Litigation Section Blog: Is Mandatory Mediation Losing Its Efficacy with Frequent Players?:

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  • Litigation Section Blog
    April
    12
    2017

    Is Mandatory Mediation Losing Its Efficacy with Frequent Players?

    Jesse B. Blocher

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    Is mediation in civil cases still effective? Jesse Blocher examines whether mediation is continuing to serve its original purpose. “Some may be surprised to learn of the disincentives that parties and lawyers who mediate frequently have when it comes to forging reasonable compromises at mediation,” he writes.

    Since 1994, when judges were permitted to order mandatory alternative dispute resolution (ADR) in civil cases by enactment of Wis. Stat. section 802.12, it has become all but standard practice to engage in pre-trial mediation of personal injury and other civil matters.

    The statute gives parties the opportunity for a cost-effective resolution that reduces the burden on the courts, and that focuses parties on the strengths and weaknesses of their positions earlier and with the assistance of a neutral who could break through the posturing of advocates on each side.1

    Jesse B. Blocher com jblocher habush Jesse B. Blocher , Marquette 2006, is a civil trial attorney and shareholder with Habush, Habush & Rottier, S.C., Waukesha.

    Many have commented on how effective ADR has been in achieving that goal: “[M]andatory ADR has moved settlement discussions from the courthouse steps on the eve of trial to a mediator's office, where lawyers can save some expenses of litigation without losing face with their clients. And that sounds like a win-win proposition for everyone.”2

    Since the statute’s enactment, the number of civil trials has decreased significantly, although not all commentators have viewed this as a positive development:

    “It used to be if you wanted to settle a case, it was face-to-face with the other lawyer.... But with the advent of mediation ... settlements just proliferated.... [I]t has gotten to the point where cases are more about completing a business transaction than about protecting the safety of consumers and workers. And that is not good.”3

    The Trend Against Reasonable Compromise

    More and more, however, the trend seems to be that parties who mediate frequently are not engaged in the process – at least in the spirit of having informed discussions designed to progress the case toward settlement.

    Many times, “frequent players” – parties and lawyers that mediate similar claims regularly – arrive with a predetermined, intransigent position. Although there is an expectation that parties mediate “in good faith,” the obligation is essentially toothless, in terms of its legal enforceability:

    • [W]hile the mediation process will often depend on the parties' good faith and open-minded flexibility, it does not require any party to abandon a legal position or settle a case. Indeed, as a skillful mediation process facilitates the “exchanging [of] information between the parties,” ... it can lead a party to recognize important facts that establish the merits of its position, thus strengthening the resolve to press forward with litigation. By the same token, of course, mediation can also help a party to realistically review a case, leading to a settlement.
    • [A] trial court that equates “good faith” with the fact or amount of settlement offers, or with the success of the parties in reaching resolution, may fail to recognize that sometimes mediation exposes that a case is not “about money,” but rather, is about issues not neatly resolved in a formal legal setting.
    • Accordingly, while mediation can be an invaluable process, its parameters must be understood and respected…. They will also understand, however, that certain parties may not be ready, willing, or able-to give much ground or mediate effectively-and that mediation simply cannot resolve all cases.4

    Failing to reach a mediated settlement is not necessarily a bad thing. In many cases, trial is necessary to resolve legitimate disputes, and I have advocated for civil lawyers to take more cases to trial.5 However, in cases where there is little legitimate disagreement, brinkmanship on both sides seems wasteful and contrary to the primary objective of court-ordered ADR.

    Anecdotally, I represented an injured plaintiff at a recent mediation of a personal injury case, where I was informed that the defendant, a major insurer, was insistent on not including in its offer the full reasonable value of the medical expenses incurred, even though there is a legal presumption (Wis. Stat. § 908.03(6m)(bm)) requiring it to do so, and the defendant had no witness to rebut the presumption. Still, the insurer took a hard line on the issue. As a result, my client held her position at a relatively high settlement value, neither side compromised, and the case did not resolve.

    An Increasing Trend

    In my practice, these scenarios seem an ever-increasing trend. To determine whether my observation was correct, I spoke with a few prominent Wisconsin mediators who confirmed that mediations amongst “frequent players” in run-of-the-mill cases6 often face the challenge of parties not being truly prepared to negotiate toward a reasonable compromise. One well-known mediator told me that it is harder than ever to settle cases with these “frequent players.”

    On one side, defendant insurers more often attend with immovable, pre-set authority that tops out near the insurer’s best day in court rather than a compromise between a good defense verdict and a good plaintiff’s verdict. Another mediator pointed out that such settlement authority is often set without input by the mediator or even defense counsel.

    It appears that this negotiation strategy does not originate with any individual case, but instead is a philosophy aggregated across hundreds, if not thousands, of cases. Insurers that take aggressive positions on case values are sure to be rewarded by seeing a fair percentage settled for what many would consider a low amount, based purely on the economics of smaller cases. One mediator commented that plaintiffs’ lawyers in smaller cases have a difficult task due to the ever-increasing expense of taking cases to trial, which makes settlement more economical, even when the offer is low.

    Keeping Track

    On the other side, mediators are often confronted with an attitude from plaintiffs’ counsel that “there will always be more money offered after the mediation.” Indeed, plaintiffs’ lawyers who are willing to take cases to trial are often presented with better offers the closer the case gets to trial. A law review article analyzing settlement practices of plaintiffs’ firms uncovered significant anecdotal evidence linking trial propensity to negotiating power.

    For example, one insurer “kept a log of plaintiffs’ attorneys, noting which ones were aggressive and which ones caved in.” Other comments included:

    • “[Trial is] your only weapon. If you don’t show up in that courtroom, you’ve got no bargaining power. If you don’t have a gun, you can’t participate in a gun fight.”
    • Q: “You think reputation matters in terms of the offers you’re given?” A: “I know it matters.”
    • “If the figure was no good, [insurers] were not worried he would go to trial because he wouldn’t.”7

    So there are disincentives working against reasonable compromise on both sides.

    Readiness is an Issue

    Another issue is readiness to truly negotiate at the mediation. One mediator told me that plaintiffs often come in with new claims, reports, and damages that the defendants have not reviewed before the mediation. Obviously, this does not give the defendants a full opportunity to prepare, evaluate, and respond. On the other side, many large insurers send a “straw man” (or woman) to the mediation to represent its interests.

    While some insurers still send experienced claims people (or have them available by phone) with power to actually make decisions, that practice is becoming less prevalent. More commonly, insurers send a representative to simply convey a pre-determined limit. The mediator feels that sometimes the best that can be done is to educate the parties and posture the case for further discussions down the road.

    The entrenchment of positions outside of what a neutral observer would probably view as reasonable can make mediation a formality and too often postpones legitimate settlement discussions to the eve of trial – the opposite of the process’ intent.

    Toward a Solution

    Unfortunately, I do not think there is a clear solution to the issue. I am not blaming the parties for taking positions they feel are in their best interest. I also do not advocate that parties stop mediating or argue that mediators are not doing an effective job. To the contrary, we are fortunate to have a host of excellent, experienced mediators in our state.

    Mediation continues to be very useful in many cases, sometimes even when a settlement is not reached. However, I do think awareness of the trend against reasonable compromise in mediating run-of-the-mill cases can lead to better decision making, improved strategy, and perhaps positive change in the future.

     

    Endnotes    

    1See Daniel A. Noonan & Judith M. Bostetter, “Alternative Dispute Resolution in Wisconsin: A Court Referral System,Marquette Law Review, 1995.

    2Richard L. Zaffiro, “ADR: Do Trials Still Matter?”, Wisconsin Lawyer, May 2001.

    3Kurt Chandler, Courtroom Avenger: The Challenges and Triumphs of Robert Habush, ABA Book Publishing, 2014.

    4Gray v. Eggert, 2001 WI App 246, ¶¶ 11-13, 248 Wis. 2d 99, 107–08, 635 N.W.2d 667, 671.

    5See Jesse Blocher, Michael J. Cerjak & Andrew S. Wier, “Earn Your Stripes, Part 1: How to Get Civil Trial Experience,” Wisconsin Lawyer, September 2015; and Michael J. Cerjak, Jesse Blocher & Andrew S. Wier, “Earn Your Stripes, Part 2: How to Get Through a Civil Trial,” Wisconsin Lawyer, October 2015.

    6The mediators I spoke with generally agreed that both insurers and plaintiffs’ counsel generally are more flexible and engaged in the process for bigger, more complex claims, and that these issues were not universally present amongst all insurers or attorneys.

    7Nora Engstrom, “Sunlight and Settlement Mills,” New York University Law Review, October 2011.





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