Essay

Managing Your Mediation Costs – Time and Money

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By: Diane McGaha, Attorney Director & Michele Sales, WAMS Panel Member

Many of the cases being mediated these days are referred into mediation as part of a court-ordered ADR scheduling requirement. While mediation by its very nature should be a “voluntary” process for the participants, there is little about court-mandated mediation that is voluntary, especially when it comes to the time and cost to attend. While most cases referred into mediation are resolved in a satisfactory way, too many disputes are being mediated with disappointing results for everyone. Determining whether a case is appropriate for mediation and how best to minimize the cost is the focus of this article.

First, don’t be forced into mediation by a case scheduling order if the circumstances don’t justify the expenditure of time and money. In situations where you or your opposing counsel will honestly admit that one of you is simply “checking the box”, schedule a judicial settlement conference or request a waiver of the ADR requirement. These situations might include that:

  1. the claims adjuster has already offered the company’s “bottom line” and says there is no more;
  2. your client has a principle to uphold and, despite your best efforts, will not agree to compromise;
  3. one party’s view of liability is unrealistic and counsel recognizes and admits that it will not change.

Second, if mediation seems a viable option, consider whether the case warrants a half-day session or even less time. Some mediators require full-day commitments while others accept appointments on an hourly or half-day basis. The hourly rate charged by a mediator does not necessarily correlate with her skills or experience, as some mediators choose to bill at lower rates than others for any number of reasons. Ask about discounted rates for claims below $100K or for cases involving non-profits or pro bono representation. Consider whether your case might get resolved with a mediator spending a couple of hours on the phone or in an office near you, instead of scheduling a full-day session in downtown Seattle.

The time commitment for mediation should not be underestimated, however. You can predispose mediation to failure by not allowing enough time for the process to work. If you have three claimants, each with a sizable claim and two insurance companies disputing liability, there may be insufficient time if the mediation is scheduled for four hours in a morning time slot. If the claimant has an especially emotional story to tell, as often happens in an employment or medical malpractice case, consider scheduling the mediation for a full day. The failure to schedule adequate time is a major reason why disputes are not resolved at mediation. Mediator follow-up and subsequent sessions only increase the time and expense of reaching a settlement.

Third, when scheduling mediation, don’t forget to consider the impact of pending motions for summary judgment, CR 35 exams, depositions or other important discovery activities. Scheduling a mediation to occur while a summary judgment motion is pending may be the best time to mediate a case since both sides still have risk. But the outcome of a summary judgment motion or medical exam could significantly impact the ability to settle the case, so leave enough time between that date and the mediation date to allow you to cancel the mediation without incurring a cancellation fee. Clients do not appreciate being charged for mediation services they don’t receive, especially when the cancellation fee could have been avoided by counsel with better planning.

Fourth, alert everyone who might play a part in the settlement, such as lien holders (including Medicare and prior attorneys), to make sure they’re available throughout the mediation. Don’t schedule a mediation to start in the afternoon if the adjuster is on the East Coast. Make sure your client’s flight home isn’t booked for late afternoon, which could require her to head to the airport just as negotiations enter a critical stage. Determine whether a parent or spouse or CEO must be consulted if negotiations are not where you had hoped. If the right parties are not accessible when you need them, your mediation time and money will not be spent efficiently.

Fifth, remember that most mediators charge for their time to review voluminous materials submitted by counsel. Although WAMS mediators include “reasonable” review time in their flat rate structure, there is a limit to what will be reviewed without an hourly surcharge. Bring those deposition transcripts, photographs and medical records to the mediation for access if needed, but don’t send them to the mediator unless you are willing to pay her review time. Email a case summary to the mediator (highlighting key discovery, if helpful) and take supporting records to the mediation. (On a side note, avoid using multiple formats to deliver information to the mediator: messenger, fax, mail or email – just not all four methods!)

Sixth, come ready to make the most of mediation. Prepare your client about what to expect so you can utilize the mediator’s skills and experience productively. The day of mediation is not the best time to start educating your client about claim value, liability or other problems in her case. Clients should arrive for the mediation prepared to listen with an open mind to consider various aspects and risks of their case. Think of a scheduled mediation as a “today only opportunity” for you and your client to work with a mediator – not an indefinite, open-ended process that can drag on for months. When a mediation effort extends beyond the scheduled time, it will generally produce a higher mediation expense than what was originally quoted if the mediator bills for her excess time.

Finally, respect the mediator, the parties involved and the process. If you agree to participate in mediation, prepare appropriately and come to negotiate. The mediator expects to ask tough questions and work with you in the hope of crafting a settlement, but can only do so if you’ve spent the time to prepare yourself and your clients to use the process efficiently. Leave the posturing behind and you’re much more likely to settle the case and save your clients some time and money in the process.

A Question of Style

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By: Diane McGaha | Attorney Director

& Tamara Roberts | Mediation Director

WAMS Case Administrators are often asked by prospective clients and new staff members to distinguish one mediator’s “style” from another – and it has nothing to do with anyone’s choice of tie, watch or footwear. Particularly when a client is unfamiliar with one or more mediators under consideration, it can be helpful to know which mediator style might work best for a particular client or case.

It’s fairly well agreed within the “old school” ADR community that there are three main style categories used to describe how mediators may approach a given case: facilitative, evaluative and transformative. Of course, it’s important to understand from the outset that an experienced and well-trained mediator can’t be categorized by any single, universal definition. But it’s also undeniable that the dynamics of each case can be greatly influenced by the style employed by a mediator in his/her approach to resolution, whether by choice or direction. If a specific style/approach is specifically needed or requested by the parties to a prospective mediation, it’s helpful to share that request with the WAMS Case Administrator at the time of scheduling.

The first mediator style category is facilitative, which is generally regarded as the most common and traditional style of mediating. A facilitative mediator helps parties explore options for settlement by listening to all sides and helping them analyze the issues involved. The facilitative mediator does not typically offer specific settlement recommendations or voice an opinion about possible outcomes. He does, however, facilitate resolution by helping the parties come to an agreement based on information exchanges and compromise. When asked about mediators within WAMS who might be considered to be facilitative in their approaches to any given case, the usual WAMS response is that most mediators are trained to be facilitative. It’s the basic training model used by WAMS and most mediation training organizations for many years.

An evaluative mediator is generally known and expected to offer opinions and make specific recommendations about settlement values and outcomes should the case go to trial. The evaluative mediator is often retained precisely because the parties want an outside, neutral opinion about various aspects of a case that are pivotal and hotly contested. While both the evaluative and facilitative mediator will point out the strengths and weaknesses of the case to help parties understand the costs and risks of going to trial, the evaluative mediator will be much more directive and opinionated in her approach. Most retired judges who work as mediators are evaluative in style, as the authoritative judicial role is not easily

left behind. Obviously, there is an inherent risk that the evaluative mediator will express an opinion that isn’t received well by one or more mediation participants, even if the mediator is specifically asked and expected to opine. As soon as an evaluative mediator expresses an opinion, the risk is that the mediation will be ended by a party who doesn’t like the opinion. The use of an evaluative mediator should be by specific request, with a clear understanding by all involved of the expectations and obligations of the mediator and parties to be involved in an evaluative mediation. Some mediators are more comfortable with the evaluative mediation style than others, so be sure to convey any request for an evaluative mediator to the WAMS Case Administrator at the start of the mediator selection process – avoid asking the mediator during the mediation to be evaluative, as he may decline if not forewarned.

The last category of mediator style is transformative, wherein the objective is to transform the relationships between the parties through improved communication and guided interaction. The transformative mediator helps parties appreciate each other’s viewpoints and works to empower them to deal with future conflict in a healthier, more productive manner. Transformative mediators tend to handle many cases involving relationships between the parties beyond the dispute(s) at issue. Whether the relationships pertain to a family-owned business, partnership or organizational conflict, the transformative mediator lets the parties control the process. With guidance throughout to help each party see the other’s perspective and establish a framework for future conflict avoidance, transformative mediation goes beyond the objective of ending a specific conflict to bring some semblance of reconciliation to the relationships involved.

The reality is that WAMS mediators have been extensively trained to employ all three mediation styles when the case calls for creativity and adaptability. No WAMS mediator is interested in being typecast with a particular style that might preclude her consideration for a case. It is, however, undeniable that there are stylistic differences between mediators that can assist in the neutral selection process. At the end of the day, WAMS strives to match the mediator to the case in order to maximize the opportunity of settlement. In one recent case, the plaintiff related well to Tom Harris because of their shared interest in eclectic watches. In another case, Margo Keller’s golfing hobby landed her an appointment to mediate for an unknown client. The reality is that choosing a mediator is certainly not an exact science – but knowing more about mediator styles and what might best suit a particular client or case can only be beneficial. One size definitely does not fit all!

Technology & Mediation

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By: Donald E. Kelley | WAMS Mediator | Since 1989

DonKellyRTMediation has always been about communication. The parties exchange their respective points of view through the mediator and present evidence supporting their positions in a highly focused and time constrained setting. Today, thanks to technology, the ability to “communicate” in this fashion has never been better.

In the last few years, the evolution of devices used for everyday communication has been astounding. Whether text messaging or emailing on cell phones, the advanced features of “smart phones” and other devices have changed our ability to communicate over great distances in real time with a multitude of resources.

With the advent of mobile devices, information has never been more readily accessible. Nowadays, when a bored mediation client ponders who wrote the poem, “Oh Captain, My Captain  ” (as used by Robin Williams in “Dead Poets Society  ”), the answer is just a Google search away. In seconds, Google and Wikipedia can provide the name of the poet (Walt Whitman), the theme of the poem (metaphorical eulogy of Abraham Lincoln) and additional trivia, including the complete lyrics, life and times of the author or details about the Robin Williams movie (including box office gross). Just as we used to say, “I’ll get a Xerox of that”, now we just “Google it.”

Whether in a restaurant, on a bus or in a mediation caucus room, the answers to such obscure questions are now as close as the nearest tech device.

Tools of the Trade. When I first began as a mediator some 23 years ago, the “tools of the trade” in mediation consisted of loads of paper. The Plaintiff’s group would bring its banker’s box full of medical records, pleadings, reports and pictures. Likewise, the defense attorneys and insurance representatives came loaded down with “the claim file,” containing their copies of medical records, billing statements, treatment calendars, deposition transcripts, expert reports and every other potentially needed document. Of course, there was a huge amount of duplication between the two groups, but each side needed to be prepared to access some part of this sea of paperwork to address the issues that could come up at the mediation. I can’t even guess at the number of binders and pages of documents I’ve received, then recycled or shredded, over my career as a mediator.

Now when I enter a caucus room, I’m likely to see participants with one or more laptop, smart phone and iPad. These are now viewed as essential tools in mediation. Mediators and parties who are slow to adapt to the use of these new resources in mediation are in danger of being left behind.

Let’s take a look at some of these devices and how they can be used to great advantage in mediation, whether by the mediator or by the participants. I’ll focus on the use of my two favorites, the iPad and the smart phone. Of course, WAMS provides free wi-fi access to accommodate such devices during its proceedings.

iPad. This handy device from Apple (and its cousins produced by a number of competitors) is not a personal computer. But it certainly is well suited to handling an immense variety of tasks for the mediation client. Because it doesn’t have a hard drive or complex software of a personal computer, it effortlessly processes information for easy viewing, boots up quickly, and (almost) never crashes or freezes.

Over 75% of the materials submitted to me as a mediator are now sent electronically (and I love it!!) Typically, mediation materials now arrive by e-mail to the WAMS mailbox and are logged in (for delivery receipt purposes) then forwarded within minutes to my e-mail account. I then transfer the submissions to one of my iPad applications and I’m good to go. No more printing of hundreds of pages of documents, no more waiting for deliveries by legal messengers and no more heavy briefcases full of submissions to carry back and forth between the office and mediation venue. Documents can even be printed wirelessly as needed.

E-mail, calendaring, and contact information is right at the user’s fingertips at all times and can be easily updated and automatically synchronized with the home or office computer. Mediators and counsel can continue their negotiations electronically, if necessary, after the mediation session is concluded. It is much easier to keep track of ongoing discussions that may extend over many months if there’s an email trail to follow.

Documents of all kinds can be transferred electronically to the iPad and then viewed, scrolled through, highlighted or zoomed in or out without the need for a mouse.

Photos are easy to view on an iPad (with great resolution) and can be manipulated to zoom in to demonstrate particular points of interest.

Web-based content is readily accessible using the iPad browser. Examples I have recently used include WebMD descriptions of medical conditions, court decisions, sample pattern jury instructions, maps, graphs and other illustrative materials.

Native applications (Apps) number in the thousands. These are typically developed by third parties to simplify access to specialized information by creating user-friendly screens with intuitive radio buttons and other guides to help the user move though the available resources. They are easily downloaded to the iPad (or smart phone in some cases) in a matter of seconds, and are generally free or available for very low cost (2-10 dollars). I regularly use two anatomical Apps (Spine Decide  and Skeletal 3D  ) to help parties understand and see the parts of the body being described in the medical records. Now, when a doctor describes a spondylolisthesis in a medical record, I can show the parties detailed (even animated) anatomical drawings, medical definitions, symptoms, treatment, etc. – just like on the Discovery Channel! My colleague Larry Levy at WAMS has recently discovered the Picture It Settled  application developed by a mediator for use by mediation clients to track their negotiations.

iPhones, Droid Phones and other Smart Phones. Smart phones have become so much more popular with our mediation clients in recent years because they are so versatile.

The #1 use of a smart phone at mediation is still clearly e-mail. Participants at mediation are able to keep in touch with their offices or key participants who otherwise are not in attendance. In a recent mediation, one participant was able to get an immediate e-mail clarification from an expert witness to an issue that was being discussed based on his written report. Defense attorneys use e-mail, rather than voice connections, to communicate with their out-of-state insurance representatives. While this may sound less satisfactory, often the opposite is true, as e-mail commentary is faster and more efficient than “phone tag”.

Video Conferencing. This is not yet common in mediation, but is certainly on the immediate horizon. More than half of the smart phones (and iPad) sold today are capable of two-way video conferencing. With both forward and rear-facing cameras, there is no reason why key parties cannot “participate” meaningfully in mediation regardless of physical distance. WAMS offices in Seattle and Tacoma are equipped to provide video conferencing (via Skype) for parties who request that capability.

Social Networking. The implications of social networking throughout our society have been nothing short of a phenomenon. Since Facebook can be easily accessed via various mobile devices, it is very topical at some mediations. I find that each side has looked to see what information has been publicly displayed by the parties to a lawsuit and by their witnesses, including experts and lay witnesses.

Conclusions. What conclusions can we draw from this influx of new technologies into the mediation process? Well, here are a few thoughts:

  •  Mobile devices can be infinitely more efficient than paper.
  • Mobile technology is here to stay and getting better.
  • Allows multi-tasking, making mediation more attractive for participants to attend without forsaking access to other matters.
  • Professionals who are slow to adapt to these new technologies will be left behind.

So, You Want To Be a Mediator?

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By: WAMS Staff

Every year since 1981, WAMS has received inquiries from “want to be mediators”, attorneys (and non-attorneys) interested in joining the WAMS panel of neutrals. It’s one thing to have the paper resume for becoming a professional mediator, but it’s quite another to be professionally successful in the very competitive market for mediation services. Before venturing into a new career in ADR, WAMS advises a period of serious self-reflection and networking to help determine if mediation will be a good fit for you.

First comes the self-assessment part: do you have the reputation and personality to attract mediation clients and allow them to feel comfortable with you and willing to share personal details and insights? Is your law practice one that has left a trail of bitter adversaries behind or are you known for your professionalism and collegiality in advocacy? Are you in a practice niche that can attract mediation clients through networking with colleagues and former adversaries? The most obvious way to garner a good reputation as a mediator is to first be known as a reasonable, experienced trial attorney with integrity, tenacity and dedication to the legal profession. “Prospective mediators should have some degree of subject-matter expertise, litigation experience and familiarity with both sides of advocacy,” says Diane McGaha, Attorney Director of Washington Arbitration and Mediation Service (WAMS). “Ideally, a mediator will be someone who has been a plaintiff’s attorney and  a defense attorney at some point in his or her career. A mediator should genuinely appreciate what it means to be a litigator in the trenches and have a scheduled trial bumped from the court calendar after a three year wait.”

If, after conferring with colleagues and current mediators, you decide to pursue mediation training, WAMS recommends that you attend the right training for you. It’s easy to assume that becoming a professional mediator is just a matter of attending any convenient 40-hour training program, but McGaha says one crucial step is often skipped at the outset. “Too often, lawyers pay big bucks to attend mediation training, and then ask for advice from others in the profession”. What’s often discovered, belatedly, is that the training attended by the prospective mediator was inappropriate for his/her future area of practice. Before signing up for mediation training, investigate the trainers and training content. If your interest is in commercial mediation, don’t attend a divorce-oriented training conducted by mediators with degrees in social work. While their training format and content may be appropriate for non-attorney mediators interested in child custody disputes, a very different training is needed for commercial dispute resolution. Check out the training links and resources available at http://law.pepperdine.edu/straus/ as well as at www.mediate.com. Once trained, try to gain experience with one or more of the volunteer mediation programs available in Washington, including the various Dispute Resolution Centers, opportunities through the courts, EEOC, Settlement Now or Better Business Bureau, just to name a few.

So, what happens next after the training and volunteer work have convinced you that a career in ADR is still in your future? Consider whether you have the administrative and networking capabilities to allow you to be a successful sole practitioner neutral. If you don’t want the responsibilities of scheduling, billing and overhead for hearing rooms, affiliation with a mediation service may be your best option. Most trial attorneys in the Pacific NW are familiar with WAMS, JDR, JAMS and the AAA. Each organization has its own panel requirements, fee structure and administrative policies. At WAMS, for example, a mediator prospect is typically a current WAMS client who has been identified as a potential mediator based on personality and advocacy skills demonstrated over several years of interaction with current WAMS mediators. Mediation advocacy can be indicative of a lawyer’s attitude and aptitude for the practice. For instance, WAMS will evaluate how the prospective mediator prepared both mediator and client for their mediation. When considering whether to add an applicant to the WAMS mediator panel, McGaha mentioned that “One of the considerations I have as the Attorney Director of WAMS is about the prospect’s reputation as a person. Has this lawyer been able to maintain good relationships with opposing counsel despite being a zealous advocate? Has this prospect pursued a ‘win at all costs’ approach to litigation and ruined his or her reputation for integrity and fair dealing in the process? Does this person provide pro bono service or volunteer his or her time to a charitable cause? Is this potential mediator well regarded within the local and legal community?”

While the aforementioned guidelines may provide some assistance to prospective mediators, keep in mind that mediation as a career is an ongoing learning experience. Each member of the WAMS panel has come to the career by a unique path that may not be applicable for anyone else. Bill Joyce was told that he was far too young to be a mediator just four years out of law school. Pat Duffy’s solo practice in Sumner made him an unlikely candidate compared to more high-profile firm attorneys. But both Bill and Pat were determined to have mediation careers in addition to their law practices – and both have been resoundingly successful in that endeavor.

If mediation is your desired future vocation, consider the advice offered above and find a way to make it happen.

Think you have what it takes to become a professional mediator?

For advice or inquiries about WAMS panel opportunities, contact Diane McGaha, WAMS Attorney Director, via email to dmcgaha@usamwa.com.

A Mediator’s Tools

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By: Aaron Calhoun | WAMS Staff

“If this organization were a fairy tale character, it would be ‘Doraemon’, because it always meets the needs of the people it serves, no matter what that need is. This organization pulls tools out of its pocket that solve any problem, and it works across generations and cultures… just like Doraemon.”

‐ A WAMS admirer

It is not every day that WAMS is compared to a famous Japanese cartoon character, but if one takes the time to read about the exploits of Doraemon, the famed robotic feline from the future, then the comparison does not sound so farfetched.

Doraemon made his first appearance in print in 1969; the stories centered on a fifth grade schoolboy, Nobita Nobi, and the robotic cat’s efforts to help his friend. Nobita would come home from school and confide in Doraemon about a problem he had encountered that day. The latter would offer immediate advice on how to handle the issue without conflict or confrontation.

Likewise, the first tool used by a WAMS mediator is administrative guidance to all sides in advance of mediation, typically with the help of WAMS Case Administrators. Parties are encouraged to mediate only when the case is “ripe”, after direct negotiations have been undertaken. Pre-hearing memos that identify each party’s view of the dispute are encouraged, as is the participation of anyone with settlement authority. In some instances, this initial preparation leads to a better mediation outcome because the parties are more educated and prepared for the process from the start.

In Nobita’s case, advice alone was never enough; he always asked his feline friend for a device that could fix his problem or help him get revenge against an adversary. At Doraemon’s disposal were futuristic wonders he could pull out of his pouch like ‘The Anywhere Door’ (a door that opens up to any location the user wants), ‘The Voodoo Camera’ (a camera that takes a picture of a person and then creates a voodoo doll), and ‘The Dream Reader’ (a television that allows someone to watch what another person is dreaming about). Although Doraemon’s gadgets sometimes caused unexpected problems of their own, by story’s end, Nobita’s problem would be resolved in some fashion and the clear moral would always come to light: It is better to work through your problems than to take the easy way out by avoiding them or fighting back in anger.

For mediators, the gadgets in their pockets are the tools of their trade that have been proven to be successful and, unlike Doraemon’s, rarely lead to more  trouble. Beyond basic attributes like patience, experience, persistence, and objectivity, an effective intermediary must have the intuition to pick up on cues during mediation, both verbal and non-verbal, in order to develop the strategy to be employed in moving the negotiations forward. For instance, mediators sometimes find it necessary to ask the plaintiff’s friend or relative to “take a break” from the mediation to permit the plaintiff’s voice to be heard. Additionally, there must be a bond of trust created between the parties and mediator that will allow everything from random thoughts to deep secrets to be shared. Sometimes in mediation, information is disclosed for the first time that proves pivotal in finding resolution. One such example was the revelation in a recent mediation of the defendant’s potential bankruptcy filing. Because of that prospect, the plaintiffs chose to settle the case for an immediate and guaranteed payment rather than wait for trial and risk being embroiled as creditors in the defendant’s bankruptcy proceeding.

Problem solving skills are imperative due to the solutions mediation allows for that the courts do not (e.g. meeting non-monetary needs). Margo Keller and other WAMS mediators have used Skype successfully to involve unexpectedly absent participants whose visual interaction was an important factor in reaching settlement. It also does not hurt to have a timely sense of humor that can temper the stress and exhaustion that intense negotiations can cause—Don Kelley is well-known for his efforts at levity. It is an effective way to remind the parties involved that mediation is a nicer, more humane process than going to trial.

Doraemon and mediators alike have the ability to quickly figure out what is at the core of an issue and how to resolve it. By listening to parties in need, offering consultation on how to come to a peaceful resolution, and occasionally using outside-the-box methods, all have the tools at their disposal to resolve disputes. Whatever the case might be, it is good to know that help—whether it be in the form of a mediator with extensive experience and negotiating tools or a robotic cat from the future with a gadget-producing pouch—is there when it is needed.

 

Why Mediation Still Matters

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By: Harry Goldman | Mediator, Arbitrator

goldmanWhen I joined the WAMS mediator panel in 1986, the concept of mediation in civil litigation was a fairly new idea. It has been my privilege to have participated in the growth of what is now a key component in the litigation process.

Many lawyers were initially hesitant or openly hostile to mediation, as it was perceived by some as usurping the role of counsel. Part of my job was to explain to my colleagues that mediation was actually a useful settlement tool that could be employed by representatives of both plaintiffs and defendants to educate clients about the risks of trial and complexities of litigation. The intervening years have seen a gratifying evolution in attitudes toward mediation, as we now have court-ordered mediation in many jurisdictions. Courts such as the U.S. District Court for the Western District of Washington have implemented specific reporting procedures by the mediator to federal judges. Business contracts commonly require mediation prior to instituting litigation. Mediation and other forms of alternative dispute resolution are frequently taught in law schools. ADR seminars are regularly presented throughout the country; for example, the University of Washington conducts an annual ADR conference that draws an international audience.

If mediation is so firmly established in 2011 as part of the framework of litigation, why would I choose to discuss its relevance and importance now? I believe that mediation is beneficial on many different levels, regardless of the outcome. Of course, everyone wants his or her dispute to resolve, but parties often gain valuable information and a perspective that may not have been present beforehand in that small percentage of cases that do not settle. As a possible analogy to the mediation process, consider that computers were also in their comparative infancy in 1986 and have evolved exponentially in succeeding years. Computer users no longer need to know an intricate version of DOS to operate their systems, and few of us use more than a fraction of the computer’s functionality. We are frustrated when the computer doesn’t perform in accordance with our expectations, even if the malfunction is partly due to our failure as users to properly appreciate and contribute to the proper operation of the computer. That being said, few would deny the benefits of computers.

In a similar vein, users of the mediation process have come to assume that the mediator will succeed in achieving a settlement in every case. This is a reasonable goal as the parties are paying a considerable price for the service and coming to the table to settle the case. When the mediator is a trained professional, the participants have a right to expect that he or she will use experience and skill to craft a settlement of the dispute. It is important for all participants to remember, however, that mediation is a collaborative process that requires everyone to exercise his or her best efforts if a resolution is to be achieved. Success is defined not only by the result but also by how it is accomplished.

In order to achieve success, the mediator needs the assistance of everyone involved in the process. First and foremost, each participant, whether it is the client, the attorney, an insurance claim representative, or any other decision-maker, must be willing to commit him or herself to the effort. If someone is present only because the mediation has been court-ordered, the likelihood of success drops. If an individual is convinced even before the mediation starts of the righteousness of his or her position, believes the sole reason for the mediation is simply to move the other side, is not interested in listening to the opposition, or is unwilling to consider the potential risks of going forward to trial, mediation may not be productive. If all parties are not engaged in the discussion, the mediator’s task is much more difficult. Everyone must come prepared to do what is necessary to accomplish the universal goal of resolution and remain committed to that end.

The relevance and importance of mediation can be sustained through this collaborative effort. In this increasing era of congested court dockets and the ever-mounting expense of litigation, we must use our best efforts to achieve the optimal result for the participants. It is easy to forget that not everyone at the mediation understands the process or is familiar with the format. I always start my mediations by explaining to people who are new to the process what my role is and what the general framework of the sessions will be. I want every person in the room to know what is going on and understand what we are doing and why. It matters how the road is traveled to the final destination.

To achieve the ultimate goal of resolving a dispute in mediation, it is critical that everyone from the most sophisticated user of the process to the bewildered first-time participant become engaged in the effort. I want mediation to be relevant, not only in resolving the dispute itself, but in helping parties appreciate the risks of going forward so they will be comfortable with the outcome.

I am confident as I approach my 5,000th mediation and a quarter century of assisting others in resolving disputes that the process is even more relevant today than it was in 1986. Few people today question the importance of mediation as a settlement tool. A voluntary settlement, even if imperfect, is almost always preferable to a result imposed by a third party. Because of the ongoing commitment of everyone involved in the process, I believe mediation will continue to evolve as an effective way to help settle disputes and will still matter for many years to come.

Don’t Forget the Memorandum of Settlement!

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By: Michele Sales | Mediator, Arbitrator

salesA good mediator recommends that the parties draft and sign a Memorandum of Settlement at the conclusion of what appears to be a successful mediation. The Washington Supreme Court recently re-emphasized the need for such a writing in its decision of In re Disciplinary Proceeding of Bradley R. Marshall  , 279 P.3d 291 (2009).

Part of the complaint against attorney Marshall involved whether a settlement had been reached at mediation1  by a King County Superior Court Judge. The court noted that “most, if not all, of those present believed some settlement was intended”2 , including the judge.3  However, two of the Plaintiffs decided that they did not want to settle. Shortly after the mediation, the Defendant’s counsel sent a release and settlement agreement that those two Plaintiffs refused to sign. According to the charges and findings, Mr. Marshall then attempted to force those clients to proceed with the settlement against their wishes.

While the facts of the Marshall case are not ones we hear about on a regular basis, the issue of one party trying to renege on a settlement does raise its ugly head at times. It may occur because someone close to the party (spouse, parent, significant other) who did not attend the mediation and witness the reasons or basis for the settlement tells the party that settlement was a bad idea. Other times, it may simply be that a party changes his or her mind after thinking about the day’s events over night. Worst of all, it may be that the party felt compelled by his attorney to agree to a settlement. Whatever the cause, it is worth revisiting the idea of signing a memorandum at the conclusion of mediation and what needs to be in that writing.

CR 2A states, “No agreement or consent between parties or attorneys in respect to the proceedings in a cause, the purport of which is disputed, will be regarded by the court…unless the evidence thereof shall be in writing and subscribed by the attorneys denying the same.” In similar fashion, RCW 2.44.010 (1) states that an attorney has the authority to bind his client, but that the court shall disregard all agreements “unless such agreement … [is] signed by the party against whom the same is alleged, or his attorney.”

Washington law has been clear since the early 1980’s that standard contract law governs whether the parties have reached a settlement. Stottlemyre v. Reed  , 35 Wn.App. 169, 665 P.2d 1383 (1983). It is interesting to note that although the agreement in Stottlemyre  was only an oral agreement, the appellate court found that the attorney’s written representation in an affidavit that a settlement was reached was sufficient to meet the “signed by the party…or his attorney” provision of the statute. Some might say that this ruling was appropriate because “the law favors the private settlement of disputes and is inclined to view them with finality”.4  But counsel should not rely on such a creative interpretation of the Rule and statute and should make sure that a settlement document is created and signed.

Subsequent cases have flushed out the court’s holding in Stottlemyre  by clarifying that a party’s subjective intent not to be bound until the execution of a final settlement agreement will not void an otherwise enforceable settlement agreement.5 However, the agreement must not have been reached by fraud, coercion or mistake.6

The signature of the party’s attorney is not needed if the party has signed.7  Alternatively, Stottlemyre holds that an attorney’s signature alone is adequate to bind the party assuming all other things are equal. In this instance, however, the practical effect is likely to be that the party fires his attorney and institutes a malpractice action.8

But the courts have said that the settlement memorandum must refer to all material terms, or there is a basis to challenge whether a settlement was reached. In Howard v. DiMaggio  70 Wn.App. 734, 855 P.2d 335 (1993), the appellate court found that attorneys simply agreeing on the settlement amount (cash plus repayment of the Plaintiff’s PIP carrier) did not cover all material terms. The appellate court found that the Plaintiff had not agreed to sign a medical guaranty letter, had not agreed to “the details of the release and hold harmless documents”, and had not agreed who would be the designated payees on the check. Thus, the alleged settlement agreement was not considered enforceable.

Similarly, in Lavigne v. Green  106 Wn.App. 12, 23 P.3rd 515 (2001), the parties attended a mediation at which they agreed on an amount of settlement. No writing was signed. Allegedly, the insurance adjuster at the mediation said there “were no additional terms or provisions or conditions on the settlement”.9 However, a release was sent that included indemnification, hold harmless and full release language. The party seeking to avoid the agreement essentially conceded that his real disagreement was about the amount of the settlement, but because he raised a genuine issue of material fact on the other terms, the appellate court sent the matter back to the trial court for determination.10

My strong recommendation is to make sure a memorandum is signed when you believe you have reached a settlement. In a personal injury action, the memorandum should indicate the amount of settlement, that all claims will be released, that an indemnification and hold harmless as to subrogated interests will be signed along with a release, that the lawsuit (if any) will be dismissed with prejudice and without costs, and that the parties acknowledge that the agreement is binding and enforceable. Defense representatives may simply choose to bring a standardized settlement agreement and then later supplement it with a document that acknowledges receipt of the settlement check by the plaintiff.

In an employment case, the extent of the terms can be much more involved. While a mediator can assist in drafting a memorandum during or at the end of the mediation, a better practice is for defense counsel to provide a copy of a proposed settlement agreement to plaintiff’s counsel prior to the mediation and then make changes as the mediation proceeds throughout the day. Not only are the non-monetary terms (ie, confidentiality, no re-hire, no application for rehire, no disparagement, etc.) outlined for the plaintiff’s attorney clearly and concisely, but you have given the plaintiff plenty of opportunity to seek more information about the meaning of terms before signing.

While these suggestions provide no guarantee that your mediated settlement agreement will not be challenged, your client should be better protected by taking these affirmative steps in mediation.

  1. The decision refers to the proceeding with Judge Heavey as a mediation in some places and as a settlement conference in others. Whichever correctly describes the proceeding, the use of a CR 2A document would have alleviated part of Mr. Marshall’s problems.
  2. Id.
  3. 279 P.3d at 303, fn 22.
  4. 35 Wn.App. at 173.
  5. Morris v. Maks, 69 Wn.App. 865, 850 P.2d 1357 (1993).
  6. 106 Wn.App. at 15. The court reviewed each argument under an abuse of discretion standard and found the evidence lacking in Patterson. There is an interesting discussion on a plaintiff’s mistake as to policy limits in a mediation and subsequent settlement in Brinkerhoff v. Campbell, 99 Wn. App. 692, 994 P.2d 911 (2000) that bears reading in its entirety.
  7. In re Patterson, 93 Wn.App. 579, 969 P.2d 1106 (1999).
  8. See, e.g., In re Ferree, 71 Wn.App. 35, 856 P.2d 706 (1993).
  9. 106 Wn.App. at 15.
  10. See also Veith v. Xterra Wetsuits, L.L.C., 183 P.3d 334 (2008) in which the court succinctly concludes that so long as the parties are still in negotiation on material terms and have not resolved their disagreements over some of them, there is nothing for the court to enforce.

Resolving Family Business Disputes

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By: Margo Keller | Mediator, Arbitrator

kellerI do love to buy from a family business. I especially enjoy the immediacy of knowing the person who picked my carrots at the organic farm, stomped my grapes at the winery, or smoked the salmon that I’ll place on the table. I value the local banker who handles my business and the neighborhood restaurateur who knows just what I like to order. I believe in “the family business ethic,” like watching a father and daughter operate their law firm together, learning from each other along the way. All of this just confirms many core social and economic values. But, in my experience, a family-run business must develop strong conflict resolution skills to remain viable through the generations and continue on the path of success.

Some family businesses are great role models for healthy communication and positive conflict resolution. Others suffer from unique barriers to reaching agreement, often issues which actually originate in the familial relationship.

CLASSIC CONFLICTS

Consider the following cases:

  • A father brings only one of his four adult children into his fish processing business. He is considering gifting smaller percentages of the company to the other children over time but he has not discussed this with any of the other three. The working sibling resents the others getting shares of a company “for free,” while the others wonder why they have been excluded.
  • Siblings start up a restaurant with one putting up the capital and the other contributing non-quantified “sweat equity.” The sister who put in the money resents her brother’s blanket assertion that his work equals what she put in. (Of course, the IRS has an even stronger view.)
  • Two brothers have been buying houses, fixing them up, and selling them without any agreement for division of profits. Now that the older brother has married, he wants a monthly salary, while the other wants to keep living with their parents for “free” in order to hold all earnings for the next house purchase.
  • Five cousins inherit the family winery in equal shares; however, two of the five have been working in the business for years. Everyone has a different view of how the business should be run now that the founders have passed. (For starters, they all want to be the boss!)

COMMUNICATE: WHAT’S OUR DEAL?

How many of us are assertive in a general business setting but cannot confront our father or older sibling? Sometimes it is very difficult for members to overcome the family dynamic to communicate messages of change, approval or dissatisfaction. Family members can transport notions of fairness or patriarchy from the kitchen table to the board room without considering factors such as merit, aptitude, work ethic or profitability.

The time for tough talk is never as good as when the deal and the parties are just coming together. Discuss and hash out: who is contributing what, who makes what decisions, what happens if more capital is needed, when and how profits will be distributed, and what buy-sell provisions will be implemented if one party wants out. Communicate and then put those agreements in writing. No written agreement should be postponed under the theory of: “we are family and we trust each other”. Trust deepens after good communication and the execution of a good written agreement.

NEGOTIATE: WHAT ARE OUR INTERESTS?

When differences arise, focus on interests rather than positions. Your position is what you have decided on: “I want a controlling percentage in this LLC”. Your interest is what motivates you-what lies behind your position: “I need to make sure no one can fire me until I retire”. Once the interest is understood, the other member may be able to address the interest and agree to a long-term employment agreement which can only be terminated in the event of gross misconduct, or perhaps, the parties can require unanimous or supermajority votes in certain areas to protect the non-controlling members.

In almost all cases of family business conflict there is an overriding interest in preserving the family relationship. If parties learn to negotiate based on interests rather than positions and agree to place this shared interest as paramount to any negotiation, they will have a greater chance of success. Advisers to family businesses should recognize and respect this shared interest and acknowledge that sometimes, protection of the ongoing relationship is far more important than the particular conflict. Without this recognition, Thanksgiving dinner can become a pretty tense affair.

MEDIATE: WORK BEYOND A WIN-LOSE PARADIGM AND DEVELOP CREATIVE OPTIONS FOR SETTLEMENT

When family members take their dispute to trial, someone is generally regarded as the “winner” and the “loser(s)” may be forever alienated. Not only is there a resulting alienation from the business but more importantly, disputing family members can become permanently estranged from the larger family.

Mediation can provide an opportunity to be creative and develop solutions well beyond what a court could do if the parties went to trial. Maybe the parties can craft tax-advantaged results, agree on payment plans for a buy-out, or at least stipulate to appraisers and a process for resolution. Consider mediating a dispute before a lawsuit has been filed, before the tension from a deposition has hardened hearts (and spouses), and before the pie has been reduced by legal fees. Alternatively, consider mediation once the discovery has been completed but well before the trial date where settlement offers can still reasonably be compared against the risks associated with trial.

Mediation can also assist the parties in negotiating new ways of doing business, such as:

  • including outside members on the Board of Directors to provide that “objective standard” and feedback;
  • developing agreements for regular meetings and communications;
  • creating or amending existing member agreements that address old and new issues;
  • negotiating succession planning before the triggering event occurs; and
  • stipulating to an expedited arbitration process for disputes.

The family business is often touted as our country’s key to economic recovery. Therefore, the key to resolving conflict in the family business involves three components. First, engage in early communication that addresses specific family issues and the “deal” of being in business together. Second, practice negotiation that recognizes the primary need to preserve relationships. Finally, use mediation which depends more on creative problem solving than a model of winning versus losing.

UIM Arbitration: 2009 Update

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By: Pat Duffy | Mediator, Arbitrator

duffyAs Congress considers the proposed Arbitration Fairness Act of 2009 to address several problems with the use of contractual arbitration clauses (see HR 1020), it’s a good opportunity to re-examine the evolution of arbitration in Washington and how changes in the act may impact arbitration as a method of resolving UM/UIM claims.

In the 1950’s, insurers began to voluntarily offer uninsured motorist coverage to their insureds in exchange for payment of an additional premium. In the late 1960’s, legislation was passed requiring insurers to offer uninsured motorist coverage. Later, some insurers began to offer policies that contained both uninsured and underinsured motorist coverage. In 1980, the legislature passed comprehensive uninsured/underinsured motorist legislation (which can be found at RCW 48.22.030).

Historically, automobile insurance policies have provided that UM/UIM injury claims would be decided by 3-person arbitration panels. Each party nominated one arbitrator and those two “party arbitrators” then agreed upon a neutral or “swing” arbitrator. Traditionally, a decision by a majority of the panel members was binding and the arbitrators’ fees were shared equally by the parties. This format satisfied each side’s desire to have its own “advocate” on the panel, although it certainly can be argued that the “party arbitrators” nullified each other and left the decision to essentially be made by the swing member of the panel.

But after the courts ruled in 1989 that payment of arbitrators under UM/UIM policies was the sole responsibility of insurers, there was a gradual transition by most carriers to the use of only one arbitrator. Using a sole arbitrator has undeniably saved insurers a substantial amount of arbitrator hearing fees.

Whether accurate or not, a perception began to develop with insurers that arbitrators’ awards were overly generous in favor of claimants. This view led to the advent of “sue me” clauses, which are now common in UM/UIM policies. While most policies have continued to provide for arbitration, it was to be utilized only if both parties agreed to arbitrate. If not, the only option for claimants was to initiate a lawsuit for damages against the insurer. A typical policy might now read as follows:

 If we and the insured do not agree…the dispute maybe resolved:

 a) In a binding arbitration proceeding, but only if both sides agree to arbitration, or

(b) By civil lawsuit brought by you in a court of competent jurisdiction.

Advocates for claimants have decried these changes and attempted, so far unsuccessfully, to have “sue me” clauses declared void. The plaintiff’s bar has consistently argued that the high expense and protracted delay in getting to trial is placing an unfair burden upon insureds. In turn, the plaintiffs’ bar has been soundly ridiculed for its so-called hypocrisy in attacking the right to trial by jury.

As of this writing in 2009, claimants and insurers continue to arbitrate many, if not most, uninsured/underinsured cases. Both sides have an interest in getting claims resolved without the delay and expense of a jury trial, and there is little argument about the cost and time savings associated with UM/UIM arbitration. In fact, many arbitrators like me are now seeing parties agree to resolve third party claims in binding arbitration as an alternative to trial. There is often a “high-low” agreement, not disclosed to the arbitrator, which provides for the award to be modified if it falls outside the range set by the parties.

I think it’s fair to say that arbitration is still widely viewed as an expeditious and cost-effective method of resolving UM/UIM claims. The benefits of arbitration are endorsed by Civil Rule 1 that states, in part:

These rules…shall be construed and administered to secure the just, speedy and inexpensive determination of every action.

Arbitration should continue to serve as a popular method of dispute resolution for UM/UIM claims, since the benefits of arbitration are many, including:

  •  Reliability of the hearing date
  • Privacy – no public record
  • Special expertise of neutral
  • Parties select neutral
  • Expeditious compared to trial
  • Achieves finality
  • Very narrow scope of appeal
  • Usually less costly than trial

The Arbitration Fairness Act will potentially impact UM/UIM arbitration only insofar as some policies may be considered to be “anti-consumer” by virtue of any discovery, timing, arbitrator or cost constraints that may still be used by some carriers. For the most part, however, UM/UIM arbitration in Washington is likely to remain a good choice for many disputed claims.

 

Supporting the Lawyer’s Complex Role in Mediation

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By: Kathleen Wareham | Mediator, Arbitrator

warehamMediation offers many benefits to clients, providing them an efficient, effective means of resolving their legal disputes. One reason mediation works is that it supports the complexities of the attorney-client relationship and helps lawyers satisfy their dual duties to both advocate for and advise clients about risks and benefits of settlement. When the mediation parties and their lawyers clearly understand the lawyer’s role and duties to the client during mediation, they can work more effectively with the mediator and fully utilize the mediation process.

Washington’s Rules of Professional Conduct, revised in September 2006, provide lawyers clear direction to consider social, emotional and economic consequences of litigation, as well as alternatives to litigation such as mediation. In fact, when a legal matter “is likely to involve litigation, it may be necessary under Rule 1.4 to inform the client of forms of dispute resolution that might constitute reasonable alternatives to litigation.”1

Multiple Roles for the Lawyer

The Preamble to the RPCs describes multiple roles for a lawyer representing a client: advisor, advocate, negotiator and evaluator. These roles may seem in conflict with each other. As an “advisor,” the lawyer “provides a client with an informed understanding of the client’s legal rights and obligations and explains their practical implications.” As an “advocate,” the lawyer “conscientiously and ardently asserts the client’s position under the rules of the adversary system.” As a “negotiator,” the lawyer “seeks a result advantageous to the client but consistent with the requirements of honest dealings with others.”2

A lawyer acts in all three of these roles in mediation. In both mediation and litigation, the lawyer is helping the client by advocating and asserting the client’s position. In mediation and in settlement negotiations, the lawyer takes on the negotiator role, to seek a result advantageous to the client, and as an advisor, to explain practical implications of a client’s legal rights and obligations.

Lawyers Must Give Candid, Straightforward Advice

The RPCs specify the duties expected of lawyers in their role as advisors.

“In representing a client, a lawyer shall exercise independent professional judgment and render candid advice. In rendering advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social and political factors that may be relevant to the client’s situation.”3

These non-legal factors are part of the lawyer’s assessment and advice because pure legal advice, in a vacuum, fails to fully meet the client’s needs. As described in Comment 2 to Rule 2.1 “Advice couched in narrow legal terms may be of little value to a client, especially where practical considerations, such as cost or effects on other people, are predominant.”

The rules encourage client need-centered guidance and “candid” advice. Comment 1 to Rule 2.1 reminds lawyers of the standards they are expected to meet and of the importance of honest, straightforward advice, even when it is difficult to give. This comment provides: “Legal advice often involves unpleasant facts and alternatives that a client may be disinclined to confront. In presenting advice, a lawyer endeavors to sustain the client’s morale and may put advice in as acceptable a form as honesty permits. However, a lawyer should not be deterred from giving candid advice by the prospect that the advice will be unpalatable to the client.”

The comments acknowledge this is not always easy. The duty to advocate and assert the client’s interests complicates the advisory role even more. By providing broad advice, including consideration of moral, economic, social and political factors, lawyers can strike the balance and fulfill the duties to clients expected by the rules — both to assert the client’s interests through advocacy and also to give honest and candid advice.

Settlement Is a Client Decision

While the lawyer works to both advocate and advise the client toward resolution of a legal dispute, under Rule 1.2(a) the lawyer must be mindful of the fact that decisions concerning the objectives of the representation, the means to pursue the objectives, and the ultimate decision regarding settlement of a legal dispute, are client decisions.

The lawyer’s role is to advise the client regarding the possible objectives of representation, the potential means to pursue the objectives and the pros and cons of particular settlement options. Fulfilling these duties to the client is a complex task. The lawyer must remember that the client is the decision maker under Rule 1.2(a), but also remember to give the client complete, broad advice pursuant to Rule 2.1.

Mediation: An Ideal Forum

Advising the client about mediation as a means of pursuing the client’s legal objectives is not only encouraged by the RPCs, it is a way for the lawyer to strike the balance between giving advice, advocating for the client and listening to the client. Mediation supports these complex communication tasks for the lawyer. A professional mediator helps the lawyer give the client advice and yet abide by the client’s decisions regarding the objectives and means of the representation and the client’s ultimate decision regarding settlement.

The RPCs provide lawyers with ethical guidance for fulfilling the complex roles of both advocating for and advising a client. More than establishing ethical duties, the rules help promote resolution of legal disputes — the ultimate purpose of litigation — by defining the lawyer’s role as both advisor and advocate.

Perhaps mediation has become the paramount method of dispute resolution not just due to economic pressures and crowded court dockets, but because it best supports the tensions in the litigation process between lawyers’ dual roles as advocates and advisors. Following the ethical guidance of the rules when considering, preparing for and participating in mediation helps lawyers fulfill their duties to their clients and effectively resolve their clients’ legal disputes.

1 Comment 5 to Rule 2.1.

2 Preamble [2].

3 Rule 2.1.

Kathleen Wareham has been a panel member of WAMS since 2004. She mediates disputes, utilizing more than 20 years of legal experience in negligence, personal injury, civil rights, wrongful death, and complex probate, guardianship and trust matters. This article draws on material from Ms. Wareham’s chapter on “Washington Mediation Ethics” that will appear in the update to the Washington Legal Ethics Deskbook (Wash. St. Bar Assoc.) scheduled for release in January 2009.