Impasse! You have been in mediation for ten solid hours. Everyone is exhausted, including you (except, of course, the mediator who is still hammering away). The pressure has really been mounting: your client desperately wants to settle her complex dispute. You have analyzed, with the help of the mediator, the enormous risk in going forward at trial and the huge expense your client faces. But the parties have dug in and trial is only 45 days away. What do you do?
Strategic planning! Your new client has just retained you on a complex multi-party dispute. Research and investigation have allowed you and your client to feel strongly optimistic if the dispute goes to trial. However, you have also determined that trial will take weeks after additional weeks of costly preparation, and that, in fact, legal and expert witness fees may be disproportionately large compared to the best possible scenario-award. And there are risks: there are cross complaints against your client. And though you have determined that the chances of any one of them being successful is not great, if one of them sticks, there could be a big hit against your client. To complicate matters, your client has other disputes brewing and you know he, like other conscientious consumers, is shopping for cost-conscious counsel in an increasingly competitive marketplace. What do you do?
The purpose of this article is to explain some of the different forms of mediation, along with their advantages, disadvantages, and ethical issues. This is a summary of processes which the author has learned from personal experience, other mediators, judges, and attorneys.
If this article appears too long to read, skip straight to the conclusion.
Why Are There Choices in Mediation?
Though traditional mediation is usually successful, not every mediation brings a dispute to settlement. There is, therefore, the potential for lack of finality using traditional mediation. If mediation is unsuccessful, the parties must use an additional dispute resolution process, either arbitration or trial with a different neutral, at additional expense, time, and emotional pain. Use of alternative mediation processes can keep costs down compared to trial and arbitration. I have found that the more resources invested by the parties in attorney’s fees and expert witness costs, the more the parties become convinced that their positions are the right positions. As a result, the parties become much less flexible, which reduces the likelihood of a settlement in traditional mediation.
Some forms of alternative mediation processes provide counsel the opportunity to preserve the benefits of arbitration, i.e. cross examination of the opposing party or expert. This enhances the cathartic or venting process and provides greater satisfaction for the examining party, a necessary step for some parties and counsel before they can be receptive to mediation.
Alternative mediation processes recognize that there may be a need to customize the dispute resolution process to the unique needs and interests of the parties. If parties are involved in the creation of the dispute resolution process from the initial stages, they are more likely to settle. The parties have bought into, or own the process, therefore accept it, and want to see the process succeed. Successful alternative forms of mediation start with the design of the process which becomes a consensus gathering technique.
The many forms of alternative mediation allow parties the opportunity to have differing interests and needs met.
Designing a dispute resolution process which will bring finality to the dispute helps keep costs down, especially when an unsuccessful mediation goes to arbitration or trial. Litigation can be much costlier than expected. Though some cases may be estimated at a particular time length before commencement, many go way beyond the estimate. Two of my current arbitration cases, each originally estimated at 5 to 7 days, have gone more than 30 days. Neither side in each case agrees to stipulate to a limitation of time. These cases, and many others like them, are veritable nightmares for the parties. Each party wants justice but may not find it. These experiences can be avoided through the use of alternative forms of mediation, some of which can bring about a conclusion to a dispute by a date certain.
Traditional mediation begins with a joint session in which all parties and counsel are present with the mediator. Each side, including the parties, states its public position. When no further progress can be made in the joint session, the mediator then meets with each side in separate caucus sessions.
Exhibits and other documents may be exchanged between counsel and provided to the mediator prior to and during the mediation. Counsel may submit documents in confidence to the mediator.
All discussions during the mediation and all documents prepared especially for use during the mediation are confidential under Evidence Code sections 1152 and 1152.5. None of the participants, including the mediator, can be called upon to testify in any pending arbitration or trial concerning the settlement discussions or the content of any document prepared especially for use during the mediation.
During caucus sessions, the mediator meets with each side separately. The discussions are confidential. The mediator cannot reveal to one side what is discussed without first obtaining permission from the other side. The caucus provides an opportunity
for the party and attorney to candidly discuss their view of the case with the mediator. The strengths and weaknesses of each party’s position are analyzed as well as risk factors and costs of going forward in trial.
Ideally, the mediation results in the formulation of a settlement agreement which is documented and signed on the spot by all parties and counsel.
When the parties become deadlocked, this is termed impasse. There are several relatively fast and inexpensive means of overcoming impasse when the parties do not wish to expend any further resources or when they feel a need to bring the dispute to an immediate conclusion.
Each side writes down its final position, how much it will agree to pay or accept, or a non-monetary position, and hands it to the neutral. The neutral then decides for either one or the other position, but at no point in between. The neutral’s decision takes the form of a binding award or judgment.
Advantages: Baseball mediation provides a strong incentive for both parties to present reasonable positions. Studies have shown that unreasonable positions are often not accepted by the neutral. This process encourages parties to narrow their positions and when positions are narrowed, there is a greater chance of settlement. The parties, through counsel, can exchange their final positions before the neutral makes a decision.1 The parties may find that their final positions are not so far apart and they may be able to negotiate a settlement. This process avoids the potential of leaving the decision in the hands of an arbitrator who could possibly “split the baby.”
Disadvantages: When the parties are unable to negotiate a settlement and have tendered their final positions to the neutral, the parties have lost control of the settlement process and have left the decision in the hands of a third party.
On impasse, the neutral writes down what he or she believes to be the fairest, most reasonable, and realistic final conclusion, either in monetary or non-monetary terms, on all claims and counter claims. The neutral keeps this final position confidential and then asks all sides to write down their final positions. The side whose final position is closest to that of the mediator’s becomes an award or judgment.
Advantages: The same as baseball mediation. There is a greater likelihood of a more reasonable solution with Golf Mediation in that it is originated by the neutral and not by one of the parties as in baseball mediation.
Disadvantages: The same as baseball mediation.
Pocket Golf Mediation
On impasse, the mediator carefully analyzes the facts, law, needs of the parties, risk factors, and costs of going forward to arbitration or trial. As in golf mediation the neutral formulates a monetary or non-monetary recommendation on all claims and counter claims. The neutral then presents it to each side in separate caucus sessions and explains why each party should accept this recommended final position. If both sides accept, there is a settlement. If only one side accepts, that side does not lose face because the party which does not accept does not know the decision of the other side.
Advantages: Pocket Golf Mediation is very effective, especially in cases where the parties are far apart in their final positions but want desperately to settle the dispute. I have used this process in mediations in which I have not revealed the opposition’s positions because of my deep concern that if either side knew the other’s position, each side would bolt from the mediation. In one mediation where the parties were more than $100,000 apart, this process was used successfully to the shock of everyone, including myself.
A significant advantage to Pocket Golf Mediation is that a party saves face by accepting a final position proposed by someone other than the opposition. In some cultures it is very difficult, if not impossible, to accept an offer from the opposition, even if it makes good sense. In those cultures, the party who made the final offer has gained the upper hand.
Disadvantages: Though the parties still maintain control over the negotiation process by keeping the option to accept or reject the neutral’s recommendation, if all parties do not accept the recommendation, the parties may end up going to arbitration or trial. But, this is no worse than if the parties had not tried this option.
On impasse, the parties stipulate that the mediator decides a monetary or non-monetary final position which becomes an award or judgment. Typically, the parties agree ahead of time that the neutral’s final position cannot be higher or lower than the final positions of the parties. See High-Low Mediation, immediately below.
Advantages: Similar to Pocket Golf Mediation.
Disadvantages: The parties have relinquished control over the negotiation process and have stipulated ahead of time to be bound by the decision of the neutral.
On impasse, the parties stipulate that the mediator determine a monetary or a non-monetary final solution of an amount no higher nor lower than that agreed to ahead of time by the parties.
Advantages: Sometimes the parties do not wish to leave to a neutral the decision resolving their dispute unless a comfort level is reached for a floor and ceiling of risk. That is, the plaintiff may need to know that he or she will be awarded no less than the floor amount while the defendant may need to have the assurance that an award against him or her cannot exceed a pre-agreed upon ceiling. With this comfort level stipulated to, some parties are able to go forward with Binding Mediation, Med/Arb, or Arb/Med in conjunction with High-Low.
Disadvantages: Though the parties are involved in establishing the floor and ceiling numbers, they have effectively relinquished their negotiating power to the decision of a neutral third person.
Mediation Combined with Arbitration
At some point the following dispute resolution processes utilize the presentation of evidence in an arbitration setting. These processes combine arbitration and mediation conducted by the same neutral.
The process starts with traditional mediation. The parties agree ahead of time that if there is an impasse, the mediator concludes the mediation and begins an arbitration, either immediately or at a pre-determined future date. Once the presentation of evidence has concluded, the neutral, now acting as an arbitrator, renders a binding award or judgment.2
This process works well in conjunction with High-Low Mediation.
Advantages: Med/Arb reduces the cost of having a second neutral hear the case in arbitration. The neutral in this process may be in a better position to address the needs of the parties, thus allowing the neutral more flexibility in rendering an award compared to traditional arbitration or trial.
Disadvantages: Theoretically, there is a possibility that the award could be based partially upon what is told the neutral during the confidential, private caucus session that occurred during the mediation phase. Another disadvantage is that the opposition does not have an opportunity to cross examine during a confidential caucus. Theoretically, this disadvantage can be overcome by a warning issued by the neutral at the outset of the Med/Arb. The neutral states the award will be based solely on evidence presented during the arbitration phase during which parties have an opportunity to cross examine the opposition and witnesses. This disadvantage can also be overcome by allowing the parties to have a dialogue during the initial mediation joint session. The dialogue can provide the opportunity for ventilation, bloodletting and cross examination. This technique may be used in the joint session of any form of mediation.
The third disadvantage is that the parties may feel inhibited about being totally candid during the private caucus sessions of the mediation phase because they know the neutral mediator can become the decision-making arbitrator.
This form of dispute resolution is sometimes referred to as “Last Chance Mediation.”
This process also combines arbitration and mediation conducted by the same neutral. In this setting arbitration is conducted first. The neutral prepares a written award and seals it. The same neutral, now sitting as mediator, conducts a mediation. If the mediation is successful, the award is destroyed and no one ever sees it. If the mediation is unsuccessful, the award is then given to the parties.3
This process works well in conjunction with High-Low mediation.
Advantages: During the mediation phase there is great pressure on the parties to settle because the neutral has already rendered an award. The parties retain the power and opportunity to negotiate a settlement. The ethical dilemma of Med/Arb, wherein the award theoretically could be based in part on what is told the neutral during a mediation private caucus session, is not present because the award in the Arb/Med is rendered before the mediation phase begins.
Disadvantages: Theoretically, the neutral can coerce a settlement, given the imminent ability to deliver an award against one party, or the other. This coercion would reduce the parties’ level of control and satisfaction in the process. In fact, the challenge to the neutral is to finesse a voluntary settlement without the appearance of coercion.
Notwithstanding the potential for coercion, the inherent power of delivering the award can make the settlement process go more quickly and successfully. In a study conducted by Pruitt et. al.4, it was found that parties work a lot harder at resolving a dispute using Med/Arb or Arb/Med than during traditional mediation. The parties are much more motivated to settle. If there is no settlement, the consequences are immediate: the award is rendered against one party or another.
Arb/Med and Med/Arb are most efficiently used in conjunction with Mini-Trial. There are different types of Mini-Trial, however, the type referred to here calls for the parties to stipulate, before commencement of the Arb/Med or Med/Arb process, to condense the arbitration phase.
All aspects of an arbitration or trial can be condensed. Stipulations can be reached with respect to limitation of time each party takes for its case and rebuttal. There can be stipulated limitations as to the number of witnesses, the time spent on direct and cross examination of witnesses, and the number of expert witnesses.
Even if a traditional mediation does not result in settlement of all claims, it is possible for the mediator to assist counsel and parties in designing a Mini-Trial process in order to successfully cut litigation costs dramatically.
Unique/Specially Designed/Designer Forms of Mediation
Some forms of mediation can be combined with others to meet the unique needs of the parties and attorneys.
In a recent complex home remodeling dispute between a homeowner and general contractor, counsel’s original time estimate for the arbitration was four hearing days. At the beginning of the fourth day, counsel announced they wanted to schedule 25 additional days of evidentiary hearings. I suggested mediation. One of the parties indicated its willingness, but did not want to give up the opportunity to examine the opposing party. Counsel and parties thereafter agreed to two more days of evidentiary hearings to be followed by a mediation. If the mediation reached impasse, I was authorized to render an award in the capacity of arbitrator. This was dubbed an Arb-Med-Arb. The case settled several hours into the mediation. In discussions with counsel after the settlement, everyone agreed that the parties were in a more flexible state of mind to negotiate a settlement after each had caused satisfying bloodletting of the other.
Before beginning the resolution of another complex construction dispute, the parties stipulated that though the dispute resolution process had to provide finality, counsel still wanted to give the parties every opportunity to negotiate a settlement. Counsel therefore agreed that the dispute resolution process would be in three phases. Phase One called for traditional mediation. If an impasse was reached, the mediator would then move to Phase Two. Phase Two called for Pocket Golf Mediation in which the mediator would pose a final number or non-monetary solution to each side in private caucus sessions. If both parties did not accept the mediator’s recommended solution, the mediator was authorized to move on to Phase Three. Phase Three called for binding mediation, that is, the neutral would then pick a number or non-monetary solution which both parties were bound by in the form of an award.
When to Make the Choice
Fashioning a unique mediation process requires making some choices before the process begins, i.e. Med/Arb or Arb/Med.
Though impasse breakers can be decided upon before the mediation process begins, such as in a conference with the mediator, counsel frequently leave the decision to utilize an impasse breaker until the time it is needed, i.e. at impasse.
Document the Stipulation Re Process As Soon As Possible
As with any agreement, it is best to document the stipulation concerning the dispute resolution process. Not only should this stipulation be signed before the process begins, it should be signed as soon after discussions on the process are concluded, before any party changes its mind.
Document the Settlement Agreement
No matter what form of mediation is utilized to settle the dispute, once a settlement is reached, it should immediately be documented and signed by all parties, counsel, and where appropriate, the neutral, before the parties leave the room and have the opportunity to change their minds.
Is all of this too complicated? Not at all! The time it takes to read this article probably exceeds the time necessary to determine which alternative mediation process is best.
These processes get results. Cases are more easily and more quickly settled when the appropriate form of mediation is used. Settling disputes requires the agreement of all participants: parties and their attorneys. The settlement agreement starts with the formulation of the dispute resolution process. To be effective, this requires the active participation of the parties at the earliest possible discussions.
When the parties are involved in helping decide the form of dispute resolution process, they have an investment in its creation and want to see it succeed.
Why bother going to all the trouble of designing a dispute resolution process that is unique to each case? (Even if parties and counsel choose traditional mediation after they have considered all the alternatives, that process will be uniquely suited for their case). This process greatly enhances the chances of success. This process creates client, and counsel, satisfaction. A successful mediation is very gratifying, challenging, and fun. You mean you can have fun practicing law? You bet!
I recently concluded an all day mediation involving a dispute in excess of $1 million. During caucus, counsel and I determined that trial would take 7 to 10 days and require four to six weeks of preparation, including expensive discovery. At the time of impasse, counsel and parties agreed to use High-Low Binding Mediation. Of course the dispute was then quickly concluded, and the parties were delivered a coup de grace from the tortures of negotiation. I pointed out to one of the parties that his attorney had given up a large amount of attorneys fees in settling the dispute. The party said he knew that and had just discussed a new case with the attorney. As we were walking to the elevators, the opposing attorney asked her client how he felt.
The client answered, “I’m relieved.”
1. Coleman, Jennings, and McLaughlin, “Convergence or Divergence in Final-Offer Arbitration in Professional Baseball,” Industrial Relations, (32:2), Spring 1993.
2. For an excellent discussion on Med/Arb, see, Barry C. Bartel, “Med-Arb as a Distinct Method of Dispute Resolution: History, Analysis, and Potential,” Willamette Law Review, (27:3), Summer 1991.
3. Guittard, “Arbitration/Mediation, When Mediation is Not Enough,” American Bar Association ADR Newsletter (1:1), Summer 1993.
4. Pruitt, McGillicuddy, Welton, and Fry, “Process of Mediation in Dispute Settlement Centers”, Mediation Research, 308.
This article is dedicated to Evelyn Fisher, who has had indomitable spirit at the worst of times. And to Ira Weiner, who has been of great guidance to me. I pray both will have the strength to deal with future’s challenges.