Article: Mediation - Plews Shadley Racher & Braun, Indiana

CONSIDERATIONS IMPACTING THE LITIGATION AND RESOLUTION OF COMPLEX DISPUTES

By: Christopher J. Braun
August 18, 2000
Indiana University School of Law -- Indianapolis

I. Why is dispute resolution vitally important and increasingly demanded
by sophisticated clients in complex legal matters?

A. The litigation services valued and increasingly demanded by clients, particularly in the corporate world, are undergoing a revolution in ways that relatively few lawyers perceive or understand. For those lawyers who understand the dynamics of these changes, they will prosper. For those who are unable, unwilling or incapable of changing to meet the demands of the marketplace, their practice, their value and client base will become stagnant and then, with time, will decline.

B. Problem: The delivery of litigation services to the market is highly inefficient and ineffective.

1. Notice of claim and/or complaint. How do you handle the matter?

a. Bygone era: days of assigning multiple associates to work on case, prepare numerous research memos, unnecessary written discovery, needless depositions of minor players, needless motions for extension of time, etc.

2. Traditional client/attorney relationship with standard hourly billing system. Client bears all the risk: client pays for judgment, settlement, wasted time billed by its attorney. By comparison, the lawyer gets paid regardless of outcome and regardless of his/her efficiency/inefficiency.

a. Meyer v. Shell Oil Company.

3. In complex litigation, generally less than 5% of all documents produced in discovery are used as exhibits at trial.

C. Clients want to participate in the litigation process as partners with their lawyers, not as spectators who pay the bills, receive periodic status reports and then await the outcome in a process that can last several years. Clients bear all the risk in this model.

1. Many clients increasingly believe that they are not satisfied with this process nor are they getting their money's worth. They are right.

2. Key: Dispute resolution and ADR involve the client in the process.

D. Bad news for traditional"litigators" rather than trial lawyers with dispute resolution skills. Lawyers who are more interested in the process of litigation rather than focusing on their client's ultimate needs will suffer.

1. In the traditional model, efficiency is penalized and inefficiency is rewarded.

2. An inefficient lawyer is far more costly to the client than an efficient lawyer.

a. Pressure on associates to bill hours; pressure on partners to increase their billings. Fewer hours means lower revenues.

b. Lawyers who resist changes to the litigation process through the use of ADR will be underutilized by clients.

c. Clients generally don’t fire their lawyers, they just stop calling them for new representations.

E. Dispute resolution is good news for:

1. Clients. When inefficiencies are removed from the system, clients can realize enormous savings in human costs and litigation costs with no decrease in quality of representation or result.

2. Lawyers who:

a. Can approach a dispute with the perspective of the client. This is vitally important. Put yourself in your client’s position, whether it be a family law or corporate law matter.

b. Have a fundamental understanding of the client’s business. Understand why this dispute is important, what impact the case and its potential outcomes would have on the client;

c. Are committed to using technology to increase their productivity when preparing for the resolution of cases, via settlement or trial;

d. Exercise judgment based on experience that results in tasks being undertaken with a focus on what is necessary to prevail at trial and/or at ADR rather than merely pushing papers, creating work and unnecessary fees for the client; and

e. Are committed to dispute resolution through direct settlement negotiations and third-party ADR.

f. Result: Lawyers who combine this judgment, experience and commitment will thrive in the new marketplace because they will provide better, more satisfying lawyering in a more cost-effective manner. The client will be more involved and will become an integral part of the process.

F. Dispute resolution is a timely topic because clients favor dispute resolution and ADR as a cost-effective, result-oriented alternative to lengthy, costly litigation.

II. Why dispute resolution is vitally important in the corporate world.

A. You must understand the business significance of litigation and the role of litigation lawyers.

1. How many products does the client have to sell to pay $500,000 in legal fees?

2. Lawsuits are generally business problems with a legal aspect.

3. Lawyers need to be "problem solvers" rather than "problem handlers."

B. Success will be driven through innovation in both technology and process.

1. Labor-saving techniques and cost-cutting measures are highly valued.

2. Efficiency will be rewarded.

3. Knowledge will be rewarded.

4. Research and development: clients are increasingly demanding that lawyers be conversant with their business and issues before you are retained to work on their case. Clients are not willing to pay for "reinventing the wheel" or paying the “tuition to educate young lawyers.”

C. In evaluating the selection of legal counsel to handle a complex environmental litigation matter, sophisticated clients demand multiple expertise. Complex litigation and environmental law are highly specialized areas. To properly handle such a matter, the lawyer must be knowledgeable of (a) the client’s business; (b) ever-changing federal, state and local environmental laws; (c) federal and state rules of civil procedure; (d) federal and state rules of evidence; and (e) effective use of alternative dispute resolution.

1. If you do not possess these tools, and the other side’s lawyer does, you and your client are at a critical disadvantage.

2. Even if you possess these tools, there is no guarantee that alternative dispute resolution will succeed.

a. Kiger v. American States Insurance Company.

2. To be successful, it is absolutely critical that a lawyer consistently hone his/her skills in these multiple areas to be able to provide cost-effective, result-oriented litigation and dispute resolution services.

III. Preparing for dispute resolution: the role played by counsel when performing litigation due diligence.

A. Determine the affected parties.

1. Federal agencies?

2. State agencies?

3. Buyers/sellers/neighbors?

4. Competitors?

5. Who is the ultimate fact finder?

6. Who are the ultimate decision makers?

B. Determine the interests of the decision makers for all affected parties.

1. Compliance?

2. Enforcement?

3. Penalties?

4. Remediation?

5. Compensation?

6. Case specific or agency-wide precedent?

7. Political agenda?

C. Determine the forum and status of dispute.

1. Pre-suit? Avoidance of publicity?

2. Represented by counsel, qualified counsel?

3. Federal court?

4. State court?

5. Administrative Law Judge?

6. Enforcement Section?

7. Disclosure of evidence requirements?

8. Timetable for trial setting?

9. Timetable for appeal?

D. Evaluate the various outcomes and costs associated with each outcome.

1. What is important to client?

2. What is important to public agencies?

3. What is important to private persons/entities?

4. Evaluate financial considerations for each affected party?

5. Evaluate non-financial considerations for each affected party?

IV. Key litigation techniques for improving the quality of lawyering in
dispute resolution.

1. Cost/benefit analysis is not done often enough. Cost/benefit approach of litigation and dispute resolution should be undertaken at onset of engagement with client's full participation and agreement. Approach should be used to develop a "game plan" early on for developing theme of the case and agreeing upon the client's ultimate goal.

2. SWAT team approach: Early case evaluation is essential.

a. Early establishment of case themes, theories of liability, and potential damages.

b. Facts don't get any better with time. Don’t become an “ivory tower” litigator.

1. Cf. Downs v. NGO, et al.

c. Promptly review relevant documents; client's documents; public records.

d. Interview key witnesses.

e. See Rule 26 of the Federal Rules of Civil Procedure which requires early disclosure of witnesses, exhibits, damage computations, insurance agreements, pretrial conference, etc. Failure to do so may result in exclusion of evidence.

3. As part of the cost/benefit analysis, the lawyer must candidly and objectively evaluate case with client's early and full participation on the issues of liability and damages.

4. Be able to fast forward case to ultimate goal: how can we get to ultimate result in the most cost-effective way while meeting the client’s objectives?

a. How is the client going to meet its objectives? How many human and financial resources is the client willing to devote to reach that result?

b. Krompak case.

5. Put yourself in the position of each participant in the dispute. Understand the strengths and weaknesses of their positions.

6. Meet with other affected parties and opposing counsel early on to determine their evaluation of case, level of preparation, what they want or need.

a. Challenge their factual and legal positions, move toward early case disposition before iron clad positions are formed, extensive investment of time and money by each side.

b. Be better prepared than other side, steer parameters of settlement, focusing on other side's weaknesses, stress savings of litigation costs, time, etc.

7. Navigate case into best possible position for achieving result.

a. Determine when and how to assert maximum pressure on other side.

b. Evaluate variety of ADR methods: direct settlement negotiations, arbitration, mediation, summary jury trials.

c. Direct negotiations provide most meaningful feedback, no filtering of information or observations.

1. Greatest control over achieving outcome.

d. Third party is helpful when (i) opposing counsel has "oversold" case to his client; (ii) opposing counsel is not prepared; and (iii) opposing counsel or person is not qualified and/or their position is not supported by the law or the facts.

1. With mediation, though to a lesser extent, you still have control over the outcome rather than a third party, such as a judge or jury.

2. If your case is well-researched, properly presented and candidly evaluated, opposing party is much more likely to want to resolve claim.

e. Give enough information to demonstrate you are credible and have undertaken necessary due diligence.

f. Take reasonable and defensible positions. Provide opposition with support for your positions.

V. Selection of Mediator.

1. Before selecting a mediator, carefully evaluate opposing counsel and his/her client.

2. Carefully select a mediator. What factors are important? Is he/she experienced as a mediator? Experienced in subject matter of dispute?

a. Does mediator possess skill set necessary for resolving dispute? Is the mediator a former judge?

b. Do you need a mediator who is creative? Pro-active?

c. Willingness of mediator to properly prepare for mediation.

3. Importance of confidential mediation statement.

a. First impression. Strength of written product.

1. Be succinct, candid and persuasive.

2. Disclosure of prior settlement efforts and settlement considerations. Include monetary and non-monetary considerations.

VI. When is dispute resolution most effective?

A. Know the expectations of all affected parties.

B. Understand egos of parties and counsel.

1. Pre-mediation communications. Begins with first communications with opposing counsel. Spend time getting to know the people and their personalities.

C. Presence of all decision makers.

D. All necessary discovery has been completed.

E. Properly prepare your client for mediation.

F. Provide mediator with options and leverage.

1. Court’s role in marathon negotiations in Downs case.

G. Challenges to resolution:

1. Turnover of state agency personnel on cases.

2. Need to establish precedent.

3. Unreasonableness of expectations of opposing counsel and/or opposing client.

4. Additional discovery needs to be completed before positions can be finalized.

5. Cutting edge of public policy.

VII. Benefits of effective lawyering and use of dispute resolution.

A. Able to handle higher volume of work.

B. Market place will respond by sending more work to that lawyer.

C. More creative billing arrangements with clients which allow for sharing of the risk of litigation with premiums paid for efficiently handled, result-oriented work.

D. Highly satisfied clients.

E. High energy, intellectually-challenging work makes for personally satisfying lawyering.

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