Recent Trends in Alternative Dispute Resolution
Hon. Richard A. Levie (Ret.)
Recent Trends in Alternative Dispute Resolution
Hon. Richard A. Levie (Ret.)1
ADR Associates, LLC
Three words describe the recent trends in the field of alternative dispute resolution ("ADR") in the United States: "more not less." There is a corollary to this trend: "sooner rather than later." As 2002 comes to a close, it is more than fair to say that ADR, within the context of litigation in the United States, is well past the point of being "trendy" – it is a growth industry for the courts, for the practitioners of ADR and for the parties who use it – willingly or unwillingly.
Role of the Judiciary
The judiciary is a reactive institution, having virtually no control over the number or timing of matters that end up on a court's docket. Criminal cases, by statute or custom and practice, generally get priority in terms of "moving the docket." While this is not surprising, given the potential loss of liberty or life, the impact on civil cases generally is an increase in the time from filing to disposition. The mathematical formula applicable to courts is deceptively simple: increased Court filings and delay in resolution equal congestion. The corollary is that, in many cases, there is a direct relationship between time to disposition and money expended by the parties.
As more and more courts, both federal and state, shift to case management techniques that transfer control of the timing and pace of litigation from members of the bar to judges in an effort to reduce delay and concomitant costs, ADR has grown as a necessary adjunct to the court systems.2 Indeed, the use of ADR often increases parties' satisfaction with the outcome of litigation. Effective use of ADR, however, remains dependent to some extent upon the case-management skills of the judge to whom the case is assigned and the degree of familiarity the judge and counsel have with ADR. Most judges are not appointed or elected to the bench because they have superb case-managerial skills. Not all trial judges understand the many nuances of ADR in terms of types of ADR and the subtlety of the timing for using ADR. By the same token, not all experienced and talented litigators understand these same nuances of ADR or possess the necessary training, skills and personality to make most effective use of ADR for the benefit of their clients. 3
Understanding the course of ADR in the United States and knowing how best to utilize ADR in the interests of a party can produce both long and short-term benefits. Selection of the appropriate form of ADR with an experienced and capable ADR professional can aid parties in avoiding prolonged and/or unnecessary litigation with resulting savings of money and time. In the business world, ADR provides a means to resolve disputes and litigation while maintaining relationships with employees (in terms of an "in-house" dispute) and businesses with which there is an on-going relationship. Timely resolution of disputes conserves the valuable time of executives - time otherwise spent dealing with litigation or extended disputes.
Role of Counsel
Too often litigators in the United States see themselves as the legal version of the movie character – Rambo. The characteristics of such individuals may be more brawn than effective use of brains, and more use of brute force than selective finesse. "Rambo" litigators are not necessarily lacking in intelligence; rather, they are programmed to use that intelligence in a directed, often unvarying, approach to all litigation – "ask no quarter and show no quarter."
While clients, in the end, are in the best position to determine the effectiveness of this approach, most judges are not impressed with this approach. Not infrequently, a "fight over everything" attitude adds to a judge's workload by increasing the number of matters requiring judicial intervention. Whatever effect the "Rambo" approach has on the wallets/purses of the clients, its effect on the judiciary usually adds to, rather than subtracts from, congestion of the court's dockets by increasing the instinct to fight all battles, rather than seek solutions that lead to resolution of matters sooner rather than later and, usually, at a reduced cost.
Although the numbers are decreasing, there still remain a number of litigators and clients who are concerned that any suggestion of ADR/settlement is tantamount to a "scarlet letter" of weakness and/or fear of going to trial. This attitude has lead some court systems to establish ADR as a mandatory institutional prerequisite of getting to trial. By requiring parties to engage in some form of ADR before they can get to trial, court can eliminate the potential perception that a suggestion to engage in ADR is a sign of weakness.
Notwithstanding the requirements of federal or state courts, there are two ways clients and attorneys can implement ADR in the earliest stages of disputes. In both their internal corporate dealings and in external contractual matters, businesses can make effective use of dispute resolution processes by inserting ADR clauses in contracts and by incorporating such processes into internal corporate governance and operations. Additionally, if counsel uniformly suggests ADR in all cases, it reduces the chance that others will see such a suggestion by counsel as based on fear or weakness.
Critical Hint: Suggesting the use of ADR is not a sign of terminal weakness.
ADR in United States Federal Courts
By way of perspective, for fiscal year 2001 almost 251,000 new civil cases were filed in the federal trial courts (United States District Courts). At the end of that fiscal year there were 297,265 civil cases pending and these cases were assigned to 665 judges in 94 judicial districts.
In 1990 the United States Congress passed legislation (Civil Justice Reform Act) as an initial step toward incorporating ADR into the federal court structure. In 1998 Congress passed the Alternative Dispute Resolution Act of 1998 [28 U.S.C. §§ 651-658] and, as part of that enactment, made the following pertinent findings:
(1) alternative dispute resolution, when supported by the bench and bar, and utilizing properly trained neutrals in a program adequately administered by the court, has the potential to provide a variety of benefits, including greater satisfaction of the parties, innovative methods of resolving disputes, and greater efficiency in achieving settlements;
(2) certain forms of alternative dispute resolution, including mediation, early neutral evaluation, minitrials, and voluntary arbitration, may have potential to reduce the large backlog of cases now pending in some Federal courts throughout the United States, thereby allowing the courts to process their remaining cases more efficiently;
This 1998 statute requires each of the 94 districts to "authorize" the use of ADR in civil actions filed in each district. The law permits each district to design its own ADR program but requires each district to adopt procedures for making neutrals available to the parties. To date, 63 of the 94 districts authorize mediation; 28 of the districts authorize arbitration and 23 authorize early neutral evaluation.4 Anecdotally, it is reported that several districts have declined to implement ADR programs because they believe their case processing system is so fast that ADR would slow down the progress of cases.
Among the districts that provide for an ADR process, some require parties to use the process, but most do not.5 The use of ADR thus is left to the discretion of the judge assigned to the case and/or the parties. Consequently, the use of ADR varies from district to district and from judge to judge. Not surprisingly, some judges are quite knowledgeable about ADR and use it effectively as part of case management, while others are less knowledgeable about the use of ADR and may not use ADR as often or at all. Depending on the district, if a referral for ADR is made, the ADR process may be provided by a federal magistrate judge, a private ADR practitioner, or a neutral who serves on a court-managed roster of ADR neutrals. In most federal courts the parties are required to pay for the provision of ADR services. Beyond this generalization, however, provisions for payment, like most features of the federal ADR programs, vary from district to district. One requirement that does appear to be fairly standard across districts is attendance of the client or a representative with full settlement authority.
Settlement is a long-standing method for resolving disputes in the federal (and state) courts. Currently fewer than 3% of all civil cases filed go to trial. The remaining 97+% of the civil cases are resolved through settlement, dismissal by the Court or voluntary dismissal by the parties.6 Precisely how many of the settlements are due to ADR methods is unknown, as there are presently no nationwide reporting requirements by which the effectiveness of ADR in the federal courts can be measured. In FY 2001, approximately 24,000 cases were referred to some form of ADR. Anecdotally, somewhere between 50-60% of the cases referred appear to settle through the ADR process. Most of the remaining cases will, of course, eventually settle, but the goal of court ADR is to bring about earlier, and thus less costly, settlements.
Critical Hint: Given the variety of procedures employed by federal courts and the diversity of views and experience federal trial judges have with the forms of ADR, counsel should be prepared to take the initiative in ensuring that clients are educated in ADR and in advocating to the Court and opposing counsel use of an appropriate form of ADR at the optimum time in litigation.
ADR in the State Courts
Not surprisingly, in the "colonies" each of the 50 states and the District of Columbia handle ADR in whatever way they believe appropriate. For precisely the same reasons applicable to the federal courts, the states and the District of Columbia are moving increasingly toward more use of ADR. The move toward more ADR reflects both the courts' "survival instinct" and the courts' desire to provide a better service to its constituents – the bar and the parties.
The areas of distinction among the state courts essentially are between courts that require ADR and those that do not, with a further differentiation between those courts that provide ADR services and the ones that expect parties to use private, non-court appointed neutrals. In "mandated" programs, parties are required to attempt some form of ADR as a prerequisite to getting to trial. Where, as in the District of Columbia, the Court operates the ADR program as part of the Court system, it often is referred to as a "court annexed" program. In such programs the court usually undertakes the training of neutrals and the logistical operations of the ADR program. In other programs, parties are expected to use private ADR practitioners not provided by the court.
In terms of compensation, there are varied approaches: court payment of the neutrals from the court budget; payment by the parties directly to the neutral at rates set by the court or by the neutral and ADR services provided without charge to the parties.
Critical Hint: In state courts the advice set out above with respect to federal courts applies equally here.
Neutrals – who, where and how?
In many cases, including the federal system, the court system will train the neutrals or monitor the training provided. Because all effective ADR providers need both training and experience, it is important that parties using ADR be assured that the neutral has both training and experience. In this respect, the obligation is on the parties to explore the training, experience and methodology of ADR providers.
To find a neutral (as opposed to having a court appoint one), a party may explore institutional ADR providers (ADR firms – ADR Associates, LLC, JAMS, CPR Institute for Dispute Resolution, American Arbitration Association), individual ADR practitioners or law firms, many of which have attorneys who regularly conduct mediations and arbitrations.7
Having obtained the names of ADR providers, a party should "interview" the potential neutrals by asking the neutral for: references, training, experience with the particular dispute, and about possible conflicts. It also is appropriate to ask a prospective mediator about his/her style of mediation:
• Does the mediator use a facilitative approach to explore, often through questions, the interests and limitations on parties?
• Does the mediator prefer to give her/his evaluation of the issues?
• Does the mediator appear to be flexible in terms of his/her approach to your dispute in terms of structuring the mediation session to fit the particular dispute or does the mediator seem to have a "one size fits all" approach to mediation?
Critical Hint: Buyer/user – Beware! Find out information about your mediator's background and experience.
Keys to Effective and Successful Mediation8
An essential prerequisite of effective use of mediation is an understanding of its benefits9 and limitations.10 The timing of mediation also is significant and should be a considered reflection of the nature of the dispute or litigation, rather than a process that is used at the same time in every dispute or litigation. Although mediation in federal and state courts frequently is used at the conclusion of all discovery, knowledgeable and creative counsel may suggest to the Court and opposing counsel mediation following limited discovery.
Thorough preparation for mediation often is the key to a successful mediation.11 Such preparation includes the education of the client/participants on the likely structure of a mediation session, the mediation techniques expected to be encountered, and a careful analysis and evaluation of the client's interests, limitations and goals for the mediation. Critical to any mediation is the decision regarding the attendees at the mediation session. The identity of the attendees may be seen to reflect a party/participant's view regarding the seriousness (or lack thereof) of the matter in dispute or litigation. Recognizing that mediation may provide the opportunity for a party's representative to address directly the opposing party and that party's counsel, counsel are well advised to prepare their client as they would for a trial or deposition.
The form of the presentation at the mediation warrants careful consideration and preparation. Far too often counsel underestimates the importance of visual aides as a means of effective adult communication. Use of Power Point presentations, charts, blow-ups of important documents, side-by-side comparisons of important documents or pretrial testimony are especially effective in highlighting the most significant aspects of a dispute in a form that will be remembered long after spoken words, no matter how eloquent, are forgotten.12 Counsel may also consider the use of handouts to be given to opposing parties and counsel, thereby permitting careful study and analysis if the mediation extends more than a single day.
Critical Hint: In preparing for and conducting the mediation: be creative, be persuasive, be flexible and be open to new and unusual ideas.
1 Thanks are due to the author's partners (Michael K. Lewis, Esq., Jerry P. Roscoe, Esq., Margaret L. Shaw, Esq., Linda R. Singer, Esq.), James E. McGuire, Esq. (Boston, MA) and Donna Stienstra of the Federal Judicial Center (Washington, DC) whose ideas and writings were used in developing this paper. Any errors or omissions, however, rest solely with the author. 4
2. Recognition of the role of ADR and responsibility of courts with respect to the use of ADR hardly is limited to the United States. See Dunnett v. Railtrack Plc, 2002 WL 45445 (CA),  2 All E.R. 850.
3 While there may be some types of disputes where ADR is not as useful as in others, such disputes will not be discussed here.
5 In September 2002 the United States Court of Appeals for the First Circuit held that a federal trial court, in the absence of a statute or local rule authorizing ADR, has the inherent authority to order mandatory mediation by a private ADR provider paid for by the parties, if the case is an "appropriate one" for mediation and if the Court's order "contains adequate safeguards." In Re Atlantic Pipe Corp., _F.3d_ , 2002 U.S. App. LEXIS 19175, 2002 WL 31051583 (1st Cir. 2002).
6 These statistics also generally reflect the status in state courts.
7 Without suggesting any preference or attempting to indicate the absence of other internet site, two internet sites that might be useful in finding ADR providers are: http://www.martindale.com/ and http://www.mediate.com/.
8 This brief paper is not intended as an encyclopedic recitation of all the tactics, strategies and techniques employable in mediation. Many ADR providers offer entire courses on effective mediation advocacy. Additionally, many such providers offer mediator-training courses that have a natural effect on mediation advocacy by training advocates to understand the nuances of the thinking and techniques used by mediators.
9 Benefits include: avoiding litigation, preservation of on-going business relationships, avoidance of publicity, obtaining information, saving money, saving time, and, often, affording counsel the opportunity to address directly the opposing party without the case analysis being filtered by the opposing party's own counsel. In addition, mediation enables parties to fashion a resolution that includes "relief" that would not be available within the limited contours of litigation seeking relief limited by law to the particular dispute and cause of action.
10 Loss of time (and possibly money) if settlement is not achieved, giving up information about your case, eliminating the opportunity for one's "day in Court," eliminating the opportunity for vindication, eliminating the opportunity to establish a "precedent," and requiring each side to take less or give more than desired.
11 While defining success as resolving the dispute, it is important to recognize that mediation may involve more than a single meeting, and may entail numerous telephone calls.
12 Use of such visual aides may be less well received at a judicial settlement conference where the judge may have less time available for the conference than would a non-judicial mediator.
4Information about each district's local rules can be found by going to http://www.uscourts.gov/, which provides a link to each court's home page.