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Alternatives
TO THE HIGH COST OF LITIGATION
INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION
Alternatives
TO THE HIGH COST OF LITIGATION
Publishers:
Kathleen A. Bryan
International Institute for
Conflict Prevention and Resolution
Susan E. Lewis
John Wiley & Sons, Inc.
VOL. 26 NO. 4 APRIL 2008
Editor:
Russ Bleemer
Jossey-Bass Editor:
David Famiano
Production Editor:
Ross Horowitz
Alternatives to the High Cost of Litigation (Print ISSN 1549-4373, Online ISSN 1549-4381) is a newsletter published 11 times a year by the International Institute for
Conflict Prevention & Resolution and Wiley Periodicals, Inc., a Wiley Company, at Jossey-Bass. Jossey-Bass is a registered trademark of John Wiley & Sons, Inc.
Editorial correspondence should be addressed to Alternatives, International Institute for Conflict Prevention & Resolution, 575 Lexington Avenue, 21st Floor, New York,
NY 10022; E-mail: alternatives@cpradr.org.
Copyright © 2008 International Institute for Conflict Prevention & Resolution. All rights reserved. Reproduction or translation of any part of this work beyond that permitted by Sections 7 or 8 of the 1976 United States Copyright Act without permission of the copyright owner is unlawful. Request for permission or further information
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For reprint inquiries or to order reprints please call 201.748.8789 or E-mail reprints@wiley.com.
The annual subscription price is $190.00 for individuals and $253.00 for institutions. International Institute for Conflict Prevention & Resolution members receive Alternatives to the High Cost of Litigation as a benefit of membership. Members’ changes in address should be sent to Membership and Administration, International Institute
for Conflict Prevention & Resolution, 575 Lexington Avenue, 21st Floor, New York, NY 10022. Tel: 212.949.6490, fax: 212.949.8859; e-mail: info@cpradr.org. To order,
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ALT26_4
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Page 73
Alternatives
TO THE HIGH COST OF LITIGATION
DIGEST
ADR SURVEY
Gerald F. Phillips, of Los Angeles, polled
dozens of leading arbitrators and mediators
in an attempt to gauge the profession’s current comfort level with med-arb. In this
month’s cover story at right–Part I of II–he
analyzes how providers view the occasional
use of the mediator for an arbitration to
finalize agreement terms ................Page 73
CPR NEWS
The latest CPR International Dispute
Negotiation podcasts; a new online training
partnership with West LegalEdcenter debuts
with four sessions from January’s Annual
Meeting; registration has opened for next
month’s Fourth Annual European Business
Mediation Congress, and more ......Page 74
COURT DECISIONS
The U.S. Supreme Court hands down the
first decision from a 2007-08 docket that
now includes four arbitration cases.
Michael E. Johnson and Piret Loone, of
New York, who wrote the January preview
of the Preston v. Ferrer case, return to analyze the Court’s holding that the Federal
Arbitration Act preempts a California
statute that a state appeals court had said
sent a management contract dispute to
the state’s labor commissioner before the
arbitrator ....................................Page 75
ADR BRIEF
The American Bar Association Section of
Dispute Resolution’s Task Force on
Mediation Quality has completed its extensive focus group-based investigation, and
issued a report. The study shifts the dialogue about mediation evaluation to a
broader view of widely used analytical
techniques. But the report also acknowledges that a “substantial minority” of mediation users and lawyers still don’t want
mediator opinions ........................Page 79
DEPARTMENTS
CPR News......................................Page 74
Subscription Info............................Page 74
ADR Brief ......................................Page 79
Cartoon by Cullum ........................Page 79
INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION
VOL. 26 NO. 4 APRIL 2008
Back to Med-Arb: Survey Indicates
Process Concerns Are Decreasing
BY GERALD F. PHILLIPS
perienced neutrals, in April 2001. See a report on the results at “Is Creeping Legalism Infecting Arbitration?” Dispute ResoluMore information is needed about medtion Journal (American Arbitration Associarb, a process this author strongly advoation February/April 2003).
cates. In an effort to build a base of knowlTo attempt to help change the direcedge about an ad hoc process that raises
tion that arbitration appeared to be taking,
eyebrows in the commercial conflict resothe then-president of the Collution profession, the results
lege of Commercial Arbitraof a survey, provided below,
tors, the late Winslow Christsupport the position that
ian, conceived of the “College
med-arb can be deployed effiof Commercial Arbitrators
ciently and effectively to reADR SURVEY
Guide to Best Practices in
solve business disputes.
Commercial Arbitration,”
Problems with med-arb
which was published by the
inhibiting the mediation part
CCA and JurisNet LLC.
of the process can be ad[This author was a condressed by skilled players. The
tributor to Chapter 6, “Preliminary Conprocess can and does work.
ferences and Pre-Hearing Management in
A little background: It’s often claimed
General.” An original draft of the chapter
that arbitration is becoming too much like
suggested that the neutral consider discussing med-arb with counsel and the
parties. This view was not acceptable to
• PART I OF II •
the editors.]
The CCA, established in 2002, is a
nonprofit, invitation-only membership orcourt litigation, and losing its promise of
ganization of prominent, experienced
providing an expedited and cost-efficient
commercial arbitrators that provides a fomeans of resolving commercial disputes.
rum to discuss professional issues such as
To ascertain the validity of this critiethics, best practices, and standards of arcism, this author conducted a survey of exbitrator qualifications and performance.
The guide mostly fulfills its mission of
The author is a full-time, Los Angeles-based
informing practitioners on best practices.
neutral focusing on large complex commercial
But with respect to med-arb—a process in
and entertainment disputes. He serves as a
which the same neutral serves both as the
mediator and arbitrator on various panels, and is
mediator and then as the arbitrator if the
a founding member of the College of Commercial
Arbitrators, a group discussed in this article. He
matter is not settled in the mediation—the
is an adjunct professor at the Straus Institute at
CCA stated that it “takes no position.” It
Pepperdine University School of Law, in Malibu,
noted, “[p]erhaps the best advice that can
Calif., where he teaches ADR in the entertainbe given is that arbitrators should apment industry. The surveys discussed in this article are on file with the author; for more information, E-mail gphillips@plljlaw.com.
Published online in Wiley InterScience (www.interscience.wiley.com).
Alternatives DOI: 10.1002/alt
(continued on page 77)
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ALTERNATIVES 77
Back to Med-Arb
(continued from page 73)
proach this matter with care, conscious of
both the potential benefits and potential
risks. . . .”
This position led this author to conduct
another survey of experienced arbitrators
on the propriety of med-arb. This author
has returned to address the propriety as well
as the utility of med-arb in several articles,
including, “The Same Neutral Med-Arb:
What Does the Future Hold?” Dispute Resolution Journal (AAA May/July 2005); “It’s
More Than Just ‘Med-Arb’: The Case for
‘Transitional Arbitration,’” 23 Alternatives
141 (October 2005), and “A Case Study
Demonstrates How the Entertainment
Business—and Everyone Else—Can Benefit by Using Hybrid Med-Arb Processes,”
25 Alternatives 67 (April 2007).
Questionnaires were sent to about 100
leading commercial arbitrators and mediators in the country. The survey recipients
included CCA members, full-time mediators and arbitrators who have been practicing for many years, and board members of
the California Dispute Resolution Council, a La Jolla, Calif., nonprofit group of
neutrals, providers and academics that raises ADR awareness, advocates, and lobbies
on pending ADR legislation in California.
Survey recipients were also mostly panel members at the AAA, and at Irvine,
Calif.-based provider JAMS. Although 52
replies were received, not every participant
answered all the questions.
[Next month’s Part II will include an
acknowledgment box. The author is a
board member of both the CCA and the
CDRC, which helped considerably in
making contacts for survey purposes with
those receiving the questionnaire.]
The survey gave top-notch practitioners a chance to speak out. This article summarizes and highlights some of their comments. It names them with their permission. It tabulates some of the answers. The
article focuses on addressing some of the
concerns about med-arb, and offers, in this
author’s past spirit of strong support for the
process, counterpoints to the objections.
DISSIPATING DOUBTS
Before undertaking this survey, most
ADR professionals probably would have
said that most arbitrators do not approve
of med-arb. But the survey’s first question
indicates that doubts are dissipating: 68%
of those answering agreed that an arbitrator “may serve” as both the mediator and
arbitrator.
Getting to Med-Arb: The Stipulation
A sine qua non for using med-arb is execution by the parties and counsel of a
“Stipulation for Mediation Followed by
Arbitration.” (This is the caption of the
stipulation form used by provider
JAMS.) The stipulation includes the
parties’ and counsels’ written informed
consent; a knowing waiver of the parties’ right to have the arbitrator’s decision based solely on information received in the presence of each of the
parties, and a waiver of their rights to
complain of ex-parte contact between
the opposing party or counsel with the
mediator-arbitrator.
The stipulation and the entire medarb process rely on disclosure. The parties stipulate that when using med-arb,
information may be communicated in
confidence to the mediator that may not
be communicated to the adverse party,
and that this may influence the neutral’s
decision when acting as an arbitrator.
The parties stipulate that they will
proceed with med-arb, waive any procedural defect, and waive the right to oppose the confirmation or seek a vacature
of any award rendered by the arbitrator,
on the grounds that the med-arb procedure was used.
The parties specifically release the
ADR provider and the neutral from any
liability that otherwise may exist due to
the receipt of information through exparte communication. The parties acknowledge in the stipulation that they
are represented by competent counsel,
agree that they are sophisticated, and
that counsel has fully explained the disadvantages and advantages of the medarb process.
–Gerald F. Phillips
The percentage may have been even
higher, because in retrospect, the question
may have been misleading—some who answered “should not serve” likely answered
based on their own risk-benefit analysis,
rather than based on the facts that persuade
parties to want an opportunity to have a
conflict mediated and then, if necessary, arbitrated by the same neutral.
Clearly, some of the arbitrators were
conscious of the risks in using this process.
In his survey response, Robert Holtzman, a
leading ADR ethicist and private practitioner in Los Angeles, stated, “To me the
risk is that the neutral, wearing his or her
arbitrator hat, will be influenced or even
controlled in the final decision by something said in a confidential brief or in a
caucus session by one party that the other
party did not have the opportunity to respond to.”
Still, parties may waive those risks for
what they deem would be med-arb benefits—such as the belief by many that the
process encourages settlement, and that
having the mediator and the arbitrator the
same person has advantages that outweigh
the arbitration risks.
Survey comments show a strong belief
in the value of the med-arb process, even
though it is relatively new. Today, med-arb
is highly respected by many arbitrators—
but it certainly is not accepted by all.
Richard Chernick, a Los Angeles-based vice
president and managing director of the arbitration practice of provider JAMS, acknowledged in the survey that he has “often
used” med-arb. He answered that an arbitrator, “may serve if the parties initiate the
subject.” Chernick answered that “many
times” cases in which he was the mediator
and arbitrator were settled in med-arb.
Veteran San Diego neutral Carl F. Ingwalson Jr., in a letter to the author that was
part of his survey reply, reminded Californians that state Evidence Code Section
1128 provides that “. . . Any reference to a
mediation during any other subsequent
non criminal proceeding is grounds for vacating or modifying the decision in that
proceeding. . . .” He suggested that “if the
neutral does serve as mediator and is then
going to be the arbitrator, a waiver of [Section] 1128 would seem to be essential.” He
also suggested that the stipulation reference
the section, quote it, and then expressly
waive it.
(continued on next page)
Published online in Wiley InterScience (www.interscience.wiley.com).
Alternatives DOI: 10.1002/alt
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78 ALTERNATIVES
VOL. 26 NO. 4
Back to Med-Arb
(continued from page 77)
The “Alternative Dispute Resolution—
California Practice Guide” (Rutter Group
1995), has med-arb at Form 17, which includes the following:
The parties waive the right to seek disqualification of the arbitrator by reason
of participation in the mediation and
waive the right to seek to vacate any
award on this basis. The parties also
recognize that the determination that
may ultimately be made by the arbitrator might be influenced by confidential
information or other information received in the mediation. The parties
waive the right to seek to vacate any arbitration award on this basis.
Under this form, the editors appended:
“Caution: It is uncertain whether such
waivers are enforceable agreements.” A box
discussing stipulations appears on the preceding page.
AAA’S ‘VIEWS’
In its “Drafting Dispute Resolution Clauses—A Practical Guide,” the American Arbitration Association, when discussing
combined processes, explains the procedure. It also states that “except in unusual
circumstances a procedure whereby the
same individual who has been serving as a
mediator becomes an arbitrator when the
mediation fails is not recommended, because it could inhibit the candor which
should characterize the mediation process
and/or it could convey evidence, legal
points or settlement positions ex-parte, improperly influencing the arbitrator.” The
association “does not give its views as to the
enforceability or validity of the Stipulation
where the parties gave their written consent to the process.”
Some survey respondents expressed
concern that a court may not confirm, and
may vacate an award on the grounds that
the med-arb procedure was improper because the neutral had received ex-parte
communications. Some respondents appear to believe that the stipulation does not
fully protect the neutral, the parties, and
the award.
But no reasoning has been offered to
explain, in the face of a strong stipulation
executed by counsel and the parties, where
both parties have opted for the benefits of
med-arb, how a court could properly vacate an award or fail to confirm an award
made by the arbitrator who participated in
a prior mediation.
Robert Holtzman stated, “To me the
risk is that the neutral, wearing his or her
arbitrator hat, will be influenced or even
controlled in the final decision by something said in a confidential brief or in a
caucus session by one party that the other
party did not have the opportunity to respond to.”
The parties, however, waive those
risks in a stipulation. They opt for the
benefits to them from med-arb, such as
the belief by many that the med-arb
process encourages dispute settlement,
and that having the same person mediate
and arbitrate has advantages that outweigh arbitration. The risk is only present
if the dispute goes to arbitration.
A few arbitrators, such as William
Quinby, of San Francisco, reminded that
“it is the parties’ process.” Likewise, Eugene S. Ginsberg, a leading neutral in Garden City, N.Y., opined, “Med-Arb is not
an ethics issue if the parties and counsel
have given their informed consent.” See
Eugene Ginsberg, “Binding Mediation an
Oxymoron? Yes, but Doable,” Nassau
Lawyer (October 2006)(discussing an unusual type of med-arb). See also, “A Case
Study . . .,” 25 Alternatives 67, supra.
Why then should arbitrators decline to
participate in the med-arb when it is requested by both parties who want the benefits of mediation to bring about a resolution in less time and at substantially less
cost, and have executed a stipulation similar to the one discussed above?
If the arbitrator doesn’t wish to be the
neutral in the med-arb process, he or she
should recuse himself or herself rather than
deny the parties’ use of the med-arb
process. The neutral by refusing to follow
the parties’ request isn’t permitting the parties to construct their own process. The
parties have their own reasons to ask for
med-arb. If the case isn’t settled in the mediation, the parties, by their request, are indicating that they trust the mediator/arbitrator’s integrity, and have confidence that
the neutral serving as the arbitrator will decide the conflict fairly. Isn’t the arbitrator
improperly substituting his or her judg-
APRIL 2008
ment for that of the parties, when he or she
refuses to participate in med-arb, when the
parties have requested that process? Isn’t a
stipulation adequate protection for the
award and for the arbitrator?
AN ‘AMPLE SAFEGUARD’
John Morrison, an Evanston, Ill., neutral,
wrote that observing the parties’ stipulation conditions “should be ample safeguard.”
There is no question that during the
mediation ex parte communications, confidential information may be conveyed to a
neutral who would become the arbitrator if
the case isn’t settled during the mediation.
It would appear that the parties have more
faith in the integrity of arbitrators to correctly handle all such communications
than do some arbitrators—who are concerned that they will obtain nonadmissible
confidential information that will affect
the award they render.
Those arbitrators raising possible medarb risks fail to appreciate that the parties
opting for med-arb do so recognizing the
process risks. The parties are deliberately
balancing the risk against the greater
chance that the matter will be settled in
the mediation before needing to go to arbitration. Weighing the options and deciding to use the med-arb process is the
parties’ right, and shouldn’t be prevented
by neutrals.
The questionnaires’ answers fail to discuss that some mediators do more than facilitate a settlement between the parties.
At times, they evaluate the parties’ positions. Most often, mediation resolves the
matter. The question if the arbitrator has
received confidential information thus
never comes up when the matter is settled
during the mediation.
Robert Holtzman commented on the
effect of an evaluative mediation process
on med-arb: “It seems to me that where the
mediator has formed and/or expressed
opinions in the course of evaluating [and]
the case proceeds to arbitration[,] this impacts both the mediator’s thinking and perception of the parties (and possibly a reviewing court) as to possible bias or prejudice as well.”
Jay W. Elston, a Houston solo practitioner, attached to his reply his “Rules of
Med-Arb.” He wrote: “(1) Med-arb is ap-
Published online in Wiley InterScience (www.interscience.wiley.com).
Alternatives DOI: 10.1002/alt
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ALTERNATIVES 79
plicable only in specialized industry disputes where the continued relationship of
the parties is more important than the
‘Correct Decision’ of the particular dispute; (2) Med-arb should be conducted
only by a person of great experience in the
applicable industry with a good reputation
for integrity and knowledge of the customs
and practices of the industry. . . . This is
perhaps the most important rule. It takes
an expert . . . to be able to follow through
the process with knowledge and integrity
such that the parties will have confidence
in the outcome; . . . (3) Med-arb should be
conducted only for parties who are sophisticated, aware of the coercive elements of
the process, and who consciously accept
the risk.”
***
Next month, Gerry Phillips analyzes his
survey results question by question, and
provides comments from dozens of wellknown practitioners.
DOI 10.1002/alt.20222
(For bulk reprints of this article,
please call (201) 748-8789.)
ADR BRIEF • ADR BRIEF • ADR BRIEF
ABA TASK FORCE
RELEASES MEDIATION
RECOMMENDATIONS–
AND CALLS FOR
MORE RESEARCH
Cartoon by Leo Cullum
A two-year-old American Bar Association
Section of Dispute Resolution task force
wrapped up its investigation work in February by issuing a report confirming some
long-held beliefs about civil mediation
practice, but also setting out new suggested
guidance for parties and neutrals.
The 17-member Task Force on Improving the Quality of Mediation produced a couple of obvious findings: Mediation parties say preparation by mediators,
parties, and counsel is paramount, and
mediator “persistence” is an important
ADR value.
But the report—based on an ambitious
focus group program, surveys, and inter-
views targeted to get to the heart of mediation consumers’ needs and expectations–
also redefines the controversy over whether
mediators should provide parties with an
evaluation of their case.
Examining what the task force broadly
calls “analytical input” by neutrals, the report says, “The concept of ‘evaluative’ mediation (which some would say describes
some or all of the techniques discussed [in
the report section on analytical techniques]) is often controversial. The term itself is understood to mean many different
things to many different people.”
The report then lists five examples of
“analytical inputs” and “analytical techniques,” with pure evaluation as the last
technique listed: “Specific mediator opinions, delivered to all sides, or delivered selectively only to one side or the other,
about potential outcomes, dispositive factual or legal issues or settlement values.”
“HAD
WE KNOWN YOU’D BEEN NEUTERED WE NEVER WOULD HAVE LET YOU DO THE CLOSE.”
The report qualifies the pervasive use of
analysis by noting that a “substantial minority” of mediation consumers still aren’t
interested in mediators’ opinions.
“It’s no surprise to me or others that
practice in the area that lawyers expect
that kind of work by mediators,” says
task force co-chair R. Wayne Thorpe, a
neutral in JAMS’ Atlanta office, “but
there’s also a fair amount of critique of
the way people do it.”
The report got its first public airing at
the Section of Dispute Resolution’s council
meeting on Feb. 9.
The report also categorically rules out
repetitive processes for modern mediation practice:
Some mediators and some parties and
counsel may, almost by rote, rely upon
essentially identical approaches to
every case. In most cases, however, mediators would be best advised to make
an effort to evaluate each case on its
own, and develop a process, in coordination with parties and counsel, that is
best suited for that particular case.
There’s more to come. The report concludes with six recommendations, most of
which involve further ABA Dispute Resolution Section committee work to produce
user and educational materials, and further research.
Some of that proposed work already is
underway, according to Thorpe and task
force co-chair Rachel Wohl, who is executive director of the Maryland Mediation
and Conflict Resolution Office, which is
an Annapolis, Md., part of the state court
system. Comprehensive user guides, and
shorter pamphlets for parties and counsel
Published online in Wiley InterScience (www.interscience.wiley.com).
Alternatives DOI: 10.1002/alt
(continued on next page)
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