Wisconsin Lawyer: 101 Door 1, 2, or 3: An Intro to ADR:

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    Door 1, 2, or 3: An Intro to ADR

    Mediation and arbitration can help attorneys and clients reduce the time, financial, and emotional costs of resolving disagreements, but reaching good results depends on having appropriate expectations for the process.

    Howard N. Myers

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    doors in a desertYou’re fired!” or as employers say today, “Sorry, but we have to let you go; we’re downsizing.”

    An employee with 20 years in the workplace is unexpectedly called into a meeting with company officials. The “capital punishment” of the working world is then administered. The individual is told to immediately gather all his personal possessions and is then ushered out of the building by security. Many people have gone through this harsh experience.

    After recovering from the shock and anger, the employee often consults with an attorney and decides to raise several issues with his former employer, particularly age discrimination. The employer responds that the aggrieved employee has not kept up with technological changes and thus has disrupted the department’s operations. The employer denies that the employee’s age (52) has played any role in the termination. Furthermore, the employer maintains that the individual was “an employee at will” and therefore lacked any vested right to a job.

    The matter is then processed through the appropriate administrative agencies, mediation is recommended, and the parties agree to participate in the process to resolve the claim. The parties exchange settlement offers, but they are miles apart: The complainant demands $350,000 or reinstatement with benefits and the defendant employer offers $5,000. How does the mediator then proceed?

    We are in the age of alternative dispute resolution (ADR). Having participated in numerous employment mediations as an advocate and now functioning as the mediator in such disputes, I acknowledge that ADR methods are not necessarily the panacea for dispute resolution, but often serve a vital role in the process. This article addresses only the most commonly used procedures of ADR (apart from direct negotiations) – mediation and arbitration.

    Basics of ADR

    The legal system provides many options for conflict resolution, including negotiations, arbitration, mediation, and litigation. Protracted litigation typically entails extensive discovery, use of expert witnesses, submissions, motions, possible appeals, large time commitments, and high costs – all of which can be stressful for the participants. Granted, many complex matters in which both the facts and the law are disputed necessitate formal litigation. However, I believe that ADR, primarily mediation, is a better method to serve society’s needs because it empowers the client’s active involvement in the resolution process.

    Howard Myersrr hnmyers wi com Howard Myers, U.W. 1964, is of counsel to Hawks Quindel S.C., Milwaukee.

    In many ways, ADR is an extension of informal negotiations. Usually with arbitration, after a hearing, the arbitrator has the authority to render a final and binding award.

    Mediation, with the assistance of a neutral third party (the mediator), provides an informal environment so that the parties can jointly develop a solution or compromise.1 Mediation may be voluntarily initiated by the parties, who then select a mediator. If a court orders mediation, the court will appoint a specific mediator or allow the parties to choose one.2

    In the employment field, administrative agencies such as the Wisconsin Department of Workforce Development, Equal Rights Division, the Equal Employment Opportunity Commission, the Federal Mediation Conciliation Service, and the Wisconsin Employment Relations Commission encourage mediation as a vehicle to address pending matters. Many employers mandate mediation for dispute resolution. Collective bargaining agreements might contain provisions requiring mediation before arbitration.

    The lessons learned from the employment field for dispute resolution should be applicable in other areas of the law. These would include real estate and business disputes, divorce, insurance, contracts, personal injury, torts, and others.

    Selecting the Mediator

    No matter what the field of law, the selection process should include consideration of the potential mediator’s background and work history. For example, in an employment-related dispute, it is vital that the neutral third party have sufficient knowledge of employment, labor law, discrimination matters, the employment environment, and the negotiating process. For all types of disputes, creating a nonadversarial environment, suspending preconceived notions, and being a good listener are essential traits for a successful mediator.

    The mediator must be sensitive to the prevailing emotional climate. Sometimes waiving opening statements is necessary to avoid creating an unworkable atmosphere for the mediation. Some matters require the parties to be physically separated during the mediation session. In this context, the mediator shuffles back and forth, facilitating and orchestrating a potential solution.

    Mediators use different styles of mediation. An evaluative mediator will render an opinion as to the strengths and weaknesses of each side’s positions and a possible outcome if the matter proceeds to litigation. A facilitative mediator will allow the parties to develop the resolution. A transformative mediator encourages more interaction between the parties to further define the real issues and the eventual solution. Choosing a mediator who is flexible as to style and modus operandi is significant in meeting the parties’ needs and expectations.

    The mediator’s involvement is generally a result of the parties’ willingness to attempt to reach a compromise. For the mediator to be effective, the parties must educate him or her as to the salient aspects of the case by providing the following: a pre-mediation statement summarizing the facts and the pleadings, relevant case law, authorization for the mediator to conduct independent research, confidential settlement offers so that the mediator knows how far apart the parties are, and a willingness to communicate with and provide additional information to the mediator before the mediation session. It is vital that the mediator knows the case as well as the parties do.

    What Happens in Mediation?

    The process should begin with the mediator giving the parties a complete explanation so that both sides are comfortable with the methods the mediator plans to use. The mediator should present the parties with a mediation agreement, which they should review and sign before the process can begin.

    “Mediation, with the assistance of a neutral third party (the mediator), provides an informal environment so that the parties can jointly develop a solution or compromise.”

    Unreasonable demands evoke unreasonable responses. Significantly, such interaction may lay the foundation for the success or failure of the mediation. Sometimes new facts are elicited, placing a different spin on the matter. The parties’ failure to set aside traditional adversarial relationships and preconceived notions can create roadblocks preventing possible resolution. Quite often, unrepresented and unsophisticated parties are not familiar with legal guidelines and applicable case law. Often the mediator forces the parties to consider financial and time factors associated with discovery and litigation, which can make the possibility of compromise more palatable and achievable.

    The mediation might fail to address the parties’ emotional needs and overall concerns, thus resulting in a breakdown of the process. The client and his or her attorney might disagree or the parties might settle. Sometimes the parties come to the mediation without the flexibility or “wiggle room” needed for development of a workable compromise. The mediator is placed in a difficult position of analyzing factual or credibility issues. Complex legal issues can sometimes become an obstacle to the mediation process. Finally, the parties might not have been educated by counsel as to available remedies or potential damages. The mediator and the parties all must possess some flexibility and open mindedness if a settlement is to be reached.

    Various Uses of Mediation

    Impasses in collective bargaining or grievance disputes may require the intervention of a mediator to assist the parties. Discrimination matters encompass a multitude of claims based on federal and state laws. Terminations of employees, including executives, administrators, engineers, health care workers, attorneys, doctors, and whistle blowers, often wend their way to mediation. Wage, NLRB, pension, ERISA, and FMLA issues, among others, also can be addressed with mediation.

    In the education field, situations have occurred in which tenure has been denied for a variety of reasons, including a failure to satisfy a research and writing obligation. In these instances mediation has been used to facilitate a resolution or the crafting of an acceptable severance package.

    Many mediations simply consist of efforts to develop solutions regarding hiring or promotion matters. Mediation has been used to resolve contract disputes over specific language that is ambiguous, but controlling. This process allows the parties to receive a preliminary opinion from the mediator as to a possible court determination regarding the language’s meaning and application.

    Advantages and Disadvantages of Mediation

    Mediation has both advantages and disadvantages.

    Advantages include the following:

    • The process is confidential; what is said or occurs cannot be used in any administrative or court proceeding.

    • The parties have the opportunity to select a qualified and knowledgeable mediator who can create a nonconfrontational environment that is less stressful than a courtroom setting.

    • The parties might find the setting to be therapeutic, one in which they can, if they choose, vent their pent-up emotions, anxieties, and stresses to the neutral third party. (As the mediator, I insist on this process.)

    • The opportunity to receive from an impartial third party a constructive legal evaluation of their positions’ strengths and weaknesses can serve as a reality check for each party.

    • The cost-effective, timely, and informal process protects the parties’ interests.

    • Mediation is aimed at providing an outcome agreed to by the parties; however, if unsuccessful, all legal rights are preserved for litigation.

    • The resolution does not necessarily reflect “who is right or who is wrong.”

    Disadvantages may exist in the following circumstances:

    • Taking the wrong case to mediation;

    • Using mediation as discovery and lacking a good-faith desire to resolve the matter;

    • Limiting the mediator’s role such that his or her recommendation is generally not binding on the parties;

    • Hardening the parties’ resolve and creating more tension if the mediation is unsuccessful;

    • Not conducting enough discovery and finding that the parties are not ready for mediation;

    • The existence of credibility issues whereby the mediator must exercise caution so as not to place either party in a precarious position; and

    • Placing the mediator in a position as a limited fact finder might compromise his or her role as a neutral.

    Barriers to Effective Mediation

    Not all mediation efforts are successful. Situations that might cause the mediation to fail include the following:

    • Counsel fails to prepare a participant with reasonable expectations and a willingness to relinquish the right to litigate.

    • The parties lack the authority to resolve the matter.

    • A party is reluctant to be candid with the mediator and withholds relevant information (for example, in a sexual harassment claim).

    • Advocates are too aggressive and argumentative (one’s ego may interfere with reasonable interaction).

    • The attorneys have a negative relationship because of previous interactions, thus interfering with a proper environment for resolution.

    • A party lacks the ability to understand the process and the ongoing communication, because of language barriers or a cultural void.

    • One party is convinced that he or she has a very strong legal rationale for his or her position and is unwilling to listen to advice from counsel or observations from the mediator.

    • Case law, discovered by the mediator, limits the damages available.

    Arbitration versus Litigation

    Over the years, arbitration has been useful for bringing about industrial peace. In essence, unions gave up the right to strike and employers gave up the option of locking out employees for the quid pro quo of arbitration. Arbitration has stood the test of time to bring conflict resolution to the parties.

    Noted arbitrator John Sembower once remarked that “arbitration’s effectiveness is based upon simplicity, informality and the avoidance of over-complication.” Arbitration affords the parties the opportunity to select a neutral and knowledgeable third party to render an award after hearing both sides of the story. Litigation, before a court or a jury, results in much uncertainty concerning the decision maker and the jury’s or judge’s expertise regarding the matter.

    Many arbitrators convert arbitration proceedings to mediation sessions with the consent of both sides, in an attempt to resolve the pending matter. In essence, the arbitrator then wears a different hat as a mediator. If this process fails, prior confidential communications may affect his or her ability to serve as a neutral arbitrator. In this context, a new arbitrator should probably be selected to create the appropriate atmosphere for the arbitration.

    Advantages. Many advantages exist in using arbitration instead of traditional litigation. These include the following:

    • The process is much more informal and the truth can emerge in a less stressful environment for the parties.

    • If no discovery or motion practice is provided, costs and time commitments are reduced.

    • The rules of evidence are adhered to in a less strict manner.

    • The use of stipulations makes the process better and informal for creating a total record.

    • The decision maker, chosen by the parties, is knowledgeable about the working environment and the implications of certain conduct.

    • The typical site of an arbitration hearing, for example a hotel, removes the stigma and formality of traditional court proceedings.

    However, if discovery is part of the arbitration process, this may mirror litigation and undermine some of these advantages.

    Disadvantages. Certain problem areas may be inherent with arbitration. These include:

    • Defining the arbitrator’s authority if overlapping laws are applicable;

    • A lack of meaningful standards and guidelines the arbitrator may use in creating a rationale for a decision;

    • Determining the role the arbitrator should play in developing the facts and the truth; and

    • The danger that a “final and binding” award could disappear if the “loser” attempts to set aside the award by bringing a court action.

    Conclusion

    Many causes of action are not suited for mediation or arbitration. The complexity of the matter and the demeanor of the parties, as well as other factors, might preclude efforts at informal settlement or arbitration. However, experience suggests that the public can better adapt to informal and nonconfrontational settings for conflict resolution. Litigation is a formal process and takes many aspects of conflict resolution out of the parties’ hands.

    A high percentage of participants in mediation are sincerely interested in reaching an informal resolution.3 By its very nature, the mediation process is controlled by the parties. The resolution affords the parties and the mediator the opportunity to exercise creativity by developing remedies and solutions that best fit the factual setting. Court statistics demonstrate that most matters are now settled by the parties and not as result of decisions by courts, juries, or administrative agencies.

    Bringing matters to finality in a cost-effective manner and in a reasonable time frame, without expensive and protracted litigation, demonstrate some of the benefits of alternative dispute resolution. Mediation and arbitration are options that judges should encourage more frequently and attorneys should use more often.

    Endnotes

    1 Wis.Stat. § 802.12(1)(e); Fed. R. Civ. P.16 (c)(9).

    2 See Wis. Stat. § 802.12(2)(a), (c).

    3 This is reflected by this author’s success rate of over 90 percent in more than 350 mediated employment conflicts.




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