Wednesday, December 30, 2009

Are Judges the Best Mediators?

Way back when I served as a law clerk to a federal district court judge, I remember watching a trademark infringement bench trial about to begin. The parties had all their exhibits lined up; they had prepared their experts and their surveys; their attorneys announced that they were ready to proceed. Months before, I had worked on the opinion denying one side's motion for summary judgment, so I knew that the parties had already invested in a lot of pre-trial proceedings. Before hearing opening statements, my judge advised the parties that he had formed no conclusions yet about which side was in the right. He told the parties and their attorneys that he would try to reach the correct result, and that he was ready and willing to give everyone a fair trial, but that he was himself uncertain about the outcome. He also wanted to remind the parties that whatever the result of the trial, the losing party could always appeal, and they could still be looking at a long period of expensive litigation ahead of them. He then asked if they had made all efforts to settle the case. His entire speech took about two minutes. One of the attorneys asked if they might have a few more minutes to confer between themselves, and the judge retreated to chambers. Less than an hour later, the attorneys sent back word that they had settled the case.

Such is the power of the trial judge to settle cases. Sometimes all people have to do is look into the eyes of the person in whom they are about to entrust their fate before they realize that it might make more sense for them to control the result themselves.

Of course judges often have to get a lot more involved in settlement negotiations, employing a variety of mediation techniques to help the parties reach a settlement. Some of them are masters at mediation. But the real power of the judge usually rests in the parties' perception of the judge as an authority figure. Parties come to court expecting an embodiment of wisdom and power to dispense justice to them. They sometimes carry these same expectations into a mediation.  Even if the settlement judge is a different judge from the trial judge, or is a retired judge, parties tend to put some stock in his perception of the case's likely result, based on their confidence in his experience. Studies support the idea that what judges bring to the table is their moral authority and their ability to provide reliable case evaluations. (also here and here)  And as shown by the example I witnessed, sometimes judges don't even have to intimate the likely outcome to retain their power to induce a settlement.  They might just need to look the parties in the eyes and suggest that settlement would be a good idea.

The drawback of using a judge as a mediator comes when the parties aren't so intimidated by the settlement judge, or when the judge is too opinionated and one or the other party disagrees with the settlement judge's opinion. Even if that party is being foolish to disagree, the judge can still lose his effectiveness when his assessment of the case is simply rejected. As this article by Jeff Kichaven points out, it is not often that even experienced judges are able to provide a better valuation of the case than the parties' attorneys, who have lived with the case for months and are intimately familiar with its details. Judges sometimes think that case assessment should be the end-point of a mediation. They may not always have the patience to allow the parties to work their way through their own assessments, or to probe into other factors preventing resolution of the dispute. When considering a judge as a mediator, it may be helpful to ask what else that judge brings to the table aside from his judicial experience and authority, or is that experience sufficient to help settle the case in a satisfactory way. The best judge-mediators retain their aura of authority, while refraining from being too quick to judge the outcome; and they continue working with the parties beyond the case assessment stage of a mediation.

(Paul Benedict in The Addams Family)

Tuesday, December 22, 2009

The End of Employment Arbitration?

This week, the Franken amendment to a Defense appropriations bill became law, forbidding most defense contractors from using mandatory arbitration clauses in their employment contracts. I have written about this subject on my law firm blog site previously. This legislation is part of a larger, continuing trend towards the elimination of mandatory arbitration in virtually all employment and consumer disputes.

People in the ADR community may be concerned about this trend, but I think we should applaud it. The US Supreme Court in recent years went very far in the direction of upholding the enforceability of mandatory pre-dispute arbitration clauses (in contrast to the approach of the state courts in California for example). As a result of the inevitable backlash against the perceived harshness of this approach, Congress is on its way to eliminating pre-dispute arbitration clauses in most consumer and employment situations. (There is a nice list of pending legislation on this subject on the Disputing blog.) My view is that we are not eliminating arbitration; we are only restricting the non-knowing waiver of the consumer’s right to jury trial. People can always agree to arbitrate after a dispute arises if they really feel that arbitration is in both parties’ best interest. And in the brave new era when consumers can no longer be compelled to give up their constitutional right to jury trial in order to accept a job, open a bank account, or accept some other good or service, maybe companies should instead be encouraging mediation prior to commencing litigation or arbitration, which does not require anyone to waive anything.

(Scott Jacobs photo from

Thursday, December 17, 2009


"Preparation, preparation, preparation," is the trial lawyer's mantra. It is possible to over-try a case, but it is not possible to be over-prepared for trial. On the other hand, preparation is expensive. And preparation may seem wasteful, if the case does not go to trial, as most cases don't. So most trial lawyers would rather avoid burdening their clients with unnecessary costs, i.e., costs that are not going to help try the case if it must be tried, or that would help settle the case, which might mean costs that show the other side that you will be well-prepared for trial.

Parties go to mediation precisely to avoid the enormous costs of preparing for trial. As long as they have sufficient information to evaluate the likely outcome of a case, they do not need to be ready to cross-examine every possible witness, or research every possible motion. But what about preparation for the mediation itself? To the extent mediation is becoming a substitute for trial, as years ago depositions started becoming a substitute for trial, shouldn't the parties prepare for the mediation in a manner similar to preparing for trial? That means not only thinking about negotiation strategy, but also thinking about how to present helpful facts, and how to deal with expected questions from the mediator and the other side.

I mediated a case recently where the plaintiff was demanding compensation for lost earnings. But the plaintiff had no documentation to support her claim. I told her that she couldn't expect the defendant to take her word for the number of jobs that she claimed to have lost, any more than she could expect the judge or jury to take her word for that at trial. We ended up continuing the mediation to allow the plaintiff to come better prepared next time. Almost the exact same thing happened in another case where one of the issues was property damage. An itemized list is nice, but in this case the list was sloppy and contained a number of discrepancies. Receipts and appraisals and photographs would have been even nicer. Somehow, we settled that case, either because the defendant was willing to accept that the plaintiff would be able to come up with additional support for the claim, or because the defendant wanted to avoid the risk that the jury might accept the claim based on the plaintiff's testimony alone. Could this plaintiff have gotten a higher settlement if he had brought better evidence to the mediation? Quite possibly, if he had it. It may be that he brought all he had. The point remains, however, that the parties need to think about putting on the best case they can at the mediation itself.

If you have favorable evidence, you should turn it over to the other side. What are you saving it for? The value of surprise at trial is overrated anyway, in my opinion, and the case probably isn't going to trial anyway. If you have the caselaw on your side, you should cite it in your mediation brief. If your case would benefit from a meticulous and organized presentation (and whose wouldn't?), you might want to show the other side your meticulous and well-organized brief. If you think the value of the case will improve by taking a deposition, you should probably take it before the mediation. If you think the other side is not going to look very credible in front of a jury, you might think about how to get the opposing witness to reveal his weaknesses in front of the mediator and his own attorney, or you might at least cite some deposition testimony. If you can't or don't bother to do these things, the other side might just call your bluff.

Mediation gives parties the opportunity to avoid the enormous costs of a full-blown trial. That doesn't mean that it is also worth shirking the much lower costs of an impressive presentation at the mediation itself.

(Reuters photo of Chrysler legal team on their way to bankruptcy court in lower Manhattan)

Tuesday, December 15, 2009

The Medicare Gambit

As everyone knows, the US Senate is currently in the midst of negotiations, mostly among the 60 members of the Democratic caucus, aimed at producing a consensus health insurance reform bill that can pass the Senate. Without being privy to any inside information, I can only speculate as to what is really going on behind closed doors in these negotiations. But I did find interesting this week's reports that the Democratic Senators had apparently reached a compromise agreement that would have jettisoned the so-called "public option" but included a provision to allow people over 55 to buy into Medicare. This latest new idea now seems dead, but the bill may be back on track, and the majority of Senators remain hopeful for its passage.

So again, without knowing what any of the parties involved were actually thinking, I have to wonder what is going on here. The Medicare buy-in proposal seemed like a clever idea because no matter how much various opponents of reform complain about government-sponsored health insurance, nobody is very much opposed to the government-sponsored program we already have, namely Medicare. There may not be a single member of Congress who would vote to repeal that program. Therefore the idea of expanding Medicare rather than creating a new government program, was--not suprisingly--popular among a whole range of members of Congress. (perhaps too popular with liberals, as some have speculated.) On the other hand, the idea of expanding Medicare was rejected a long time ago as too threatening to the status quo of private employer-based health insurance. So what purpose was served by re-introducing this concept into the negotiations?

Sometimes in the midst of a stalled negotiation, it is useful to get the parties away from the issue they are stuck on and take them down a whole new track. For example, when parties reach an impasse on the amount of the settlement payment, I have tried sidestepping the impasse by asking whether something other than payment of money might be of benefit to the plaintiff, say the possibility of future business in a commercial case, or the provision of in-kind services, or finding another position for an employee whose employment was terminated. Sometimes the introduction of such ideas will get the parties thinking about how to solve the problem in a more creative way. More importantly perhaps, throwing out new ideas gets the parties working together to explore whether those ideas will work. Even if they decide that the alternative method of settlement is not feasible, they may still make important progress. That progress comes from the experience of collectively trying to solve a problem, and can even come from the mutual rejection of a new alternative. (Mutual rejection of an idea can be viewed positively: it means the parties finally agree on something!) Rejection of an alternative forces the parties back to the original way of settling the dispute, and may provide them with greater incentive to break the impasse that prevented the original form of resolution.

As I said, I have no idea what is actually going on in the Senate other than what I read in the papers. But I do know that failure to achieve an alternative approach does not necessarily doom the possibility of resolving this complicated, multi-party dispute, and may even help advance resolution.

Thursday, December 10, 2009

Opening bids

It is commonplace advice in settlement negotiations, including mediations, to warn the participants not to be insulted by the other side's opening demand or offer. Those who play the negotiation game often enough know that these opening numbers merely set the parameters for further negotiation, and are often deliberately unreasonable. Whether consciously or unconsciously, parties making unrealistic opening demands or offers are taking advantage of the concept of "anchoring." That theory, which has been validated by some research, holds that people are highly affected by the number, or price, that is attached to something. So theoretically, if one were to conduct two settlement negotiations of the exact same case (let's say this case has an objective value of $50,000), and in the first negotiation the plaintiff's counsel starts by saying his case is worth a million dollars, while in the second negotiation of exactly the same case, the plaintiff's counsel initially demands $100,000, the defendant is likely to end up paying more to settle the case in the first negotiation. The same holds true for defendant's opening offers. If the defendant starts off by offering $5,000, he is ultimately likely to get a better deal than if he starts off by offering $20,000, simply because he undermines the plaintiff's confidence in his own valuation by offering a lower number. Parties therefore have good reason to start a negotiation with an unreasonable number.

How do parties counteract this tendency? First, as suggested by the above example, both parties may have to play the same game. If one side makes an unreasonable demand, the other side is likely to make an equally unreasonable offer, thereby creating equally unfair dual anchors.

Another way is to let everyone know up front that these opening bids should not be taken very seriously. I handled a mediation recently where we had some discussion early in the session about the likely range of outcomes at trial. The plaintiff's attorney acknowledged--in front of opposing counsel--that he had only about a 10% chance at trial of hitting his top valuation. Then he turned around and demanded that amount as his opening bid for the settlement negotiation! We all understood that this wasn't a serious settlement demand; the other side treated his opening bid merely as an invitation to start the real settlement negotiation.

Yet another approach is for parties to ignore the mediator's or their own counsel's advice not to act outraged. If one party in a negotiation has communicated his passion about the case, and appears likely to walk out of the room if the other side insults him with an unreasonable offer or demand, that might cause the other side to think about tempering their opening bid somewhat, unless they want to torpedo the negotiation.

Is it the mediator's job to try to get the parties to be reasonable from the outset? Or is it the mediator's job to help both sides get the best deal they can? I lean toward the latter view. So I would not necessarily counsel parties to start with a reasonable number. I am perfectly willing to communicate an unreasonable number, with the caveat that such a number will probably provoke either an outraged reaction or an equally unreasonable number from the other side. Once we've gotten those anchors on the table, they function as the boundaries of the playing field for the subsequent negotiation. That doesn't mean that the case is going to settle halfway between those opening numbers. It just means that we have gotten the opening mind games out of the way, and can then perhaps start trying to look at the case more objectively.

Friday, December 4, 2009

Making War While Making Peace

I've been debating Afghanistan policy on my political blog and elsewhere, and here will reprint the post I did on that subject:
Politically speaking, it is not a viable position simply to suggest that we pull US and NATO forces out of Afghanistan, because that implies that we don't care whether the Taliban returns to power and makes Afghanistan into a haven for Al Qaeda once again. Anyone who wants to talk about Afghanistan in a way that might be listened to has the obligation to show that a different strategy has at least as good a chance of fulfilling the objective of keeping the Taliban out of power as our current strategy. One organization that seems to be addressing this issue in those terms is, which suggests six alternatives to a troop build-up: (1) protecting civilians, (2) upholding women's rights, (3) prioritizing development, (4) addressing underlying problems (unemployment), (5) supporting civil society, and (6) advancing diplomacy.

These are constructive suggestions. It seems to me, however, that they are not necessarily inconsistent with increasing military forces. In other words, NATO and the US can increase troop levels and use those forces to drive insurgents from populated areas, and at the same time use the military and other personnel in Afghanistan to protect human rights, assist in re-development, and promote civil society and the rule of law. I understand that there is an argument that an increased presence of foreign troops may sometimes be counter-productive to peacemaking efforts, and the military needs to be conscious that their presence is often resented. And to the extent that is true, it is all the more reason why attention should also be paid to re-building and creating a stable economic and political society in Afghanistan, at the same time as the military is working with the Afghan army to improve security.

(Photo from a story about the use of units of female soldiers to interact with women and children in Iraq and Afghanistan, from LA Times blog)

Like everything else, this subject of course ties in with the theme of settling lawsuits. There are plenty of lawyers who believe that the best way to get a favorable settlement is to prepare aggressively for trial. When the other side knows that you are not afraid to try a case, and that you have a good track record of winning at trial, they are more likely to come to terms than if they think you are bluffing. On the other hand, just as when we decide to send more troops to Afghanistan, there are certain litigation activities that have the potential for inflaming the other side, and sometimes make it more difficult to reach a settlement. So a lot of lawyers like to keep a settlement track open at the same time as they are working on a trial preparation track. It is also a good idea to consider whether litigation tactics will so increase costs or create a negative adverse reaction that they can make a case more difficult to settle. My job as a trial lawyer is certainly not to make the lawsuit a picnic for the other side. On the other hand, if I unnecessarily antagonize the other side or drive up their costs for no purpose, then they are likely to do the same thing to my client and everyone is worse off. I think that cases can be litigated zealously but at the same time with an eye toward cost control, preserving a professional relationship with opposing counsel, and keeping the settlement track open. That way you are fully prepared to defeat your adversary if necessary, or to make a fair deal with him.

I should note that you can only carry the analogy between fighting a war in Afghanistan and trying a lawsuit so far. I am not trying to suggest that we are in Afghanistan to make a deal with the Taliban. From what I understand of the Taliban leadership, they are not good candidates for deal-making. There has been an effort made, however, with some success, to lure Taliban fighters away from the Taliban forces, as these fighters' loyalties only go so deep. (Dexter Filkins's book The Forever War talks about how fickle are the loyalties of the various fighters in Afghanistan, whom he saw fighting for some warlord one day and for the Taliban the next.) The Taliban also have the option of laying down their arms and participating in the political process, but they know they are not likely to win an election, and so have always used illegitimate means to achieve power. But I am not suggesting that the legal positions of the various sides in the Afghanistan conflict are symmetrical, only that some of the considerations that apply to the use of the military can be analogized to the litigation process.