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Law Rules

How we resolve our disputes

Entries in courts (9)


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. 


Hazardous duty?

It has finally happened. A shooting following a mediation session.  I never thought mediators would have to request hazardous duty pay.  Fortunately, it wasn’t the mediator who was shot, this time.  In this case, one participant shot another participant and his attorney.  But I’m sure it will happen someday, if it hasn’t already. It has happened in courthouses and courtrooms.  Given the widespread ownership of guns in this country, and the lax system (if you can call it that) of background checks before a person can buy one, I suppose it is inevitable.  Someone will take the law into his or her own hands and shoot a mediator.  And the NRA will say it wasn’t the gun’s fault, it was the shooter.  Don’t take guns away from bad guys; get more good guys to carry them.  But has anyone heard of some good guy with a gun (other than a law enforcement officer) shooting a bad guy before the bad guy shoots someone else?  I haven’t.  Besides, owning a gun doesn’t necessarily give you the right or ability to determine who is a good guy and who is a bad guy.  

This blog is supposed to be about how we resolve our disputes, so I won’t get into the gun control debate any further.  But I do need to say that we should all step back and remember what it means to live in a civilized society.  Our social contract says we have given up the right to use lethal force to resolve disputes in exchange for a judicial system whose decisions are final.  Yes, we can still use force and guns in self defense, and for recreational purposes, like hunting.  But those are not legitimate means of dispute resolution.  The idea behind civil litigation is that a judge or court resolves the dispute, rightly or wrongly, the parties put it behind them, and then they get on with the rest of their lives.  The idea behind mediation is that the parties discuss the dispute with the help of an impartial mediator, and find a resolution they can both live with, even if a court could not order it, and then do just that — live with it! 

Americans frequently get criticized for being overly litigious.  Why is that a bad thing?  Eighty to ninety percent of all civil cases are settled short of trial.  Even when litigation is not settled, the parties usually get a full and fair hearing.  I like to think that if Hamlet had lived in the U.S., he would have filed a lawsuit and avoided his existential crisis.  But the shooter in the mediation case has proved me wrong.  Like Hamlet, he chose to face the slings and arrows of outrageous fortune and, by opposing, end them — along with his own life. 


Extraordinary circumstances

In Wisconsin, absent excusable neglect, newly-discovered evidence, fraud, illegality or subsequent change in circumstances, a court can vacate a judgment or settlement agreement only if it finds “extraordinary circumstances” justifying relief from the judgment or agreement in the interests of justice.  In a recent unpublished decision, the Wisconsin Court of Appeals decided that a woman’s subsequent “discovery” of earlier releases she executed with a former business partner prior to entering into a mediated settlement agreement did not constitute such extraordinary circumstances.  The woman admitted that she had effective legal counsel in the mediation and she did not assert that she did not voluntarily choose to participate in the mediation and enter the settlement agreement, rather than to litigate the business dispute.  The mediation was conducted at an early stage of the litigation and the woman asserted that she did not remember or appreciate the legal significance of the earlier releases.  Nonetheless, both the trial court and the appellate court found nothing extraordinary enough to justify vacating the mediated settlement agreement.

I question whether this woman’s legal counsel was truly effective.  Preparation is as important prior to entering into settlement negotiations as it is prior to trial.  If these litigants truly had released their claims in prior documents, this should have been discovered and discussed before or during the mediation.  However, the courts’ decisions in this case, upholding the mediated settlement agreement, are not unusual.  Courts do not exist to extricate people from their own neglect, mistakes or lack of preparation.  This is why it is often just as necessary to have an attorney represent parties in mediation as it is in litigation.  Even so, mediation will usually result in a faster and more economical resolution of the dispute.  Satisfaction with the result depends on the partipants’ and the mediator’s preparation.  There is nothing extraordinary about that. 


A New Year Wish

In his annual report on the judiciary, Chief Justice John Roberts expressed concern about the “economic downturn that has imposed budgetary constraints throughout the government, and the persistent problem of judicial vacancies in critically overworked districts.”  In most federal districts that I am familiar with, U.S. Magistrate Judges conduct settlement conferences in civil cases.  In state courts, if you want a neutral third-party to facilitate settlement discussions, you hire a mediator.  Why should the federal courts be different?  My wish for the new year is that the federal courts outsource or privatize the settlement function.  Want to save judges’ time and taxpayers’ money?  Let the judges (and magistrates) be judges.  Let mediators mediate.


Discovering the costs of discovery

A couple of recent articles in the Metropolitan Corporate Counsel highlight the effect that the cost of conducting discovery in complex civil litigation has on settling such cases.  It used to be that an attorney could file a lawsuit on behalf of client and serve it on the defendants along with interrogatories, requests for production of documents, and maybe a notice of deposition or two.  With notice pleading, the plaintiff did not have to be certain of who was responsible for the loss that prompted the lawsuit, or even how exactly it happened.  They would figure that out after reviewing defendants’ records and statements. 

Not anymore.  Most corporate defendants’ records and statements are now maintained in electronic documents and communications.  Accessing such records often requires large investments of time and money in technology and technically savvy personnel.  So the cost of conducting litigation, and e-discovery,has grown enormously for both plaintiffs and defendants.  The courts’ response has been to require more fact pleading and to restrict pretrial discovery by imposing prerequisites such as “meet and confer” conferences to discuss the costs and plan the course of discovery.  Attorneys who normally represent defendants in civil cases complain that this increases the cost of litigation and prompts settlements just to avoid legal costs, even where there is no or minimal liability.  Attorneys who normally represent plaintiffs complain that fact pleading and limits on discovery deter economically impaired plaintiffs from pursuing actions, unless the damages are great enough and liability is clear enough even without knowing defendants’ internal statements and documents.  These considerations apply equally to corporations and individuals.  Corporations can be defendants (e.g., securities, products liability, and employment discrimination cases), and they can be plaintiffs (e.g., intellectual property, real estate, and breach of fiduciary duty cases).  Likewise, individuals can be plaintiffs (e.g., personal injury, breach of contract, and consumer claims) as well as defendants (e.g., embezzlement and fraud schemes, civil RICO actions, breach of non-compete agreements).  Regardless of which side of the fence you sit on, a dispute is going to cost money to resolve. 

It takes investigation and preparation in order to negotiate just as it does to litigate.  The question is whether you need a judge or jury to help you resolve the dispute, or can you do it informally?  Some people are afraid to negotiate because they think it indicates weakness.  But that is true only if they have not investigated or prepared their claim or defense adequately.  So the question of whether to litigate or negotiate a settlement should not depend on the cost of discovery.  If you need a court’s help to get the information necessary to an adequate evaluation of your case, then go to court.  If not, a negotiated settlement is almost always preferable. 

Knowledge is power, and knowledge may cost money.  But, as the saying goes, if you think education is expensive, try ignorance.