Creative Dispute Resolution

ADR: Off on the Wrong Foot
by
Paul D. Fritz
 

(This article is reprinted from Verdict, 2nd Quarter, 1994, Pages 37-38)

Using a "professional neutral" to help solve an impasse is an old concept and a good idea.

If Alternative Dispute Resolution (ADR) is such a good idea, why isn't everyone doing it? Easy! They tried it and they didn't like it! They've been burned. Several negative reactions have hurt the ADR movement. Here's what the detractors commonly say:

(1) It's too expensive! These high hourly fees, per party per hour, plus large fees per party up front are too expensive. One hears the word "gouging."

(2) The quality is sometimes poor. The former jurist assigned by the ADR provider didn't know civil cases and seemed a little sleepy. He or she suggested a value of less than the defense already offered (or vice versa).

(3) The former jurists who are good at MSC's and Arbitrations are too busy. They're booked for several months (six to eight) in advance.

(4) The former jurists, now attorney/businessmen and women, were not intellectually honest. They "cut the baby in half," thus offending everyone.

Those are the spoken reactions but there seem to be some other, more personal and private reactions:

(1) "I want to be in control. I don't want to give up control to someone I don't really know . . . and don't really trust."

(2) "It's my job to settle cases. I don't need some outsider reviewing my files. They're trying to take my job away."

(3) "They're trying to take the bread off my table. Those ADR companies are marketing with insurance carriers and large companies in an effort to take files out of my hands."

(4) "I don't want to waste two or three hours at a meeting. I don't want to pay for it. I can do this over the phone ."

Most recently, a new criticism involving disclosure and ethics has arisen: The former jurist who's here to help us has a contract (Memorandum of Understanding?) with the ADR company. The same ADR company which requires that he or she work exclusively with that ADR company. This same ADR company has an agreement with the defendant company or financial institution to work exclusively with them to resolve consumer/customer claims through binding arbitration. Wells Fargo Bank and Bank of America now require that customers submit to binding arbitration and each bank names a particular, but different ADR provider. Do these paper connections between the "decision maker" former judge, the ADR company, and one of the parties have to be disclosed to the other parties, the customer? Why can't they exchange names or use any independent jurists just like we've always done? Does this have the ring of fairness?

Regarding the insurance industry, some ADR companies have marketed heavily by creating programs specifically for this industry, e.g., "binding mediation." Some of us believe that this is a conflict in terms. It looks like another form of binding arbitration. This phrase has caused much confusion.

Some ADR companies will send in a team of staffers to review the files of an insurance carriers. Does the carrier lose the attorney-client, work-product privileges by letting representatives of the "professional neutral" review their file material? How can one train claims representatives how to use ADR if the ADR representatives make the ADR choices for them? Does this feel like the foxes are in the hen house?

Our legal eco-system must include all parts: courts, plaintiffs' attorney, defense counsel, litigants, experts, attorney services of all kinds and ADR providers. Like any other eco-system, it must stay in balance. There must be that "ring of fairness." No one particular component can have the advantages or else the entire system will fail.

But don't throw the baby out with the dirty bathwater. Sometimes ADR is helpful. Keep it in balance. You can't settle every case by telephoning the opponent. Sometimes you need the help of a third party. That's why mandatory settlement conferences (MSCs) are so successful, isn't it? Or is it because the "decision makers" are present? Or is it because all that discovery has not been completed? Or is it because the MSC has become the socially acceptable place to get serious, face the options, and compromise? ("The judge made me do it!")

And what is ADR anyway? The odd thing is that there is nothing new about ADR except its new generic name. All good practitioners have used these tools for many years which are now considered the be ADR: exploratory settlement meetings, voluntary settlement conferences, binding arbitrations (sometimes with a floor and ceiling agreement, sometimes with a three-person panel), pro-tem court trials, pro-tem jury trials, and mini-trials (advisory or binding with limited issues going to a jury.)

These tools will not resolve every case. Don't forget: Some cases have to be tried. Be prepared! However, these tools can help you and your clients proceed to a decision more quickly and at a lower cost.

So, what to do? Here are some recommendations: (1) Do as you've always done; i.e., explore settlement on your own. For those cases where you have no luck, try ADR. (2) Shop around! It's O.K. to "forum shop" in the private "professional neutral" industry. Pick your facilitator, mediator, or arbitrator carefully by reputation, as you've always done.Don't be overwhelmed by brand names and salespeople. (3) Ask about potential conflicts of interest and if the ADR company has any contracts or agreements with any of the parties or judges. (4) Get aggressive! Review your case list. There are always 15 to 20 percent of the cases that are in a posture where you have enough information, but normal settlement avenues haven't worked. They're stalled. Call and ADR service for help.

Another tip is that many ADR companies will take an assignment from you and then call the opponent on your behalf. This is the preferred way, since we all run the risk of raising the red flag of suspicion if we make a suggestion to our opponent: i.e., "If it's good for him, it won't be good for me!" So, let the ADR company make the invitation to the other parties.

Note here that ADR is most effective when there are multiple parties. These parties instinctively know that outside help is needed to get them organized with a plan. It's all but impossible to call around and settle a case like this, e.g., a construction accident case with eight defendants and an intervenor.

Think of ADR as one of many tools available to help your client. There's a lot more to learn about how ADR can help practitioners. As we all learn, we don't need a "feeding frenzy" over ADR. We need reasonable goals and a balanced approach. Do what you've always done. If that's not working in a particular case, get help. Open the lower left drawer for one of your tools . . . ADR.