the points of agreement? Focusing on this beforehand will set a tone of reaching agreement rather than a tone of conflict.
4. What is my Plan B?
Once you've thought through the first three questions, what's your fall back position? Having your Plan B in mind gives you a feeling of options so if the deal goes to far against you, you are comfortable with your option B.
5. What is my worst case scenario?
Answering this question sets your "don't cross" line. You've predetermined what you're willing to give up and more than that is a deal breaker… that means you can negotiate confidently, since you know your direction.
6. What are some possible external standards?
External standard are outside measures that can move the negotiation away from personal stakes to measures from an outside authority. Examples might be interest rates, rate of exchange or time frame.
7. What is or are my reserve price / terms / limits?
Knowing what your limits are and then not not going past them results in more useful and enjoyable negotiation.
8. What is my game plan?
Map it out. What do you want and how are you going to get there?
It happened at a settlement conference again just last week. Defense counsel said there was "no insurance" for the defense orindemnity of a professional malpractice claim.
This naturally surprises me. Some professionals are required to have coverage or disclose its non-existence to their clients. No such disclosure had been made in this case.
"No insurance policy?"
"She has an insurance policy; there's just no coverage."
"Why did the carrier deny coverage?"
"The carrier said there was no coverage."
"I don't know. I'm not coverage counsel."
"Is there coverage counsel?"
"No. I told you there's no coverage. Let's get back to negotiating the settlement."
After obtaining (via fax) the policy, the demand and the denial, it turned out that there was a good reason for the carrier to deny coverage for the plaintiff's claim. But the denial letter expressly withheld comment on the existence of coverage for the defendant's principal, who had not failed to make a timely claim for coverage, and who had not yet been sued.
Call me an activist or a "fund raising" mediator if you will, but when there's not enough money to settle a case and the parties continue to wish it could be settled, I start asking questions about sources of available funds.
And, listen. Every litigator must be enough of a "coverage lawyer" to evaluate the likelihood that any existing insurance policy might provide defense or indemnity for the law suit you are defending.
So, if you are a commercial litigator -- or any type of litigator who defends your clients against claims -- you must
ask your clients for all of their insurance policies, even those that seem unlikely to provide coverage;
carefully review the precise wording of the policy's insuring agreements, paying particular attention to the language concerning the defense of claims and the deadlines for submitting those claims to the carrier;
research the case law in the relevant jurisdiction(s) to determine how the courts have interpreted the insuring agreements and other pertinent policy provisions contained in your clients' policies under facts similar to those alleged in the lawsuit you've been asked to defend;
except for some narrow additional protections provided to insureds, be aware that there is no such thing as "the law" of coverage under any particular type of policy -- all coverage flows directly from the precise language of the insuring agreement;
remember that in most jurisdictions, that language -- if ambiguous -- will be interpreted in favor of the insured's objectively reasonable expectations -- that means the law of coverage always favors your client's claim for coverage;
understand that in most jurisdictions the rule of contra proferendum will require a court to construe any ambiguity in an insurance policy against the insurance carrier, once again meaning that the law of coverage will favor your client's claim for coverage;
never accept the carrier's refusal to provide a defense without asking yourself -- or a coverage specialist -- why in the heck you should accept the carrier's word for it when you were born to contradict everything from "good morning" to "let's have lunch";
never conclude your client doesn't have coverage before tendering the claim; the response to the tender will outline the pertinent policy provisions in stark enough detail -- not to mention 12-point type -- and the denial in sufficiently weasley words to activate your B.S. meter;
if you finally accept the fact that your client's policy won't cover the defense of the litigation or indemnify your client in the event of a judgment, continue to keep the carrier informed of the litigation's progress in any event, inviting the carrier to attend all mediations and settlement conferences and to respond to all settlement demands;
remember that the law of coverage changes on a daily basis; read those coverage decisions sent down by your local appellate courts and subscribe to Mealey's on coverage remembering that a really good reason for a client to sue a lawyer for malpractice is your failure to give it reasonably informed legal advice about the availability of insurance coverage; and,
retain coverage counsel If the cost of the lawsuit is beyond your client's means or will deprive it of capital necessary to meet its business goals for the next few years.
The Defendants filed a motion to enforce the mediated settlement agreement [Guess why! Good guess!]. The Plaintiff argued that a “mutual mistake” allowed him to avoid the parties’ mediated settlement agreement.
Not so fast . . . .
Continue reading here. There are two solutions to this problem in any jurisdiction: (1) know your policy limits; or, (2) make your agreement to settle contingent on verifying them.
If you aren't using writs of attachment in contract cases where the amount due is certain, you aren't using the most powerful means of increasing your bargaining power in litigation.
Attend LACBA's Brown Bag Lunch with Judge James Chalfant at the Stanley Mosk Courthouse 111 N. Hill Street, Los Angeles on May 15, 2008. Program Description:
Writs and Receivers: Practice tips for those who are rarely there. Judge James Chalfant will host a brown bag lunch highlighting tips and tricks for those who may not have much experience in this area. There is no cost to attend, but participation is limited to the first 12 attorneys who register. The program will be held in the judge's chambers at Stanley Mosk Courthouse, Dept 85. Please note, there is no CLE credit for this program.
I promised you a series of posts on mediating complex and sophisticated commercial mediation.
Here's what I'm really most interested in doing -- starting a high level conversation among commercial litigators and commercial mediators about the best way in which we can help one another help your clients to achieve the best resolution possible to their commercial dispute and the legal problem/solution associated with it.
I'm always looking for the smartest guy or gal in the room because. I'm just a geek who really enjoys spending time with people who are savvy, astute, original well-read, and, well-spoken. These people tend to see things more clearly than I do and that clarity of vision often results in a way of approaching problems that generates better results in a shorter amount of time than is the norm.
One of the smartest guys in any room is AAA arbitrator and Judicate West mediator, Jay McCauley. O.K., he's Harvard Law and I'm just a state university girl. But pedigree doesn't matter to me. Brilliance and creativity does. Jay and I have recently spent a lot of time talking about the way we feel that we're sometimes talking past our attorney clients and they us. So we have plans to write some really interesting articles that we hope will help both mediators and attorneys achieve better results more consistently when they decide to settle, rather than to try, a case.
Jay's written a lot already. And because I'm now getting around 11,000 hits/month (!!yay!!) I've decided to simply pull up his existing articles on mediating particular commercial disputes before launching our jointly written posts. If any of those 11,000 monthly "hits" come from commercial litigators, we'd LOVE to hear back from you on this series.
That said, here's Jay's article on Wage and Hour Class Action Mediation.
There is no such thing as a "cookie cutter" mediation. Nonetheless, most mediations have, among other things, the following general characteristics:
At least four participants whose interests are not naturally aligned - Plaintiff, Plaintiff's counsel, Defendant and Defendant's counsel.
Little or no genuine concern that a settlement will foster future claims.
Some prospect of integrative, or "value adding," resolutions.
A rich body of applicable case law to serve as the empirical basis for risk-based claims valuation analysis.
A virtually unrestricted free market where almost any resolution agreeable to the parties can be turned into a contract fully enforceable by the courts.
Wage & hour class action mediation, by contrast, has none of these characteristics.
Mediating with Only Three Participants
All fictions aside, there are three, not four, interested participants in a wage & hour mediation. They are the defendant, its counsel, and the counsel for the class. Plaintiffs themselves (including the named representatives) are literally absent from the negotiation altogether, and are typically absent physically from the mediation sessions.
Any imbalance resulting from the absence of plaintiffs themselves is, in theory, "corrected" by an institutional device unique to class actions: the fairness hearing, in which a court imposes outside boundaries on the settlement for the protection of the plaintiffs.
Nonetheless, the absence of the plaintiffs themselves is significant. The court is not, in any sense, a substitute negotiator for the plaintiffs. It simply either approves or rejects the settlement agreement, in accordance with reasonably well-established standards, after the settlement has been negotiated by plaintiffs' counsel and the defense team.
The actual negotiators have a common interest in avoiding agreements so extreme that they will be either rejected by the court, or undermined by excessive "opt-outs" from the plaintiffs themselves. But subject to these outside limits, the three players at the negotiating table have an interest in maximizing two things: the portion of the settlement funds that goes to plaintiffs' counsel as approved fees; and the portion of the settlement funds available to be returned or otherwise used by the defendants.
The upshot is this: Plaintiff's counsel seek, and usually get, one third of the settlement funds as fees; amounts unclaimed by class members revert to the defendant to the extent the court permits ; and the stated settlement amounts include the resulting social security and FICA charges the company will have to bear as a consequence of the settlement - an amount that turns out to be 13.85% of the total paid to the class members. These terms are easily arrived at because those at the negotiating table can "give" each other these benefits, without cost to themselves.
The absence of the plaintiff also eliminates one of the most common challenges a mediator has to face in "ordinary" litigation - the challenge of plaintiffs resisting economically advantageous proposals because of a desire to use the courts to obtain perceived benefits that go beyond economics: retribution for perceived wrongs; public vindication; and principled refuge in the Rule of Law.
This not to say that the issues addressed in wage & hour class action mediations are entirely economic. But the non-economic issues characteristically arise from the defense side, and tend to break down into two categories. The first category is the common "principled" resistance to a fairly rigid statutory scheme that typically strikes defendants as entirely inconsistent with the statutory purpose and with common sense. Specifically, those rationally thought to be managers cannot be treated as exempt in California if the time they spend in identified categories of non-exempt functions (e.g. sales) happens to take up more than half their time. The "player-manager" may be thought of as a manager, but there will be exposure if he is paid like a manager, and that fact is a hard-to-swallow surprise for many companies.
The Defendant's Need to Deter Future Claims
Then there is the second form of defendant resistance to otherwise attractive settlement opportunities. This one is born of a genuine dilemma: the company concludes it cannot "turn managers into foremen" without losing the critical work incentives or esprit-de-corps or "company culture" that it concludes comes with classifying class members as exempt; but to "buy off" the class action claim through settlement without also turning class members into non-exempt workers for the future would be to inspire, by that act, endless waves, every three or four years, of new wage and hour claims.
These claims would come from new employees who are not collaterally estopped or otherwise bound by the class action judgment supporting the settlement. It would also come from its current employees, class members, who have a basis to argue their release can only apply to past "wrongs," but cannot release the continuing "wrongs" that take place after the release is entered into. Such companies are sorely tested take their chances at trial to escape the dilemma. The prominence of that question is an unusual hallmark of wage & hour mediations. And much of the focus of mediations I have handled has involved finding creative solutions to this very dilemma.
The Absence of Integrative Bargaining Opportunities
While there is a need to find creative techniques to subdue extraordinary needs for deterrence that wage & hour defendants will often have, there is a curious absence of opportunity to employ another form of creativity - that of finding integrative (rather than purely distributive) resolutions to the dispute. With one obvious exception , the "Jack Sprat" non-monetary exchanges that are the special joy of mediators - where parties give what's cheap to get what's dear, and thereby optimize the likelihood, as well as the quality, of the resolution - are not to be found in this arena.
The reason is not that negotiators in this specialty are not creative, but simply that the inherent nature of class actions virtually eliminates any prospect that the form of any exchange will be anything other than money. Specifically, one stricture of class actions is that similarly situated class members be treated uniformly, and the only uniform needs the members will have is the presumptively universal need for money. As a result, the nature of class action bargaining is heavily distributive, not integrative.
The Absence of a Rich Body of Case Law to Support Risk-Based Claims Valuation Analysis
It is a bit of an irony that a field which is so tilted toward distributive bargaining is also one in which mediators are essentially deprived of a major tool used to facilitate such bargaining - a substantial body of actual outcomes at trial in analogous cases to provide a realistic assessment of the actual risk of trial, and therefore the reasonable settlement value of a release. Because the large volume of wage & hour class actions is historically new, and because so few that do exist go to trial, little such evidence of likely outcomes in fact exists.
What girds the negotiation in the absence of that evidence? It is four things. First, the statutory scheme in this area is fairly administrable, and results are arguably more predictable for this reason even in the absence of extensive actual results.
Second, there is an extensive and ever increasing body of evidence of actual class certification decisions, and the factors relevant to class certification decisions in wage & hour actions are more closely related to the ultimate issues at trial than they are in other actions (compare, for example, securities fraud class actions, where the class certification issues have almost nothing to do with the significant issues at trial).
Third, some narrowing of the range of potential settlement is achieved by the fact that extreme low ball offers typically are not made, even preliminarily, because both sides know (or can be reminded) that there is a certain threshold that will not survive a fairness hearing, nor sustain the plaintiff's counsels basic need to preserve reputation in the context of a settlement record that (unlike the settlement of individual claims) is always public.
Finally, and perhaps most importantly, parties tend to be guided by a kind of "market price" for these claims - settlements tend to fall within a fairly well defined band established by publicly available information of what other cases have settled for relative to the total potential exposure in the case.
What is notable is that, given the fairly strict and administrable standards of liability set forth in the statutes, the market price of the claims is probably materially below the amounts that a standard risk-based discounted claims valuation analysis would yield. This probably makes sense in light of the various incentives of the participants. Defendants need attractive offers (relative to exposure) to overcome both non-economic resistance factors as well as the lack of extensive palpable evidence of trial results. Defense counsel, paid hourly, have, if anything, an economic advantage to honor the client's resistance, as well as reputational and self-fulfillment benefits to keeping at least some quota of cases to try.
Plaintiffs' counsel, particularly specialists in demand, reach a certain threshold where the economically optimal course is to declare the offered amount to be enough and free up their time to fry another fish. And that threshold, in turn, need be no greater than a respectable outcome as compared only to the settlement market price itself. The Court, for its part, is institutionally loath to second-guess the norm, and institutionally dependant on most large cases settling in any event. Finally plaintiffs, themselves, are, for all practical purposes, absent from the process. They can opt out, and thereby preserve the right to bring claims on an individual basis, but the value of individual claims is rarely enough to warrant the transaction costs.
Role of the Mediator
It helps immensely for the mediator to have substantive familiarity with the rhythms and restrictions of class actions generally, and specific familiarity with the rights and duties of employers regarding wage and hour matters. That is the environment in which the mediator is applying his or her skills. But the mediator's primary contributions come from the use of more general "process skills" to anticipate, analyze and avert impasse in the negotiation process. Those skills are not unique to wage & hour mediations.
Some taste of the actual process of analyzing and averting impasse may be provided by an actual example of an email I sent to defendant's counsel to overcome an impasse in a wage & hour class action I was mediating. The text - attached as "Attachment 1" - has been left in its raw form, with one exception: all names appearing in the original have been made generic so as to fully protect confidentiality. The case settled shortly after the email was sent.
John (Jay) McCauley is a mediator who also serves as an arbitrator on the Complex Commercial Panel of the American Arbitration Association and an Adjunct Professor at the Straus Institute for Dispute Resolution at Pepperdine University School of Law. He is also a hearing officer for the ADR firm Judicate West.
As information is learned in a given case, great trial lawyers also tell their client the truth. They give an opinion about whether to make, accept or reject a settlement proposal, or indicate that the proposal is so within the range of reason to make it a toss-up. They give these honest opinions whether the client likes the advice or not, and explain the basis for the opinion.
A great trial lawyer will not hesitate to tell a client that the client is making a mistake by not taking a recommendation of the lawyer, but then will follow the client's wishes so long as the course of action is legal and ethical.
In other words, great trial lawyers understand that client is the boss, and unless the client is demanding illegal or unethical action or the relationship between lawyer and client has become so impaired that the lawyer cannot adequately represent the client, the lawyer yields to the client's wishes.
At bottom, virtually all litigation is a tool of negotiation. The numbers say it all: Ninety-five percent of all filed lawsuits in fact settle before trial, and upwards of ninety-nine percent perhaps should. Nonetheless, the specialized and challenging task of negotiation is normally left to the “trial lawyer” – a person whose training and orientation are focused on trial preparation, and whose efforts at negotiation are almost always secondary and often ineffectual.
The problem is not that trial lawyers don’t settle lawsuits; they almost always do. But when the mission of settlement is left to the trial lawyer, opportunities for early and optimal settlements are lost.
The solution for clients is not simply to engage trial lawyers who are sensitive to the task of negotiation and skilled in that art. Regardless of such lawyers’ negotiating skills, the reality is their task cannot be optimally accomplished while they are otherwise burdened with the "role” of being the trial lawyer.
The reason for this is basic: negotiation, by its nature, is driven by an inescapable tension – the tension between cooperation and competition. To display enough cooperation to promote early settlement, a trial lawyer almost inevitably must risk the client’s competitive position in the bargain. When a trial lawyer extends a proposed resolution to the adversary, the adversary will focus not only on the advantages of the proposal, but also on the firmness of the trial lawyers’ resolve. When a proposal is attractive enough to be tempting in itself, the fact that it is offered at all undermines the trial lawyer’s apparent resolve to fight, thereby tempting the adversary to do the wrong thing: defer or avoid serious settlement discussion.
Trial lawyers know this. And a vicious cycle therefore develops – to protect against the risk of appearing to lack resolve, they naturally tend to make their opening bids extreme. As a consequence, their adversary is characteristically left with nothing but two bad options: either to respond in kind (with an equally extreme and polarizing counter-offer) or not respond at all. Further negotiation is thereby sidetracked, while each party spends more time and treasure on “trial preparation” – i.e., extensive and expensive discovery exercises – to show further resolve and thereby bring the other side to its (apparently missing) senses.
Repeated experience tells us this vicious cycle is rampant in litigation. And an extensive body of literature from the fields of game theory and cognitive psychology tells us why: litigants are playing out the consequences of reactive devaluation – the dynamic wherein an otherwise attractive proposal becomes unattractive by virtue of its being presented by the adversary. See Lee Ross, “Reactive Devaluation in Negotiation and Conflict Resolution,” in Barriers to the Negotiated Resolution of Conflict (Kenneth Arrow et al, eds., 1995).
What, then, is the solution? Police departments bargaining for a confession from the suspect really do separate the “good cop” role from the “bad cop” role. Clients exposed to major lawsuits would do well to separate the roles as well – by engaging a specialized settlement counsel in addition to the needed trial lawyer, and commissioning the settlement counsel to bring his or her skills to bear on a single critical objective: early and optimal resolution of the dispute.
Who are settlement counsel? They are, by background, experienced trial lawyers capable quickly to become intimately familiar with the subject matter of the dispute at hand. They are also more than this: specialists in the methodology of risk-based claims valuation analysis and in the science and art of interest-based negotiation. Ideally, they are also experienced in the techniques of mediation advocacy, and familiar enough with the mediators in their community to advise and represent the client in achieving mediated resolutions in cases that warrant that treatment.
But they are not the trial lawyers for the case. By design, their mission is a short one. If they do not achieve a settlement quickly, they pass the baton to the trial lawyer, along with the full benefit of their early analysis. Their role is revealed to the adversary from the outset. It is because they are nothing more and nothing less than settlement counsel that they can afford to use some needed cooperative techniques to foster early resolution. No lack of resolve is conveyed by that effort. They can demand and measure a response in kind from the adversary, and exact a unique penalty if that response is not forthcoming: their own departure. The adversary knows from the outset that if, through recalcitrance, the mission of early settlement is not achieved, a new lawyer will appear – one who is single-mindedly focused on an entirely different mission: victory at trial.
This post was originally meant to highlight Allstate's (or its consultant's) unfortunate use of the term "Zero Sum Game," when discussing claims handling procedures. My original comment was that "those who continue to play it often get their . . . uh . . . soft parts caught in a wringer."
The Slabbed post highlights the damage done to an admitted "Zero Sum Game Player" who is engaged in a human-harm-cost-benefit analysis. The Pinto punitive damages award came readily to mind because the case was decided while I was in law school learning about negligence.
For my non-attorney readers, I need to stress that it's not wrong to engage in a cost-benefit analysis for the compensation of injury under a negligence system. In fact, this is what the law itself (and injured Plaintiff's attorneys) do, i.e., "calculate" the risk of harm + the potential severity of the injury against the cost of avoiding that harm.
People react badly when they see that type of calculation being applied to human injury or the loss of human life because those losses are considered to be "incommensurable," i.e., no amount of money can recompense someone for, say, the loss of a child. For an excerpt from my own article discussing the concept of incommensurability -- The Cost of a Thing is Your Life, click here.
I'm hoping my non-attorney readers will understand that these formal monetary calculations are routinely made by businesses and governments when making decisions about how much risk to human life is worth taking when they engage in potentially dangerous activities for the purpose of creating a significant benefit for many.
In a previous post that received a notice in the Silicon Investor BB I spoke of insurers and their lawyers using the court system as instruments of institutionalized bad faith. Indeed Allstate has taken much criticism for ignoring lawful subpoenas over these documents as well as substantial fines as noted by Ms St John. This brings me to the beginning of the main story.
For more than a decade, Allstate Insurance Co. kept a secret from its auto policyholders — a national strategy to force customers to accept reduced cash payouts or face years in court.
Thousands of pages of Allstate documents reviewed by the Herald-Tribune detail how the nation’s second-largest insurer systematically cut payments to customers as a way to boost profits.
The documents describe a two-pronged strategy.
First, the company evaluates claims with a computer program designed to reduce payouts by as much as 20 percent of what the company once paid for the same injuries.
Second, Allstate pushes policyholders to accept quick settlements without the help of lawyers. Policyholders who try to fight for more money face Allstate attorneys coached to refuse to negotiate and to drag out litigation.
The approach often forces car accident victims to take what Allstate offers right away or spend years in court while their bills go unpaid — a strategy Allstate spelled out in guidelines for claims adjusters that “forces the claimant and attorney to think about the obstacles they must overcome …”
Indeed it appears we have a road map of how tort reform is being used against us. Limits on damages only make it easier for these large insurers to get away with outrageous behavior. The story continues:
It was a “Zero Sum Economic Game. Allstate gains … others must lose,” declared a consultant’s PowerPoint slide from a 1994 presentation to executives.
During the next five years of Allstate’s claims overhaul, the same consultant, New York-based McKinsey & Co., chose confrontational words to describe the new system. In PowerPoint presentations and discussion papers drawn up for Allstate executives, McKinsey used “boxing gloves” to characterize how Allstate should treat policyholders who balk at settlements. For customers who hired lawyers, McKinsey urged, “align alligators,” adding these instructions: “sit and wait.”
The documents also show:
Allstate removed much of the discretion of local claims agents to set payouts, requiring them to base their recommendations on a computer program called Colossus. Under that program, average payouts for bodily injuries dropped more than 20 percent in the first few years, internal documents show, a big step toward reaching McKinsey’s goal of “establishing a new fair market value” of such injuries.
Allstate recognized that when an injured driver hired a lawyer, the insurer lost money. In repeated presentations to Allstate executives, McKinsey coached tougher and increased legal action. By 1996, Allstate had doubled its legal force, hiring 225 more lawyers. “The bottom line is that Allstate is trying more cases than ever before,” a corporate newsletter said . . .
Allstate Corp., the second-biggest U.S. home and auto insurer, released 150,000 pages of documents sought by opposition lawyers and company critics related to McKinsey & Co.'s review of claims-handling practices.
McKinsey suggested strategies for the company to become more profitable by paying less in claims, according to videotaped evidence presented in Fayette Circuit Court in Lexington, Kentucky, in a civil case involving a 1997 car accident. Lawyers for policyholders said Allstate's previous refusal to release the documents showed the company wasn't treating its customers fairly. The insurer has said the documents include trade secrets.
``Public criticisms by people with a vested interest in creating an inaccurate picture of the company's claim practices have been based unfairly on only snippets from the documents taken out of context,'' the Northbrook, Illinois-based insurer said in a statement today. ``Because of the need to address misunderstandings resulting from the growing misplaced focus by our critics on very small pieces of the whole, we have decided to make the documents public.''
One slide the consultant prepared for Allstate was entitled ``Good Hands or Boxing Gloves,'' and recommended the insurer put on ``boxing gloves'' to deter about 10 percent of claims deemed to be exaggerated, padded, or fraudulent, according to portions of the report shown to the Kentucky jury. For more than 50 years, Allstate has advertised its employees as the ``Good Hands People,'' telling customers they will be well cared for in times of need.
The strategy proposed by McKinsey would ``send a message to the attorneys of our proactive defense stance'' in cases dealing with minor impact soft tissue injuries, the consultant said in the document. Lawyers would have to ``think about the obstacles they must overcome to recover significant settlement or the benefits of a smaller, walk-away settlement.''
Allstate implemented the plan in the 1990s because studies showed more people were submitting claims even though accident rates were declining and cars were safer, Allstate lawyer Floyd Bienstock told the Kentucky jury. The McKinsey report found Allstate was overpaying bodily injury claims by 16 percent, Bienstock said.
``It was never a plan to intimidate people,'' he said.
Using Your Case Management Order or ADR Panel to Convene Your Mediation
There are many reasons you may not wish to initiate mediation. Many lawyers justifiably do not wish to appear overly desirous of settlement. Others are discouraged because their opponents
long ago indicated their client would not consider paying/accepting anything less/or more than $X, which is a non-starter;
say they won’t consider settlement until after some key event; or,
insist their client will “pay millions for defense but not a penny in tribute.”
The best way to encourage settlement discussions without any loss of face is to agree upon a mediator (or mediation services provider such as Southern California’s Judicate West) at the commencement of the case, authorizing the neutral to suggest mediation at any time without prompting by the parties. This is the general practice in most multi-party construction defect cases and there's no good reason to limit the benefits of this practice to complex litigators.
This strategy permits one party to suggest mediation to the neutral who can then initiate a negotiation session without divulging who, if anyone, sought the mediator’s assistance.
Any mediator worth her salt will be trained in and skilled at convening mediations without party pressure.
Some, but not all, mediation service providers also possess these skills. Judicate West’s case managers, for instance, are all skilled professionals with a minimum of five-year’s experience convening mediations for the parties.
At the commencement of your action, ascertain whether a neutral or ADR service provider in your locale specializes in the art of convening. A service provider like Judicate West will often know more about your opposition than you do, particularly in large legal markets like Southern California where you may well not “do business” with your opponent on more than one occasion.
It’s a long-held rule in California that a defendant sued on a contract may recover attorney fees pursuant to a provision in the contract even if the defendant prevails on a theory that he was not a party to the contract or that the contract is nonexistent, inapplicable, invalid or unenforceable. The rule exists in order to further the purpose of Civil Code section 1717, which is to make unilateral fee provisions reciprocal. . . . .
Consider now whether a similar rule should apply to arbitration provisions. . . . . Should a defendant be able to compel arbitration pursuant to a contractual arbitration provision in a contract alleged by plaintiff even if the defendant denies the existence of that contract?
Sometimes reading my statistics page is the best way I have of taking the pulse of my readers and diagnosing the current actual rather than the aspirational state of settlement and mediation practice.
Listen. Only the squeakiest client or party wheel will tell you that he is feeling coerced into settling the litigation that has become a millstone around your neck.
I'm talking to attorneys here -- but settlement officers, judges and mediators should pay attention as well. Whether you're representing the CEO of a Fortune 500 Company or the 60-year old man who slipped on the iconic darkened bananna peel in the produce section of the local Ralphs, at some point during settlement negotiations your clients are going to suspect one or more of the following:
you're tired of his case and want to get rid of him
you're in cahoots with opposing counsel, with whom, frankly, you have a far more enduring if not affectionate relationship than with your client
you and your old buddy the mediator or settlement judge/officer have joined forces to to compel him to give up his legal rights in exchange for less money than you, his attorney, told him he was likely to recover two years ago
despite his protests, you, the mediator and opposing counsel keep saying the fact most important to his case is "irrelevant" to his chances of recovery
when you talk to opposing counsel or the mediator about the case, he doesn't even recognize what you're talking about -- this is not the same case he brought to you to try two years ago
he feels extorted and no one is paying any attention to that
he feels like he's being sold down the river and no one is paying any attention to that
he paid his you and your law firm tens of thousands, hundreds of thousands, millions or tens of millions of dollars in attorneys fees and he thinks he could have settled the case for the sum that's being offered/demanded now before he paid you to litigate this case to the settlement conference.
he's really really irritated now -- angry even -- though he doesn't get angry; he gets even, and he'll have no trouble spending another few million on attorneys fees so show that lying, cheating so and so in the other caucus room a thing or two
he's a successful business man and he's never been treated with so little respect before.
Now let me tell you something else. If these thoughts are some of those which race through your clients' minds during settlement conferences, your mediator should be sufficiently alert to the changing temperatures in the room to address them.
Because the mediator's job is not to settle the case.
The mediator's job is to:
assist you in helping your client understand the options available to him
assist you in delivering bad news to your client in a way your client can hear it
assist you in negotiating as good a settlement as possible for your client without making your client feel as if he has no other options
assist you in resolving for your client the justice issues that your client originally brought to you to resolve
assist you in helping your client recognize and set aside the emotional experience of the settlement conference for the purpose of doing a sober cost-benefit analysis
assist you in helping your client recognize that legal cases change over time; sometimes getting better and sometimes getting worse, usually both in the discovery process -- this is not the case your client originally brought to you -- untarnished by the harsh adversarial systems but puts "facts" to a more exacting test than any other process in business, political or social life
assist you in helping your client recognize his own fallibility, potential for error, and accountability for his part of the harm for which he is seeking recompense
assist you in helping your client recognize that the other side -- evil, destructive and hateful as it may well be -- also has a few items of "truth" and "justice" on its side of the balance sheet
assist you in helping your client make an informed decision without pressure from anyone whether he wishes to accept less than he wants to or would like to take his chances at trial
assist you in walking away from the mediation or settlement conference with your client clapping you on the back and saying, "great work, John. If I'm ever in need of a litigator again, rest assured it's to you I will come. I'll tell my friends on the block or on the Board of Directors that you're the man.
How do we accomplish these ten aspirational goals together -- attorney and mediator and client? Stay tuned.
The Jerry McGuire video above is for our clients -- with whom we do not share just how hard we are working and what a toll it takes upon us because that's what they've paid us to do -- and paid us handsomely I might add.
the plaintiff [in that case] argued that the judge's encouragement of settlement talks demonstrated bias; the court strongly disagreed. It is entirely appropriate for a judge to suggest that parties resolve their claims through mediation. . . "No less renowned a figure than Abraham Lincoln recognized the desirability of settlement when possible...it borders on the offensive for a party to claim that a justice should be recused for adhering to this policy [of encouraging settlement]."
As "amusing" as this might first be to lawyers, I don't want to let it pass us by without pausing a moment to consider the possible communication gap between Judges and lawyers -- on the one hand -- and people seeking justice -- our clients -- on the other.
People Seek the Services of Lawyers to Solve a Justice Problem
Having recently earned my LL.M and taught a semester of ADR theory and practice to law students, I can report back from the law school trenches that cynicism about justice is not limited to old dogs like me. By their second year in law school, most aspiring attorneys have narrowed their view of justice/injustice to those wrongs the law will remedy. See Writing on a Piece of Rice in a World of Injustice. More troubling, they've narrowed to a vanishing point their former hopes, if any, to be part of a system that delivers justice.
When I ask defense attorneys in settlement conferences why they think their opponent filed the lawsuit against their client they answer with a single voice: MONEY!
"But why do you think they hired a lawyer," I persist.
"Money," they respond again, as if I'd suddenly lost all reason.
"But why did Mr. X even think of seeking resolution in Court . . . under the law . . . why did he turn to the justicesystem?"
Losses the Law Will Redress
People suffer losses every day of the week. They lose their luggage in Madrid. They don't get a raise or a year-end bonus. They slice off the tip of their finger while chopping onions for Sunday dinner. If they are lawyers of my generation, they got a 610, instead of a 700 on their LSAT -- thereby losing any hope of attending an Ivy League law school.
The cynical persist. "People have been known to sue for those losses too," they say.
True, but they are among the very very very few. Most people who undertake the considerable effort to find an attorney willing to take their case do so because they believe they have been treated unfairly. They believe themselves to be victims of an injustice.
And attorneys, not clients, are the first ones who monetize injustice for their clients. Still, years after that injustice has been monetized, right before trial when most mediations and settlement conferences take place, the clients continue to long for justice.
A Monetary Solution to a Justice Problem
So we should pause before we give in to the temptation to make light of the client who must have urged his lawyer to recuse the Judge for even suggesting that he not immediately be given access to justice -- a jury trial. A client who likely feared he'd be strong-armed into accepting injustice in a Court suggested mediation.
Our clients are speaking and we are not listening. We are in danger of processing monetary claims rather than helping our clients come to terms with the justice issues they brought to us to resolve.
As a mediator, I can tell you that most clients need to have monetary resolutions framed as "fair" or "just" results. And if that is impossible, they need -- at a minimum -- to have the injustice they are suffering acknowledged by the mediator.
As to those Judges who "encourage" mediation, I suggest that the directive be framed as an attempt to achieve, through settlement, that which it may not be possible to achieve in Court. I would, in all events, assure the people seeking justice who appear before me, that I will be there, ready and able to try their case -- happy to serve their justice needs -- if the mediation I suggest they pursue fails to deliver the fair result they are seeking.
I was a commercial, antitrust, IP and securities litigator long before I devoted nearly a decade of my practice to environmental coverage litigation. In the process, I learned enough about Comprehensive General Liability ("CGL") coverage to make me worry about how well I'd served my commercial clients in regard to the insurance coverage potentially available to them.
If you are a commercial litigator -- or any type of litigator who defends your clients against claims for damages or for injunctive or other equitable relief -- you must
ask your clients for all of their insurance policies, even those that seem unlikely to provide coverage;
carefully review the precise wording of the insuring agreements and research the case law in the relevant jurisdiction to determine how the courts have interpreted those insuring agreements under facts similar to those your client's case presents;
except for some narrow additional protections provided to insureds, be aware that there is no such thing as "the law" of coverage under any particular type of policy -- all coverage flows directly from the precise language of the insuring agreement
in most jurisdictions, that language -- if ambiguous -- is interpreted in favor of the insured's objectively reasonable expectations; and,
in most jurisdictions the rule of contra proferendum will require a court to construe any ambiguity in an insurance policy against the insurance carrier
carefully review the exclusions contained in those policies and research the relevant state's case law (as well as federal cases applying state laws) interpreting those exclusions;
before concluding that there is no coverage, read available treatises as well as recent law review articles that may well suggest creative ways of distinguishing adverse authority or extending existing principles to bring your client's claims within the terms of the policy or outside of pertinent exclusions;
if you have any doubt whatsoever about the existence of coverage, tender the claim to your client's carrier and let the carrier do the analysis;
if the carrier denies coverage, read the reasons for denial critically and respond with any reasonable interpretation of the policy that will support a claim of coverage;
if the carrier continues to deny coverage, keep the carrier informed of the progress of the litigation and invite the carrier to respond to all settlement demands and to attend all mediations and settlement conferences.
If the cost of the lawsuit is beyond your client's means or will deprive it of capital necessary to meet its business goals for the next few years, retain coverage counsel for a second opinion.
Have I mentioned that my beloved husband is one of the best coverage attorneys in the country -- having litigated the World Trade Center coverage action on behalf of Larry Silverstein's lender GMAC? And that I formed my opinion about his brilliance while I was representing the London Market Insurance Carriers and he was representing the policy holder? Even if your case does not justify hiring someone like my husband to give you a second opinion, there are lots of good coverage attorneys out there who can so that you can complete your coverage "due diligence" for your client.
At last, to the 2007 Fifty State Environment Coverage Analysis
If your clients have been hit with demands to clean up toxic waste, this is an invaluable resource. A specialist in the field, however, should be consulted to maximize the chances that coverage will be provided.
Have I mentioned that I'm on the Insurance Coverage Mediation Panel of Neutrals with the International Institute of Conflict Prevention and Resolution ("CPR")?And since I'm a former defense coverage attorney currently married to policy holder counsel, you're unlikely to find many other mediators who are both extremely knowledgeable about the law of coverage and deeply neutral!
Evaluative mediators provide the parties with an evaluation of the strength and weaknesses of their legal positions, usually in separate caucus. If asked, the evaluative mediator will give his/her opinion about what verdict a jury would likely deliver. Though I've co-mediated with sitting Judges quite a lot (the paradigm of evaluative settlement officers or mediators) I rarely see them tell the parties what to do -- see DIRECTIVE MEDIATION below.
Evaluative mediators often end a session with a mediator's proposal, i.e., the mediator chooses a number he/she believes would be acceptable to all parties (not necessarily what he/she believes the case is "worth") and tells the parties. If both parties accept, the deal is done. If either rejects, neither will know if the other party accepted.
I rarely make a mediator's proposal -- preferring to help the parties move toward resolution so long as no one is walking out. They really do feel better making their own decisions. That's why they've come to mediation and not arbitration. So long as I believe the parties' differing "bottom lines" might overlap, I encourage continued discussion even when the parties are feeling exhausted and cranky. Persistence and optimism about resolution in equal measure. Sometimes the process just needs a cheerleader.
Faciliatative mediators assist the parties, again often in separate caucus, to decide how the bargaining session will proceed, i.e., how high a first offer or demand should be; which party might benefit the most from making the initial offer; how many concessions the parties should consider making during the course of the negotiation; and, what reasoning might spur their opponent to make another concession. Once again, I rarely see the mediator, settlement officer or Judge tell the parties what to do. But see DIRECTIVE MEDIATION.
Transformative mediators strive to empower the parties to express their true needs and desires; to shift from self-concern to understanding of the other and to move from entitlement and blame to accountability. Transformative mediators do not direct the process of the mediation, which is always held in joint session.
Transformative mediators encourage the parties to set their own ground rules; state what their own desires and interests are; and, express themselves as fully as they wish, even if that includes persisting through angry outbursts, tears, recriminations, and the like.
In its pure form, the mediator acts something like a therapist. Uh, huh, uh huh, anything else? Have you said everything to Jim or Julie that you want to say? Uh, huh, uh huh? Jim/Julie, what do you want to say back to Julie/Jim about that? The purpose of transformational mediation is to resolve the conflict completely to the parties' mutual satisfaction even if that does not settle the actual dispute. See Bush and Folger, The Promise of Mediation.
DIRECTIVE MEDIATION -- Once again, I've never see Judge or mediator tell the parties to do anything other than to bring all the stakeholders and their insurance carrier representatives. I have, however, seen and done the following:
I need $X from you to settle the case -- $Y is not going to do it. Please talk to you client/carrier and bring me back that number if you want to settle the case today.
This directive usually occurs very late in the proceeding and most often in a multi-party mediation in which a dozen or more defendants are contributing to the settlement. I also call this type of mediation FUND RAISING MEDIATION. I've never seen anyone do this better than Judge Victoria Chaney in the Complex Court in Central Civil West, Los Angeles.
My own "directive" suggestions to the parties generally concern the need for at least one party to step up to the line of impasse. If I believe the parties are bargaining in the nano-and stratospheres and are not getting within a hundred yards of where they'd really settle the case, I'll generally tell them so -- i.e.,
someone needs to step up to the line of impasse for this case to settle. If you don't do it, you'll likely lose your opportunity to resolve the matter today.
That's about as "directive" as I get, although I have been known to say I need $5,000 or $500,000 or $1 million more NOW. Or, I need you to drop your demand by $10K or $500K or $50 million NOW.
You can only do this if you have established a strong relationship of trust and confidence with both sides. Each side needs to know that you are not simply carrying the other side's bluff to them with your extra weight behind it. So directive and evaluative techniques -- I don't know their bottom line but I believe we're getting pretty close to it -- go hand-in-glove.
Ideologies aside, here's the real reason to probe party interests -- i.e., their genuine desires, expectations, fears, business needs, financial situation, lines of authority, reserves, reporting relationships, etc. -- it's the only way you can offer, with any credibility, your opinion about the "temperature" in the "other room" and the likelihood that party A might settle the case somewhere in the range of $X and party B somewhere in the range of $Y.
get the Plaintiff to concretize his monetary expectations, i.e., what he might do with the money to take the Court-as-Gambling-Casino element out of the process;
ask the Plaintiff to imagine the offered sum sitting on the table before him -- to see it as a stack of cash or a thing or services or an improved quality of life he might purchase with it -- this makes the money real and more difficult to literally "leave on the table;"
assist the defendant to:
subtract "sunk costs" from his/her/its calculations when considering the "body blow" that paying money to their opponent will be;
brain-storm about business interests that could be satisfied by using the litigation as an opportunity to make a business deal;
come to grips with the loss that settling the litigation will inevitably entail, dealing directly and honestly about the issues of unfairness and injustice that must often be accepted to justify paying even a reasonable sum.
don't let the parties leave until they've had principal-to-principal discussions -- the parties are often able to resolve a matter that their lawyers cannot because their lawyers are acting on instruction (I don't have the authority to settle for that) whereas the principals have more flexibility on often arbitrary "bottom lines" -- this also helps humanize the opponent who has been thoroughly demonized by the process of adversarial litigation (see autistic hostility)
For reporters who are following this story at depth, the video includes a sophisticated presentation by Jones Day attorney Mark Herrmann about settlement strategy from Merck's point of view; a provocative presentation by Professor George M. Cohen -- who calls the settlement proposal an illegal antitrust conspiracy -- and a scholarly presentation by Professor Nagareda on the public policy issues raised by the settlement of mass tort claims.
For attorneys who have been retained to provide their clients with a second opinion, Professor Cohen's presentation will be a useful addition to their own research and independent conclusions. Attorney Andy Birchfield -- the only forum speaker with first hand knowledge of the negotiations leading to the settlement proposal -- may be of the greatest interest as he walks counsel for Plaintiffs through the structure, purpose and effect of the proposed settlement program.
Professor Cohen not only concludes that attorneys recommending this proposal to their clients are violating professional ethics, but asserts that it constitutes an illegal antitrust "conspiracy" as well.
Professor Nagareda discusses the settlement from a dispute resolution public policy standpoint.
As a contract between Merck on the one hand and the "lawyers who have a large market share" on the other, Professor Nagareda suggests that the settlement proposal is more an artifact of the law flowing from the Supreme Court's AmChem opinion than of any legal "connivance" among the Plaintiffs' attorneys or between them and Merck.
This settlement proposal, he says, is a valuable and creative peace-making transaction for mass claims.
Andrew Birchfield, an attorney at Beasley Allen and co-lead counsel on the Plaintiffs’ Steering Committee for the federal Vioxx litigation addresses the negotiations themselves and the structure of the settlement.
Andy says that in approaching settlement Merck required global peace -- that there couldn't be a "second round" because Merck had seen how disastrous open-ended liabilities could be for a corporation.
The plaintiffs' attorneys, says Birchfield, negotiated a settlement agreement designed to serve the best interests of each individual client no matter how strong or weak each of their cases might be.
Attorney Ted Frank of the American Enterprise Institute who once represented Merck in the Vioxx litgation.
Frank talks about the law and economics of the settlement proposal, focusing on the weakest link of Plaintiffs' cases -- causation.
As the Court itself acknowledged, under its holding,
a plaintiff could settle a disputed insurance claim, keep the money paid, and then sue for fraud (rather than on the released claim) if it was fraudulently induced to settle the claim by a misrepresentation of policy limits.
We must say we're surprised by this holding and imagine the insurance carriers are as well. The "parade of horribles" raised by State Farm, however, was dismissed as exaggerated by the appellate court, stating that the
consequences of applying this principle are not dire. Indeed, to avoid them, the insurer need only avoid misrepresenting policy limits when it settles claims. We seriously doubt insureds who settle their claims can be expected thereafter to assert groundless claims of misrepresentation of policy limits on a routine basis.
Is this a case of bad facts making bad law? Or am I missing something?
Another reminder of the narrow scope of Evidence Code section 1152's protections has just come come down from California's Second District Court of Appeal in Zhou v. Unisource Worldwide, Inc. here.
Before discussing the Zhou holding, we remind our readers that in California, at any rate, the differences in protections between mediated settlement communications (absolute protection from disclosure) and non-mediated settlement communications (limited protection) make it imperative that counsel clearly specify, in writing, whether the settlement conference they are about to attend is a "mediated" conference -- and hence protected by Evidence Code section 1119 -- or a "non-mediated" conference -- and hence protected only by Evidence Code section 1152.
Though I'm aware of no case law on the topic, I'll go so far as to say that an attorney's failure to make this distinction will likely be found to fall below the applicable standard of care in the event the client suffers harm as a result.
The Zhou Holding
Briefly, Plaintiff, who was injured in two separate automobile accidents, sent the insurance carrier an offer to compromise -- which was just barely brought within section 1152's protections -- for Accident No. 2. During the trial of Accident No. 1, the defense proferred into evidence the settlement offer made for Accident No. 2 to prove the invalidity of the claim arising from Accident No. 1.
In holding that the trial court erroneously excluded that correspondence from evidence, the Court of Appeal explained:
[I]n this case Zhou’s letters to State Farm regarding his purported injuries
from the March 1, 2004 accident were not offered to disprove the merits of the claim under negotiation, but rather “to show the invalidity of a different claim.” *
The entire case is well worth reading as a refresher if you're about to send a settlement demand, attend an MSC or pursue mediation.
* The Court also cites federal law to the same effect -- Broadcort Capital Corp. v. Summa Medical Corp. (10th Cir. 1992) 972 F.2d 1183, 1194 [federal rule barring admission of evidence relating to settlement discussions does not preclude evidence of settlement of different dispute; “the evidence was not admitted to prove the validity or amount of the ‘claim under negotiation’”]; Towerridge, Inc. v. T.A.O., Inc. (10th Cir. 1997) 111 F.3d 758, 770 [“[r]ule 408 does not require the
exclusion of evidence regarding the settlement of a claim different from the one litigated”].)
predict[ed] that settlement values may start trending downward after reaching a record high this year. The median settlement during the first six months of this year was $9 million, up from $7 million in both 2006 and 2005, according to NERA.
The NERA researchers base this prediction on recent declines in the median investor loss, which historically has been a “strong predictor” of settlement values. For cases that settled in 2007, the median loss was $381 million, less than the $407 million median loss for cases that were resolved in 2006. This trend is also apparent if one looks at new lawsuit filings. The median investor loss for cases filed in 2007 was $240 million, down from $265 million in 2006 and $340 million in 2005.
These trends are early hints that recent filings might not lead to continued increasing average settlement values in the future, although it is still too early to know which of the recently filed cases will result in settlement as opposed to dismissal,” the NERA researchers explain.
Meanwhile, Forbes reports that that the Court in the Sprint Nextel settlement set aside 27.5 percent, or $15.8 million, for plaintiffs' legal fees, as well as an additional $2.2 million for plaintiff expenses.
The full post is well worth reading. Most applicable to my own practial ethics needs, however, is the following post excerpt.
None of the existing or proposed ethical codes, he writes,
address the relatively common and always difficult situations in which more than one ethical principle is implicated, and in which no course of action perfectly protects all of the mediation principles involved.
One party appears to have an imperfect understanding of some aspect of a deal, the other party is credibly indicating an intention to withdraw from the mediation, the conversation up to this point suggests that the issues appearing in the legal complaint are only one component of what’s going on and what each party cares about, the case is proceeding under brutal external time constraints, the media are making regular requests for updates, and the mediator isn’t sure what the best next steps might be.
That’s not just an ethical question, but there are ethical questions embedded in there. And nothing in most articulations of mediation ethical standards even acknowledges, much less guides, the balancing I must do.
Amen, brother and thanks for joining the conversation about ethics.
Want an angry tax attorney serving as the arbitrator on your personal injury case? Then head on down to Arizona where the Ninth Circuit has just held that he can be forced by State law to serve as your neutral for $75 per day -- all without violating the U.S. Constitution.
The indentured tax attorney? Mark V. Scheehle, to whom you might throw a little tax planning work out of collegial fellow feeling.
The facts below. Link to Scheehle v. Justices of the Supreme Court here.
Arizona law requires that each superior court, by rule of court, provide for the arbitration of cases in which the amount in controversy does not exceed $65,000. Ariz. Rev. Stat. § 12- 133. At the time this action was filed, the Local Rules of Practice for the Superior Court of Maricopa County required that all attorneys who reside in the county and have been active members of the Arizona Bar for five years serve as arbitrators.
Attorneys who served as arbitrators under the Appointment System were paid a flat fee of $75 for each day in which they actually conducted an arbitration hearing.
Scheehle has been a member of the Arizona Bar since 1981, and a certified tax specialist since 1988. In September 1996, Scheehle was appointed as the arbitrator in a motor vehicle personal injury action. He served as an arbitrator and submitted a report to the Maricopa Superior Court in December 1997.
In July 1997, Scheehle was appointed as the arbitrator in a second motor vehicle personal injury suit and accepted the appointment. In October 1997, while still serving as the arbitrator in the second action, Scheehle was appointed as the arbitrator in a third personal injury action.
Scheehle decided to challenge the authority of the Arizona courts to require that he serve as an arbitrator. He returned the file to the Presiding Arbitration Judge of the Maricopa County Superior Court with a letter declining to serve as an arbitrator. He also expressed his unwillingness to serve as an arbitrator in any subsequent case, and his belief that the Appointment System was unconstitutional and violated Arizona law.
The judge responded by holding a telephone conference at which Scheehle placed his objections on the record. The judge further encouraged Scheehle to apply for relief for good cause shown from the particular assignment, but Scheehle declined, choosing to challenge the Appointment System as a whole.
Scheehle was allowed to file a brief in support of his position. In January 1998, the Presiding Arbitration Judge entered an order rejecting Scheehle’s arguments and imposing a $900 sanction on Scheehle for refusing the arbitrator appointment.
Take a look at Geoff Sharp's post on the so-called pure money case and then please please please send me your stories on meaning-making about money in the course of mediated or non-mediated negotiations.
(see our previous posts on the subjective experience of money here and here)
What do I mean by "meaning making"?
Let me give you an example of the type of story I'm looking for.
I was mediating a personal injury case and we'd reached impasse. The Plaintiff was having trouble understanding how the amounts of money being discussed could possibly adequately compensate her for her injury -- a self-report of daily 3-hour headaches.
After much discussion I sat down with my calculator and "translated" the final offer of settlement into an hourly wage for two years worth of headaches "if suffering were your full-time job."
The resulting "hourly income" was pretty substantial when viewed as an hourly payment for pain. This way of presenting defendant's offer broke the impasse.
Before we translated the total settlement offer (minus costs and fees) into a compensation scheme familiar to the Plaintiff -- an hourly wage -- she had no metric against which to value that offer. The money wasn't real until she understood it in terms of earnings.
I've heard many other stories like this but my appetite for them is insatiable. Whenever a mediator or lawyer tells me a story like this, I am always inspired and heartened. Their telling also helps me become better at facilitating "pure money" negotiations. I'm hoping they will also be useful to my readers.
All things being equal -- or, more to the point -- most things being impossible to equalize -- your clients' satisfaction with the settlement you negotiate is going to depend upon something other than the absolute number attained.
In fact, the social scientists who study these things have told us that people tend to be more satisfied with the outcome of negotiations in which the following occur:
the other side makes numerous concessions (even if they are small or inconsequential);
the outcome achieved is as good or better than similar outcomes obtained by colleagues or competitors (i.e., a 10% raise in salary tends to be viewed favorably if one's co-workers receive 7% raises and unfavorably if one's co-workers receive 12% raises);
the negotiator does better than he hoped to (without regard to whether the expected outcome is "good" or "bad" based upon objective factors);
the negotiator feels that the process by which the outcome was reached was "fair and reasonable"; and,
the negotiator does not believe that his will was overridden by a stronger negotiator on the other side.
What's new about this relatively commonplace insight is that it is at work not only in sophisticated bargainers, but also in human toddlers and our primate friends the capuchin monkeys.
How do we apply this "choice preference" insight to client satisfaction with settlement outcomes?
It's not hard to do.
Whatever a client's reservations about the course a negotiation session takes, by the end of the day they've made dozens of small decisions among (potentially) equally attractive or unattractive choices. Add to the negotiation mix the fact that we tend to value choices that were made only after great difficulty and the "satisfaction outcome" is nearly guaranteed.
Even without coaching by you or assurances given by the mediator, your client should be pretty satisfied with any negotiation outcome by the end of the day. If not, only a little negotiation post-mortem back-patting should be necessary to focus your client on the difficulty of your mutual achievement and on your joint superior wisdom in settling at the time and for the number you both did.
We're not suggesting being disingenuous here. Most cases can profitably settle in a fairly wide range. So long as you've done a thorough cost-risk analysis with your client and have a firm bottom line you've agreed not to alter, most settlementsof risky and unpredictable litigation are the smartest decision you and your client can make at any stage of the proceedings.
Year-end's coming and with it the time to close the book on many cases that are becoming more problematic with time.
Clear these troublesome pieces of litigation away and both you and your client will have much to celebrate in 2008.
Let me just say I'm prejudiced on this topic before we begin yet another discussion of the Vioxx settlement -- this one focusing on the stellar and collaborative case management skills of the jurists responsible for managing these cases through litigation, trial and settlement.
I was a true-believer of the benefits of the Complex Court on the first day my nine-figure environmental insurance coverage dispute was reassigned from a downtown courtroom to the Hon. Carolyn B. Kuhl, presently the Presiding Judge of "Complex."
My respect for the Complex Court only grew when I became Judge Victoria Chaney's superannuated law extern while pursuing my LL.M degree in Conflict Resolution at the Straus Institute.
So it is no surprise that Judge Chaney was one of those Judges who were highly instrumental in pressing the parties to resolve one of the most sophisticated mass tort cases ever -- and not by "twisting arms" or "banging heads," but by the art of case management, collaboration and principled persuasion.
By December 2006, there had been enough [Vioxx jury] trials for both sides to recognize the strengths and weaknesses of their arguments, [New Jersey Superior Court Judge Carol] Higbee said.
Both sides had spent a lot of money, but the litigation was still progressing too slowly.
That month, [U.S. District Judge Eldon] Fallon, Higbee and [Ass't Supervising Complex Court Judge Victoria] Chaney met in New Orleans. Over dinner, they prepared for a meeting the next morning with attorneys from both sides. It was time, the judges had decided, for the lawyers to discuss a resolution.
The judges urged the lawyers to begin talking. They asked for monthly meetings and regular progress reports. They emphasized, among other things, the need to move the cases along.
"We were simply not going to be able to continue this slow progress," Higbee said. "It would go on forever."
Six months later, in June, the judges notified the team of plaintiff attorneys they intended to meet with Merck's legal team, Higbee said. The pace of the litigation weighed on the judges.
"Trying the cases one at a time was no longer going to be an option," Higbee said. "We never thought we would try all the cases, but there was a chance we would try another 500 cases."
The judges told Merck's lawyers they would have to start spreading the cases out among more judges, which would diminish the chance of getting a settlement. "The chance of a fair resolution was much more likely," Higbee said, "while there was a control of the litigation by the three judges."
The Judges' Management Strategy Plus the Three-Year Statute of Limitations, Pushed the Negotiations Along
Kent Jarrell, an outside spokesman for Merck's legal team, said the possibility of the lawsuits being spread out among additional judges was "a factor" that pushed the negotiations along. But Jarrell said the three-year statute of limitations, which arrived at the end of September, also was a big factor.
The statute of limitations on filing new cases gave Merck a clear definition of the litigation's magnitude, and that would prove to be a key factor in Merck's ability to formulate a settlement.
The settlement negotiations, which grew more serious during the summer months and into the fall, culminated in the early morning hours of Nov. 9.
"Both sides had a similar goal -- to settle as much of the litigation as possible and to pay people with the strongest cases, the most serious injuries, the most money," the judge said.
Higbee believes the settlement will ultimately succeed. "I'm anticipating they will get more than 85 percent of the cases," she said.
Gini Nelson is the founder and author of the Engaging Conflicts Blog. Gini received her law degree from George Washington University Law School in 1983 after teaching Social Problems at the University of Kansas while completing her MA in sociology.
Gini's practice includes mediation and settlement facilitation.
Gini, who posted her response to my request for comments on mediation ethics on her own blog here, did so before I noticed and after I make a few edits here. Any flaws in this version must therefore be laid at my door.
As a starting point, I echo the physicians' ancient ethical code as First, do no harm.
When we look at short lists of ethical obligations, this bedrock principle appears to undergird all of them -- most of which emphasize client determination and transparency. This list should be short and it should be clear.
The obligation to do no harm, however, must be distinguished from the aspirational goal of "doing good."
I am concerned about the blurring of lines between the two.
Is it our ethical duty, for instance, to advance the field of mediation, as much as we might aspire to do so?
Let's Take Pro Bono Services as an Example of an Aspirational Goal
I, for one, oppose mandatory "pro bono" services, whether the professionals being hauled into servitude are mediators, lawyers, physicians, accountants or interior decorators (as much as the world would benefit were it as aesthetically pleasing as, say, every shop window in Paris).
At least in New Mexico, however, we are not ethically required to provide pro bono services. We are only asked to aspire to provide them.
This professional aspirational goal leaves it up to the individual attorney to consider what she can afford in terms of time, money and energy when considering whether to provide her services for free. Despite the clarity with which this principle is expressed in New Mexico's Code of Professional Responsibility, I've sat in meetings with a combination of practicing attorneys, practicing mediators, state bar staff, court staff, and a judge where everyone was in complete accord on a mediator's ethical obligation to provide pro bono services.
Why the Problem?
When the people responsible for establishing and implementing court-annexed mediation programs misunderstand an aspiration as an ethical obligation, they feel free to incorporate mandatory pro bono mediation services in those programs. In New Mexico, most state and city, government and judicial ADR programs require their mediators to provide their services free of charge.
I understand the budgetary constraints these programs work with. At the same time, I believe a confusion of the professional aspiration to "do good" with the ethical obligation to "do no harm" provides principled justification for program designers to expect mediators to work for free.
This, of course, harms the solo practitioner who can seldom afford to provide the same scale of pro bono services that larger or richer offices can handle. Perhpas more importantly, it constitutes a continuing harm on the entire mediation field by demeaning the value of its practitioners' services.
This confusion also perhaps helps fuel some of the intolerance of other forms of practice that Diane writes about here.
I'm a student of the social psychology of conflict. Of in-groups and out-groups. Of choosing sides and aligning interests. Of polarization and cognitive biases.
But I just never get it when a newspaper reporter -- even someone living as rarefied a journalist's life as New York Times reporter Joe Nocera -- sheds crocodile tears for BigPharma.
Call me crazy. Call me neutral. But the recently settled Vioxx cases never struck me as low-merit, extortionate rip-offs nor as slam dunk victories for injured consumers or their survivors.
Why? For all the reasons Joe notes -- it's extremely difficult to prove that one assault on a person's physical well-being (the use of a potentially life-endangering drug) is a more likely explanation for stroke, heart attack or death than the thousands of other reasons we all eventually die -- obesity, smoking, genetic pre-disposition, exposure to toxic chemicals in the workplace, stress and the like.
John Doe's Alleged Vioxx-Related Heart Attack
In negotiating the settlement of litigation, I find it best when people actually engaged in the dispute are in the room because it tends to focus the parties on the intricacies, texture, dimensionality and simple messiness of real life.
With that in mind, I'll use a hypothetical to put a little flesh and blood into the debate. More precisely, I'm going to use a hypothetical John Doe who had a heart attack about ten months after he started taking Vioxx.
What Merck Did and Failed to Do
As Nocera acknowledges in his article Forget Fair, It's Litigation as Usual, Merck did not behave with the high level of caution the consuming public would expect of a drug manufacturer creating and marketing a product we ingest to help make us better. I mean, no one was taking Vioxx as a recreational drug, right? Here's what Nocera says about Merck's marketing of Vioxx.
[Merck] caught a serious case of blockbuster fever in the 1990s. In its effort to crank out drugs with $1 billion or more in annual sales — the definition of a blockbuster drug — it over-reached. . . .
Merck spent hundreds of millions of dollars marketing Vioxx, largely through direct-to-consumer advertising, portraying it as some kind of miracle pain reliever. So instead of having a few hundred thousand users in the short time it was on the market, it had 20 million. Its annual sales grew to $2.5 billion a year.
Even before the drug was approved by the Food and Drug Administration, there were rumblings in the scientific community that Vioxx might increase the risk of heart attacks or strokes. It’s not quite right to say that Merck completely ignored those potential problems — but the company certainly tried to avert its eyes.
. . . At Merck . . . “there was a kind of studied ignorance” of the possibility that Vioxx could increase the chances of a heart attack — even after one study, called Vigor, suggested that the drug could quadruple the heart attack risk. Only in 2004, when another study confirmed the increased risk, did Merck finally react — by taking the drug off the market.
So Merck was making billions of dollarson a drug that probably should not have been marketed to the general public. Merck ignored the medical research -- some of which showed the drug could quadruple the risk of heart attack -- until yet another study confirmed the increased risk.
Nevertheless, Nocera worries about a judicial system railroading Merck into creating a fund for people who are able to demonstrate that the drug likely caused stroke, heart attack or death.
John Doe's Bereaved Family Seeks to Recover for Their Devastating Loss
As Nocera notes, you can never really be certain what caused your cancer or heart attack. No one will ever know for sure why your brother had a stroke at 35 when everyone else in your family lived into their nineties. We all have medical histories that make us vulnerable to one or more life-threatening conditions that will eventually kill us off. As the National Geographic recently noted in the chart reproduced above, our odds of death from any and all causes are 100%.
At the close of yesterday's seminar on mediation ethics for lawyers, I was asked what ethical standards guided my own practice. Other than "neutrality" and maintaining confidences, I'm sorry to say that the question caught me short.
The highly unusual agreement not only requires 85% of plaintiffs to agree before it can be finalized but also might unduly force some claimants to settle or risk losing their lawyer.
That's because the deal includes highly unusual restrictions on plaintiffs' lawyers. The settlement requires them to recommend the deal to all of their clients or none. In addition, lawyers must stop representing any clients who turn it down as long as they don't violate ethics rules.
The agreement was hammered out by Merck and a committee of top trial lawyers who represent Vioxx claimants. Lawyers for both sides said it was a good deal because it provided immediate and fair compensation instead of lengthy trials with uncertain outcomes. Merck requested the all-or-nothing conditions because it feared lawyers would settle weaker cases and cherry-pick stronger ones for trial and possible higher payouts.
Clients are not inventory that lawyers can just shed when they become inconvenient. It's forbidden.
Local trial attorney Tom Girardi, however, who took at least one 'bellwether' Vioxx case to a jury verdict before Assistant Supervising Complex Court Judge Victoria Chaney in Los Angeles earlier this year, notes that it is
always the clients' decision to accept a settlement or not, and lawyers aren't going to do anything that's unethical [and that] those considering [whether to accept the offer] should know these are not easy cases to try in court.
So is a Mass Tort Injustice on the Horizon? Not Likely.
The law -- and the contract between attorney and client -- gives both the right to withdraw from the attorney-client relationship for any or no reason. Generally, however, the relationship continues unless the same type of "irreconcilable differences" that permit husband and wife to divorce, arise between counsel and client.
One of the most common reasons for the dissolution of the attorney-client relationship is a disagreement over settlement. The attorney is not, of course, the client's indentured servant and the client is neither chattel nor "inventory."
If the attorney believes the client has been offered a settlement that is a better alternative to further litigation and trial, he would dishonor his ethical obligation if he didn't say so. If the client disagrees and their difference of opinion cannot be resolved, they separate.
The only ethical requirements on the part of the attorney in this circumstance are: (1) not to abandon the client or separate at a time when it would cause harm, i.e., bowing out on the eve of trial; and, (2) not putting the attorney's own interests above those of the client.
This is where that pesky contingency fee comes in.
Any attorney who has a one-third to fifty percent financial interest in a settlement reached or judgment entered in his client's case will often appear to have a financial interest that conflicts with his client's. This apparent conflict, however, is actually more of a guard against unnecessary litigation than the defense lawyers' practice of charging their clients an hourly fee.
A contingency attorney lives or dies by his ability to assess the risk of victory or loss and maximize the value of the threat of further litigation and trial to the defendant.
When the contingency fee intersects with mass tort practice, however, common daily practice is writ so large that the tension between attorney and client that accompanies all personal injury litigation can be made to look like injustice -- clients as inventory and attorneys as self-serving monsters.
Let's Talk About the Risks in the Real World
Tom Girardi, after trying a brilliant case to the jury in Judge Chaney's courtroom, lost to Merck. In closing, Merck's attorney argued to the jury that Tom's client was "all in" based upon his testimony about the number of Vioxx tablets he'd taken.
Clients, however, just like any other fallible human beings, "forget" or dissemble. Whatever the Plaintiff's "true" recollection, the pharmacy records proved otherwise. He had not only not taken the number of Vioxx tablets prescribed -- his recollection of how many he took was not even close.
Can the Vioxx attorneys predict victory? No. Can Merck? Nope. Did both sides take their best shot at trying a couple of dozen cases at enormous expense. I think so.
Is there an ethical problem here? Not likely. These are some of the best personal injury trial attorneys in the country. And they don't get that reputation by settling their clients' claims for less than they're worth.
Here in California, we call an "offer for judgment" a "998."
"Have you served a 998?" is a question I often ask the parties during mediation when we appear to be reaching impasse. The usual answer is "we haven't done enough discovery" or "we've been waiting for the mediation [to fail] before serving it."
As Cullum and Tuvel correctly note, it's a mistake not to use this hammer as early in the litigation as possible. I'll add to their excellent advice that it's very good to serve the offer prior to mediation -- not after.
It's ammunition I can add to the "parade of horribles" for the other side.
Apparently, there's a new decision in New Jersey called Palmer that clarifies the previously open question whether you could serve multiple offers of judgment during the course of the litigation. I must admit that I don't know the answer to the question here in California (readers?) but provide you with the Practice Tip of the Week from Cullum and Tuvel.
Nice article guys. Thanks for adding to the collective wisdom.
The Palmer decision provides tremendous guidance to both attorneys and litigants with respect to case management and strategy. For example, if an attorney has not had the opportunity to complete discovery, but has analyzed the case enough to make an informative estimate on damages, an attorney can advise his client to file and serve an offer of judgment as soon as possible to get an early trigger date for fee-shifting purposes under the Rule.
Thereafter, once discovery has concluded or been more thoroughly explored, a subsequent offer(s) can be made that is more likely to invoke a settlement.
In the alternative, a subsequent offer may have only slightly modified a prior offer, and therefore the offeror will stand a good chance of collecting fees on the earlier offer which will cover more of the offeror’s expenses because it has never exinguished in lieu of the Palmer decision.
Good strategy that should be applied for tactical advantage in any jurisdiction that permits it.
Because these materials are the basis for a speech and not the speech itself, they may be a bit confusing. I'm providing them for those who attended the seminar. If you didn't, please understand that not everything discussed appears in these materials.
The entire day of speakers (a pretty high powered group) will soon be available in audio from the Pincus CLE company here.
The judge didn't care where they went, Herman said yesterday from his New Orleans office, he just wanted them -- all of them -- in one place. Fallon wanted the settlement done by the end of the week.
They converged in New Orleans, where they averaged three hours of sleep a night and lived on pizza, gumbo, diet coke and coffee.
And before dawn yesterday, they finalized the agreement . . .
This was not, of course, the first time these high-powered lawyers met to resolve the most aggressively defended pharmaceutical litigation in remembered history.
From the Star Ledger again
Herman, the plaintiff attorney in New Orleans, said the judges, including Fallon and state Superior Court Judge Carol Higbee from Atlantic City, ordered negotiations to begin last December. The judges' message, said Arnold Levin, who helped negotiate the settlement, was it was a good time to get started because the litigation had matured, or progressed.
Over the course of the past 11 months, two teams of attorneys -- 10 in all -- met face-to-face as many as 50 times in a variety of cities across the country. The negotiations, which remained confidential until late Thursday, involved as many as 100 conference calls, Herman said.
They Don't Call Them "Behind the Scenes" Negotiations for Nothing
As the Star Ledger coverage concludes:
"Negotiations over a multibillion settlement only work when they're done confidentially," Herman said, adding the attorneys were under orders by the judges to keep them secret.
In New Orleans, it was nearly 5 in the morning when the attorneys finalized the agreement. Most went off to their hotel rooms to nap or shower before they had to head over to a regularly scheduled conference before Judge Fallon.
And never underestimate the power of pizza, coca-cola and sleep deprivation to get the deal done.
And yes, only a Plaintiffs' trial lawyer from New Orleans can get away with similes like that!
Settlement negotiations began last December and have proceeded fitfully since, reportedly spurred on by Fallon and other judges. The final stretch began Thursday morning at the New Orleans offices of Russ Herman, liaison counsel for the plaintiffs, and wrapped up Friday morning around 5 a.m.
Herman says the primary lawyers for the plaintiffs included Chris Seeger of Seeger Weiss, Birchfield of Beasley Allen, and Arnold Levin of Levin, Fishbein, Sedrad & Berma. Merck was represented by Doug Marvin of Williams & Connolly, John Beisner of O'Melveny & Myers, and Adam Hoeflich of Bartlitt Beck. "It was a true, hard-fought rough and tough negotiation on a very high, professional plane," Herman told Legal Times, ALM's Washington weekly.
(left: football without the grease)
Herman says a general deal was struck 10 days ago. "But the devil's in the details and they can break down at any point," says Herman. "Nobody raised their voice. Or made threats. But people's positions were very hard. It was like each lawyer had a greased football and was running like a wild monkey."
Now its the turn of another BIG "V" LAWSUIT -- Merck's Vioxx litigation -- to benefit itself with the largest drug settlement ever but only in the event 85% of all 26,600 litigants agree to drop their cases.
Here's an except and link to the MSNBC article on the settlement:
TRENTON, N.J. - Merck & Co. said Friday it will pay $4.85 billion to end thousands of lawsuits over its painkiller Vioxx in what is believed to be the largest drug settlement ever.
The deal becomes binding only if 85 percent of all plaintiffs in about 26,600 lawsuits agree to drop their cases. It was finalized in the early morning hours after attorneys for Merck and the plaintiffs met with three of the four judges overseeing nearly all Vioxx claims.
Merck faced personal injury lawsuits representing 47,000 plaintiffs, and about 265 potential class action cases, filed by people or family members who claimed the drug proved fatal or injured its users. The agreement covers cases filed in both federal and state courts.
To qualify, claimants will have to pass three gates:
an injury gate requiring objective, medical proof of MI or ischemic stroke (as defined in the agreement),
a duration gate based on documented receipt of at least 30 VIOXX pills, and
a proximity gate requiring receipt of pills in sufficient number and proximity to the event to support a presumption of ingestion of VIOXX within 14 days before the claimed injury.
Individual cases will be examined by administrators of the resolution process to determine qualification based on objective, documented facts provided by claimants, including records sufficient for a scientific evaluation of independent risk factors.
Neither stroke claims that are hemorrhagic in nature nor transient ischemic attacks will qualify.
Law firms on the federal and state Plaintiffs' Steering Committees and firms that have tried cases in the coordinated proceedings must recommend enrollment in the program to 100 percent of their clients who allege either MI or ischemic stroke.
The parties agree to seek court orders from the four coordination judges requiring plaintiffs' attorneys to promptly register all of their VIOXX claims, whether filed or tolled, and to identify the alleged injury - in order to establish the universe of all existing claims in the United States.
Participation conditions: payment obligations under the agreement will be triggered only if, by March 1, 2008 (subject to extension by Merck), the following number of plaintiffs enroll in the settlement process
85 percent or more of all currently pending and tolled MI claims,
85 percent or more of all currently pending and tolled ischemic stroke claims
85 percent or more of all eligible claims involving a death; and
85 percent or more of all eligible claims alleging more than 12 months of use.
My question: how much of the nearly $5 billion settlement fund does Merck actually project will be paid to Plaintiffs able to jump through all three hoops and what happens to sums remaining in the fund if they are not all expended to compensate Plaintiffs?
Hmm, anchoring to support aggressive opening bids? Doubtful, despite the academic literature -which in my opinion has little contact with real negotiation.
And nothing about coordination versus nash equilibrium reasoning? Big oversight, in my opinion.
Because I respect (and generally defer to) Michael's opinion, but because I disagree with him this time, I include here my response and open the discussion to our readers. To help our readers, I'd like to ask Michael, if he has the time, to provide us with his thoughts about the coordination v. nash equilibrium reasoning that is absent from my Power Point Presentation (an absence I'd like to rectify before giving this presentation on the 13th of November)
Response to Michael:
For once in my blogging-career, Michael, I'm going to differ with you but ask for help on the coordination v. Nash equilibrium reasoning.
It's difficult to "observe" the effects of anchoring and framing outside of a controlled environment. You need to have a kind of duplicate bridge experience where the bargaining partners are all negotiating the same deal to determine the effects of framing and anchoring. Research shows we'll all deny that we've been effected.
I have, however, participated in these types of role plays with "teams" of seasoned attorney negotiators.
In fact, it was the first of these experiences, on my first day of mediation training through the Straus Institute here in Malibu (at Pepperdine where the fires were yesterday -- terrible) that I experienced the power of anchoring first hand.
All twenty attorney teams negotiated a buy-sell contract for about 45-minutes. When we returned to the classroom, we all put our negotiated deals on the blackboard together with the first offer made.
I'd been taught as a young attorney NEVER to make the first offer -- folk practice where I come from, i.e., California. In the role play, without exception, the negotiator who made the first offer in the hypothetical bargaining session got the best deal -- often by many magnitudes.
THIS is the moment when I decided I wanted to return to school to learn more about this and everything else having to do with negotiation -- rules of persuasion, the effect of cognitive biases, etc.
Since that time, what I've read in the academic literature on controlled negotiation studies, not only on students but on judges and attorneys and business people, has concluded that he who makes the first offer sets the bargaining range and gets the best deal.
As to Personal Bargaining Experience.
Since I've been mediating full time, I've helped lawyers negotiate hundreds of deals. Still, it's difficult for me to say whether the first offer had a substantial anchoring effect because I don't know how the negotiation would have turned out had the other side made the first offer or if the first offer had not been more or less aggressive.
More importantly, a REAL negotiation to settle a REAL dispute is so multi-determined that I can't imagine being able to opine on which of the many factors was determinative (assuming one factor could ever be determinative) of the final deal.
Every deal in my business results from a combination of the vitality of the parties' legal and factual positions; their financial and personal or business interests; the personalities of the attorneys and the disputants; the willingness of the disputants to share information that will increase the number of options available; the negotiation and "people" skills of the mediator; and, numerous other factors that I often am never advised of, i.e., at the end of one difficult negotiation session, I learned for the first time that two of the three parties had been negotiating the sale of one of their businesses while I was negotiating the settlement of an unfair competition lawsuit.
My fellow panelists (Superior Court Judges Chaney and Williams; former Federal Magistrate John Leo Wagner; Patent Infringement and Competition Arbitrator and Mediator Les J. Weinstein; and, Complex Commercial Arbitrator and Mediator Jay McCauley) have all been working hard in preparation for our November 13, 2007 Winning Settlement Strategies Seminar (.pdf flyer here and complete program description here).
Novice and seasoned litigators will learn to maximize the value of their litigation positions by learning winning settlement techniques from a panel of seasoned ADR experts.
Experienced mediators and Judges teach the latest settlement techniques, such as distributive (splitting the settlement “pie”) and integrative or interest-based (expanding the settlement “pie”) bargaining.
Topics also include the dynamics of conflict resolution, settlement best practices, negotiating techniques, settling complex and patent litigation cases, and international disputes. Don’t miss this chance to hear from those who truly know -- how you can best maximize your client’s settlement opportunities and outcomes.
Fees Individual: $349 per person
Group: $324 per person for 2 or more from the same company pre-registering at the same time.
Government employee/Non-Profit* Rate: $299
Students: $199 (current students only)
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.
In Catholic Mutual Relief Society et al. vs. The Superior Court . . . , victims sought to learn whether the nonprofit entity, which administers self-insurance funds for more than 300 archdioceses and other Roman Catholic entities in the United States and Canada, could meet its policy obligation should they enter into a settlement with the Archdiocese of San Diego.
In 2004, a Los Angeles County trial court judge said the victims could seek reinsurance information . . . A state Court of Appeal . . . rul[ed] that California law authorizing limited discovery of a defendant’s insurance coverage does not authorize pretrial discovery of reinsurance agreements with a “nonparty” liability insurer.
On Monday, the California Supreme Court agreed. It found that discovery of reinsurance is allowed when a reinsurer’s policy functions “in the same way as a liability policy (fronting arrangement), or where the reinsurance agreement is itself the subject matter of the litigation at hand.”
I'd just been musing on this issue (really! -- listen, only nerds blog) because I think attorneys should use discovery as much as possible to settle litigation as to try it.
Conducting Discovery to Settle the Case
I'm just back from vacation so I haven't yet read this Supreme Court opinion. I have, however, fought the reinsurance issue more times than I care to remember. I also once sought to discover the extent of a privately owned corporation's ability to pay a sizable judgment only to be thwarted by the rule that discovery must be relevant to the subject matter of the action (etc.)
Still, I recommend that counsel find creative ways to learn facts that will assist them in settling the case during depositions (where "background" questions receive less scrutiny than interrogatories).
What information pertinent to settlement is useful to obtain other than the ability to fund an award? Plenty! but since I'm still on Hawaiian time and in an Hawaiian mind, I'll provide only a few -- let your own imagination make far longer lists than the following.
The identity of those making the settlement decision is question number one, not only to assure that you have the proper parties at your first settlement conference, but also because -- as McElhaney recently suggested -- you want to "hip" corporate deciders to some of the dangers of proceeding that the company's attorneys might not have mentioned (or couldn't stress strongly enough).
Where the corporate entity is split into operating divisions, which division is going to take the "hit" if the case settles.
Whether there are any corporate acquisitions or mergers on the horizon -- or any major upheavals in management -- that might suggest that the executive team green-lighting the litigation is on its way out and less litigation-friendly management about to come on the scene.
Whether other litigation on this same issue, product, financial practice, etc. is pending, making the possibility of bad precedent an issue for any eventual settlement "team."
How can you obtain answers to these questions during a deposition when none of them are relevant to the subject matter of the action or likely to lead to the discovery of admissible evidence? The same way you do everything else in your legal practice -- with chutzpah, imagination, creativity, preparation and sheer good luck.
I'd innocently sprinkle most of these questions into the background portion of the deposition when opposing counsel is generally less attentive than during "substantive" questioning. You can also get away with "it's just background, counsel" when s/he begins to awake with his/her morning latte. If it's a big case with less experienced attorneys assigned to less important depositions, I'd first ask these questions of low level corporate representatives who might be, shall we say, under-represented.
Then there's always simple dumb luck. When I was a first year taking one of my first depositions, opposing counsel fell asleep after lunch! He was snoring while his client innocently waited for me to continue questioning him as if this were a normal event!
I genuinely didn't know what to do. Could I legitimately and ethically continue to question my opponent's client in his "absence"? I suppose a more experienced or aggressive attorney might have done so. But because it just didn't seem right to me, I woke him up before continuing with my line of questioning.
Some defenders, however, might just as well be asleep. As I teach my NITA students, you can do that which you can (ethically) get away with in a deposition. And that is quite a lot if you are a skillful poker player who doesn't let on that the questions you're asking might be strategically beneficial even though entirely irrelevant to the substance of the litigation.
It's the beginning of a new "school" year. Go get 'em!
Robert Shaprio, one of the members of O.J. Simpson's "Dream Team" has settled a whistle-blower wrongful termination case on his law firm's behalf with his former secretary who claimed she was fired for exposing wrongful billing practices.
[Shapiro had earlier been dismissed from the lawsuit and was not, therefore, an individual party to the resolution].
Lawyers for James and the Christensen law firm appeared before Los Angeles Superior Court Judge John Shepard Wiley Monday, saying both sides agreed to all terms and that the defense will prepare the final document for signatures.
Wiley said he was pleased to hear of the agreement in principle. "To try this case would have been nasty," Wiley said. "Neither side would have had a pleasant experience." The judge said the settlement avoids the uncertainty James and the Christensen law firm would have faced had the case gone to a jury, which was scheduled for trial Sept. 11. He urged the lawyers to put the settlement in final form soon before any last minute disagreements develop.
"Let's get this in the can," Wiley said.
Outside the courtroom, James' lawyer, Patricio T. Barrera, said the terms are confidential and therefore his client, who was present in court, cannot comment.
Why am I reading Deepak Malhotra's and Max H. Bazerman'sNegotiation Genius in my comfy funky beach shack ON THE SAND on the windward side of Oahu at 8:45 a.m. (local time) listening to the waves gently slap the shore and occasionally looking up to see if the fisherman at water's edge has caught anything besides happiness this morning?
Am I insane? No, it's because:
no one taught me to negotiate in law school and despite being an B+ to A+ litigator for twenty-five years, until I met Peter Robinson at the Straus Institute, I was a C- negotiator. So learning these skills reminds me learning how to read in kindergarten (yes I do remember, running home at full speed, bursting through the front door and chortling to my mother, "I can spell 'red' Mommy, RED! It's R-E-D red!")
Bazerman and Malhotra have been my "distance learning" zen negotiation masters through the Harvard Business School Working Knowledge Newsletter for the past year and I would read with high expectation and rapt attention anything they scribbled on a napkin in a bar after a couple of drinks.
who could resist any negotiation book with chapters entitled: Negotiating from a Position of Weakness and Confronting Lies and Deception, both of which I avidly and happily consumed this morning after watching the sun rise over the Pacific around about 6 a.m.
That's it. I will be providing the executive summaries of these and other dynamite chapters for you attorneys who are billing 2000-2300 hours/year and any business manager or executive who drops by. Most of my mediator friends will be consuming it whole.
Right now, I'm putting Bazerman and Malhotra aside to follow Mr. Thrifty to the beach, clutching the new (and fabulous) new biography of Einstein in hand -- a man whose childlike wonder at the mysterious workings of the universe never faded.
This post brought to you by the letter "A" for awe.
Charlie Brofman, the CEO of CyberSettle, started his legal career as a criminal prosecutor in the Bronx and ended it as a civil trial lawyer in New York City.
Then he engaged in two activities so contrary to the stereotype of a New York City trial attorney that you feel you've entered the Seinfeld episode with Bizarro Jerry and Kramer and George.
First, Brofman went into business with opposing counsel. Then he chose algorithms over stare decisis.
Yes, numbers, ladies and gentlemen. Algebraic, trigonometric, calcuanalytic maddening mind-numbing numbers. The entire reason most lawyers go to law school in the first place. Because they can't do math.
How Does Cyber-Settle Work and Will It Put Lawyers and Mediators Out of Business?
Even a mathophobic such as myself can easily understand and use the CyberSettle system. Here's how it works (unless, of course, I'm wrong; in which case I'm counting on Charlie to correct me).
You've got an auto accident case and a 15/30 policy. We'll make it easy with a single injury -- soft tissue -- and $5,000.00 in medical specials. Liability is 50-50 and, well, you do the math for the probable jury award were anyone taking cases like this to trial anymore.
Plaintiff's counsel and the insurance carrier (with or without counsel) each submit three blind offers (online) and agree that they will "split the difference" if any set of those three numbers comes within $2,500 of the other's number.
No one but the offeror will ever know what these figures are, not even CyberSettle, unless the parties: (1) settle automatically online; or, (2) authorize the disclosure of the numbers for the purpose of working out a deal -- possibly with one of the neutrals with whom CyberSettle contracts to mediate the settlement.
As you can see, the automated system works a little like a mediator's proposal (the double-blind offers) without the mediator making a proposal.
Give Us An Example
Say the Plaintiff's demands are policy limits -- $15,000 -- then $12,000 and finally $10,000. The insurance carrier's are $2,500, $5,000 and $8,000.
The algorithm will compare the first two numbers against one another -- $15 and $25. They don't match and they're not within $2,500 of one another. The computer program will move on to the next two numbers. Once again, $12,000 and $5,000 are neither a match nor within $2,500 of each other.
Finally, the computer hits the parties' Zone of Potential Agreement (the ZOPA). Plaintiff is willing to accept $10,000 or split the difference between eight and ten. The carrier is willing to pay $8,000 or split the difference between ten and eight. Voila. The case settles for nine.
Will This Take Business Away from Mediators?
My answer to this question is -- I sure hope so.
Because these are the kinds of cases that don't require face to face (or phone to phone) negotiation, let alone third-party facilitation by a mediator.
I am informed that more than 100,000 lawyers have used this system, including many name-brand insurance companies. I'm also informed that CyberSettle facilitated the settlement of somewhere between 12,000 and 15,000 cases last year and sent another sizable group to live mediators when the parties authorized CyberSettle personnel to take a look at the bidding to determine whether they were "close enough" to warrant human follow-up.
But don't think this service is only for the slip and fall at your local Ralph's or the 15-mph fender bender at the corner of Merchant and Main. Recently, two litigants settled a case that had been in litigation for eighteen months for $12.5 million in eleven minutes using CyberSettle.
The average settlement, however, is in the numeric range you'd expect it to be, between $10 and $20,000 with an average fee paid to CyberSettle of $210 per case. (Here's the CyberSettle Price List).
I like it. If the parties with these smaller can can use an on-line bidding system without filing suit or, if the case is litigated, before much money is spent on litigation, it could speed money to those in need and reduce expenses for all concerned.
I'll begin worrying about losing my day job to a computer when they make one that can understand the Rule against Perpetuities.
First, the scope of review available for an arbitrator's ruling is significantly limited. . .
Second, the conventional time and cost-savings of arbitration may be lost in class proceedings, since each of the interim phases related to class- and merits- arbitral awards will carry with them potential burdens relating to discovery, briefing, hearings, and time, money and effort spent in obtaining judicial review at each of the various phases, which will not necessarily be present in individual arbitrations.
Third, the parties' arbitrator selection process will likely be guided by different factors in a class arbitration proceeding than in an individual arbitration, since the fate of all of the class claims will be decided by a single arbitrator or panel.
Fourth, the specter of class arbitration disposes of the presumption of privacy and confidentiality in arbitration.
Part II of this two-part article will address potential means for companies and practitioners to attempt to avoid these and other pitfalls of class arbitration.
Don't let this summary lead you to believe that this article is not extensive, thorough and deep. If this is a topic of interest to you, this is one of the best articles on the topic I've seen. Do click on the above link and take a peek.
What Does a Class Action Lawyer See (right)? CLIENTS!
The AP reports a proposed class action settlement (pending judicial approval) of $10.5 million. If you read between the lines of the report, you'll see that this was apparently a good deal for the defendants.
Why? Because the Board of Directors charged with encouraging their employees to place their pension funds in risky investments (ENRON ring a bell?) did not simply hunker down in a defensive posture when sued, but instead provided the company's former employees with "numerous enhancements" to their pension benefits.
According Plaintiffs' counsel Steven Krasner, "[t]hose benefits were very substantial If you add the $10.5 million to that, they did a pretty decent job to make people whole."
The defendants' public statement was the usual -- "[i]t's always more efficient to resolve the issues in a case rather than follow through the courts" -- according to spokesman Al Butkus.
Though the public generally sees a statement like this to be corporate %$^#, as we all know, it also happens to be the actual verifiable truth.
The Strategic Defensive Use of the California Consumer Legal Remedies Act
The California Consumer Legal Remedies Act, by the way, is a good face-saving device to bring your clients into strict compliance with consumer demands, thereby sharply reducing the settlement value of the class action or 17200 suit that invariably follows.
The CLRA requires a pre-suit demand by the plaintiffs, thereby giving the defense an opportunity to mend its ways.
In my own litigation experience, compliance with a CLRA demand to change the way a product or service is advertised is a relatively pain-free way to drastically reduce your clients' damage exposure. My client did this in response to an accusation that its advertising was misleading. Though we disagreed, the client nevertheless changed its advertising to reveal the allegedly concealed transaction fee.
As a result, Plaintiffs' counsel accepted an unprecedented injunction-only remedy coupled with a few hundred thousand dollars in attorneys fees to settle the case -- a far better deal than the dozens of other defendants in this national class action were able to achieve.
First, because our compliance with the CLRA demand made our client look like a good guy -- ruining the Plaintiffs' "spin" that all defendants were evil profit hungry businesses preying upon innocent victims (cf. the new Glenn Close series Damaged).
Second, because the Plaintiffs' attorneys (who are, remember, people) were favorably impressed and kindly disposed to us after we complied with their demand rather than simply burying them in paperwork -- well, we did also bury them in paper by strictly complying with their document demands, but that's litigation -- speak softy, carry a stick and remember the rule of reciprocity.
Here's one of those stories (Judge Criticizes Fee in Lawsuits) that people cite as good reason to hate lawyers (someone, by the way, recently said, you love your own lawyer and hate everyone elses').
This article, by Joseph Neff at McClatchy Newspapers, recounts a harshly criticized class action settlement that netted the attorneys nearly one million dollars in fees and the "injured consumers" $2,402.
Now, I've both prosecuted and defended class actions in my own legal career -- enough to do so competently, but not enough to know what I can't do. I settled one of the few class-actions I defended for injunctive relief only (promises never to do the alleged bad deed again) together with a few hundred thousand dollars in attorney fees.
The Judge who approved this settlement is notorious for his refusal to approve class compromises that excessively reward the attorneys and inadequately compensate the class. He is, for instance, a harsh critic of "coupon-only" settlements, i.e., settlements giving the class coupons to purchase the offenders' goods - settlements that act more as free advertising for the product than compensation for the plaintiffs.
Still . . . . if the class action is only marginally viable, it makes sense for the defendant (and the Court) to satisfy the attorneys with an award of fees without making the defendant spend millions of dollars to compensate a class whose injuries or right to proceed is highly questionable.
Why the below referenced settlement met with the court's scathing criticism, we'll probably never know. The big disparity in numbers coupled with the court's "outrage" (it's amazing how easily "outrage" comes to attorneys and judges, by the way) makes headlines. The eventual resolution of the matter rarely does.
Link to the story and excerpt below:
RALEIGH, N.C. --An N.C. judge has harshly criticized the settlement of a class action lawsuit in which a Wilmington lawyer and colleagues received $950,000 in fees while injured consumers across the country were reimbursed a total of $2,402.
Superior Court Judge Ben Tennille decried the excessive fees and the lack of effort made to reach customers who had been overcharged for wheel alignments at Sears automotive centers. Tennille, who specializes in complex business cases, criticized Sears and the lawyers for trying to hide the settlement results from him.
"Their efforts to keep the results secret are understandable," Tennille wrote in his May decision. "The shocking incongruity between class benefit and the fees ... leave the appearance of collusion and cannot help but to tarnish the public perception of the legal profession."
Sears is appealing Tennille's decision and declined to discuss the case.
Gary Shipman, a Wilmington lawyer who led the class action lawsuit, attacked Tennille's order as wrong on the law and filled with factual errors. Shipman complained that Tennille issued his ruling out of the blue, two years after the last hearing in the case. And Shipman said the judge did not have jurisdiction and therefore did not have the power to make decisions in the case.
"Writing a brief," counsels McElhaney, is like trying a lawsuit."
You start with your theory of the case—the basic idea that not only explains the legal theory and the factual background but also ties as much of the evidence as possible into a coherent, credible whole.
That means making choices. You throw out arguments that aren’t plausible.
You pick between the inconsistent legal theories. You cull out the weak points. You toss out whatever gets in the way. You discard what doesn’t need to be said, even if it doesn’t hurt.
What’s left is tight. Lean. Spare. It crackles with power because it’s undiluted with stuff that doesn’t matter.
Doesn't trial and motion practice focus on the parties' positions, you ask, and the settlement of litigation on the parties' interests.
Yes, but only after you've established that you have the ammunition necessary to make your adversary your partner in the mutual problem of making the litigation go away for a price (or on terms) that make a negotiated agreement far better than potential victory at trial.
I tell people that I prefer the symmetrical to the "asymmetrical" lawsuit -- both as a litigator and as a mediator. What is an asymmetrical lawsuit? One where the plaintiff is an individual represented by an over-burdened sole or small practice contingency fee litigator and the defendant is a repeat player -- an insurance carrier or other "deep pocket."
Why? Because all too often the plaintiff is unwilling (or unable) to devote the resources necessary to pose a real threat to the defendant's interests (costs of defense and potential verdict or judgment) despite the merits of the plaintiff's case.
In these cases, the defendants can afford to wear the other side down in court (why should I settle?) and often resist settlement because they firmly believe they are victims of legal extortion (yes, this applies even to insurance carriers who work by and through people who resist and resent being pushed around by an aggressive opponent who appears to be bluffing).
Although it is important to convince the mediator that your case has real merit and genuine potential for judgment, it is critical to impress your opponent with:
Your theory of the case in which the evidence tells a coherent, credible story, and one of injustice that a court or jury might respond to with sufficient passionate intensity to inflict some "unjust" harm on your opponent; and,
Your ability to make good choices -- "throw[ing] out arguments that aren't plausible," "backing up those that are with the least amount but most compelling detail," and "pick[ing] between the inconsistent legal theories. . . . cull[ing] out the weak points . . . toss[ing] out whatever gets in the way. . . [and] discard[ing] what doesn't need to be said. . . "
If "[w]hat remains "is tight. Lean. Spare. . . . crackles with power" you'll force your opponent to do some intensive interest-based negotiation to arrive at a settlement that is best for both of you.
Making Money Talk is a valuable contribution to the conflict field. Andy Little correctly identifies the weakness in traditional needs-based mediation for quite a wide variety of cases, yet shows how the basic value of a facilitative, client-centered, process-oriented, communication-focused approach is still essential to money cases. This guide is well written and presented--it's a pleasure to read." Bernie Mayer, Professor, Werner Institute for Negotiation and Dispute Resolution, Creighton University, Omaha, NE
The publishers say:
Learn how to effectively deal with the peculiar problems of traditional bargaining that you face when negotiating the settlement of civil litigation cases. This new guide written by an experienced litigator and mediator will help you understand why negotiations of insured claims are difficult to get started, why they become increasingly emotional as the parties engage in round after round of proposals and counter proposals, and how they can be settled with models and techniques that have been tested in thousands of civil trial court mediations.
With these proven models and techniques--essential for the novice or seasoned professional--you will:
gain a better understanding of the dynamics of money negotiations
be able to identify the recurring problems of traditional bargaining
learn facilitative tools and models to use when positional bargaining is unavoidable
In addition, this resource provides litigators, negotiators and insurance claims representatives with the strategies necessary to prepare for settlement negotiations and avoid the many pitfalls that exist in the negotiation and settlement of civil litigation. If you're involved in a negotiation that involves a monetary settlement, this book is an invaluable tool to help you reach a favorable goal.
$42.00 regular price; $35.00 [ABA] Section of Dispute Resolution member price
In apportioning wrongful death settlement proceeds among the plaintiffs under CCP 377.61, the Court is not limited to the evidence produced in the action nor that upon which defendant relied in caluclating the settlement sum. The evidence in this case, however, did not justify an allocation of settlement proceeds 90 percent to the daughter and 10 percent to her step-mother even though the daughter's witnesses testified that her father intended to divorce his wife.
There's a nice article on those situations in which attorney-mediators might serve litigants as well, or better, than former jurists in the July 2 edition of Lawyers Weekly ADR (give them your name, rank and serial number and you'll get a free 6-week trial to see whether a subscription is worth the price).
A lawyer with extensive courtroom experience is able, as a mediator, to understand and communicate the risks of mixed-blessing jury findings that give with one decision about a monetary award and take back with another that slashes the amount because contributory negligence was perceived.
To be sure, in court, even when you win, you don't always come away with what you thought you had won.
In the ADR process, parties often hear the "other side" of the case for the first time. It reinforces a humbling truth worth remembering: Very rarely does one side have a monopoly on valid arguments.
Just as important is the mediator's ability to avoid undercutting attorney-client relationships or compromising legal strategies. A knowledgeable lawyer is well positioned to navigate that sensitive course, respecting each side's need to avoid feeling coerced or backed into a corner.
The ADR process provides an open forum conducive to helping the parties involved in a dispute address the issues in good faith, explore acceptable remedies and shape the outcome. That sense of self-determination and of having a timely "day in court"— without gambling on six jurors unfamiliar with the issues — greatly increases the likelihood of satisfaction in the end.
When lawsuit adversaries emerge with an acceptable agreement they shaped after being heard by a dispassionate observer retained at their shared expense, justice is served. Sometimes the deal goes beyond dollars and cents to include an apology or expression of regret — a meaningful gesture no jury can provide.
Though I agree with Blake's analysis of the benefits of hiring an attorney-mediator, he writes primarily from an evaluative rather than a facilitative viewpoint. I would therefore add the following to his list, particularly where the settlement being negotiated is one necessary to settle commercial litigation.
because most attorneys have run their own businesses (or at least participated in the management of their law firms) they are able to understand the business needs, desires, interests and fears of the commercial adversaries, i.e., they can speak the litigants' language
former commercial mediator litigators, particularly when hired in a specialty industry such as the garment, manufacturing, professional services, and software businesses (to name a few) also understand the complex relationships between counsel and client, as well as the communication gaps that can occur over time during the litigation of any commercial case.
the experienced attorney mediator not only knows how the lawyer views the case, having now mediated hundreds of commercial cases, s/he also knows how the clients continue to view the dispute (as a commercial, not necessarily a legal, problem) and how wide the gap between those two points of view can be.
because the attorney-mediator first made his living in private practice based upon his continued beneficial relationship with his clients and his reputation in the community, s/he is not only attuned to the way in which lawyer-client communication gaps can be bridged, but also how to leave both parties with their sense of justice, dignity, professionalism and humanity intact.
perhaps most importantly, a commercial litigator-mediator knows how to plan, execute and close a deal.
There are more, but I must leave you to begin my holiday.
Happy 4th of July to you all!
/* Blake is a certified general civil mediator and founding partner at Detroit-based Blake, Kirchner, Symonds, Larson, Kennedy & Smith, P.C. His more than 25 years of experience includes mediations, facilitations, arbitrations and special case evaluations as well as representing plaintiffs and defendants in a range of civil litigation matters.
Once again, the trial courts are trying to mess up mediation confidentiality by judicially creating (legislating?) exceptions to the confidentiality statutes. When faced with a public policy that competes with California's strong public policy favoring mediation confidentiality, the trial courts too often seem to tip the balance the wrong way by inventing unwritten exceptions to the law. Luckily, in the recently-penned decision in Wimsatt v. Superior Court (Kausch) (Cal. App. No. B196903), the appellate court fixed things up...although it was clearly not happy about it.
Wimsatt involves a legal malpractice action against a prominent plaintiff's personal injury firm. In the trial court, the former client and malpractice plaintiff claimed that the law firm "breached its fiduciary duty by significantly lowering [the client's] settlement demand without his knowledge or consent." The client claimed he first learned of this fact from the confidential mediation brief that was provided to the mediator. You can see the public policy conflict already, can't you?
In the malpractice action, the client reasonably enough wants to obtain and introduce the smoking gun mediation brief, the one on which his entire case rests. However, as California practitioners should know by now, there is a slight problem with the plaintiff's wish: Evidence Code Sections 1115 et seq., and in particular Section 1119. California is serious, and rightfully so, about protecting the very cornerstone of mediation -- confidentiality. Under Section 1119, no mediation communications, including mediation briefs, are admissible in court. This has been reaffirmed time and time again by the Supreme Court (go reread Foxgate and Rojas if you don't believe me).
So what happened in the Wimsatt case? According to the opinion, in the underlying personal injury lawsuit, the client's lawyer made a comment to the personal injury defense counsel that it might be more appropriate to discuss settlement in the $1.5 million range rather than the $3.5 million range they had been discussing before. Because of this comment, claimed the client, he was forced to settle his personal injury case at mediation for an amount that was much less than the case was worth. Despite agreeing to the mediated settlement, the client brought a malpractice claim against his attorneys claiming he could have done better if only....
In February 2004, CPR received the highest satisfaction ratings in ADR performance in a survey of General Counsel and their Deputies by Corporate Legal Times.
CPR was the first organization to bring together Corporate Counsel and their law firms to find ways of mitigating the extraordinary costs and delays of litigation, while achieving more satisfying and lasting results through appropriate alternatives, like negotiation, mediation, and arbitration.
CPR works around the globe, serving as a primary multinational resource for avoidance, management and resolution of business-related and other disputes.
Most recently, in partnership with The China Council for Promotion of International Trade (CCPIT), CPR established the U.S.-China Business Mediation Center in New York and Beijing.
CPR is a membership-based, nonprofit alliance of global corporations, law firms, scholars, and public institutions dedicated to the principles of conflict prevention and solution through alternative dispute resolutions.
CPR's proprietary Panel of esteemed arbitrators and mediators has provided resolutions in thousands of cases, with billions of dollars at issue, worldwide.
CPR's wealth of intellectual property and published material has educated and motivated corporate legal departments toward an increased reliance on alternatives to litigation. Much of this material is targeted toward specific industries and practice groups.
If you're in need of authority to enforce an existing (but perhaps ambiguous) settlement agreement, take a look at today's 2d DCA opinion, Osumi v. Sutton.
In holding that the trial court had "the power to extend the deadline for the performance [of a real estate sales settlement contract] in favor of a party who was not at fault for the delay and against the party who was at fault," the Court relied upon the following general principles favoring the enforcement of settlement agreements under CCP section 664.6.
In determining whether a valid settlement agreement under section 664.6 exists, the trial court,
acts as the trier of fact
may consider oral testimony
may determine the motion upon declarations alone
may consult his [or her] own memory if s/he was the settlement officer presiding over the challenged settlement
More importantly, although "nothing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon,"
[o]nce the parties have reached a settlement . . . they 'may not escape their obligations by refusing to sign a written agreement that conforms to the oral terms' [and] with our policy favoring settlements, we resolve all evidentiary conflicts and draw all reasonable inferences to support the trial court's finding that these parties entered into an enforceable settlement agreement and its order enforcing that agreement. The trial court here did not create a material term of the settlement.
Just when you say the mediation privilege would prevent the parties from disclosing such matters as settlement authority and the activities of party representatives, along comes an out-of-state federal opinion that makes you glad you live and practice in California.
Although the District Court in Bauerlein v. Equity Residential Properties Management Corp.Slip Copy, 2007 WL 1521606D.Ariz.,2007.May 22, 2007 refused to award the costs of an unsuccessful mediation against parties whose representatives left the mediation "early" there was nary a word spoken about confidentiality of the proceedings.
Arizona and Federal Protections for Confidential Mediation Communications
It's not that Arizona doesn't have such a privilege. We understand that A.R.S. § 12-2238 recognizes as privileged and confidential "[c]ommunications made, materials created for or used and acts occurring during a mediation." (emphasis added).
Nor do the federal courts lack protections for mediation communications. Under 28 U.S.C.A. § 652(d), mediations conducted pursuant to federal court ADR programs are required to be protected by local rules, which "provide for the confidentiality of the alternative dispute resolution processes and to prohibit disclosure of confidential dispute resolution communications."
Therefore, whether protected by federal or state law, you would have expected that the parties accused of conducting themselves in "bad faith' would have objected to the introduction into evidence of one or all of the following mediation communications and activities:
the identity of carrier representatives attending;
when and why those representatives left the mediation;
the mediator's or the parties' explanation of the reason for the representatives departures, i.e., because there was a "vast divergence of the estimates of the value of the claims"
why one party put no money whatsoever on the table (because it was essentially judgment proof as a Taiwanese corporation without any U.S. holdings")
the mediator's statement to at least one of the carrier representatives that the case would not settle "based on the parties'individual evaluations of the claims because they were too far apart and had too divergent estimates of the value of their claims"
the mediator's approval of the carrier representatives leaving the mediation so long as counsel was left with authority to settle the claims.
Just as importantly, attorneys mediating their disputes should familiarize themselves with the laws applicable to the confidentiality of the proceedings -- particularly when they're in federal court where the applicable law is not as certain as it is in the state courts. See the following commentaries on the federal Northern District of California Olam opinion (largely disapproved in California) here and here.
It's my experience that most attorneys are completely unaware of the scope and nature of the mediation privilege under which they are operating. If we don't want this inexpensive "alternative" procedure to become a breeding ground for litigation over party mediation tactics, then we should make sure we learn, and follow, the applicable mediation protections, privileges and guidelines less we stumble into disclosures that need not be made. See Disputing Irony, a Systematic Look at Litigation about Mediation
Here in California, and I suspect in many other states, the Court cannot sanction "bad faith" negotiations because all of the parties' communications at a mediation are confidential.
I've often had attorneys ask me, however, whether they can bring to the Court's attention the fact that a claims adjuster, for instance, did not "show" at the mediation. Can't they seek sanctions for that "bad faith" they ask.
This is the question the Ky Law Blog asks and answers today under Louisiana law as interpreted in a nonpublished appellate opinion, Sullivan v. Anderson. In that case, writes attorney and blogger Michael Stevens,
the defendant's attorney . . . arranged for the date, time, location, and mediator and notifed the pro se litigant who did nothing.
[A]ffirming [the trial court] . . . a Jefferson Circuit Court . . . held that although a party was not obligated to attend the "agreed" upon mediation, he was obligated to notify the other side he would not attend so as not to waste the mediator's time. . . [The appellate court opined]
We agree with [the pro per plaintiff] Sullivan and the trial court that Sullivan was not obligated to attend the mediation since it was not ordered by the court. However, [defense counsel] did not have any reason to know that the parties had not agreed on mediation since Sullivan did not inform her that he did not agree to the arranged mediator and mediation date. [*]
A Kentucky court “may invoke its inherent power to impose attorney's fees and related expenses on a party as a sanction for bad faith conduct, regardless of the existence of statutory authority or remedial rules.” (citations omitted).
The Parade of "Bad Faith" Mediation Horribles
Mr. Stevens justifiably marches out the following parade of horribles that this opinion could lead to, such as awards of sanctions when:
the insurance defense lawyer shows up at mediation without the adjuster or the insured and rel[ies] upon the adjuster's attendance by telephone[;]
the adjuster in attendance . . . not hav[ing] settlement authority extending to the policy limits[;]
the adjuster ha[ving] to leave early[; and,]
the adjuster with higher authority [not being] available by phone, or . . . delays in contacting the adjuster by telephone[.]
Are Sanctions Available in California for "Bad Faith" Mediation Practices?
Because Evidence Code section 1120 expressly exempts any "agreement to mediate a dispute" from the protections of section 1119, a California court could presumably sanction a party for failing to appear at an agreed upon (or court ordered) mediation.
Moreoever, a party''s mediation conduct, such as a defendant's failure to bring a claims adjuster or the plaintiff's attorneys failure to bring his client, would not likely subject either party to sanctions.
Section 1119(c) prohibits a party from disclosing "[a]ll . . . negotiations . . by and between the participants in the course of a mediation or a mediation consultation." Interpreting this section broadly and strictly as our Supreme Court requires would likely result in the denial of sanctions because the choice of individuals to represent party interests is an integral part of the "negotiation" between the parties. **
Finally, section 1119(a) most certainly forecloses an award of sanctions based upon offers made or not made during -- or authority possessed or not possessed at -- a mediation. Those facts could only be learned as a result of something "said . . . for the purpose of, in the course of, or pursuant to a mediation" and therefore fall squarely within section 1119(a).
** We find this one of the strangest and most illogical formulations we've heard from any appellate court anytime, anywhere -- a dangerous one at that -- and contrary to the law of contracts. Since when does an agreement exist when party A proposes X to party B, who does not respond? Since when is an agreement formed when party B neither accepts nor rejects it?
*** The American Heritage Dictionary (2000) defines the verb "to negotiate" to mean and include, inter alia, "[t]o arrange or settle by discussion and mutual agreement: negotiate a contract."
The referenced "oddity" in American trial law? The peremptory challenge that permits lawyers to exercise more or less control over the final composition of the jury than some believe is warranted in an aspirationally color-blind justice system. As Adam Liptak reports,
Justice Thurgood Marshall wrote that . . . . “peremptories inject [racial discrimination] into the jury selection process[, the elimination of which] . . . “can be accomplished only by eliminating peremptory challenges entirely.”
Two years ago, in the Miller-El case, writes Liptak, "Justice Stephen G. Breyer appeared to endorse that view, saying that “peremptory challenges seem increasingly anomalous in our judicial system[,]” writing that
England has eliminated peremptory challenges but “continues to administer fair trials based largely on random jury selection.
Liptak concludes by suggesting that
Peremptory strikes are an odd and arbitrary historical artifact. Unlike equal protection, they are not guaranteed by the Constitution, and in capital cases — where race matters most — they would not be missed.
The settlement angle on this? You can see it coming.
In American urban courtrooms throughout the country, settlement decisions are commonly based upon the probable racial, ethnic, gender, and socio-economic composition of a jury that will eventually give their thumbs up or down on the Plaintiff's case. If settlement decisions are governed by audacity on the Plaintiffs' side and fear on the defense side, both are often pinned upon the presumed "passion and prejudice" the "have nots" will bring to decisions affecting the "haves."
And as the gulf between these two groups widens, the fear on the defense side has become more palpable. *
Is this any way to run a justice system in a racially polarized society?
The White Reaction to the Black Reaction to the O.J. Verdict
We talk about "race cards" in this country because of the O.J. Verdict. It wasn't so much the result of the O.J. trial that shocked America, as it was was the white reaction to the black reaction to the verdict.
As Harvard Professor Henry Louis Gates, Jr. wrote in the aftermath of that trial (Thirteen ways of looking at a black man’ (23 October 1995), the phrase
’ “race card” … itself infuriates many blacks. [Federal Appellate Court] Judge Leon Higginbotham Jr. . . .[said of] charges that Johnnie Cochran played the race card. “This whole point is one hundred per cent inaccurate. . . . If you knew that the most important witness had a history of racism and hostility against black people, that should have been a relevant factor of inquiry even if the jury had been all white .. .
[Academic and activist] Angela Davis [says] ... “Race is not a card,” she says firmly. “The whole case was pervaded with issues of race.” ’
Is Race a Card?
This is too big a question for this post. I grapple with this issue an upcoming article in the LaTrobe University Dispute Resolution Journal (Vol. No. 1, so you won't yet find it online) and will link to it when it is published.
In analyzing the potential pre-trial settlement of an action, the attorneys consider everthing to be a potential "card." If the stakes are high enough, they hire jury consultants to advise them how to select a jury that favors their side because trial lawyers are advocates looking for a jury that will be prejudiced in their favor.
This is not news. It is the judge and the jury that are supposed to be neutral, not the trial attorneys. And if they can increase their chances of winning by leaving African Americans or Koreans or the marginally employed on a jury, they will do so. If it helps their case to use their peremptories to empty the jury box of women or Gen-X'ers or engineers or African-Americans, they will do that too.
And This Has What To Do with Settlement?
For a negotiated agreement to do the job of resolving the dispute in a better way than its alternative -- trial -- the parties and the mediator will have to grapple with the racial and ethnic and gender elephants in the room.
And it may just be that a mediator who is capable of setting aside his or her prejudices long enough to look past issues of race, ethnicity, nationality, obvious religious affiliation, and gender, might be the one who is most capable of helping the parties achieve something that resembles justice.
* By the 1980s the United States had become the most unequal industrialised country in terms of wealth. The top 1% of wealth holders (the ‘Super Rich’) controlled 39% of total household wealth in the United States in 1989, compared to 26% in France in 1986, about 25% in Canada in 1984, 18% in Great Britain, and 16% in Sweden in 1986. More than 46% of all outstanding stock, over half of financial securities, trusts, and unincorporated businesses, and 40% of investment real estate belong to the super rich. The bottom 90% are responsible for 70% of the indebtedness of American households. Wolff, How the pie is sliced: America's growing concentration of wealth’ (1995) 22 The American Prospect 58.
We've been following the case of Simmons v. Ghaderi since the opinion appeared in October of last year. The case went up to the California Supreme Court for review in December '06. The issue, as defined by Dr. Ghaderi is:
whether there can be an enforceable settlement agreement when all evidence upon which it is based is inadmissible under the mediation statutes.
As our previous commentary on this case indicates, we believe this accurately states the matter at issue and the source of the lower court's error. That commentary, along with a mediation analysis using the Simmons' facts as a hypothetical, can be found here, here and here.
Once upon a time (at least 20 years ago) a Superior Court Judge confided in me that if s/he were overwhelmed with work and facing a calendar call, s/he would read the reply brief only "because it contained all the arguments."
This did considerably alter my briefing habits.
Here the Reply covers most of the arguments in the Opening Brief and the responses to the Opposition, which I haven't seen. If anyone wants to send it along to me, I'll post it too.
The year's must-read California Litigation Journal article is Justice Ignazio Ruvolo's "It's Time to Re-examine the State of Civil Litigation in California." You have to be a member to read the issue on-line (here Crisis in the Courts?) but if you're not, find a friend who is and steal her copy.
Justice Ruvolo begins his concise history of the state of California's courts by suggesting that "if your bar number has fewer than six digits, then you doubtlessly witnessed firsthand the crisis that was the progenitor of the current state of civil litigation in California."
He not only proceeds to swiftly chronicle the way we got to mega-firms, six-figure first year associate salaries, and partner-free-agency, but also to question whether the Courts are doing the public a disservice by continuing to provide ADR services. A few thought-provoking excerpts below:
If the courts intend to stay in the ADR business for all time, some complain that they are not now competing with private ADR very successfully. One reason for this non-competitiveness is inadequate funding . . . . [C]ourts cannot afford to provide uniform training for mediators or to pay for mediation services and must rely on voluntary panels which compete with fee-generating private ADR for the time of neutrals. Some believe that the courts must necessarily impose a level of procedural uniformity for court-sponsored ADR that is inimical to the creativity and flexibility that is at the heart of successful mediation.
Of perhaps greater concern is the growing view that ADR-related activities by the trial courts are diverting money and resources away from the judiciary's core role: that of providing adjudicative processes to litigants . . .
Since ADR has truly become part of the legal system's culture, perhaps then the courts could safely leave ADR largely to the private sector. If the judiciary limits its role in ADR it will have the associated benefit of freeing judicial resources needed to shore up the court's adjudicative services. Case management, as it relates to ADR, might focus on locating those cases in the civil justice system that are suited for non-traditional resolution but which lack the financial resources to employ ADR. These are the cases that should be the beneficiaries of court-sponsored ADR.
Appellate opinions concerning the enforceability of mediated settlement agreements are coming fast and furious.
If you haven't prepared your form term sheets and memoranda of understanding by now, you might end up litigating the settlement whose purpose it was to stop the litigation.
Oh the irony!
Today's case Irvine v. Regents of University of California (4th Dist. 2007) was decided on a narrow procedural ground, leaving at large the questions of fraud, duress and mistake alleged by the Plaintiff as a bar to enforcement of her mediated settlement agreement.
The narrow issue here was whether a party could be excused from meeting the deadlines imposed by California Rule of Court 3.1385 simply by asserting that the challegned settlement agreement was uneforceable.
The Irvine Court, reversing the trial court's Rule 3.1385 dismissal, answered the question in the affirmative, explaining:
The only decision before the court at a rule 3.1385 hearing is whether to dismiss the case or restore it to the civil active list. By alleging a dispute over whether the parties reached a binding settlement, plaintiff demonstrated good cause to restore the case to the civil active list. In reaching this conclusion, we have not considered whether any of plaintiff's contentions have merit.
If you want your agreements to be durable take the time to read the case law, check the statutory provisions and, yes, even read the Rules, like 3.1385 here, which requires that an action be dismissed within 45 days after the Court receives notice of settlement unless good cause is shown why the case should not be dismissed.
In October of last year, defendant Joe (Girls Gone Wild) Francis was ordered to private mediation in a Florida civil action. That mediation, to say the least, went badly.
Florida's mediation confidentiality protections apparently include an exception for threats of physical violence. It was this exception upon which Plaintiffs relied in telling the following tale out of mediation "school."
Francis [arrived at the mediation] wearing sweat shorts, a backwards baseball cap, and was barefoot. He was playing [with an] electronic device. As [plaintiffs' counsel] began his presentation, Francis put his bare, dirty feet up on the table, facing plaintiffs' counsel.
[Plaintiffs' counsel] said four words, "Plaintiffs were minor girls," when Francis barked, "are the girls minors now?" Continuing, [Plaintiffs' counsel] said, "plaintiffs are minor girls who were severely harmed by Defendant."
Francis then erupted. "Don't expect to get a fucking dime -- not one fucking dime!" This was Francis' mantra which he repeated, about fifteen times, during his tantrum that ensued. "I hold the purse strings. I will not settle this case, at all. I am only here because the court is making me be here!"
As plaintiffs' attorneys were leaving, Francis' threats escalated. "We will bury you and your clients!" Francis threatened. As [Plaintiffs' counsel] walk[ed] out of the room, Francis got up and faced off with [him] . . . bark[ing], "I'm going to ruin you, your clients, and all of your ambulance chasing partners!"
Francis' aggressive move and threats to "bury" and "ruin" [Plaintiffs' counsel] were clearly an assault . . . intended to . . . prevent the mediation from ever beginning. As a result of Francis' assault . . . no mediation as to Francis as an individual defendant ever occurred.
Francis then made the only offer he was to make that day. "Suck my dick," Francis shouted repeatedly, as plaintiffs' counsel left the mediation room.
Plaintiffs sought an order from the court requiring Francis to behave civilly and pay sanctions.
The Supreme Court has defined the issue before it in Simmons v. Ghaderi after its December 20, 2006, grant of review as follows:
This case presents the following issue: In an action to determine whether a valid oral settlement agreement was formed during mediation, was one party estopped to claim confidentiality for the mediation proceedings (Evid. Code, sections 1115-1124) because she had voluntarily declared the facts to be true, stipulated that she did not dispute them, submitted evidence of them, and litigated their effect for more than a year?
See our own previous commentary on this case here, here and here.
The California Court of Appeal for the Fourth District held in Jeld-Wen v. Superior Court today that parties may not be ordered to attend and pay for the private mediation of complex litigation.
After a thorough review of the law applicable to the appointment (and pay) of referees for the purpose of settlement conferences and discovery disputes, the Fourth District held
While trial courts may try to cajole the parties in complex actions into stipulating to private mediation (see Super. Ct. San Diego County, Local Rules, rule 2.3.7), they cannot be forced or coerced over the threat of sanctions into attending and paying for private mediation as this is antithetical to the entire concept of mediation. In any event, we suspect that in a large majority of complex cases most parties will agree to private mediation; as such, we foresee no apocalyptic consequences from this decision.
The case is worth reading for its coverage of the differences between mandatory settlement conferences and mediation, as well as the scope of the Court's authority to require the parties to pay a retired judge or mediator for the proceedings.
The California Supreme Court held in Fair v. Bahktiari last week that parties to a mediated settlement agreement must include an express provision that they intend to be bound by any written term sheet memorializing their settlement.
If you do not, the trial court will not enforce your settlement agreement even when, as here, you've prepared a relatively detailed deal memo including an arbitration clause.
As we've recommended before, you should prepare your term sheets in advance (or better yet, bring a laptop with your form settlement agreement on it -- many of my clients do, along with a portable printer or a jump drive to plug into a local PC).
Being prepared to draw up the settlement agreement at the mediation is not only "a stitch in time" but shows admirable optimism. Optimism that does, believe it or not, have a real and substantial effect on the settlement proceedings.
For tips on ways to insure that your mediated settlement agreements are enforceable (or to resist the enforcement of an "agreement" that you don't concede was actually reached) see Deborah Rothman's and my Daily Journal article on the topic here.
These are the words I never said/This is the path I'll never tread/This is the fear/This is the dread/These are the contents of my head/And these are the years that we have spent/And this is what they represent/And this is how I feel
Do you know how I feel ?/'cause i don't think you know how I feel/I don't think you know what I feel/I don't think you know what I feel/You don't know what I feel. Annie Lenox, Why, from Diva
Why should negotiators care? Because explaining why our bargaining partners should settle instead of litigate requires persuasive story-telling -- a compelling account of our business requirements and capabilities -- a reason why what we want is fair and reasonable, even just.
Types of Reasons
Professor Tilly has created four reason-giving categories:
Conventions: These are the rules your mother and grade school teachers taught you. Don't be a tattle tale. Share with your sister. Don't whine. Say thank you to the nice man for giving you an extra dollop of ice cream.
Stories: This is what we attorneys do for a living. Tell stories, read stories, make up stories, listen to stories. Then we compare one story (Mrs. Palsgraf was waiting for a train when a man holding a box of firecrackers stumbled out the door and then) with another story (the sherriff stopped Mr. Green on Highway 50 but let him continue driving even though Mr. Green was clearly drunk and then he passed a truck on a narrow road and then ).
Codes: These are "high-level" conventions -- the formulas that invoke procedural rules and categories. The judge and jury apply codes such as "oral agreements can't transfer real property" to the Plaintiff's story about her landlord's promise to extend her lease for a year.
Technical Accounts: These are stories informed by specialized knowledge and authority. They're the stories your expert witnesses tell.
Talking Past One Another
Anyone who's spent even a few weeks in law school knows these categories. So why are we bothering with them here? Because, according to Tilly, reason giving is most effective when we "match" the kind of reason we give to the particular role we are playing when the reason is necessary. If one person is giving a technical account and the other a story, for instance, the chances are remote that they will ever begin to understand, let alone agree with, one another.