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Message From The President
IADR is proceeding “full steam ahead”
with our Australian Conference. This will be the first of our
international conferences. We are planning an interesting CLE program
and some exciting tours of this amazing continent. Let us know of
anybody who has an interest in mediation and who might wish to join us
on our trip. Also, if you would like to participate in the CLE portion
of this trip, contact me at 847-899-3300 or our administrator, Susan
Ewing at 515-283-0331.
At our last meeting we introduced a new
permanent agenda item for Board of Directors meetings. At each board
meeting we will present for general discussion a significant mediation
subject, problem, experience, strategy or approach.
The new agenda item was identified in
the June 2, 2006 minutes as “Overview of ADR” (#9 of the Minutes). At
this board meeting Dick Calkins introduced and led a lively discussion
of the potential of ADR. Many of the areas devel-oped at the board
meeting are referenced in Dick’s article appearing in this Newsletter.
Board members will be receiving the most
recent draft of our proposed By-laws prior to the October 6, 2006
meeting. Please review them and we invite your comments prior to the
final approval.
In anticipation of the approval of our
By-laws and the specific criteria for invitation into IADR as Fellows,
we ask that you consider potential members whom you would like to
sponsor. In that regard, you, of course, have great leeway. Potential
members may be located anywhere on our plant.
See you October 6 at the Illinois State
Bar Association (Chicago office).
Fred Lane, President
Role of ADR in the
Judicial Process
By: Richard M. Calkins
There can be no question that
Alternative Dispute Resolu-tion (ADR) is literally revolutionizing the
way we resolve our differences. Across the nation, cases going to trial
have decreased dramatically. In fact, many lawyers now complain they do
not get to trial enough to maintain their courtroom skills. The reality
is that if all else fails, the last “alternative” is to go to trial. So
pervasive is this change that Former U.S. Chief Justice Warren Burger
redefined the lawyer’s obligation to do justice for his or her clients.
He stated:
To fulfill our traditional
obligation, we should provide mechanisms that can produce an acceptable
result, in the shortest possible time, with the least possible expense,
and with mini-mum stress on the participants.
ADR is successful because it fulfills
this definition of justice. It produces an acceptable result because
the parties voluntarily agree to use it; it is expeditious because it
eliminates most of the formality, minutiae, and abuse of pretrial
discovery and trial; it is considerably cheaper, for the most part,
because ADR is streamlined and more efficient; it is kinder and gentler
on those who participate – party and attorney alike – because it seeks
not only resolution, but conciliation, peace, and even healing; and it
is successful beyond measure.
Uniqueness of ADR
ADR is an amorphous term which covers all
methodology to reach resolution short of a trial. It runs the gambit
from nonbinding mediation to binding arbitration. Its uniqueness,
how-ever, is the fact that the parties can use any mechanism they want,
even create their own, to meet the exigencies of a particular case.
This article covers the prepara-tory
steps in selecting the best ADR mechanism for the client. The first
step is the recognition that whatever ADR mechanism used is
contractual. In other words, the genius of ADR is the fact that it is
by contract. The parties can contract to resolve their differences any
way they wish, so long as they do not violate public policy. For
example, Southwest Airlines, when it first came on line, found
itself in a trademark dispute with a regional airline operating in the
southeast. Facing potential litigation costs in the millions of
dollars, the two CEOs of the com-panies agreed to resolve their
differences by arm wrestling, two out of three. A party was held and
the matter resolved.
State Farm Insurance Company in Chicago found mediation unsatisfactory
be-cause cases that were not settled still had to be litigated in the
courts. It found this too expensive and therefore sought to arbitrate
its cases in order to cut costs and have finality. However, plaintiffs
resisted binding arbitra-tion. A compromise was worked out called
med/arb (mediation/arbitration). A matter was first mediated, and if
the parties could not reach settlement, the mediator switched hats and
became the arbitrator and made a binding award. If, after the mediation
phase, a party was dissatisfied with the mediator, another person could
be retained to arbitrate the matter. (This, of course, increased costs
but it acted as safety valve for the parties.)
In Rapid City, South Dakota, an arbitrator handled several arbitra-tions
involving personal injuries. In each case, there were high/low limits
placed on the arbitration award (the award could not be higher than the
nego-tiated high or lower than the negotiated low). In two of the
arbitrations, the arbitrator exceeded the highs by a considerable
margin. Concerned that he was misreading the cases, the arbitrator took
a different tact in the next arbitration. After the case was submitted
by the parties, rather than take it under advisement and make an award,
the arbitrator reviewed the facts with the parties, and explained how he
was reacting to the arguments made on both sides. He did not state what
the final award would be. Having cleared the air to a certain extent,
he then gave the case back to the parties and asked them to negotiate
further. When given this second opportunity to negotiate after the
hearing, nearly fifty percent of the cases settled without the
arbitrator issuing an award. This became known as Rapid City
arbitration.
A different mechanism was created to address issues in the business
arena. In handling the breakup of a partnership or business, for
example, rather than place the matter in the courts or formal
arbitration, which can be quite costly and time consuming, parties have
created a form of arbitration called European arbitration. By
agreement, rather than conduct formal discovery, the parties empower the
arbitrator to do his own discovery, questioning witnesses and examining
documents. After this is completed, he prepares findings of facts which
are submitted to the parties for their approval. Those not agreed to
become the ultimate facts upon which the award is based. By allowing
the arbitrator to do his own dis-covery, costs are dramatically reduced
and the time to resolution significantly reduced.
In the automotive industry, many car Dealer Agreements provide that if a
dispute arises under the agreement, the matter will be submitted to
mediation. A panel of three mediators is then appointed, one from the
corporate office, another, a dealer from a different area of the
country, and a third, a trained mediator who presides. The corporate
office will have an attorney present only if the dealer has an
attorney. The parties have an opening session with all participants
present, and thereafter the process is conducted with the parties in
separate caucus rooms. The panel decides how they will conduct each
caucus – the corporate representative may chair the caucus with the
corporation, and the dealer representative when caucusing with the
dealer. If settlement is not reached, the matter will go to arbitration
or court depending on the terms of the agreement.
A very unique ADR mecha-nism was created to meet the special needs of
the telecommunications industry. Pursuant to the Telecommuni-cations
Act of 1996, local telephone monopolies were required to make their
switching facilities available to competitors seeking to enter the local
telephone market. Interconnection agreements were entered into, and if
a dispute or problem arose, the matter had to be submitted to an
arbitrator approved by the parties. However, to avoid months and even
years of arbitration, the parties crafted a new arbitration format which
resolved disputes within a matter of weeks and at minimal cost. On each
issue contested, the matter was submitted to the arbitrator, who was
required to select one party’s position or the other’s; the arbitrator
could not make an independent determination. This forced the parties on
each issue to present their very best position for fear that the
arbitrator would select the opponent’s. This fore-closed the parties
from taking extreme positions and hoping to compromise somewhere in
between. It placed a burden on the parties rather than the arbitrator
to achieve an equitable result.
As can be seen from the above examples, the ADR format crafted is
limited only by the creativity of the parties and their needs.
Selecting or Creating the Best ADR
Mechanisms
Any dispute in which ADR is contemplated, the attorneys must address
several issues before contracting. Is it in the best interest of the
parties to (1) utilize a binding or nonbinding mechanism; (2) use an
adversarial or nonadversarial approach; (3) use a formal or informal
process; and (4) seek only a dollar amount or something more flexible
and creative. Each of these considerations should be addressed to
determine what best meets the needs of the parties.
1. Binding or Nonbinding Mechanism
In contemplating using some form of ADR, the parties and counsel must
first determine if they should use a binding or nonbinding format.
Using a binding mechanism such as arbitration means that an award will
be entered, which is binding on the parties, generally non appealable,
and enforceable. Examples of this are arbitration, rent-a-judge, and
mini-trials. Binding ADR can be attractive to parties who want
certainty, that is, at the end of the day the matter is resolved without
further hearings or appeals. Through such a mechanism they can better
control their costs and avoid further discovery and time delays.
Nonbinding mechanisms, on the other hand, such as negotiation and
mediation, are less threatening because the parties reserve the right to
proceed to trial if settlement cannot be reached. For this reason, the
parties are more apt to consent to use it. Also, generally the
nonbinding mechanisms encourage the parties to become more involved in
the process. Such involvement gives them a greater sense that they are
in control, which makes resolu-tion more palatable and even therapeutic.
2. Adversarial or Nonadversarial
The next decision to be made is whether the process should be
adversarial or non-adversarial. Of course, if the parties elect a
binding ADR mechanism, they have already made that decision; it will be
adversarial. In making that election, the parties must recognize that
if it is adver-sarial, it will be more stressful and difficult to endure
and they will have no control over the process or outcome.
Nonbinding mechanisms can also be adversarial. For example, a summary
jury trial is structured as an adversarial proceeding even though
non-binding. Likewise nonbinding arbitration, mock trial or focus study
utilize an adversarial format. This may or may not be in the best
interest of the parties.
Mediation and negotiations, on the other hand, can be structured to be
non-adversarial. If the parties are under stress or emotionally
insecure, it is preferable that a mediator, for example, be selected who
will be suppor-tive and compassionate with the parties and approach the
mediation nonadversarially as a peacemaker. This approach has been
highly successful over the years and encourages not only resolution, but
conciliation, peace and healing. On the other hand, a client may be
quite difficult and counsel may need a mediator who will be adversarial,
play devil’s advocate, and push the parties to the limits to get
resolution. Counsel must decide which approach should be taken.
The same considerations must be made when negotiating. Counsel must
decide whether to take an adversarial or positional approach and seek to
win out over their opponent; or, seek to accommodate the other side so
that the wants, needs, concerns and fears of all concerned will be met.
This is a strategic decision.
3. Formal or Informal ADR
If binding ADR is selected, the parties must still determine if it is to
be formal or informal. For example, if arbitration is selected, there
are many forms that can be utilized depending on the needs of the
parties. If a complex matter needs to be re-solved, then formal
arbi-tration might be utilized, which would follow the procedure and
formality of a bench trial.
On the other hand, if funds are short and the parties need an early
decision, they might select informal sum-mary arbitration, which can
condense a two-month trial to one week. And there are any number of
formats in between these two extremes, such as high-low arbitration,
fixed high-low arbitration, baseball arbitration, arbitration/mediation,
and mediation/arbitration, etc. Or the parties can fashion their own
mechanism making it as formal or informal as they wish.
In the nonbinding category, the same decision must be made. In
mediation, for example, the parties can use a formal trial format, or an
informal conference or caucus format. Again, what format is used
depends upon the needs of the parties.
4. Award or Creative Resolution
Finally, the parties must decide if they seek only a monetary solution
or whether non-monetary issues need to be resolved. If arbitration is
utilized, the arbitrator is limited to making a monetary award. On the
other hand, if mediation is selected, the parties can resolve
non-monetary issues as well as monetary. For example, the parties could
agree to a written apology, or naming a con-ference room after an
em-ployee who claims wrongful discharge, or providing a structured
annuity to protect a party over their lifetime, or requiring a church to
initiate rules and regulations to protect children from pedophiles and
ephebophiles. Only non-binding mediation or nego-tiation can resolve
these non-economic needs and issues. Counsel and the parties, therefore,
must decide the role non-economic matters will play in resolving a
dispute and select a proper ADR mechanism accordingly.
Upcoming Events:
IADR Board Meeting
October 6, 2006
Illinois State Bar Assn Office
Chicago, IL
10:00 a.m. – 2:00 p.m.
College Mediation Tournament
November 3-4, 2006
Drake Law School
26th & Carpenter
Des Moines, IA 50311
Mediation Training
Primary class in caucus mediation.
January 8-12, 2007
Drake Legal Clinic
24th & University
Des Moines, IA 50311
For more info. contact:
Susan Ewing
2700 Westown Parkway, Ste. 220
West Des Moines, IA 50266
515-283-0331 or
amta@dwx.com
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