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How Long Should You Plan For a Mediation To Take?
Just as each litigation has its own facts and rhythms, so too mediations will differ from case to case. Some even very complicated litigations can be resolved in a one-day mediation session if enough preparation work is put into it up front, and I try to do that with advance calls with each side, both at the outset of scheduling the mediation and a few days before the mediation session itself. For example, in a recent one-day mediation, I was able to help the parties put a broken cross-border corporate sale transaction back together. However, many complex and large stakes cases take more than a one-day session to settle, and can often require multiple sessions. I make it a practice to never give up, and to keep actively seeking a solution with the parties via email, telephone and later sessions until the case is resolved or it is made clear that no further mediation is desired.
If you have a litigation or arbitration that is in its very early stages, and there has yet to be any discovery, or discovery has just begun, it can be a very opportune time try to settle because the parties can save significant legal expense. On the other hand, the parties and their counsel may have a lot more to digest in evaluating their positions, making settlement in one mediation session not possible. This should not discourage parties, as most such cases will eventually settle. Often, I recommend that the parties plan for at least two days of mediation sessions right at the outset, particularly if some or all of the parties or counsel will be traveling to the session. If all the reserved time is not needed to settle the matter, then all the better. But, as is often the case, if more than a one-day session is needed to move the needle sufficiently to complete a settlement, then the parties and their counsel will already be together to complete the negotiation.
Even if still further sessions will be required in order finally to settle the case, the parties will be further along toward making that happen. Long running litigation in particular may take time to settle due to the size of the stakes, numbers of parties ( and/ or insurers), differences in perception of risk, animosities, litigation inertia or the need for additional exposure analysis. Here, again, I often recommend scheduling more than a one-day session. In many cases, it will take a number of sessions. Nevertheless, if the case is not settled even after the scheduled session or sessions, I feel that it is incumbent on me as the Mediator to continue to pursue efforts, and listen to and propose ideas, toward settlement. Those who have worked with me know that even when the case is not settled right away, I do not give up. I try to continue the discussion until there is a resolution. Sometimes I can achieve that simply with further emails and calls with counsel and/ or principals, and sometimes those emails and calls can lead to a further session that will ultimately resolve the matter.
Of course, there are instances when one or another party feels that it cannot settle the case given the posture of the other side or the nature of the issues presented. Sometimes, the parties are compelled to mediate by the Court when one or the other party does not wish to settle. I obviously cannot force parties to settle. All I can do, and will do, is use my inherently optimistic approach, years of high stakes litigation experience and neutral evaluation and facilitation skills to try to help counsel and the parties reach a settlement that will provide them with certainty in an outcome that they control versus the costs and uncertainties of a litigated result. In most cases, the party principals and counsel will see the light and reach
It also helps that I like working with people and enjoy helping bringing about a resolution.
The Caucus Sessions Are Where the Dispute Gets Settled
After the initial introductory joint session, it is time for me to speak separately and confidentially with each of the party representatives and their counsel in shuttle diplomacy between them. These "caucus sessions" are the heart of virtually every mediation. Like other aspects of the mediation process, I am flexible about how I handle the caucus sessions depending on what is needed in the particular case. I try to explore the best approach to the mediation in written email questions to the parties counsel (when there is time for them in the mediation schedule) and in my pre-mediation session conference calls.
I generally use the first caucus session after the initial joint session to ask questions to be sure I understand each party's positions and to discuss what I see as the relative strengths and weaknesses of the party's positions on the various issues in the case. I ask about reactions to the opening statements in the initial joint session. I try to hear out the viewpoints, facts and emotions guiding the thinking of each party. I want to be sure I have identified with the party what the major issues in controversy are from its perspective. I want to be sure I understand the prior settlement discussion history, if any, beyond what I have learned in the pre-mediation conference calls and mediation statement submissions. I want to be able to see the dispute through the eyes of the party representatives as well as my own.
At some point, I will begin to convey to the party a general initial viewpoint on how I am evaluating each particular issue ( i.e., which side has the better argument as I see it now and any nuances about the value of the issue to the dispute) and ask counsel and the party representative(s) to tell me if, how and why they see things much differently. The party may change my mind or influence how I am perceiving a particular issue as a result of this discussion. I also try to get an understanding of what each side realistically sees as the range of possible damages should there be any liability. I also use this session and my pre-mediation session conference calls and pre-mediation session written questions to try to tease out whether there are other avenues for relief besides the pure payment of money--such as, for example, (a) future business relations or employment, (b) an agreement to leave a portion of the dispute for resolution by means of an agreed yardstick based on potential developments over an agreed period such as the next 12 or 24 months, (c) an escrow arrangement, equity participation or payments over time (c) some revisions that would revive a failed deal or (d) other ideas to try to expand the "pie" of potential approaches to bridge the parties' positions.
Even before the very first caucus sessions, I try to chart for myself the various issues. Then, as the caucus sessions proceed, sharpen my thinking on rough percentage chances of each side prevailing on each of the various issues, and each issue's significance to the resolution of the overall dispute, as well its impact on a rough range of potential monetary damages or other relief in the case. With this, I try to begin to frame a monetary ( and/ or non-monetary) range of where the parties should consider settlement. I then try to work with each of the parties ( or sides), in the separate caucus sessions to get either full initial offers or their reactions and input into an appropriate range of relief (monetary or non-monetary) in which to negotiate.
Only sometimes will I ask for an actual settlement offer in the first caucus session. This may be perfectly appropriate when there has already been some settlement exchanges between the parties and an "offer" is really due. But in other cases, I do not yet want a party to harden its position into an offer because it may be too extreme at this early stage to be sufficiently productive. There is sometimes a debate between the parties about who should make the first offer at the mediation, which actually should make little difference, but I can get around this by agreeing to get both sides' "soft" offers confidentially and not to be shared with the other until I convince them both that I believe that the other party's approach is sufficiently within reason to allow offers to be exchanged.
I make myself a fount of optimism, leaving no stone unturned in a search for a compromise resolution. Sometimes a party will be more willing to move on some issues rather than others. Perhaps the other side finds another issue more appealing on which to move. These can be traded off to bring the parties closer on the final outcome. The important thing is to try to avoid the parties locking themselves into final impasse positions that make forward movement impossible, reminding them of the unnecessary risks and costs of litigating the case to a judgment over which they will have no ultimate control of the outcome. Every mediation has its own rhythm, potential avenues for compromise and personalities. It is up the Mediator to be ever sensitive to the opportunities for resolution that are presented by the peculiarities of the particular case.
If the parties appear to be at an impasse that cannot be bridged, I will often offer to provide a single final "Mediator's Proposal" for resolution. This is non-binding, but the parties agree that they will each either accept or reject the proposal confidentially to me. I tell them that I will not tell either party what the other party's answer to my " Mediator's Proposal" was unless both sides have accepted it. If there is not acceptance on both sides, I will only convey to both sides that the proposal was not accepted. Sometimes I give the parties a day or two to think about the proposal before responding. Other times, it can bridge a gap at the mediation session itself.
Finally, it is important to note that some cases cannot be settled in the first day or even two days of mediation. I generally encourage parties to schedule at least two days of mediation in case we cannot settle the case in one day, but in some cases, even two days are not enough. Sometimes one or more of the parties feel strongly that they need to know the resolution of a dispositive motion before they can commit to what it would take to reach a compromise. Sometimes a party may misread its chances in litigation or arbitration or the huge drain on resources that continued litigation will entail. Sometimes something in the business climate behind the dispute changes, opening a new window of opportunity for settlement or at least temporarily closing the window for a settlement. For all these reasons, even if the originally booked mediation session(s) have not produced a settlement, I let the parties know that I am available to continue talking by telephone or by further sessions to help them take control of their own dispute and settle it. Not infrequently, an additional session or telephone calls can resolve a case.
David W.Ichel Dispute Resolution LLC
Panel Member: FedArb,CPR, ARIAS-US
Preparation Makes A Difference In Mediations
Just as in litigating cases, preparation is a key driver of a successful mediation outcome. I generally have an early call with counsel for all parties to learn generally about the case and its status, go over my suggested approaches to the particular mediation, and any variants that might be suggested by counsel, set dates for submissions and the mediation session(s) and then obtain copies of the pleadings and any important decisions in the case. I almost always request that Mediation Statements prepared by each side be exchanged by the parties as well as submitted to me, along with copies of any key documents, approximately ten days before the Mediation, with any additional points or documents that a party wants to provide confidentially only to the Mediator submitted solely to me. I often email each parties' counsel on a confidential basis a small number of questions just for that party raised by my review of the Mediation Statements and related materials that I ask that counsel answer confidentially in a return email sent solely to me.
Shortly before the first mediation session, I hold a pre-mediation conference call separately with each party/side (counsel and often party representative) to go over questions, issues or concerns that the parties or I may have as well as to present a proposed game plan for the mediation session(s) based on what I have learned so far. Sometimes, these calls can even serve as beginnings for discussions of potential avenues for resolution.
I use these avenues of preparation to try to determine whether there can be creative business solutions to resolving the case other than simply splitting a dollar claim. And, even when the resolution boils down to dollars to be paid, the preparation is a first step in allowing me to give (confidentially and separately) evaluative suggestions to each side about the strengths and weaknesses of their positions that can assist each party in arriving at a pure monetary settlement .
In a number of mediations I have handled, insurer or multiple defendant interests must be addressed separately, and advance work can be helpful here as well in permitting me to understand all of the issues and "moving parts" for a successful resolution.
Counsel necessarily play a critical role in preparing not just the Mediator, but their own client. Advance discussion by counsel with the client about case strengths and weaknesses and potential settlement avenues is essential to having a meaningful mediation session. Preparation of a short opening statement to be presented to the Mediator and the other party(ies) at the initial joint session that is diplomatic but frank can often help the other side's business representative see the case from a different perspective as well as offer an opportunity for counsel to suggest openness toward settlement. Advance work by the parties on supporting or trimming damages claims, along with ideas for solutions that go beyond strict payment of cash, can also be helpful.
With the parties and the Mediator fully prepared for the mediation sessions, there is a much higher likelihood for a successful outcome.
Don't Dismiss the Value of a Joint Opening Session and Opening Statements
I am flexible about how I handle the initial mediation session, particularly in the larger cases that I tend to handle most, because each dispute has its own history, counsel, party chemistry and needs. However, both in the past as a litigator in mediations and now as a mediator, I have found that in many cases an initial joint opening session with opening statements by each each side ( or party / party group in larger multi-party litigations) can be a very helpful first step toward resolution if it is prepared for and handled properly by all attendees.
The preparation work begins with the mediator: I explain to counsel on our initial conference call that I generally prefer a joint opening session with short opening statements at the first mediation session because it will allow the party representatives (and even their counsel) to hear what each party believes is important about its case and, in the best of worlds, each party's suggestions about openness to a compromise resolution and hopefully even some ideas for settlement constructs or approaches that might work for that party. Moreover, in individual pre-mediation session calls that I have with each side, I stress that it is important to not just convey those facts or issues that you believe the other party(ies) should understand about the strength your case but to do it in a way that is not inflammatory and hopefully suggests openness to compromise and any ideas you might have about approaches toward resolution.
Counsel's preparation is also important: Counsel should prepare an opening statement that manages not only to convey to the other side the key points that favor litigation victory for counsel's side and the potential downsides for the other party(ies), but do so in a way that is not deprecating to the opposing party and which affirmatively holds out the desire to reach a reasonable compromise resolution. I have seen mediations where one side's counsel so verbally attacks the bona fides of the other side that the effect is to close off a party's openness to resolution. Good humor and genuine courtesy toward the other side, while still holding no punches substantively, can go a long way to creating a greater potential for successful resolution. I also encourage the party representatives, after their counsel has spoken, to consider saying a few words at the mediation to indicate their openness to a fair mediated resolution. (Even before that, in my initial call with each side, I ask for each side's commitment to work toward such a resolution).
At the joint opening session itself, it is important that the mediator act to control the tone of the session. I begin with greetings, introductions and then a little "pep talk" --which is completely true--about how and why mediation can really work to resolve the dispute, and how the mediation presents an opportunity for the parties to take control of their own destiny in self-resolving the dispute rather than leaving it up to the time consuming, expensive and unpredictable resolution by the court and even appellate courts. Before I turn it over to counsel to present opening statements, I explain to all present that I will allow each side if it desires to make a very short rebuttal statement (generally limited to five minutes). However, I discourage any questions ( unless someone truly does not understand something said) or back-and forth at this session to avoid unnecessary vitriol, and suggest that instead any issues or questions that anyone has can be raised in our first individual-side caucus session. Then I generally close out the initial session with another short "pep talk" on how and why my experience has taught me that the mediation process will succeed if the parties put in the effort into our coming caucus sessions.
There may be some litigations where there is so much history or where I have covered so much with each side (or multiple parties) before the initial sessions that opening statements may not make sense, and I am also willing to dispense with them if none of the parties wants them. Nevertheless, my experience has taught me that they often are a very helpful step in the mediation process. They allow each party to express its key points, but more importantly they allow each party to hear what the other has to say. If the statements and process are properly prepared for by the mediator and counsel, they can really add value.
Taking Full Advantage of the Benefits of Arbitration
There are many reasons why arbitration is chosen to resolve disputes. The reasons, and their order of importance, can differ for different parties, and for different types of disputes. Nevertheless, the key reasons parties choose to arbitrate are confidentiality, speed, finality of resolution, ability to choose the procedures, location, language, law and arbitrator(s), cost efficiency and limited discovery. To make these rationales a reality, however, requires planning on the part of contracting parties in drafting arbitration provisions and thoughtfulness in the positions they will take during arbitration. As discussed at the conclusion, parties should also consider pursuing mediation in arbitrated disputes because mediation gives the parties maximum control over the resolution of their dispute.
For many businesses, confidentiality in the resolution of their disputes is of major importance. Consider pharmaceutical, technology or industrial companies, where the confidentiality of formulas, testing and development ideas represent much of a business’s value. The same can be true of other businesses as well, such as professional services, retail, etc. While confidentiality protective orders can be obtained in court litigated actions, a party cannot know in advance how broad a protective order it can obtain in court and confidentiality orders run up against “sunshine laws” and public access rights once a litigation reaches the stages of summary judgment motions and trials. Arbitration, which is private adjudication, can provide confidentiality of documents and evidence throughout the proceeding. Further protection can be gained by providing for the level of confidentiality desired in the contract arbitration clause and/ or choosing in that clause a governing arbitration organization to administer the arbitration (or, at a minimum, an arbitration organization’s rules) that provide the desired degree of confidentiality. Within the arbitration itself, further protections can be sought from the arbitrators.
In general, parties look to arbitration to resolve disputes quickly and without an appeals process, although some arbitration organizations’ rules permit parties to agree to an appeal process. Of course, arbitration does not always lead to a speedier result: Some trial courts move cases to judgment very quickly as well. Some arbitrations can take longer than a party might desire due to (1) a party “dragging its feet,” (2) an arbitrator being so busy that his or her schedule will not permit early hearing dates or (3) a party seeking to challenge the arbitration award in the courts. However, arbitrations can provide for speedy, final results. Here, again, parties can use their contract arbitration clause to select as administrator an arbitration organization whose rules require both arbitrator and party adherence to certain time deadlines unless the administrator grants an extension or the parties agree to it. Federal Arbitration Inc. ( “FedArb”) rules have this feature, for example. The parties’ selection of arbitrators should also take note of potential arbitrators’ time availability and commitment within the desired timeframe. If one party is unduly “dragging its feet” in the arbitration, that fact should be highlighted to the arbitrator(s). Of course, speed should never be a substitute for fairness and due process, and no party’s legitimate aims to prepare for the hearing should be thwarted by slavish adherence to speed of the process.
Choice Of Location, Governing Law and Arbitration Procedures
Although parties can in their contracts provide for choice of law and choice of forum clauses for their disputes, whether they are to be resolved in the courts or by arbitration, the ability of parties to define their own applicable procedures (and to select their decision maker(s)), is a unique benefit of arbitration. To begin with, the parties can select a given arbitration organization and/ or its rules, with some different options being afforded by each of the major organizations (AAA/ ICDR, CPR, ICC, FedArb, JAMS). Moreover, these organizations generally allow the parties to vary the case procedures by agreement, whether in their contract arbitration clause or by agreement at the time of (or during) arbitration. Interestingly, FedArb generally specifies application of the U.S. Federal Rules of Civil Procedure subject to modification by the parties, thus providing the parties with very familiar rules as a starting point, yet with the confidentiality, ability to select the decision maker(s), ability to vary the rules by agreement, and speed and finality that are the hallmarks of arbitration.
Cost Efficiency and Limiting Discovery
Arbitrations impose the cost of paying arbitrators and arbitration organization fees. These costs, however, must be weighed against the parties’ ability in arbitration to (1) maintain confidentiality; (2) choose their own decision makers and/or method of decision maker selection, (3) choose the applicable procedures and (4) generally obtain a speedy resolution without appeal. Moreover, parties will often choose arbitration because generally the arbitral organization rules and/ or the parties’ arbitration agreement will provide for only limited discovery that will reduce the biggest cost of all modern litigation: discovery. Indeed, even in civil litigation, the overwhelming costs of discovery have resulted in revisions of the Federal Rules of Civil Procedure and various State rules to emphasize “proportionality” requirements.
Arbitrators should exercise vigilance to try to see to it that the case is resolved cost efficiently under the circumstances. In general, when the parties disagree on the scope of discovery and the answer is not provided for in the parties’ own dispute resolution agreement or the arbitral rules chosen by the parties, discovery should be allowed only if it demonstrably relates to a significant disputed issue, is proportionate in cost to the amount or issue in dispute, and is required for a fair determination of the dispute. This approach should apply to the breadth of electronic and hard copy discovery allowed, the number of custodians to be searched, and the nature, number and parameters of allowed depositions, as well as to time allowed for discovery. At the end of the day, fairness and not gamesmanship should dictate the scope of allowed discovery.
Counsel in their arguments should take care that they do not appear to be overreaching in either the breadth of discovery they are seeking or the categories of discovery they are disputing so as not to (even unwittingly) convey a weakness in their positions on the merits of the case itself. Counsel should be prepared when discovery disputes arise to show that their position is fully reasonable and has been thought out in terms of demonstrable actual needs and actual costs.
One very important reason that contracting parties often agree to arbitration is when the contract is between parties of different countries. This allows the parties to agree in advance on the applicable law, hearing location, language, administering organization, rules, procedures and decision maker selection. This allows parties far greater confidence than a race to the courthouses of different countries, although in complex cases involving both contracting and non-contracting parties, sometimes forum fights are inevitable.
Summary Judgment in Arbitration
There is little question that Rule 12(b) motions to dismiss and summary judgment motions are one area where courts, in the United States at least, may be ahead of arbitrations in quickly disposing of certain cases. However, summary judgment is in fact permitted under most arbitration rules and has in fact been granted, either on particular issues or in whole cases, in arbitrations. However, sometimes moving promptly to an arbitration hearing can actually turn out to be faster and more cost effective than providing for lengthy and costly summary judgment motion briefing and argument only to be followed by a full arbitration hearing because there were material issues of disputed fact that could not be summarily resolved.
When parties believe that a summary judgment motion is appropriate in a particular arbitration, they should no doubt pursue the motion, but consideration should be given to the costs and time involved and whether that party’s case presents better in that format.
Mediation With Arbitration
Mediation should be an important tool to resolve arbitrations as well as court disputes. Many parties sensibly provide in their contracts’ dispute resolution provisions for a mandatory mediation process before arbitration can proceed. Indeed, even without such a contractual requirement, I have found that a significant percentage of the mediations I have handled have been of cases that were otherwise headed to (or were in) arbitration. The benefit here to both parties is that they can fully control the result in a mediation whereas they are leaving their dispute to the uncertainties of a third party’s decision when they proceed with arbitration or court litigation.