Paying the Mediator

March 3, 2012 – 4:00 pm

One of the conundrums for us alternative dispute resolution folk is what to do when a party does not pay us for services performed. We tout the disadvantages of suing, but what other recourse do we have when a party breaches its contract to pay the mediator? It would be appropriate for us to mediate the fee dispute, but typically the non-paying party won’t return phonecalls or emails. That’s when litigation looks tempting, because it forces the defendant to pay attention to the matter.
I mediated an employment case two years ago, that resulted in the employee being re-hired. Since I knew the employee had a really good income, it was especially disconcerting to me that they refused to pay my mediation fee. I could not contact the employee directly, only their attorney, who promised to work on it but eventually quit responding to my emails, letters and phonecalls.
Some courts ensure that the mediator’s fee is paid before the lawsuit is dismissed, e.g., Grand Traverse, but Kent County Circuit Court does not. So I asked my peers what I should do. One of them told me that she had a similar situation, and she sent the invoice regularly for two years until she finally received payment. So I decided to do that. It felt futile, mailing off that invoice to the attorney month after month, but I wasn’t sure what else to do.
Lo and behold, I received an email from the employee last week about paying me, and the check arrived in the mail today—just a little over two years since we finished up the mediation.
In the meantime, I’ve changed my practice: I require a much larger deposit up-front, and I will call off the scheduled mediation if a party does not provide the deposit by the day of the mediation. It’s not just a trust issue; I think it’s actually fairer to the client to be clear about the cost of mediation, so they can factor that into their negotiations.
And when a party doesn’t pay, we mediators may have to use a little ADR ourselves.

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W(h)ither Case Evaluation?

February 15, 2012 – 8:59 pm

The dispute resolution process now known as “case evaluation” has been used by Michigan courts for forty years to settle litigated cases, but it is now on the far side of the bell curve in terms of its effectiveness. The basic concept seems sound: have a team of three outside attorneys review the case and offer their opinion as to its value, giving both sides an objective basis for negotiating a settlement. The original panels consisted of experienced, well-respected attorneys knowledgeable in the area of the law of that case. Their collective, seasoned assessment was hard to dispute, and the process resulted in many settlements.
As with other ADR processes, as soon as courts realized how effective it was, they sought to mandate it. It is now required of all tort cases filed in Michigan, and many courts order all civil cases to case evaluation. But two things have happened to reduce its benefit. Practitioners readily identify one cause: the expansion of panel members to include any attorney who has practiced for at least five years. Panels no longer consist of “blue-ribbon” attorneys well-respected in their field, and may now include lawyers who do very little litigation and/or have little subject-matter expertise. So litigators now have good reason to question the panel’s determination.
The other factor is not so widely discussed. The original premise was that the panel would assess the amount the case would likely garner in a verdict—i.e., after a trial. The reality nowadays is that very few civil cases go to trial (fewer than 3% of all civil cases filed), so there’s little basis on which to predict a verdict. Case evaluators tend instead to assess “settlement value,” but since settlements are not usually made public, the value is based more on each attorney’s personal experience with settlements rather than on a widely-known standard.
Thus, case evaluation acceptance rates have been declining steadily in the last couple decades. Whereas originally parties accepted the case evaluation amount over half the time, the acceptance rate in many counties is now as low as 15%. Some counties, such as Grand Traverse and Berrien, have ceased ordering cases to case evaluation.
Meanwhile, as case evaluation’s effectiveness has dropped, mediation’s has increased. To assess both processes, the Supreme Court commissioned a study in 2010, and released the results a couple months ago. The study concluded that case evaluation neither increases nor decreases the cost of litigation much, but it does significantly increase the length of time that a case is open. Based on a sample of about 400 civil circuit court cases, it found that cases not submitted to case evaluation or mediation settled less than half the time; if they went to case evaluation, 62% settled; but if they went to mediation, an amazing 84% settled. In its survey of over 3,000 attorneys and 44 judges, it found that judges view case evaluation much more favorably than do attorneys, and have a higher view of the quality of the case evaluation panels than do attorneys. Despite the fact that the case evaluation acceptance rate in the cases studied was just 22% — and only 2% within the 28 days specified by the Court Rule–, the study recommended that the process continue, and the Supreme Court adopted amendments to the court rule on case evaluation (MCR 2.403) that slightly modify the process.
Case evaluation, as the study explains (Appendix A), is unique to Michigan. Some other states have some form of non-binding arbitration, but it is not used as widely, nor imposed through sanctions. Unlike mediation, case evaluation does not involve the clients; the participants, and the panel members, are all attorneys. Until 2000, the process was known as “mediation,” the panel members were called “mediators,” and the number they recommended was termed “the mediation award,” creating confusion both in and outside the state. It bears virtually no resemblance to any type of mediation, and is in fact a form of non-binding arbitration.
It makes little sense to require Michigan litigants to participate in a process that has only a one in five chance of settling the case, but will definitely protract it. Courts have long recognized the need to handle cases more expeditiously; the study reveals that an obvious way to do that would be to relax the requirement that all civil cases go to case evaluation. Only the Legislature can change the statute mandating that all tort cases proceed to case evaluation, but the Supreme Court could do more to educate courts on more effective and expeditious alternatives to case evaluation, such as mediation.

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Article on New Confidentiality Court Rule

January 13, 2012 – 2:36 pm

An article that I wrote for the State Bar ADR Section’s newsletter on the new court rule on confidentiality in mediation has now been published in its January 2012 edition. The court rule went into effect last September, and we are still trying to figure out how to integrate it into our mediation practice–specifically, how do mediators discuss confidentiality in our retention agreements, and what do we say about it in our mediator opening statements? In trainings I’ve done on this topic, there is a lot of interest–and uncertainty. I’m part of a panel discussion on this topic with Ed & Brian Pappas at this year’s ANDRI in March ; maybe they’ll figure it out for all of us!

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Apologies in the Practice of Law

January 9, 2012 – 10:39 am

The ABA Journal recently posted a very good article on apology that encompasses all aspects of legal practice: The Last Word: When the Last Thing You Want to do is the First Thing You Ought to do. Many articles have been written about apology as a component of mediated settlements, and I’ve given workshops on how to handle the apology in mediation. This article goes beyond apology in settlements: It talks about how we lawyers ought to incorporate apology into the way we inter-act with other lawyers, and with our clients. Like one of the lawyers interviewed in the article, I had to apologize to another attorney after leaving an angry message in his voicemailbox. I have also had to apologize to mediation parties when I’ve slipped up. It’s embarrassing, but it’s the right thing to do.

It also honors God, so Christians ought to lead the way on how to do this well. But in fact we’re not very good at this, so I appreciate the tools and encouragement from Peacemaker Ministries to help us make sincere apologies/confessions. A very helpful tool is the “Seven A’s of Confession.” Bad apologies can actually make things worse, so the Seven A’s give me a better chance to make a sincere apology that will put things right.

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HOW many cases settle?

January 4, 2012 – 2:30 pm

We ADR junkies have become fond of quoting a statistic that “98% of all cases settle.” Trouble is, it isn’t true. I’ve said it in trainings, so I’m responsible for perpetuating this lie. We wandered into this innocently enough. For some years now, courts, including Michigan’s State Court Administrative Office, have released statistics indicating that fewer than 5% of all civil cases actually go to trial that results in a verdict. In our zeal to promote ADR, we assumed this meant that the other 95% settled. But of course that’s not true; any litigator will tell you about their motion practice and of how many cases are disposed of by summary disposition. In addition, there are default judgments (which don’t go to trial) and any number of reasons why a case might be dismissed before trial.

So I’m trying to choose my words more carefully. It’s fair to say that “most cases are resolved short of a trial.” It’s also fair to say that many more cases are settled than are resolved by verdict. But I’ve wondered, just how many cases are settled, as opposed to dismissed?

Now we have some data based on Michigan circuit court cases to answer that question. As part of its research on the effectiveness of case evaluation and mediation, the study commissioned by the State Court Administrative Office culled nearly 400 civil (non-domestic) cases from around the state to analyze how a case ends. Here’s what they learned (see 23 of the Report):

O Where neither case evaluation nor mediation was used, 45% of all cases still settled. We’ve always known that, even without a mediator’s intervention, some percentage of cases would settle on their own. This is also a sign that, contrary to some mediators’ concern, lawyers are still able to negotiate settlements and have not surrendered all their negotiation skills to the mediator.

O When the case went to mediation, a whopping 84% settled in mediation, and none of the rest went to trial.

O A portion of all cases filed are disposed of via summary disposition, and a higher proportion are dismissed by default or some other reason. Of cases not ordered to case evaluation or mediation, 11% are resolved by summary disposition, 3% by trial verdict, and 41% are dismissed for some other reason, including a default judgment. Cases that went to ADR had proportionately lower summary disposition rates. Thus, it’s fair to say that a case has no more than a 1-in-10 chance of being dismissed by summary disposition.

O Interestingly, when a case went both to case evaluation and mediation, it was more likely to end up in court: 10% of those cases went to trial verdict, whereas none of the cases that went only to mediation ended up in court.

We can’t say, “Most cases settle.” An accomplished litigator in one of our trainings said in his mediator opening statement, “Most cases settle, so it’s not a matter of whether your case will settle, but when.” I thought that was very effective, so I’ve used it in my mediations. But now I need to modify it: “Most cases that get this far, settle …”

We can say that most cases that go to case evaluation and/or mediation settle. We can say that very few cases go to trial. We can say that cases are more likely to be settled—through negotiation, mediation or case evaluation—than disposed of by any other means, such as a dismissal, default judgment or summary disposition.

ADR is effective. We just need to be careful not to over-sell it.

 

 

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