Confidentiality of Settlement Negotiations

Most attorneys are familiar with the principle that Federal Rule 408 (Rule 408) that protects settlement discussions from subsequent disclosure in court. Rule 408, which governs proceedings in Federal courts (Maryland and most states have adopted state analogues to this rule), prohibits the use, as evidence in court, of an offer-to-compromise a claim as an admission of the validity or invalidity of the claim.

Federal Rule of Evidence 408 states:

(a) Prohibited uses.-- Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction: (1) furnishing or offering or promising to furnish—or accepting or offering or promising to accept--a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority.

(b) Permitted uses.--This rule does not require exclusion if the evidence is offered for purposes not prohibited by subdivision (a). Examples of permissible purposes include proving a witness’s bias or prejudice; negating a contention of undue delay; and proving an effort to obstruct a criminal investigation or prosecution.

The lazy way of thinking about this Rule is that the Rule protects information exchanged and discussed during settlement negotiations. Not so fast. This assumption is wrong.

The first exception to this rule are admissions of fact, “even though made during the course of compromise negotiations, unless hypothetical, stated to be ‘without prejudice,’ or so connected with the offer as to be inseparable from it.” (See, for example, McCormick on Evidence §251, pp. 540 -541).

This exception alone, even if observed by the thoughtful lawyer, inhibits settlement discussions and restricts free communication. It also has the potential of generating controversy over what was said by whom and whether a statement is hypothetical or a statement of fact. But wait: there are more limits to the protections apparently offered by Rule 408. The rule does not require exclusion if the evidence is offered for purposes such as proving a witness’s bias, negating a contention of undue delay or proving an effort to obstruct justice.

The 3rd Circuit recently found another exception to Rule 408 in Lohman v. Duryea Borough, et al. (No. 08-3524, 2009 WL 2183056 (3d Cir. July 23, 2009). In this case the Third Circuit affirmed the District Court’s reduction of an attorney’s fees based on unusually limited success where the plaintiff rejected a settlement offer of $75,000 and after trial was awarded only $12,205. While much of the case turns on the law of attorneys’ fees, the Court also considered whether, and to what extent, trial courts may consider settlement negotiations when awarding attorney fees. It is easy to see why the Court wanted to limit the amount awarded to the attorney, given the settlement offer of $75,000 and the “win” in trial of $12,205.

In a case of first impression the Court held that evidence of settlement negotiations under Rule 408, while inadmissible to prove the validity or amount of the claim, in respect to an attorney’s fee claim, “does not offend the clear terms of Rule 408. Such evidence can be relevant when comparing what a plaintiff ‘requested’ to what the plaintiff was ultimately ‘awarded.’” (Id. at p. 12)

So there you have it. While the information about how much was offered and accepted (or, as in this case, not accepted), may seem to be the core information intended to be protected by Rule 408, when offered to evaluate the “success” of an attorney when determining attorneys’ fees, is admissible -- at least in the 3rd Circuit.

The Court further considered the major policy reason asserted for excluding such evidence – to protect and support confidential settlement negotiations – and found the assumption that “settlement discussions will not now occur because an attorney could be penalized if he or she achieves less than was demanded makes little sense. In fact, permitting settlement negotiations to be considered would encourage reasonable and realistic settlement negotiations.”(Id. at 14)

The bottom line for attorneys and mediators entering into settlement negotiations? Do not rely simply on Rule 408. Cite to another statute protecting the confidentiality of settlement negotiations – such as the Uniform Mediation Act in those states that have adopted it (Maryland has not) or to a Court rule or by agreement of the parties and, if the last, confirm the agreement in advance in writing.

More on ACUS

On September 18, 2009 I posted about the Administrative Conference of the United States (ACUS), noting that ACUS was going to be newly reconstituted, starting with the appointment by the President of a Chairman. Last week I received a comment asking if I had any updated information on ACUS, and how folks can keep track of the progress.

In an answer to the first question, I have reprinted a press release from The White House, Office of the Press Secretary announcing the President’s intent to nominate a Chair of ACUS.

November 2, 2009, WASHINGTON – Today, President Barack Obama announced his intent to nominate the following individuals to key administration posts … Paul R. Verkuil, Nominee for Chairman, Administrative Conference of the United States.

Paul R. Verkuil is a public law scholar and academic administrator. He is currently senior counsel to Boies, Schiller & Flexner LLP, where he oversees the firm’s Pro Bono program and participates in antitrust and corporate governance matters. Verkuil is also a professor at Cardozo School of Law. Previously, he has served as President of the College of William & Mary, Dean of Tulane and Cardozo Law Schools, Acting Dean of the University of Miami Law School, and CEO of the American Automobile Association. His legal activities include appointment as Special Master by the U.S. Supreme Court in the original jurisdiction case of New Jersey v. New York, which determined sovereignty to Ellis Island, and appointment as Special Master by the Fifth Circuit in U.S. v. Louisiana, a higher education desegregation case. He is a member of the board of the National Constitution Center, the Statute of Liberty – Ellis Island Foundation, and the Innocence Project. He has published over 60 articles on administrative law and regulation topics and is the coauthor of Administrative Law and Process. His most recent book, Outsourcing Sovereignty, addresses the problem of contracting out essential functions of government. He was chair of the Administrative Law and Regulatory Practice Section of the ABA and a consultant to and member of the Administrative Conference of the United States. He earned an A.B. from William & Mary, an LL.B. from Virginia Law School, and a J.S.D. from NYU Law School. He was an active duty officer in the United State Army from 1962 to 1964.

In response to the second question (how to keep track of the nomination and confirmation and the staffing of this gem of an agency) I will keep track and post whatever information I see about ACUS. So keep an eye here and I will post updates whenever I hear anything.

Update on the Mediator TV Series, "Kate"

A couple of weeks ago I posted about the possibility of a new TV series about a mediator. It seems as if I am developing a habit of blogging about television – at least if the television is about mediation.

According to THR.com, Sarah Shahi has been selected as the lead in the series, “lifting the contingency off the project.”

Shahi, according to THR.com, “most recently played the female lead opposite Damian Lewis on NBC's cop drama Life. Her series credits also include Showtime's The L Word, ABC's Alias, and the NBC comedy series Teachers.”

Now people will start seeing mediation as sexy and exciting as evidenced by this publicity photo of Shahi.


Would that the same were true if they saw me but, real mediators, unlike those on TV, must always bring reality to the table.

(Photo from Exposay.com.)

7 Common Pitfalls to Avoid When Negotiating

I found an interesting article from the Stanford Graduate School of Business Knowledgebase.

The article is based on research by Margaret A. Neal, the Stanford University John G. McCoy-Banc One Corporation Professor of Organizations and Dispute Resolution and Graduate School of Business Trust Faculty Fellow for 2009-2010.

The research described on the blog suggests that successful bargaining means putting a positive spin in every possible circumstance. “If I can trade off issues that I care about more and you care about less, then we've been able to create value in a transaction," according to Neale, "That's the silver lining." She points out common pitfalls or traps that negotiators fall into and leave money on the table. Below is my brief summary of those pitfalls.

1. Poor Planning. Planning is the sine qua non of effective negotiations. Successful negotiators make plans. They know their priorities and their alternatives. They have thought about and discussed thoroughly their Best Alternative to a Negotiated Agreement (BATNA) with their client. They know their bottom lines and deal killers. And they spend the time with their client to make sure that the clients understand and agree with the BATNA.

Good negotiators also try to understand the other parties’ preferences and BATNAs. While at the bargaining table they test to determine if their hypotheses regarding the other parties’ preferences are correct. Good negotiators often prepare a written list or set of goals for themselves.

2. Thinking the pie is fixed. Usually it is not. It is a common mistake when both parties want the same thing to assume that the other side is negotiating from a fixed “win-lose” situation.

3. Failing to pay attention to your opponent. Negotiation trainers emphasize that the single most important skill is the ability to listen to and understand what motivates the other party – the other parties’ interests.

Another important skill is called “framing.” If you are able to frame an issue that addresses the other party’s interests (for example, while your offer may be lower than the other party has asked for, you can talk about certainty of payment, or better relationships, or any other advantage that your offer provides). You can then talk about why your offer is different – and better – than the alternatives. You have framed the issue from explaining why your offer is lower in one aspect to why it is better – for the other party.

4. Assuming that cross-cultural negotiations are just like “local” negotiations. People are different. Cultural differences between negotiators or the parties they represent can create potential benefits or big problems if ignored or misunderstood. These differences range from the huge differences between people from other cultures, to the more subtle differences between men and women, or between people in different occupations, for example, attorneys and engineers.

The bottom line is to pay attention. Do your homework (see the first item above) and be sensitive to cultural and social differences between negotiators.

5. Don’t be locked into anchors. An anchor is when a party tries to set parameters to the negotiations; to try to “anchor” the other party. For example when someone walks in and says “This is a $500,000 case and if you aren’t prepared to negotiate based on that, we are out of here” they are trying to anchor the case.

Don’t accept their premise; rather try to clearly set your parameters for the negotiation. If your BATNA is $150,000, it won’t help you to respond by offering $10,000. Rather, a better approach is to ask the other party to explain the basis of their demand and then explain why that is not reasonable from your point of view. You can ask the other party to think about whether they are willing to come back with a more reasonable offer.

The risk is that they will walk, but if you make a first offer of $150,000 (your bottom line BATNA), the other party will think that it is an opening offer and you have room to move. If you open at $10,000 the other party is likely to walk or assume that you are playing a game with them. Better to watch the anchors and where they are set and negotiate about the anchors, if possible.

6. Caving in too quickly. One negotiations guru described this principle this way: “90% of the work in a negotiation is done in the last 10% of the time.” Make people feel as if they have worked for the deal. No matter what the price of a first offer, even if it is fair, offer less – if only to make the other party feel good about the deal.

7. Don’t gloat. So, when you’ve cut the deal and you love it, don’t dance in front of the other party or even in the elevator on the way out. Never tell the other side that you would have settled for less. Keep it professional and congratulate the other parties on the good job they did. Remember, your paths may cross again.

For more from Margaret A. Neale, see Negotiating Rationally by Max H. Bazerman and Margaret A. Neale, Free Press, 1992.

A New TV Series about a Mediator?

When I started with this blog I certainly did not think I would be posting about TV shows. But a blog by Professor Jill Gross of Pace Law School in the ADR Prof Blog has definitely piqued my interest. From the USA Network, she blogged, the cable channel that broadcasts Monk and Burn Notice, coming soon, is a new TV show.

Apparently the USA cable network is getting ready to broadcast a series based on a mediator. Yes, you read that correctly, a mediator. According to the network, Facing Kate focuses on Kate, a divorced lawyer who leaves her job to become a mediator. If the show is realistic, I assume they will show Kate as impecunious and always hustling for paying jobs.

This is the same cable network that has produced two of my kids’ favorite TV shows, Monk –- a series about an OCD detective set in San Francisco and Burn Notice –- a series about a fired spy ("burned" by his employer) trying to regain his position with Miami and its bikini-clad residents very much center stage. In both of these, and I believe other shows on the USA Network, quirky characters and the venue are significant aspects of the formula.

I am willing –- reluctantly –- to admit that I have watched and enjoyed both shows -– Burn Notice a lot and Monk quite often. They have appealed to me because the characters seem more "realistic" while at the same time they are –- as in most of TV-land –- funny, smart and always ready with the right quip. Sort of like in West Wing. Not particularly realistic, but with intelligence and sense of humor, just as you would expect from a mediator. Right.

I worry, however, that the show will take the easy way out. And for good reason.

The press release announcing the show states that the main character, Kate, “… realized that truth and justice are not always being found in the court room. As a mediator, you lose a lot of constraints of the law, you’re a referee in a room with no rules.”

They go on to describe Kate as a unique and inventive lead character. I can only imagine what they will do with this. This does not leave me with good feelings about the likely verisimilitude of the series.

But then I guess that real spies are not thrilled with Burn Notice, the Miami venue and bikinis and San Francisco detectives cannot appreciate the way they are portrayed in Monk.

At least, set in San Francisco, the scenery will be beautiful.

New Appointees to the Federal Service Impasses Panel

I seem to have a proclivity to write about obscure federal government organizations. First the Administrative Conference of the U.S. and now the Federal Service Impasses Panel (FSIP).

The FSIP is the labor-relations panel that resolves collective bargaining impasses between federal agencies and federal sector unions under the Federal Service Labor-Management Relations Statute. FSIP, which is a part of the Federal Labor Relations Agency, is composed of seven people appointed by the President, one of whom is designated as Chair, and all of whom serve on a part-time basis.

If collective bargaining between federal agency management and the appropriate union, followed by mediation assistance, proves unsuccessful, the FSIP has the authority to recommend procedures and to take whatever action it deems necessary to resolve the impasse.

I write about FSIP because President Obama has appointed some very impressive and qualified people -– people with not only federal sector labor relations experience, but with significant and broad-based mediation and neutral dispute resolution experience. I know well and have worked with the Chair and many of the Panel Members as colleagues and mediators. Thus I feel qualified to opine that the President has made some excellent appointments.

Mary Jacksteit, Chair of FSIP, has over 20 years of experience in mediation, facilitation and negotiation working for non-profit organizations, government agencies and community organizations. She has worked as a labor arbitrator in the public and private sectors, serving on panels of the American Arbitration Association, Federal Mediation and Conciliation Service and U.S. Postal Service. For ten years, she worked at Search for Common Ground -- a conflict resolution organization. Since 2007 Mary has been associated with the Public Conversations Project in Watertown, Massachusetts and her private practice focuses on community, public policy, organizational planning, and conflict management.

The other members of the FSIP include:

• Martin H. Malin, a Professor of Law and the Director of the Institute for Law and the Workplace at Chicago-Kent College of Law, Illinois Institute of Technology, where he teaches courses in labor law, collective bargaining, arbitration, public sector labor law, employment law, contracts and jurisprudence.
  
• Barbara B. Franklin, an arbitrator and mediator in Washington, DC, listed on arbitration rosters administered by the Federal Mediation and Conciliation Service, the American Arbitration Association and the Financial Industry Regulatory Authority and a mediator for the U.S. Court of Appeals and District Court for the District of Columbia.
  
• Marvin E. Johnson, a mediator and arbitrator of public and private disputes who is listed on the rosters of JAMS, the International Institute for Conflict Prevention and Resolution, the American Arbitration Association, and Accormend Associates. He is the founder of the Center for Alternative Dispute Resolution.
  
• Thomas Angelo, who began his career as an attorney with the Solicitor’s Office at the U.S. Department of Labor and then joined the National Treasury Employees Union, serving as Associate General Counsel in Washington D.C. and Regional Attorney for the Federal Labor Relations Authority. In 1983 he became a full time arbitrator and is a member of the National Academy of Arbitrators.
  
• Edward F. Hartfield is the Executive Director of the National Center for Dispute Settlement. He has devoted his entire 36-year career to serving as an impartial party as mediator, arbitrator, facilitator, election administrator, trainer, neutral convener, and ombudsman, also having served as a mediator for the Federal Mediation and Conciliation Service.
  
• Don Wasserman has been a labor relations professional his entire career. Since 2001, he has been an arbitrator/mediator specializing at all levels of the public sector. He is a Member of the D.C. Public Employee Relations Board and the Metropolitan Washington Airports Authority Employee Relations Council.

I believe these appointments will result in two significant changes at the FSIP. First, the Panel Members will be seen, and function, as neutrals and not favor one side – a change, at least in the perception of many, from past years. Second, since most of these appointees are seasoned mediators, the Panel is likely to place a greater emphasis on mediation and take appropriate steps to encourage the parties to resolve their own disputes, even if with the assistance of a mediator.

Congratulations to Mary, Marvin, Ed, Don and the other members of the Federal Service Impasses Panel. I know that they will all mediate well and fairly.

Ten Ways to Get Sued

Remember Paul Simon’s, “Fifty Ways to Leave Your Lover?”

Just slip out the back, Jack
Make a new plan, Stan
You don’t need to be coy, Roy,
Just get yourself free…

What does this have to do with ADR Law?

According to an article by Michael Moffitt, Assistant Professor and Associate Director of the Appropriate Dispute Resolution Program, University of Oregon School of Law, there is another “song” mediators should keep in mind: “Ten Ways to Get Sued: A Guide for Mediators” (8 Harv. Negot. L. Rev. 81 (2003).

As Moffitt correctly points out, mediators have been practicing for decades – in perhaps millions of cases by now – without significant exposure to liability for their actions. Evidence of the perception that mediators do not face much risk of litigation is the low cost of mediator liability insurance compared with that, for instance, for lawyers and physicians.

This may be changing. Moffitt posits ten circumstances that could lead to litigation against mediators for malpractice:

1. Fail to Disclose a Conflict of Interest
2. Breach a Specific Contractual Promise Regarding Structure or Outcome
3. Engage in the Practice of Law
4. Engage in the Practice of Law Badly
5. Breach Confidentiality Externally
6. Breach Confidentiality Internally
7. Maintain Confidentiality Inappropriately
8. Advertise Falsely
9. Inflict Emotional Distress on a Disputant
10. Commit Fraud

Moffitt adds an honorable mention to this list: Mediate Poorly.

This blog is not the place to analyze each of these behaviors carefully. For that, I strongly suggest that you read the article; a link to it is here.

My point is that each of these enumerated items highlights behavior that all mediators – and parties -- should understand are either unethical or unprofessional and could be malpractice and lead to lawsuits. They should result in bad consequences imposed on the mediator.

If mediators practice as poorly as this list implies, there should be more malpractice cases.

Keywords: mediation, alternative dispute resolution, adr, mediator, ethics, unethical, ethical

The Administrative Conference of the United States Returns

How many of you have heard of the Administrative Conference of the United States (“ACUS”)? My guess is that unless you are administrative law cognoscenti you have never heard of ACUS. Yet in some ways ACUS has touched all ADR practitioners and those who represent parties in disputes with the government; ACUS was responsible for the intellectual and legal basis for much of ADR in, by, and around the federal government.

ACUS was a small government administrative law think tank that addressed government processes; it lost its funding during the mid-1990s government cost cutting but has been reauthorized by Congress and funded by $1.5 million for FY 2009.

Prior to its demise, ACUS organized and facilitated administrative law experts’ studies of many aspects of the problems affecting government decision-making, especially administrative rule-making and settlement of enforcement matters, and it recommended ways to improve regulatory efficiency.

It was composed of about 100 members from academia, government and private law practice serving on a volunteer basis and had a permanent staff of about 20 at the time it closed. Despite its small staff and the voluntary nature of its members, ACUS produced numerous studies, reports and recommendations that suggested how to improve government administrative processes.

In the early 1980s ACUS recognized that ADR techniques could be used to resolve disputes and develop federal government regulations. ACUS developed the reports and intellectual underpinning that let to much greater use of ADR by the federal government (e.g., Administrative Conference of the U. S., Sourcebook: Federal Agency Use of Alternative Dispute Resolution by Marguerite S. Millhauser and Charles Pou, Jr., (Office of the Chairman, 1987) and Negotiated Rulemaking Sourcebook by David M. Pritzker and Deborah S. Dalton (Office of the Chairman, 1995)).

ACUS set the framework for the Administrative Dispute Resolution Act (ADRA, the reauthorized version of which can be found at 5 U.S.C.A. § 571) and the Negotiated Rulemaking Act (now codified at 5 U.S.C. §§ 561-570), and it brought ADR techniques out of the federal government’s closet and into common usage.

Published reports suggest that the White House may announce a nominee to chair a newly reconstituted Administrative Conference of the United States (ACUS) before the current fiscal year ends on September 30. A new ACUS chairman would have the authority to hire staff and set up the agency.

According to these reports, Paul R. Verkuil, a prominent administrative law professor at Yeshiva University's Cardozo Law School in New York appears to be the leading choice to be nominated for ACUS chairman. Verkuil, a former president of the College of William and Mary, was also dean of Cardozo and Tulane Law Schools.

ACUS will improve the discourse about administrative practice and the use of ADR techniques by and around the government and on how to increase the public’s knowledge and involvement in the federal government.

This is great news.

Keywords: mediation, alternative dispute resolution, adr, alternative dispute resolution, acus, administrative conference of the united states, administrative conference

Final Thoughts on Picking a Mediator

My last two posts addressed questions about mediator roles and functions and mediation styles. It can be difficult to select an effective mediator as there are no state or national licensing requirements or mandatory professional standards governing private mediation services. There are many mediators with many different practice areas and subject-matter experience.

Most parties desire a mediator with experience related to the merits of the matter in dispute. I agree with this view generally, if only because it can be cost-effective to engage a mediator who does not have to be educated about the language of the dispute and has some sense of the alternatives parties have to a negotiated agreement. Mediators are much more helpful if they speak your language and understand the alternatives you are considering.

However, you need to be careful that this understandable desire to select someone who speaks your language and who has “walked in your shoes” does not result in a mediator who is so immersed in the matter or issue that he or she “knows” the answer and will function as a quasi-judge. After all, the dispute is yours, not the mediator’s. In my experience parties often wish to develop an agreement themselves and do not want mediators to function as quasi-judges. In fact in most situations I would not choose a retired judge for this very reason.

Often parties consider mediation after the dispute has arisen and therefore have no agreement regarding how to select the mediator. The simplest method is for all parties to suggest names informally to see if there is someone on whom all parties can agree. However, if that does not work, parties can propose a set number of suggested names and rank the list from first choice to last. The mediator with the lowest combined score is the one selected. Other methods include conducting group interviews and agreement by consensus (often used in multi-party disputes); or parties can submit names to an impartial third party such as a tribunal administrator or even a judge.

There are innumerable rosters and lists of mediators. Two that list experienced mediators (perhaps I am biased because I’m listed on both) are, for national disputes: mediate.com (also a rich source of information about mediation as well as a roster of all types of mediators around the nation); and, for Maryland, DC and Virginia disputants, CreativeDisputeResolutions.com -- an excellent source of well-qualified dispute resolution professionals throughout Maryland, Virginia and the District of Columbia. Creative Dispute Resolutions provides tribunal administrative services and has examples of mediation and arbitration contract clauses posted on its web site.

Other factors that parties often consider when selecting a mediator are: past training, availability to meet the parties’ schedule, subject-matter experience, costs and possible conflicts.

Finally, and perhaps my most important advice -- be willing to use “their” mediator. If the mediator is a reputable neutral – easily learned by checking references -- then you have a lot to gain and little to lose by agreeing to the other side’s mediator. First, you will have started the negotiations with a positive achievement. Second, "their" mediator might be able to help the other side understand the wisdom and strength of your case -– after all they must have confidence in the mediator.

Remember the mediator, even an evaluative mediator, does not have the power to make a final decision. Only the parties can agree to resolve a mediated dispute. So you are not giving someone your proxy to resolve the dispute. You always have the final say.

Keywords: mediation, mediator, how to chose a mediator, adr, alternative dispute resolution, analytical, evaluative, facilitative

More Considerations when Selecting a Mediator -– Mediation Styles

Last week I set out some functions and roles mediators serve. This week I want to write about mediation “styles.” Many mediators claim to practice with a certain style. The two basic types of mediation style in commercial, environmental and policy mediation are the so-called “facilitative” and “analytical” styles. Analytical is also sometimes called evaluative -- but see below for more on that. Often mediators will have information about their “style” on their web site; if not, ask them.

Mediators who practice as “facilitative” mediators focus mainly on process to ensure adequate communication and appropriately contain emotions. Facilitative mediators see themselves as responsible for only process and do not have an interest in the merits. They generally refuse to express views on the merits of a dispute. From the list of techniques in last week’s post, facilitative mediators tend not to play the roles of Substantive Evaluator, “Heavy” or “Scapegoat,” Lawyer or Technical Expert, Head Banger or “Closer.”

“Analytical” mediators, on the other hand, actively participate in discussions (generally privately) about the strengths and weaknesses of each party’s issues; may opine (generally in private sessions) on fairness or possible judicial or administrative outcomes; often work with parties privately to develop settlement options; and actively push parties toward settlement. They tend to employ the full range of the techniques I listed last week.

There is a difference, in my opinion, between strictly evaluative mediators and analytical mediators. Evaluative mediators tend to opine more often and more directly on the ultimate merits of the case. In many ways evaluative mediators are closer to non-binding arbitrators where they hear the parties’ cases and express a view about the final result.

Analytical mediators, on the other hand, work so that the parties develop the agreement, not the neutral; however, when useful, analytical mediators are willing to discuss strengths and weaknesses of parties’ arguments.

Both techniques are valuable, but analytical mediators are true mediators -– in that they work with the parties to assist them to reach agreement, while evaluative mediators are closer to non-binding arbitrators -– in that they listen to the parties’ cases and express an opinion about how they should settle. However, both techniques are mediation in that no mediator, whether facilitative, analytical or evaluative has the power to decide the issue.

There are two schools of thought regarding mediation styles. Obviously much depends on the nature of the case, the parties and, as I will discuss in next week’s post, parties’ experience with or the reputation of the mediators. One school suggests that mediators should not become involved in the merits of the case, rather the neutral should simply address the process issues. The other school suggests that the mediator should assist the parties on the merits of the issues in the interests of settlement. The best mediators use both process and analytical skills.

Next week I will discuss some of the actual mechanics of mediator selection.

Keywords: mediation, mediator, how to chose a mediator, adr, alternative dispute resolution, analytical, evaluative, facilitative

Some Considerations to Think About When Picking a Mediator

In my last post, I focused on the considerations to think about in deciding whether to mediate a dispute. This week I want to focus on functions and roles when thinking about selecting a mediator. These include:

Process Facilitator: Setting process ground rules, agendas and meetings; keeping time (sometimes described as the “meeting metronome”); insuring that everyone has the opportunity to speak, etc.

Substantive Evaluator: This role can be both problematic -- it can be easy for the mediator to lose her/his perceived neutrality -- and a powerful aid to resolving the dispute. It is very dependent on the skill and experience of the mediator.

Legitimizer: Mediators are often asked: “What have others done? What are the norms? What are some objective measures?” A settlement based on some sort of “outside” or “objective” measure often makes it easier for parties to agree.

Trainer and Coach: Also a very powerful function when mediators coach parties privately about how to express their views and arguments so others can hear them more effectively. This role is important but not much discussed or understood; mediators often work with parties privately to help them explain their views/positions/demands to the other party without emotional overtone and phrased to also recognize the other party’s legitimate interests.

Problem Explorer: Similar to coaching, mediators often work with parties in joint meetings to explore the full dimensions and implications of a problem and consider possible alternative definitions of the problem.

Reality Tester: A very common technique where the neutral asks parties about their BATNAs – Best Alternatives to a Negotiated Agreement (i.e., “What will happen if you don’t settle this?”)

“Heavy” or “Scapegoat”: Sometimes it falls to the mediator to deliver the bad news. As with many of these techniques, the skill with which mediator performs this task is critical and can enable the parties to continue discussions and achieve settlement despite difficult conversations.

Lawyer or Technical Expert: Sometimes parties find the so-called expert, an experienced attorney or judge, a technical expert or sometimes simply a typical prospective juror helpful. As with all of the techniques, use of this technique is dependent on the mediator’s skill and experience.

Head Banger or “Closer”: In the end, this is the sine qua non of effective negotiations. To reach agreement, the parties have to “close the deal.” Sometimes this is difficult, even after the major issues have been resolved. Mediators can function as the advocate for settlement, keeping parties focused on the ultimate goal and asking parties to consider the alternatives to a negotiated agreement when they – all too often – stray from the path.

More about what to consider when picking a mediator in next week’s blog.

Keywords: mediation, mediator, how to chose a mediator, adr, alternative dispute resolution

Why Mediate?

Our firm often represents small businesses, individuals and non-profit organizations where we have to weigh the merits of arbitration, mediation and litigation. (My partner Cecilia Jones, in our firm’s Business Law 101 blog reviews some of the considerations savvy business owners must take into account when pursuing debts.)

We encourage those of our clients who seek our advice when negotiating contracts and leases to include a provision that calls for the mediation of disputes between the parties before they deteriorate to the point where the only recourse is arbitration or litigation. Why? Because, given that both arbitration and litigation can be prohibitively expensive and time-consuming, we believe that mediation is often the best approach.

Mediation is becoming the preferred method for resolving most conflicts because it is cost effective, allows parties to retain control and is uniquely flexible regarding the process, the issues under discussion and the possible results.

One of the reasons mediation is so cost-effective is that litigation generally requires extensive discovery as often does arbitration. Mediation, on the other hand, does not, as the mediator can assist the parties’ exchange of relevant but limited information before the first meeting. These costs savings alone can be quite significant.

Mediation is often viewed as appropriate only for small cases but, on the contrary, it is often most useful and productive in the largest and most complex cases, where discovery can otherwise quickly get out of control -- both cost-wise and time-wise.

Complex case mediation (the type I call “Analytical Mediation” – see our web site) generally begins with facilitated limited discovery, often worked out by telephone before the first meeting. During the initial meeting the mediator assists the parties in weeding out secondary and tangential issues, focuses them on the determinative issues, which has the added benefit of narrowing the scope of the discovery necessary to inform the parties and their counsel and move the case to resolution.

Another benefit of mediation –- be it a small matter or a complex case –- is that clients are directly and intimately involved, which allows them to better understand the facts, the law and the other realities in the case; this, in turn, enables them to better understand their settlement options.

It is important to note that mediated settlements are not restricted to the remedies available to the courts, and parties can –- and frequently do –- develop solutions that are unavailable from a court, including business-sensible solutions. In mediation, opposing parties are actively involved and do not communicate solely through counsel.

Because mediation is voluntary and non-binding unless and until a settlement is achieved, there is no guarantee of a successful resolution. There is, however, a guarantee that the parties and their respective counsel will gain a greater understanding of the issues and legal principles involved and will, perhaps most importantly, have the opportunity to see the dispute from the other sides’ point of view.

Next week, I will discuss the importance of selecting the right mediator and the process for doing so.

Keywords: mediation, mediation process, mediation steps, mediation pros, mediation cons, mediation costs

Liability Limits & the Burlington Northern & Santa Fe Railway Co Case

Last week I wrote about a new case regarding hazardous waste law, the U.S. Supreme Court case Burlington Northern & Santa Fe Railway Co. v. United States (556 U. S. ____ (2009)).

While it will take time for all of the implications of the Burlington Northern case to sort out, some are immediately clear. Because the Court has narrowed the definition of “arranger,” parties are not likely to have “arranger” liability if they only sold product that contributed to the contamination.

The more interesting change flowing out of this decision is the divisibility or apportionment of liability issue.

The Burlington Northern case appears to allow settlement based on “several liability” (i.e. the share of costs attributable to that one party alone) at sites where the shares of liability (and costs) can reasonably be divided based on the facts and circumstances at that site.

This means that at sites where the harm can be apportioned, the government will be responsible for the costs attributable to “orphan shares” -- liability attributable to insolvent or defunct parties -- as responsible parties will have liability only for their divisible portion of the costs.

Burlington Northern seems to allow parties many avenues to limit their liability to their “divisible” or “several” share using “reasonable” apportionment calculations. Prior to this decision the courts restricted divisibility and several settlements to those rare cases were costs were clearly attributable to only one set of parties based on unusual circumstances.

This is a big deal at sites where the parties can establish a “reasonable basis” to apportion liability and there is a potentially large orphan share.

I believe this case will give incentives to PRPs to gather facts related to divisibility to support settlements based on several liability and to propose settlement with the government based on each party’s divisible liability, leaving the government with no one to pay for the costs attributable to the orphan shares.

This could lead to the government paying more for orphan shares than in the past, putting more pressure on Congress to reauthorize the “Superfund” tax, which expired in 1995.

More about Superfund, cost allocation and Superfund taxes in subsequent blogs.

Keywords: cercla, superfund, superfund tax, burlington northern & santa fe railroad v. united states, burlington northern & santa fe railway co vs u.s., burlington northern, santa fe railway co, santa fe rw, arrange liability, prp, potentially responsible party, hazardous waste, hazardous waste law, orphan shares, liability

Welcome

This is a blog about Alternative Dispute Resolution (ADR), the law and other topics related to ADR that interest me. I seek your comments and reactions. To the extent this blog becomes a dialogue among readers, I will have accomplished my purposes here.

One area that I’m particularly interested in is settling hazardous waste cost allocation disputes. The law imposing liability for the cleanup of abandoned hazardous waste sites is known as the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), also known as Superfund.

Because the law imposes joint and several liability on large numbers of parties (called Potentially Responsible Parties, or PRPs) those parties must find some way of allocating costs among themselves.

While PRPs can and do litigate allocation disputes, the cost of litigation is very high, especially for parties whose share of liability may be small. Litigation costs can be more than the share of the damages.

Thus, PRPs, frequently with the assistance of a neutral, negotiate settlements to allocate costs of the cleanup, thus avoiding expensive litigation.

On May 4, 2009 the Supreme Court issued a very important decision regarding hazardous waste law. In an 8 to 1 decision the Court decided Burlington Northern & Santa Fe Railway Co. v. United States (556 U. S. ____ (2009)).

This opinion decided two issues. The first issue, regarding so-called “arranger liability” (liability imposed by the law on those who arrange for disposal of hazardous substances), the Court held that “arrangers” are not liable unless they intended that their shipments be disposed. While this holding clarifies the law regarding arranger liability, it is not, in my opinion, a surprise or indeed a major change from current law.

The other portion of the decision, however, which has not received nearly as much attention in the press (except among environmental lawyers), held that liable PRPs are not “jointly and severally” liable and apportionment is proper when there is a reasonable basis for determining the contribution of each to the harm.

I believe this case could have a significant effect on how parties litigate and settle Superfund cost allocation disputes in the future. More about this in my posting next week.

For a comprehensive discussion of the issues involved in hazardous waste cost allocation disputes, see Chapter 8, “Resolving Superfund Cost Recovery Disputes” in the excellent survey edited by Ann L. MacNaughton and Jay G. Martin, Environmental Dispute Resolution: An Anthology of Practical Solutions, published by the American Bar Association Section of Environment, Energy, and Resources.


Keywords: alternative dispute resolution, adr, cercla, superfund, burlington northern & santa fe railroad v. united states, arrange liability, prp, potentially responsible party, hazardous waste, hazardous waste law