Why Sue First?

As mediation has become more of an accepted and even required step in many lawsuits, expectations and practices of parties involved in litigation seem to have shifted somewhat.  We see a lot of lawsuits filed with the expectation that the filing will eventually lead to a formal settlement conference or a court-appointed or private mediation.  Parties sometimes postpone doing expensive discovery or filing expensive summary judgment motions, with the hope of resolving the case at a mediation conference.

If that is the expectation, why even bother with filing the complaint?  Of course filing a complaint serves important purposes like framing the issues, announcing the seriousness of the filer's intentions, tolling the statute of limitations, and perhaps other purposes.  But if the case is likely to be resolved in a mediation anyway, more parties might consider calling a mediator first, instead of waiting until the initial status conference for the judge to send the case to mediation.  Sending demand letters and attempting to initiate various forms of creative dispute resolution has always been part of my law practice, but as mediation becomes more prevalent, and as I incorporate more settlement techniques in litigation, I now question, in almost every case, whether filing a complaint is the best first step toward solving the client's problem.  Is it possible to short-circuit this step altogether in more cases?

Before dispensing with them, let's consider the usefulness of all those early steps, and their costs.  Filing an initial pleading in court requires a filing fee.  It involves some research, or at least a visit to the form files. It takes time to organize and write up the factual allegations, and consider the appropriate causes of action.  So the preparation of a complaint at least has the benefit of forcing the plaintiff to organize his or her grievances in a coherent format, and to formulate appropriate legal theories of recovery.  On the other hand, that organizational work can be done without turning it into a formal complaint.  Moreover, filing a complaint invites a demurrer or motion to dismiss, or at the very least requires the opposing party to prepare an answer.  People generally react negatively to being served with a summons, so initiating a lawsuit often causes resistance to resolving the dispute in a more peaceful manner.  So there is the potential for motion practice over pleading issues, and even the possibility of appeals.  That is followed by the preparation, or at least consideration of initial discovery demands.  There is also the possibility of requests for injunctive relief, or writs of attachment, the recording of a lis pendens, or other provisional remedies.  In short, a whole lot of attorney time may be required, some of which may be extremely helpful and productive, but much of which may actually be counter-productive to the goal of resolving the dispute.  After months of punches and counter-punches, the parties may be sent back to where they should have started, to a meeting to discuss the possible resolution of the case.  Perhaps some parties need to be reminded of the costs and potentially wastefulness of a lot of pre-trial procedure, as an incentive to consider settlement, but  sophisticated clients should not need such a reminder.

Does sending the other side an invitation to mediate, instead of a complaint, convey weakness?  Perhaps some people would interpret it that way, but again, more sophisticated parties should not.  They might reject the invitation, if they doubt whether or not the complainant is serious about pursuing the matter, but they  generally appreciate the opportunity at least to consider whether the case can be resolved informally.

There are also a lot of disputes that cause some trouble to bring within the court system, but still cry out for resolution.  For example, I saw a post on the IP ADR Blog, by Mary Zachar, which is partly what got me thinking about this post, pointing out that foreign authors have limited recourse in U.S. courts unless they register their copyrights in the United States.  Of course, registration is generally a pre-requisite for domestic copyright owners as well, as recently discussed in my law firm blog.  But mediation before filing avoids those time-consuming and sometimes expensive steps.  By saving the copyright holder the costs of filing in the Copyright Office, as well as the costs of filing in federal court, the alleged infringer might save itself a substantial amount on the cost of settling the dispute as well, since those items, as well as associated attorney fees, can be removed from the copyright owner's initial demand.

Finally, there are a lot of disputes that should not even be framed as lawsuits, if that can be avoided.  I heard a lecture last year by Doug Noll, on the mediation of non-litigated disputes.  He has had some success with businesses and families facing difficult internal conflicts, in conducting mediation sessions among the involved parties, in order to avoid a will contest, or a wrongful termination lawsuit, or a potential corporate dissolution suit, down the line. In such situations, all parties probably prefer to avoid litigation, but the internal conflict has been allowed to fester for some time, and its lack of resolution may be causing serious problems.  Litigation should probably be the last resort for parties in those circumstances, and should probably not be the first suggestion for resolving many other types of conflicts either.  Non-litigious means of dispute resolution should come more readily to mind. 

(Photo of one of my old haunts, the New York County Courthouse, by wallyg)

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The Costs of Negotiation

Even though I have lived in California for 20 years, I still find the habits of California drivers a bit strange.  This morning I once again marveled at how much trouble drivers here have merging into a single lane when one lane is blocked due to construction or some other activity.  Instead of just automatically doing an alternate merge into the single lane, a whole series of elaborate games seems to be required.  The cars in the unblocked lane try to close the gap to prevent the blocked cars from changing lanes, and the cars in the blocked lane often feel the need to engage in a lot of hand signals and gestures in order to continue on their way, or they just sit and wait until all the traffic has passed.  Something similar happens when we have to empty out a crowded parking structure, which takes forever when the roads are congested.  A lot of drivers feel the need to ask for permission to enter the road instead of just nudging their way out of the structure and into the moving traffic.  As a former New Yorker, where we tend to go first and ask questions later, I find these slowdowns maddening. 

These traffic interactions seem like a good metaphor for the costs of negotiation.  I am reminded that we are not always better off if we must get into a whole give-and-take with the other party every time we find ourselves in conflict.  Lots of conflicts would be resolved more efficiently if we all just followed some clear and simple rules.  For example, when two cars arrive at an intersection at the same time, just yield to the car on the right.  You don't need to go through a whole series of waving and gesturing motions with the other driver to decide who should proceed first.  Just as when you go to the supermarket, you're probably happy that you don't have to haggle over the price of every item.

Negotiations also introduce an element of perceived unfairness into the system.  When the pushiest person gets to the head of the line, or the loudest negotiator gets a better deal on a car, that understandably bothers people.  Even though we are told "caveat emptor," most of us would probably prefer to live in a world where sellers treated us fairly and equally, rather than one in which each buyer must look out for herself or himself.  This discomfort with the unfairness, as well as the time-consuming nature of negotiations, may make mediation a mysterious and even unpleasant process for many participants.  Many people who become embroiled in a dispute just want that dispute resolved fairly and efficiently.  They might accept mediation because they are told that the court system is too costly and painful and unpredictable.  But they don't necessarily buy into the do-it-yourself nature of the negotiating process either.  They might not think compromise will lead to a just solution; they might not enjoy the negotiation process all that much; or they might be afraid that the other side will take advantage of them in a negotiation.  Perhaps it is good to remember that negotiation is not always a painless or comfortable process for many participants. 

(Google image of intersection in Romania from Mycee.  This picture should serve as a warning that gridlock can occur when you rely on people to negotiate their own way out of conflict.  This picture also demonstrates that a four way conflict is a lot more difficult to resolve than a conflict between only two sides.  Of course many people would say that what this intersection really needs is a traffic cop.  That would be the mediator.  But maybe a traffic light would work just as well. Or better yet, turn the intersection into a circle and people might have an easier time negotiating their way around it on their own.)

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The Mediator's Proposal

At the end of 2009, both houses of Congress accomplished the remarkable feat of passing comprehensive health insurance reform legislation.  The only problem: the two versions of the legislation are significantly different.  To reconcile those differences called for either a conference committee (an idea the Democrats rejected, since they felt it would only be used for delay by the Republicans), or a negotiated behind-the-scenes compromise of the two bills, or one or the other chamber of Congress must pass the version of the bill passed by the other.  So it would seem that we should have been very close to the goal of getting health insurance reform to the president's desk.  The hard work was done, and only negotiation over the details and manner of completing the bill remained.  Suddenly, however, the political landscape changed with the election of Scott Brown in a special election in Massachusetts.  The Democrats no longer have 60 votes in the Senate, and therefore cannot overcome a filibuster joined by all Republicans.  And many Democrats in the House are now scared of their re-election prospects, enough to cause some delay in completing these negotiations.

It seems we have some classic formulas for impasse at work here.  Impasse can occur when parties are this close to completing a deal, but cannot quite bring themselves to close the remaining relatively tiny gap in their positions.  Or it can occur when a party starts to have second thoughts about making any kind of deal at all.  There are a number of ways to break impasse, some of which I have discussed in a previous post.

What is the president doing to resolve this impasse?  As I have also discussed previously, this president seems to view himself as a mediator, and has often in the past used mediator's instincts and techniques to solve problems.  In this case, he first proposed a new bi-partisan health care summit, inviting the leaders of both parties to air a free exchange of views.  This gambit may be aimed more at influencing public opinion than at negotiating a resolution (see this post below), since the summit has a focus beyond the most relevant parties to the negotiations.  (The only negotiation that should need to take place to get a bill passed is between House and Senate Democrats, not between Democrats and Republicans, since Republicans all opposed the bill.)  Nevertheless, the summit may achieve some of the traditional goals of a mediation process, allowing parties to "vent," allowing them possibly to listen to other viewpoints, and even creating an opportunity perhaps to exchange some useful ideas.

What President Obama also did that was interesting was to submit his own detailed plan in advance of the planned meeting.  Many political observers are questioning why he finally did that.  The administration took some heat from its own supporters for failing to put forward its own version of the bill last year, instead just giving general details, and leaving it up to Congress to design the specifics.  Why wait until we already have two completed bills ready to be adopted to propose yet a third bill?  And why propose a bill which appears different in many respects from what the president advocated last year, instead representing a compromise position between the House and Senate bills?   It strikes me that the answer to those questions is that the president's plan seems to represent the classic mediator's proposal, which is reserved until the end of the negotiations, when settlement does not appear possible by any other means.  It is a somewhat risky gambit, and one that is disfavored by many mediators.  (See these discussions by John DeGroote, Victoria Pynchon, and Steve Mehta.)  But it is also sometimes necessary, when the parties involved are looking for a kind of deus ex machina solution after having exhausted their efforts to reach resolution themselves.  Because the mediator represents a kind of authority figure (and in these health care negotiations, what better authority figure can there be than the president), parties who still want to resolve a dispute will sometimes accept a neutral's recommendation when they cannot bring themselves to compromise any further with the other side.

To be effective, the mediator's proposal must come at the right time, perhaps not until all the parties are begging for one.  The mediator's proposal must also represent not necessarily what the mediator thinks is the right solution to the problem, but rather a solution that he thinks both parties want to accept.  Sometimes that means arbitrarily splitting the difference between two parties' last offers, and sometimes that means putting pressure on one side to compromise more than the other.  In the health care example, the Obama proposal leans toward the Senate version, in recognition of the greater difficulty in passing another bill through the Senate.  At this point, it remains to be seen whether the mediator-in-chief will be successful in resolving this dispute, but he does seem to be going about it in a way that should be understandable to people in the conflict resolution field.

(AP photo from USA Today)

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Fear of Joint Session

The practice of quickly moving to caucus sessions has become so widespread that many parties attending mediation seem to expect to caucus almost immediately.  Parties seem to want to cut to the chase of settlement negotiations quickly, and are concerned about the possible volatility of a joint session.  I had a couple of experiences recently where counsel expressly asked me before the mediation even began to please not even allow the parties into the same room at all, because they viewed it as a waste of time, or worse, to face the other side.  My response was to suggest that we at least stay together for introductions and some initial housekeeping matters, and then continue in joint session only for so long as the joint session continued to be productive. 

In both cases where counsel had asked me to keep the parties apart, it turned out that they had little difficulty in talking to each other.  Interestingly, I'm not sure we would have reached a settlement in either case if the parties had not remained in the same room for an extended period.  In one case, a landlord-tenant dispute, the joint session gave the parties a chance to see each others' human sides.  The parties also needed to make that kind of connection so that they could avoid similar disputes in the future.  In the other case, a dispute between two contractors, the parties needed to exchange a lot of technical information, which they were able to do directly, and which would have taken more than twice as long, and probably would have been less effective, had they been required to filter their views through the mediator.

The lesson for me was that parties sometimes need to be nudged away from their initial reluctance to remain in joint session.  Joint sessions present the fastest and most direct means of exchanging information.  They also allow the parties a terrific opportunity to observe how the other side presents their case, and reacts to their side's claims.  And they present a real opportunity for potential reconciliation in some cases.  Parties should enter into mediation with the expectation that they are going to be sitting in the same room with their adversaries, the same as if they were attending a deposition or a trial.  They should expect to break into caucus only when there is a real need to protect the confidentiality of information they may not care to share with the other side, or to conduct a strategy session outside the hearing of the other side.  The fear that a mediation will devolve into an unproductive shouting match is overblown, in my opinion, but of course precautions should be taken to protect against negatively-charged joint sessions.

(The photo, which I found on a soccer blog called True Fan, illustrates what sometimes happens in mediation.  Both the disputing players are pointing fingers at each other.  One of the disputants is trying to confront the other one, but that one is directing all his comments at the referee.  And the ref seems to be looking elsewhere for guidance.)

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Settlement of Public Disputes

I read today that the Los Angeles Conservancy got the owners of the Century Plaza Hotel to agree to preserve the key historic features of the hotel in their plan to develop the property.  (My prior post on that dispute is here.)  Coincidentally, I saw a post today on Victoria Pynchon's blog about a preservation dispute in Dallas, raising the question whether internet comments on newspaper blogs and similar forums can assist in resolving such disputes.

Of course public comments can be helpful in putting ideas on the table, and in ascertaining the extent of public support for preservation of an historic landmark, or for the development that threatens that landmark.  But commenting on Victoria's post  reminded me that what really helps get public disputes like these settled is pressure from the decision-making body on both the preservationists and the developer to reach a compromise solution.  In the case of the Century Plaza Hotel, it took effort by a city council member to induce the parties to come to the table to hammer out a solution.  In a dispute over the development of the Cinerama Dome property in Hollywood, in which I represented the Los Angeles Conservancy, we were able to obtain the developer's commitment to modify their project to preserve the property's historic features, only after the agency responsible for approving the project told the developer they must make efforts to satisfy the preservationists before the project would be approved.  I was involved in a similar process with an apartment project in Beverly Hills, where the City Council actually convened a mediation session in the middle of a City Council meeting to put pressure on both the developer and the preservationists to reach a compromise.  I also worked on the failed effort to preserve the Ambassador Hotel, which was demolished to make way for a school.  The difference in that case was that the judge, while careful to listen to every point of view during the hearing, was also not inclined to delay her decision in order to pressure the school district into accepting a compromise.

Often judges feel that the best way to induce parties to settle a case is to set a trial date, and to stick to it.  When the parties are forced to bear the cost of preparing for trial, and get close enough to contemplate the risk of losing, settlement often becomes a more attractive alternative.  But with public disputes over historic preservation and similar issues, where the interests at stake may be broader than those contemplated by the parties involved, the best result may not always be obtained by rushing a decision.  If developers know that they must satisfy the community's concerns before they can proceed with a project, they are much more likely to be responsive to those concerns, and much more willing to sit down with the community's advocates to reach a solution.

(Photo of the Ambassador Hotel from lageneology.)

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Managing Conflict

In a post on my political blog, I discussed the president's plan to hold a bipartisan session on health insurance reform, which at face value seems to represent an offer to mediate or negotiate a compromise, or at least to invite the Republicans back into the process. The Republican leadership has responded by demanding that the Democrats admit that their whole effort to reform the health care system was a mistake and that they agree to start over. The Democrats don't seem inclined to do that, but they don't seem to expect they will persuade many Republicans to support the bills passed by the House or Senate either.  Rather, their offer to hold a public negotiating session may aim only to expose the Republican opposition's proposals as failing to meet the administration's announced criteria for reform.  Since they seem more interested in defeating rather than embracing the Republicans' ideas, Democrats must instead plan on using these negotiations to gain more public support for their own proposals.

If this health care summit goes forward, it will do so with the recognition that it carries risks as well as rewards for each side.  Both sides may decide that such an effort is worthwhile even if they have no expectation of persuading the other side to accept the soundness of their principles.  It is worthwhile because political opponents understand that they are going to remain in conflict over basic principles forever, but nevertheless recognize the occasional need to debate and compromise in some sort of civil fashion in order to get anything done at all.  They may be engaging in debate as sport for we the people to judge.  So what we learn from watching political or religious or philosophical debates is that resolving these kinds of conflicts may not be the point of the debate at all.  Rather, public diplomacy or debate is just the arena for managing the continuing unresolvable conflict, and helping to prevent it from erupting into violence.

In private disputes, parties are more likely to enter into negotiations or mediation with the goal of reaching an agreement.  Reaching an agreement in a private dispute is less likely to require the parties to surrender their principles, while still allowing them to satisfy at least some of their (perhaps purely monetary) goals.  Ideally, an agreement may even allow parties to reconcile, to put their disputes behind them, and to achieve justice as well as peace.  But oftentimes, mediation will not achieve any of these results, or will only achieve a few of them, because many private conflicts are as intractable as public ones. 

A mediation should not be deemed a failure if it does not result in settlement.  Indeed in some cases, settlement might even be viewed as failure, if settlement leaves one or both parties feeling unsatisfied or defeated.  Mediation, however, whether or not it results in settlement, is almost always a useful way to gain valuable information; to test out the soundness of each side's legal and factual positions;  to convey those positions to the other side; or to help both sides see their options more clearly.  In most cases, settlement will emerge as the better alternative to continued litigation, but even if the parties remain in conflict, they should still gain a means of managing that conflict in a less self-destructive fashion as a result of participating in mediation.

(photo of political debate in South Korea from crazynews)

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Fair is Fair

In a meeting with a group of mediators last night, one mediator told us that he believes it is important to suggest to the parties what he believes would be a "fair" settlement amount. Most of the rest of us were skeptical of this approach. Someone pointed out that the mediator often doesn't have enough information to determine what a fair settlement might be, as sometimes one or both of the parties is withholding information that could materially affect the outcome. Others suggested that it is not the mediator's job to try to arrive at an objectively "fair" result, only a result that is satisfactory to the parties.

I think it can also interfere with a mediator's effectiveness to attempt to impose a solution on the parties. I generally prefer not to provide my own opinions or evaluations, or make mediator's proposals, unless both parties press me to do so. A number of times in which I have represented parties in mediations, I have seen the process break down when the mediator attempts to force his own evaluation of the case onto a resistant party. I think it is better to encourage the parties to rely on their own counsel's evaluation of the case, of course also taking into consideration a differing evaluation by opposing counsel. A third opinion by the mediator may be just too much information. If the mediator's suggestion is merely an average of the parties' evaluations, it is unnecessary, as an average can be easily calculated. On the other hand, if the mediator's suggestion is closer to one side's offer than the other's, the mediator may appear to be favoring that side.

Of course we must deal with the larger philosophical question of what exactly constitutes fairness, anyway. Does fairness merely represent a prediction of how the court would likely treat the dispute? Or does fairness reach for a more abstract concept of a just result? Does fairness attempt to maximize the satisfaction that each side should receive from settlement of the case, both in terms of approximating each side's goals, and in terms of minimizing each side's pain? In determining fairness, how does one place a value on the psychic benefits of achieving peace, and of avoiding the costs and stresses of continued litigation? My view is that these questions may all be worth raising with the parties in a mediation, but they are probably too difficult for the mediator to answer for them. They are questions that the parties must answer for themselves.

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Rational Information Overload

I happened to hear a program on NPR this morning talking about a psychology experiment in which subjects were asked to memorize a number, then walk down the hall to another room and repeat the number. The trick was that half the group was given a two digit number and the other half a seven digit number. The second trick played on these unsuspecting subjects was that on the way to the second room, they were stopped by someone offering them a snack, who asked them to choose between a slice of chocolate cake and a bowl of fruit. It turns out that the people who were asked to remember the seven digit number are about twice as likely to choose the cake as the people who only had to remember a two digit number.

Why do people who are trying to store a maximum amount of information (other experiments have shown that most people have trouble holding more than seven digits in their short term memories) choose the less-healthy but perhaps more appealing snack? This result accords with the theory that if we over-tax the rational part of our brain, the emotional part of our brain may take over decision-making. The emotional part of our brain wants cake!

This story reminded me of the dangers of expecting participants in mediation to process a lot of information in a rational way. If we start off mediation sessions with a lengthy discussion of rules and procedures, or jump too quickly into a discussion of the costs and benefits of settlement vs. litigation, we may risk swamping the rational parts of people's brains. That could make it more likely that they will make negotiation decisions based on more emotional "fight or flight" type of responses. It's probably better to discuss less taxing issues at the outset. There are probably good reasons for negotiating a business deal over lunch, and spending the first part of the meal discussing the weather, or sports, or hobbies, or people's families, before moving to the issues that require a rational calculation. There are also good reasons for trying to initiate friendly human interaction at the beginning of a mediation, as well as encouraging people to deal with the emotional issues that contribute to conflict. It may also be a bad idea to ask people to think too much about rules and procedures and the other rational trappings of the litigation process, because that may crowd out their ability to think rationally about how to resolve the dispute.

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