Case Evaluation is Changing

The Michigan Supreme Court has adopted changes to the case evaluation process, over strong dissent.

Case evaluation is a settlement technique, perhaps unique to Michigan, where attorneys present summaries of their case to a panel of three disinterested attorneys who come up with a number (“award”) representing the panel’s determination of the case’s worth. That number is designed to give the parties a more realistic view of their case, and possibly a settlement figure. To incentivize parties to accept the case evaluation award, a party must pay sanctions if it rejects the case evaluation figure but obtains a judgment within ten percent of the case evaluation award. MCR 2.403.

Until 2000, this process was called “mediation.”

By statute, all medical malpractice cases as well as tort cases in which the claimed damages exceed $10,000 are subject to this process (still called “mediation” in the statutes). See MCL 600.4901 et seq.; MCL 600.4951 et seq. Many courts refer all their general civil cases to case evaluation.

When case evaluation was introduced to Michigan trial practice in the 1980s (having started in Detroit in the late 1970s), it was highly effective at settling cases. The acceptance rate was something like 80%. To hear seasoned practitioners tell it, that’s because the panels consisted of the leading litigators in their fields. It was hard to argue with the experts, who knew the likely verdict value of these cases better than anyone, because they tried these cases all the time.

But at least three things happened to change this. One is that the desire for panels with decades of experience meant that they were comprised of older white men; women and minorities were not getting appointed to panels. So the eligibility rules were relaxed to make it easier for newer attorneys to get appointed. Some practitioners will tell you that this fatally weakened the reliability of case evaluation awards, because the panels included people with as little as five years of trial experience.

Another change is simply fewer trials. It became increasingly difficult to predict the value of a case, because fewer went to verdict, and settlements are typically private. The panel’s award number seemed more arbitrary, less a prediction of what a court might award and more a number that the panel thought the parties might settle on. A third change in Michigan civil trial practice is the advent of mediation, enshrined in its own Court Rule, MCR 2.411, since 2000. Perhaps because the parties are present during mediation, it has become an effective case settlement process, reducing the need for case evaluation.

The result is that, in this century, the acceptance of case evaluation awards in some jurisdictions is below 15%. That’s not a very high rate for what is a rather complicated process that requires quite a bit of work on the part of court administrators. In fact, the 13th Circuit Court (Grand Traverse, Antrim and Benzie Counties) dispensed with mandatory case evaluation several years ago.

So the State Court Administrative Office has been exploring over the last ten years whether case evaluation should be altered or even dispensed with. In a 2011 study of more than 3,000 lawyers and judges, it found that case evaluation added several months to case disposition times, that a significant majority of lawyers felt the process was less valuable than mediation, and that judges rated the process more favorably than lawyers. In a 2018 follow-up study, support for case evaluation had eroded further. A follow-up survey recommended that case evaluation should become voluntary and that sanctions should be removed. (Supreme Court Order, p. 8)

A Case Evaluation Court Rules Review Committee convened by the State Court Administrative Office met in 2019 and recommended that the Court remove the sanction provisions, so that parties are not penalized for rejecting an award and proceeding to trial; and permit the parties to waive participation in case evaluation if they stipulate to another ADR process. The Supreme Court adopted these recommendations by order dated December 2, 2021.

But not without dissent. Justice Viviano, joined by Justice Zehra, opposed this move on several grounds. One is that, by permitting parties to opt out of case evaluation in favor of another ADR process, the court rule now conflicts with the statutes, which make case evaluation mandatory. Another is that many judges still believe that case evaluation, as is, is an effective method for resolving civil cases, especially when compared with the more expensive process of private mediation. The dissent also questioned whether now is the time to weaken case evaluation when many trial courts face a pandemic-induced backlog of cases.

Although some judges associations predict that these rule changes will add costs and cause significant delays in resolving cases, I suspect that trial practice will adapt to the new litigation landscape. Lawsuits do not need case evaluation in order to settle; they settle at high rates in states that do not have case evaluation. Cases settle because litigants prefer the certainty of a negotiated compromise over the risk of trial, and that has not changed.