Participation Matters

This week I had a mediation take place by an agreement of the parties in which one of the clients expressed his displeasure that the other side was represented at the mediation by someone with less than “full authority” to settle the case. The client was grumpy, his lawyer explained to me in my office. I thought the client’s sentiment was appropriate. He had committed a lot of time and money to the process. He had traveled from the West Coast to participate. Who should the client be disappointed with?
I asked the lawyer in my office if, when the parties agreed to mediate, it occurred to him to make attendance by a key player in the dispute, the person with full authority, a condition of agreeing to mediate. “No”, was his response. “Maybe next time”, I responded.
Participation Matters
We have all learned the hard way that participation matters in mediation. Whenever someone is participating “by phone” the likelihood of success of the process plummets, regardless of their good intentions. All too frequently the process gets off to a bad start when one side learns first thing in the morning that the other side has brought the “wrong” person, or the process bogs down in the afternoon because a key player has boarded a flight. Why do we let this happen?
If a mediation is court-ordered, did you know that the rules for mediation say you are entitled to know who the other side is planning on bringing to the mediation in advance? If you or your client have any concern at all about the other side’s participation, just let your mediator know and give them an opportunity to intervene. If a mediation is occurring by agreement, can you think of a reason why you should not make an assurance about full participation on the other side a condition of your agreement? Neither can I.

Different Kinds of Bias

Do “repeat players” in the arbitration arena fare better than their adversaries? Texas Lawyer reported on a case recently before the Fifth Circuit, regarding an allegation of bias in employment-related cases by the American Arbitration Association. The plaintiff in that case relies on an academic study published 3-years ago by Dr. Alexander Colvin which advanced the notion, among others, that because employers are “repeat players” in the arbitration arena, there is statistical evidence which proves that employers are more likely to prevail in a AAA arbitration than the employee, and employees do worse in arbitrations than they do in federal courts.

The “repeat player” phenomenon is a time-honored concern raised by opponents of arbitration. Is the neutrality of the service provider compromised by the desire to continue to be the “go to” service provider for a particular party?

In the case of AAA, I don’t think so. Although facts often prove me wrong (!), I have served as a panelist on dozens of AAA arbitrations over the years. I can’t remember a single instance in which a panelist in one of these arbitrations seemed the slightest bit affected by the “repeat player” syndrome. That’s just not how AAA functions. No one is appointed to a AAA panel thinking, “I want to be sure the repeat player wins so that AAA will continue to get their business”. I’m not saying there aren’t other biases that come into play sometimes, just not the one advanced by the study and the plaintiff in the recent Fifth Circuit case.

Sleepy Time?

Fifteen to twenty years ago, the mediation that lasted until midnight, and beyond, was not uncommon. My mediator colleagues and I would get together and astonish each other with tales of wee-hours of the morning negotiation.

I never thought that the “all-nighter” was a good idea. Without good reason (jury trial starting next week?), why expose your client and yourself to the vulnerabilities produced by pure weariness? We are not meant to think clearly at 3:00 am. Fortunately, this practice seems to have faded. I think in the last ten years I have only had three mediations go past midnight, and one of them lasted until 4:00 am. That they were all in the span of thirty days in February of 2012 is something I will never understand!

Why CPR?

I am pleased and proud to have become a Member Panelist of the International Institute for Conflict Prevention & Resolution. That’s a mouthful. All you need to remember is “CPR”, as in

I have written about CPR in the past, and been engaged through them in a handful of ADR matters. I think CPR is an outstanding, and intriguing, organization. CPR provides a meaningfully different ADR resource for you and your clients than that offered by any other organization (notably AAA or JAMS).

While CPR offers a wide range of diverse rules and procedures so that you can “fit the forum to the fuss”, the true distinction in CPR’s model is it allows arbitration to be conducted at a lower cost than what you are probably used to. If you are proceeding to arbitration under CPR rules, your client will most likely not incur “case management fees” or “administrative fees”, which in the real world of arbitration these days can be daunting.

I hope you will investigate CPR, become familiar with their rules, and consider incorporating a CPR dispute-resolution clause in future contracts you are drafting for clients. And I am always delighted to answer any questions you may have about ADR in general, and CPR in particular.

Nothing Mock About It!

A couple of weeks ago I was invited to serve as the presiding judge for an in-house mock trial, presented to lawyers and claims handlers for an insurance company. The trial roles of counsel and witnesses were covered by experienced trial counsel, and the purpose was not so much to train them as to give the audience a chance to watch, and discuss, the reality of a courtroom proceeding.
Like every other mock trial or summary jury trial I have ever been involved with, the “mock” nature seemed to quickly disappear and the adversarial, competitive elements of a “real” trial took over. Pretty soon it was clear that both sides wanted to win, and when the 8-person jury returned it’s verdict late in the afternoon, there were high-fives at one counsel table, and real dejection at the other. It was a lot of fun, and very educational.

If you have any interest in offering an in-house mock trial at your firm, either for a CLE or focus group purpose, I would be delighted to assist.

I’m No Expert, But . . .

I received a call recently from a lawyer wondering whether I could mediate an oil and gas dispute, specifically a dispute his client has with a major oil company over the language of a royalty calculation provision. What was needed, I was told, was a mediator who could convince the arrogant oil company that they were wrong!

Like every other experienced commercial litigator, mediator or arbitrator in our community I have “handled” a few oil and gas cases in my day, and I told the caller that with proper study, there was probably no issue or argument that I would come across in the mediation that I would not understand. And then I told the caller I should not serve as the mediator.

Process vs. Substance Expertise

The issue here is a lesson in neutral selection. I am an expert in the process of dispute resolution. But I claim to be an expert if very few other things (let’s just say I have a spice-grinder—and I use it). Having mediated over 3,000 disputes, I know a LOT about creating and facilitating a process that can lead to resolution. But I knew that what my caller needed was a neutral who, because of his or her background, expertise, and reputation IN THE OIL INDUSTRY, would be able to offer an evaluation during the mediation that was unassailable—or at least would have more credibility with a major oil company’s representatives than would my evaluation.

More often than not, process expertise is what you are looking for. But occasionally substance expertise can be critical.

D Magazine Best (Again)

D Magazine has published (again) an issue listing the “Best Lawyers” in Dallas. I wish they would quit doing this. The numbing frequency, the ads, the suspect methodology . . . has this thing long since failed to be a reliable public resource and become nothing but a cash cow for the publishers of the magazine.

That being said, I would rather be included on the list than not, and once again, I am on the list. To my knowledge there are only two mediators in Dallas who have made the list every time: me (of course!), and my friend Mary Burdin. I am pleased to have been selected, I am grateful to anyone who voted for me, and I congratulate Mary for her well-deserved distinction.

Making the First Move

“They filed the lawsuit; they should make the first demand”. “We’re not going to make an offer until we know what the opening demand is”. “They are the ones who wanted this mediation; they need to make the first demand”.

How often have you heard, or stated, a variation of this negotiation mantra? From the day I was born, it seems, I have been told that a critical advantage in negotiation is achieved by making the other side make the first move. But recent negotiation studies are raising a serious question about this time-honored assumption.

Psychologists call it “anchoring”. In one study, a group of experienced real estate agents were shown a house, and handed an MLS listing. The listings were identical, except each contained a different “list price”, which is essentially a “first offer”. After the tour the agents were asked to answer four questions: (1) an appropriate list price for the house; (2) an estimate of the appraisal value; (3) a reasonable amount for a buyer to pay for the house; and (4) the lowest amount the seller should accept.

In every response the agents who received the higher list prices thought the house was worth more. And when asked if the list price they had been provided had influenced their answers, 80 percent said, “not at all”.

I Am Not Making This Up
One academic puts it this way: “Our minds tend to give disproportionate weight to the first information we receive when we are required to make decisions”. Students of negotiation professor Charles Craver are asked, in their role of defense counsel on a personal injury claim, how much their client will have to pay to settle the claim. The only variable in the hypothetical is that half the class is told that the opening demand is $60,000; the other half is told $30,000. The students receiving the higher demand almost always conclude that more money will be required to settle, often concluding that more than $30,000 will be required.

How many mediations have you been to where the claimant makes a demand of two million dollars, and the insurance company defendant retaliates with an offer of $5,000 or $10,000? What if the insurer, instead of insisting on the Plaintiff going first, made an opening offer of $30,000, thus anchoring the negotiation? Would the Plaintiff still start at two million? I think not. What do you think?

In Support of Voluntary Mediation

I just received a wonderful update prepared by Mike Schless of Austin on the status of efforts by the Texas Supreme Court to comply with a legislative directive to make more efficient the resolution of disputes where the amount in controversy is $100,000, or less, and the parties have elected to proceed with a new Expedited Jury Trial Process. This is the legislation that for awhile threatened to include a controversial “loser pays” provision, but ultimately did not. A task force of ABOTA, Trial Lawyers, and Defense Counsel, after considerable debate, has recommended to the Supreme Court Rules Advisory Committee the following: “ADR: Unless the parties have agreed to engage in alternative dispute resolution or are required to do so by contract, the court must not–by order or local rule–require the parties to engage in alternative dispute resolution”.

The principal issue debated is whether ADR in these cases can be mandated, or should be strictly voluntary.

I wonder how far in the minority among my professional neutral colleagues I may be, but I actually think “voluntary” is the way to go. I have become concerned in recent years about abuses of mediation referral by some courts, who have become, in my view, overly dependent on ADR as a mechanism for docket control. Too often mediation has become not the efficient win-win alternative to disputing, but an added layer of delay and expense for the parties.

Ten to fifteen years ago a healthy percentage (90%?) of my mediations were mediations of pending lawsuits, and a healthy percentage (50%?) of those mediations were court-ordered.

Today about 50% of my cases are “pre-suit”, and the percentage of cases I mediate because the parties are satisfying a court-ordered obligation is around 10%.

I am close to the point where I could not receive another court-ordered mediation and it would not make a difference in my practice. I may get to a point in five years where 100% of my mediations are pre-suit (or at least pre-arbitration).

Mediation is not going away, but the market for ADR services is evolving—more contractual, more voluntary, and less court-annexed. Mediation works best when it is voluntary.

It will be interesting to see in which direction the Texas Supreme Court decides to go.

Tip: How to Make the MSA Binding!

Most successful mediations result in a written “Mediated Settlement Agreement” (MSA). Advocates usually agree that it is best to reduce the settlement agreement to writing, even if the MSA is merely an outline of the essential terms of the settlement.

What if the agreement breaks down over the terms of the more elaborate settlement documents that everyone assumed would not be a problem”? Fortunately the Houston (14th) Court of Appeals, in a recent decision, helps us with this perplexing issue! In Border Gateway, LLC v. Gomez the parties obligated themselves, in an MSA, to “enter into a formal settlement agreement within ten business days”. In a trial over an alleged breach of the MSA, it was argued that the failure of this condition precedent rendered the “agreement” non-binding on the parties. Citing established precedent, as well as the Restatement (2nd) of Contracts, the Court opined, “the fact that the parties intend for an informal agreement to be reduced to a more formal writing will not necessarily prevent present, binding obligations from arising”. The party challenging the MSA could not establish that the MSA manifested an intent to not be bound.

Practice tip? An expression in an MSA of “the parties intend to be bound by this agreement, notwithstanding the fact that more formal settlement documents are contemplated”, should go a long way in bolstering the enforceability of the agreement. Conversely, if you have any reservations about the “more formal settlement documents” to follow, the MSA should clearly state that the MSA is non-binding (in which circumstance why even sign the MSA?).