This article was originally published by the Detroit Legal News on October 25, 2019.
Much has been written about the benefits of the different types of Alternative Dispute Resolution (”ADR”). We know that Arbitration can, among other things, bring finality. Mediation can help parties to preserve relationships. Negotiation can save time and money. Case evaluation, much maligned but still regularly utilized in Michigan, can help parties close the final gap to resolution. But what if your matter needs more than one of these benefits? Which do you choose? Well, the good news is that you do not have to choose at all. There are many options for mixing different forms of ADR, making your dispute resolution process malleable in accordance with your particular needs. This article will focus on the “A” in ADR, looking at some of the many alternative ways that dispute resolution can be applied to fit the unique needs of the parties in any given case. The beauty of combining two or more types of conflict resolution is that parties can draw on the benefits of more than one form of conflict resolution and thereby maximize the utility of several forms of dispute resolution.
To illustrate some of the ways to mix different forms of ADR to meet the needs of the parties, this article will look at five Case Scenarios. Case Scenario One will discuss how parties in a contract case successfully used arbitration, then mediation, then arbitration again to resolve their dispute. Case Scenario Two exemplifies how, in a divorce case, a resolution was reached by combining negotiation with mediation then litigation. Case Scenario Three involves an auto negligence case in which the parties combined mediation with case evaluation to reach resolution. Case Scenario Four is an employment case in which the parties moved from mediation to arbitration to resolve the matter. Finally, Case Scenario five demonstrates the resolution of a probate case by using mediation then litigation then mediation again.
Case Scenario One: In this matter, a supplier of automobile parts sued its biggest purchaser (who, in turn sold parts to an automobile manufacturer) for failure to pay for parts when the automobile industry was going through a financial downturn. The parties’ contract required that the dispute go to arbitration, which it did. This allowed the parties to utilize three arbitrators who the parties and the court chose. Some of the benefits of arbitration were that the chosen arbitrators were trusted by the parties and the process protected the confidentiality of the parties and their business interests. The arbitration process began and successfully narrowed the scope of the conflict. After a few days of testimony, however, it became apparent to the arbitrators that, on one of the more complex pricing issues—central to the case–having one side testify then another was not the best route for reaching a resolution. The arbitrators then offered that the neutral arbitrator meet with the parties’ key employees with knowledge of the pricing issues and have the neutral informally “mediate” their discussion about pricing. Having the two sides talk to each other, rather than testify against each other, quickly led to resolution of 90% of the central issues. With those issues resolved and the need for prolonged testimony eliminated, the case returned to arbitration, where it wrapped up quickly, saving the parties much time and money. It is not certain, but the brief diversion to mediation may have also salvaged the relationship between the parties. In arbitration, a more adversarial process, the parties had been restrained by their counsel from communicating with one another. However, in the informal mediation, it became apparent that there was no animosity between the parties, who had worked together very amicably for decades before this dispute. The mediation seemed to have given the parties a chance to rekindle that relationship and possibly return to doing business with each other after the matter was resolved.
Case Scenario Two: This matter was a divorce case where the issues included division of personal property, parenting time, custody and division of real estate. The parties first tried negotiation and were, through that process, able to resolve some of the personal property issues in the case with just the parties and their attorneys. However, there was a great deal of animosity between the parties that made resolution of the more emotional parenting time and custody issues difficult. Accordingly, the parties agreed to take the remaining issues to mediation. The mediator was able to alleviate much of the parties’ negative emotions and get them to focus on their children’s well-being. As a result, the child related issues were all resolved in mediation. The one issue that remained was a purely legal issue regarding real estate that each party claimed sole ownership of. After drafting an agreement on the children’s and personal property issues, the parties, now with much less animosity, agreed to let the court resolve the sole remaining issue regarding the real estate, either by motion or an abbreviated hearing. This saved the parties much time and money and because of the purely legal nature of the issue, the animosity between the parties was not rekindled by the court’s ruling on that issue.
Case Scenario Three: This case involved an automobile negligence claim. The plaintiff sought damages for pain and suffering, not from her own no fault insurance company, but from the ‘at fault’ driver of the other car. The parties started out with mediation and after a full day, came close to resolution but could not reach a final agreement. The parties’ attorneys were in accord that a certain ‘magic number’ in between each of their client’s last offers should settle the matter. However, each client dug their heels in and neither would move to what the attorneys thought was the magic number to resolve the case. Shortly after mediation concluded, the case went to case evaluation (which, as usual, only the attorneys attended.) When, as is the practice in case evaluation, each attorney was asked to suggest to the three evaluators what the case should settle for, each attorney gave the same ‘magic number’. Having both sides agree on the case evaluation number, that was the number the case was evaluated for. The attorneys then could tell their clients that three experienced attorneys had evaluated the case at the “Magic number” and thereby encourage their clients to accept the case evaluation. Each client did accept the evaluated ‘magic number’ and the case was resolved.
Case Scenario Four: Like the foregoing case, this employment gender discrimination case began with the parties going to mediation. They had discussed arbitration, but both sides were concerned that the parties needed generous time to vent, which they might not get in arbitration. Arbitration was also initially unattractive because the arbitration outcome was deemed too unpredictable, too out of the parties’ control. However, after trying mediation, the parties did not even come close to a resolution. On the other hand, the mediation did give the parties the opportunity to vent and begin the process of healing. With this background, the parties and their counsel revisited the idea of binding arbitration. To protect against a completely unpredictable outcome, the parties and their attorneys agreed that the arbitration award must be within a prescribed range. Specifically, they agreed to use the last offer of the Defendant in mediation as the lowest possible number for an arbitration award and the last demand of the Plaintiff as the highest possible arbitration award. The arbitration, thus, allowed the parties to not waste the progress made in the mediation, but still come to a certain, reasonable and final resolution.
Case Scenario Five: This final scenario involved a probate case where emotions ran high among family members. The judge urged the family members to pursue resolution through mediation to avoid exacerbating the already strained family relations. Begrudgingly, the parties attended mediation. However, in mediation, the family members were adamant in their opposing positions. No matter how much the mediator warned the parties of the pitfalls of trial, the family members insisted they wanted to have their day in court. The matter then went to trial and after a few days of heated testimony and surprising rulings from the judge, each party began to rethink the wisdom of the seeing the litigation through to conclusion. The judge again suggested mediation and this time the parties willingly participated. Coming in with a better appreciation for the benefits of a process that allowed for party self-determination and collaboration, the parties mediated their case to resolution in a relatively short period of time and salvaged at least some of the family ties.
There are many other options for combining forms of ADR in addition to those set forth above. In any case, ADR never has to be a one trick pony. Keeping an open mind, being creative and combining various forms of dispute resolution is becoming the new normal to allow parties to reap the benefits of several ADR processes and increase the likelihood of a resolution that all the parties truly embrace.