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How we resolve our disputes

Entries in arbitrator (4)


Electronic discovery and mediation

Recently, I attended a seminar sponsored by the American Bar Association and FINRA titled Utilizing Mediation to Navigate the Perils of Electronic Discovery in Arbitration. I have previously written about effect that the effort and cost of obtaining discovery from adverse parties has on litigation and prospects for settlement. Today, with increasing amounts of information being stored in electronic formats, the cost and effort of obtaining that information has soared. Frequently, the parties need to retain an IT specialist to search, find and interpret the records and data. In complex commercial and financial cases, especially when allegations of fraud are involved, the level of distrust between the parties makes settlement and discovery even more difficult. Judges and arbitrators do not like to wade through the reams of pleadings and documents that are often necessary to resolve disputes concerning electronically stored information (ESI). 

Enter the mediator. By focusing the parties’ attention on the specific issues, rather than on allegations of spoliation of evidence and threats of sanctions for discovery abuse, the mediator can help the parties devise a plan to allocate the costs and schedule the timing and manner of production of evidence, thereby maintaining confidentiality and credibility with the court or arbitration panel. A mediator familiar with the concepts of proportionality, privilege and data mapping can help the parties minimize the time, effort and expense they put into discovery. Thus, they can concentrate on prepartion of the case for trial or arbitration. After they obtain the information they feel they need, the parties might then return to mediation to fully evaluate their settlement options. 

It takes more time, effort and money to fully and properly prepare a case for trial or arbitration today than it did before the advent of ESI. The federal courts and FINRA (which supervises arbitration panels in many securities cases) have done much work lately to help the parties and the tribunals minimize the costs and time involved in resolving modern discovery disputes. Attorneys would serve their clients well by becoming adept at using mediation to relieve the parties and tribunals of most of these burdens. 


Neutral evaluation

Sometimes when I am called upon to mediate a dispute, what the parties really seem to be looking for is a neutral evaluation of their legal case or negotiating position. While I am happy to do that for the parties, I make sure to explain to them that this is different than mediation. It requires the parties to present to me, in summary form, most of their case. The parties need to consider whether or not they want to share all of that information with the other side, either directly or through me. If they do, it is really like non-binding arbitration. This can help the parties get a more realistic view of their chances of prevailing at trial and, therefore, promotes settlement. However, if the parties or their attorneys are not communicating well, a mediator may still be necessary to facilitate negotiations. On the other hand, if mediation is attempted and reaches an impasse, neutral evaluation may help to break the impasse.

There are no rules declaring what type of dispute resolution is best for resolving any particular type of dispute. It depends on the nature of the parties’ relationship and the dispute. It also depends on how much time and money the parties want to spend trying to resolve it. All of these considerations should be laid out and discussed before attempting to resolve any dispute. One size does not fit all. Your mediator should be familiar with all of the dispute resolution options and discuss them with you before proceeding. In Wisconsin, the statutes require a judge to discuss with the parties the desirability of alternative dispute resolution before trial. Don’t get tunnel vision and lock in on only one option. As I have said before, options are good. Keep them open.


Alternative Dispute Aggravation

Mediation and arbitration are often referred to as alternative dispute resolution.  But here is an arbitration case that could be called alternative dispute aggravation.  It should be filed under “Be careful what you wish for; you may get it.”  A company hired a female lawyer as its in-house counsel.  When she complained that she was being paid less than a male subordinate, in violation of the Equal Pay Act and Title VII of the Civil Rights Act, the company fired her.  The parties agreed to binding arbitration.  The arbitrators awarded the lawyer $1.7 million and ordered reinstatement, despite the lawyer’s admission that she did not want to be reinstated.  The employer appealed, but the trial court and court of appeals affirmed.  The case is now on appeal to the Wisconsin Supreme Court.  The employer is arguing that the award exceeds the arbitrators’ authority under the parties’ agreement to arbitrate, and it violates the company’s state constitutional right to be represented by a lawyer of its own choosing.

Regardless of how the Wisconsin Supreme Court decides this case, someone should ask why these parties chose binding arbitration?  One of my earliest posts is titled “To Mediate or to arbitrate?”  I suggested that arbitration is a win-lose proposition while mediation can lead to a win-win solution.  In this case, arbitration might result in a lose-lose proposition.  If the award is upheld and the employer allows the lawyer to come back to work, but the lawyer refuses to do so, must she give up the monetary award as well?  Both parties made it abundantly clear that they don’t like each other.  Will the Court really give them the benefit of their bargain by enforcing a shotgun wedding?  In any event, this arbitration has not proven to be an economical and confidential alternative to litigation.  The parties arbitrated and are now engaged in very public litigation.  Was there no mediator available to save these people from themselves?


Caveat arbitrator

The recent settlement of the Minnesota Attorney General’s lawsuit against National Arbitration Forum (NAF) was a welcome development for consumers.  Minnesota alleged that the company—which had been named as the arbitrator of consumer disputes in tens of millions of credit card agreements—hid from the public its extensive ties to the collection industry.  Under the settlement, NAF must stop accepting any new consumer arbitrations and will permanently stop administering arbitrations involving consumer debt, including credit cards, consumer loans, telecommunications, utilities, health care, and consumer leases.  Mandatory pre-dispute consumer arbitration clauses have been suspect for many years because the clauses have been hidden in fine print and the parties’ bargaining power is extremely unequal.  The American Arbitration Association has developed Consumer Due Process Protocols in order to determine which alternate dispute resolution (ADR) mechanisms were fair and which were not.  Arbitrators and mediators should be required to be familiar with these protocols.  The Seventh Amendment to the United States Constitution guarantees the right to a trial by jury in civil cases, when more than $25 is in dispute.  This right can be waived, but like any other waiver, it should be done only after fully informed and voluntary consideration of the costs and benefits.  ADR can be faster and less costly than litigation, but we already pay for judges and the courts through our taxes.  Before giving up such a valuable right, consumers should be fully advised.  They may be giving up not only their right to be heard by a jury of their peers, but also the right to an appeal.  They may also be taking on costs that they are not prepared to pay.  And sometimes confidentiality is not desirable.  If one consumer has been harmed by an illegal financing scheme, it is likely that others have been similarly harmed.  If such disputes are kept out of public courtrooms, other consumers may not become aware of the problem.  There is also the issue of independence, which was the problem with NAF.  When deciding whether an arbitrator or mediator is truly neutral and independent, follow the money.  Where do their fees and referrals come from?  Everyone knows how judges and jurors are paid (poorly!).  Make sure you know how your mediator or arbitrator makes a living.