Friday, February 28, 2014

Directions

Say you're planning an excursion to the beach. Would it make sense to suggest that the best way to get there would be to head in the opposite direction, toward the desert? When your passengers question that route, the only excuse you might have to offer is that after they spend a few hours driving around in the dry heat, they will appreciate eventually getting to the beach even more. But they probably would have arrived at the beach in a better mood if you had taken them on a more direct route.

One commonplace saying I've heard over the years from litigators is that the best way to get a favorable settlement in a lawsuit is to prepare the case vigorously for trial. The statement recognizes that the vast majority of cases are not going all the way to trial, but instead will be resolved at some point along the road by negotiated agreement. Litigators can nevertheless justify the expenditures of time and money necessary to prepare for an event that in most cases will never happen, by claiming that this activity helps produce more favorable settlements. The rationale goes something like this: If the other side knows that we are prepared, that will help them recognize they might lose at trial, and they are more likely to back down to some extent in settlement negotiations. And if we don't settle, we won't get caught with our pants down. We'll be prepared for any eventuality.

Of course any good trial lawyer should be prepared if the case goes to trial. But most trial lawyers recognize that a lot of litigation activity doesn't have all that much to do with good trial preparation, and ends up being discarded or disregarded at the time of trial. Often, it seems to have been done for some other purpose. And for the vast majority of cases that settle, such activity often seems to take the parties in the opposite direction from the negotiated settlement they are eventually going to reach.

The truth is that litigators file a lot of motions and get into a lot of discovery battles, because the opportunities to do so present themselves naturally and that is what we have been trained to do. We rationalize these activities as necessary trial preparation, which might be useful whether the case settles or not. We are unfamiliar or uncomfortable with the sorts of activities that might actually help the parties down the road to resolution of the conflict. And we sometimes underestimate the costs both in dollars and in negative feelings, that are created by litigation. In other words, we are often furiously driving in the wrong direction. If we expect to take a dispute toward a negotiated resolution, we ought to spend more of our time and energy doing things that help parties reach that goal.

Sunday, February 16, 2014

Agents

One of the plot lines of the new season of House of Cards (I'll confess I've spent a good deal of President's Day weekend binge-watching it), depicts a trade negotiation between the US and the Chinese that abounds in confusion and double-crossing. On the American side, the negotiator is our anti-hero, the new vice-president Frank Underwood, who repeatedly misrepresents to the President what his Chinese counterpart told him. On the other side, Xander Feng is a shady businessman who might--we are never sure--be speaking for the Chinese government or only for a faction trying to change government policy. Or he might be put away after a corruption trial.

While exaggerated, this depiction of international diplomacy has its roots in reality. I heard a talk the other day about the history of negotiations between the US and Iran over Iran's nuclear program. Those negotiations broke down a number of times over the past 10 years, in part because the negotiators for each side did not always have the full backing of their respective governments. Even now, when the latest round of negotiations finally seems to be bearing fruit, forces back home in each country are second-guessing and some are even trying to derail the initial agreement. Questions are also being raised about whether the negotiators have accurately represented to the home front the concessions the other side has made so far.

In such difficult negotiations between long-standing adversaries, the many levels of distrust that must be overcome before an agreement can be reached can actually be increased when agents and principals and their broader constituents do not accurately communicate or understand what is being discussed. Faithless agents sometimes sabotage negotiations, while principals who withdraw authority the agents thought they had, also have the power to kill potential deals.

These pitfalls highlight the need for greater transparency: all the necessary parties should participate in some fashion in negotiations, or at least understand accurately what has taken place and why. These examples of failed negotiations also raise the question of what role mediators can play in keeping negotiators honest. Had there been a mediator in the room when Frank Underwood and Xander Feng were making statements somewhat at odds with what they were telling their principals, perhaps the negotiations would have stayed on track.

Friday, February 7, 2014

Mediation's future

I've heard a number of evangelists of the mediation world, most recently Lee Jay Berman in a talk SCMA sponsored this week in San Diego, talk about the seemingly limitless future of the mediation process. That future seems to depend on the public finally becoming more aware of the possibilities of mediation to resolve not only conflicts that have already worked their way through the court system, but also conflicts that have never even made it to court, or that might be unsuitable for court. But right now the public still seems only vaguely aware of mediation's possibilities. People might have heard of resolving a divorce or other civil dispute out of court, but might still think that mediation is only available just prior to trial. Some might be aware that there are programs available to resolve neighbor disputes, but they are still confused by what a mediator does that is different from what an arbitrator or judge might do.

Like my predecessors before me, it is now my job to try to bring about more public awareness of mediation as an available option for resolving conflict. The question is, what is it going to take for the public to grasp mediation's potential? The bright future for mediation always seems just within our grasp, while frustratingly out of reach. Meanwhile, mediation's present presents a difficult and uncertain career path for many who would like to practice in the field, many more than it seems are needed to satisfy current demand for mediation services.

To try to answer that question, we might start by asking what is keeping most parties in conflict from taking advantage of mediation. Is it their lawyers, always a popular group to blame? While there has been resistance from the bar in many places to efforts to deny litigants access to the courts, and while that resistance may be motivated in part by self-interest, I have not found most American lawyers to be hostile to the mediation process. Lawyers already know that it doesn't make sense to take most cases all the way to trial. They often welcome the opportunity to find a less expensive and less risky means of resolving cases.

Instead it may be that resistance to mediation lies deep within human nature, which resists peaceful resolution of conflict at least at first. When a person feels wronged, their first instinct is not usually to reconcile with the party that wronged them. Their first instinct is to retaliate. Clients feeling aggrieved by conflict don't generally come to their lawyers' office begging for the chance to make up with the other side. Lawyers file lawsuits because clients demand justice.

Then there is the elaborate structure of the legal system itself, which is supposed to provide the justice that the public is seeking, or at least to provide the certainty of resolution of conflict according to pre-determined rules of law. So when human nature, which is looking for an assessment of blame and a determination of right and wrong, encounters a system which is designed to do just that, it is only natural for people to want to seek recourse in that system. Only later when they discover the costs and imperfections of the traditional justice system, do they resort to a consensual alternative settlement process.

What is going to cause the change that people in the ADR community are seeking? It's probably not going to be enough simply to try to spread the gospel of mediation to the public, trying to persuade people seeking answers to their conflicts, that they have the ability to resolve those conflicts themselves with the help of a mediator. It's a message that needs to be repeated, but people are resistant to that message.

It's probably going to take a new generation to absorb the idea of resolving conflicts in a more cooperative manner, rather than through an adversarial system based on apportioning blame according to a pre-determined set of rules. A generation that is gaining experience with peer mediation in schools, perhaps (discussed in a previous post). A generation that is growing up in what is being called the sharing economy, where interactive and collaborative tools are commonly used to solve problems. A generation grown up around the internet, which for the most part does not operate within the traditional justice system, but rather depends on communication and informal means of dispute resolution. That kind of public may eventually grow more receptive to the idea of resolving conflict by collaborative means.

Mark Davis/WireImage

Saturday, February 1, 2014

Mediation ethics

At a program I participated in this week (my part is summarized in the two posts below on choosing a mediator), co-sponsored by the Santa Monica Bar Association, one of the panelists, mediator Mark Fingerman, gave an informative presentation on mediation ethics. The problem of assuring that mediations are conducted in a fair and ethical manner is complicated by strict protections for mediation confidentiality that exist in California. While confidentiality is generally agreed to be necessary to the process, prohibitions against introducing evidence of misconduct alleged to have occurred during mediations can potentially give free rein to attorneys--and mediators--to pressure or deceive parties into agreeing to settlements to which they might not have agreed otherwise. In fact, mediation seems in some ways designed to encourage parties to let down their guard and trust one another, and that trust may not always be justified.

Fingerman noted that other than the intrinsic satisfactions derived from acting as a moral and ethical person, there do not seem to be many effective tools available to prevent fraudulent conduct that may induce parties to enter into a settlement agreement. He did, however, suggest one possible safeguard, a common technique used in corporate deal-making, which is to include in the settlement agreement a recitation of any important representations upon which the parties relied, and warranties by the parties making the representations. Such statements in a written settlement agreement are not shielded by mediation confidentiality. So if any of those representations can later be shown false, the aggrieved party at least has the opportunity to set the agreement aside.

Can we design other effective safeguards to prevent coercion and fraud from tainting settlement agreements arrived at through mediation without unduly threatening confidentiality? Somehow parties have to be given adequate time and space to make sure they are not making agreements they will regret in the morning. But it is often only after a long, grueling day that makes all the participants tired and confused, that the parties' own counsel, and frequently the mediator, urge them to make the final concessions necessary to get a deal done. Under such conditions, they may not have the time or capacity to think through their decisions, and they may be swayed by false information. But if we were to build in a cooling off period, or allow parties to rescind their agreements within a number of days, we would have to accept the fact that a lot of settlements would come unraveled, and in most cases that would not benefit the parties.

Does this mean that mediation is an inherently flawed process, as opposed to the traditional justice system, with its many rules and procedures designed to prevent fraud and coercion? Perhaps, but the traditional justice system doesn't always do such a great job of preventing or policing fraud either.  Let's start with the fact that there is an awful lot of fraud out in the real world. It doesn't just exist in the conference rooms where settlement discussions are held. Victims of fraud--probably the number one crime in the world in terms of both economic impact and occurrence--are often told when they call the police or the district attorney, that the department doesn't have the resources to pursue this crime, and they should handle it as a civil matter. But if they resort to the civil justice system, victims of fraud find that the courts set a high bar for pleading and proving fraud, that judges and juries tend to blame the victims of fraud for their losses, and that they are often reluctant to compensate them. I have frequently had to remind victims of fraud just how difficult it is to prove those claims, and obtain adequate compensation.

Not only is it difficult to prove fraud in court, court opens up opportunities to commit even more fraud. It should not shock anyone to learn that witnesses sometimes lie under oath. Whenever a jury has to choose between two diametrically opposed stories, it's likely that one side or the other is lying. But the legal system rarely prosecutes such perjury. And sometimes the trier of fact accepts the wrong story.

Remedies for fraud and coercion are difficult to obtain in mediation as well as in the traditional justice system. Sometimes fraud will occur in mediation just as it sometimes occurs in court. The most effective protections against fraud may still reside in being cautious to accept anything anyone tells you at purely face value; while trusting at least to some extent in the innate desires of most of us to try to do the right thing most of the time.