Mediation Philosophy


When I announced that I am dedicating more time to conducting private mediations, especially commercial mediation involving intellectual property issues, the most common response is why. Why would a 40-year litigator be an advocate for the spread of private mediation? The answer is more complex than just litigation versus mediation. Litigation has its place, and it can be the only means of resolving some issues. However, it is an almost universally held opinion that litigation, especially commercial litigation, is too long a process, too expensive, and too much of a drag on the corporate energy without truly yielding a commercial return that is reasonably commensurate with the effort. Even the winner can be left with the feeling it was a Pyrrhic victory.

At some point, the consensus was that arbitration would stem the flood of litigation and control expenses. Compulsory arbitration found its way into numerous commercial and consumer contracts. Unfortunately, this approach has not produced the hoped-for results and it may have actually replaced one problem with another.

In the consumer arena, there continues to be litigation over whether compulsory arbitration in “take it or leave it” consumer contracts are contracts of adhesion that render the arbitration provision unenforceable. This effort at “forced” arbitration to avoid litigation seems to have fostered litigation about avoiding “forced or compulsory” arbitration and resurrecting the right to litigate the underlying grievance.

The process of selecting the arbitrator or arbitrators can take on a life of its own in the commercial arena. Once that is settled, there is often a long period of negotiating the procedure for the arbitration and whether the deliverable will be just an arbitration award or an opinion and an award. Once the parameters are settled, there is often discovery which, although modified from discovery under the relevant court’s rules, can have a long and expensive life. Thereafter, issue briefing and, in some case, live testimony typically follow. After the live testimony, there may be post hearing briefing. This process is often just litigation in a different forum with virtually the same expense and consumption of corporate energy that the parties hoped to avoid by opting out of traditional litigation. Additionally, the parties must go “out of pocket” to finance the arbitration where the court system is taxpayer funded. Just like traditional litigation, even the winner can feel that it was a Pyrrhic victory.

So why does arbitration so often seem to fail at its mission as a less expensive and quicker alternative to litigation? The answer may be in the party’s messenger in the arbitration. Litigation attorneys most commonly represent the parties in arbitration because arbitration is so much like litigation. Not unexpectedly, litigation attorneys approach arbitration as an adversarial proceeding that is a fight to the death and they are the client’s gladiator. This approach is reflective of the winner – loser outcome of arbitration, and almost no one has a problem visualizing their gladiator as someone who will fight to the death for their cause. This is as it should be – the messenger sends the message that it is a fight to the death albeit a somewhat abbreviated fight due to the fact it arbitration. This flawed message is not borne of the attorney’s advocacy because the attorney is sending the precise message that is consistent with the adversarial aspect of the arbitration forum.

In addition to arbitration often being a not-so-mini litigation, appeals of arbitration awards or the arbitration process itself are becoming more common. This has the effect of creating litigation within the litigation and compounds the animosity between the parties. In all likelihood, this compounding of animosity means that the litigation will go to the very last stage that the poorest party can afford. In other words, it becomes a war of attrition or a classic Pyrrhic scenario!

Is there a better alternative to litigation? Yes, it is mediation. Why is mediation a better option? There are multiple reasons why mediation is the better alternative to litigation. Although all of the reasons will not apply to every situation, there are many reasons that apply every time, and they justify giving mediation serious consideration every time.

Perhaps the best reason for private mediation is that it is private, flexible, non-binding, the parties can decide when to engage in mediation, even before they engage in litigation, and the mediator is neutral. Private mediation is the opportunity for the parties to frame the process according to their preferences in a mediation agreement and have off-the-record discussions without the possibility of a disclosure in the absence on one party breaching the mediation agreement. The mediator’s role is to facilitate discussions, identify points of common interest, and find those areas for compromise that are acceptable to the parties. While the parties hope to settle on terms mutually acceptable to them, the parties can walk away from private mediation without any repercussions from an oversight authority. There is no repercussion, absence ill will between the parties, in walking away. By contrast, in binding arbitration, whether by a single arbitrator or a panel, an unrelated third entity decides the outcome, and a party generally cannot just walk away. As noted earlier, arbitration is developing into another form of litigation with a cost and complexity that make the parties inclined to continue in the process, even if the arbitration agreement did not prohibit walking away. Further, a party dissatisfied with the decision in an arbitrated matter frequently has no or very limited appeal options, and many of those appeals involve alleged arbitrator bias or a failure to adhere to the arbitration agreement.

If there is pending litigation, private mediation is still preferable. Many courts have procedural rules that mandate at least one settlement conference with a magistrate judge or a special master as a quasi-judicial officer. This is the opportunity for off-the-record discussions without the possibility of a disclosure in the absence of one party breaching the mediation agreement, but a party cannot just walk away. The substance of these settlement conferences is not reported to the presiding judge, but scheduling orders frequently include a settlement conference date, and the presiding judge is obviously aware of the outcome. Court mediation conducted before a magistrate judge or a special master as a quasi-judicial officer has the additional drawl back that one party and the presiding judicial or quasi-judicial officer may deem that the parties reached the terms of a settlement and the only thing remaining is preparation of the final settlement document. When the other party disagrees or rejects a draft settlement document with supposedly “agreed terms,” the court may elect to enforce those “agreed terms,” especially if they were recorded by a stenographer. This layer of judicial formality is an element of the informal give and take of settlement discussions that a party may not fully appreciate or the potential consequence of the “record” reflecting a binding agreement.

It is reported on a somewhat regular basis that over 90% of the civil litigated matters settle before they get to the court for trial and a large number of those that make it to trial settle on the courthouse steps, or just before the verdict. This negotiated resolution usually comes after much time and expense and the creation of a public record that neither party really wanted. The conclusion from these statistics is clear – most civil ligation is resolved on negotiated terms. For those cases that go to a verdict the appeal process available to an unhappy litigant is not particularly inviting, is expensive, and is often a long shot taken by the losing party in the hope of forcing a post-verdict settlement that is more favorable than the verdict. This is particularly true for federally litigated matters because the federal appellate courts have mediation programs and favor settlements. See, Mediation & Conference Programs in the Federal Courts of Appeal, Robert J. Niemic, Second Edition, 2006. Unfortunately, this strategy for reaching a negotiated resolution usually comes after even more time and expense and an enlarged public record. Negotiating at the appellate level is much more difficult because one party has a victory in hand, and the loser’s big hope is to convince the winner that it is not worth the risk of having the victory overturned. This is not a negotiating position of choice.

In most commercial/business disputes, everyone argues for an agreed mediation structure and early intervention by a neutral third party. Since the issues addressed in the mediation are not limited by what might constitute an actionable litigation claim, the parties are free to identify all of their concerns. By addressing all of their concerns, the parties increase the chances of reaching an agreement that resolves their immediate issues and returns them to their business enterprises more quickly than possible through litigation.