One of the most prevalent complaints about arbitration these days is the cost associated with the process when certain national arbitration organizations serve as the administrator.  Filing fees of several thousands of dollars are not uncommon from these national and international groups.  But large filing fees and high hourly rates strip away one of the most compelling reasons to go to arbitration in the first place, especially if the high costs are also combined with a discovery and motions practice that mirrors what you would see if you were in state or federal court. 

When done properly, arbitration can serve as a very useful alternative to litigation — not only because the parties can pick their own knowledgeable decision-maker, but also because the process allows for significant cost and time savings.  If you are considering arbitration, or if your contract mandates its use, please know that there are options out there for whom to use as the arbitrator and the arbitration service provider.  Local and regional ADR groups — such as Creative Dispute Resolutions — do not charge the large filing fees, and they offer a streamlined process that stands in stark contrast to protracted litigation.

For an interesting perspective on the reasons why parties might want to choose arbitration, there is a recent article entitled “Litigation Consternation; Arbitration Celebration,” written by Julie R. Rubin, Esq. and published in a recent May 2010 edition of Baltimore Smart CEO magazine.

There are different schools of thought within the ADR community as to whether a mediator ought to have expertise (or even substantive knowledge) in the subject matter of the dispute before him or her.  Some argue that a good mediator can be effective in any type of dispute regardless of that mediator’s knowledge of the subject.  Others — like me — disagree.  For many of us, subject matter expertise is deemed a critical part of the mediator’s qualifications for a particular dispute.

Some attorneys and parties want their mediator to be able to provide some evaluation and analysis of the claims and defenses being asserted.  That evaluation only carries credibility if the mediator has a thorough understanding of that area of the law.  But, even for those situations when the mediator is only serving in a facilitative capacity and does not provide any form of analytical feedback, subject matter knowledge is still important.  A thorough understanding and background in a certain subject allows the mediator to ask pertinent questions and to focus in on critical emotional and evidentiary issues.  It also arms the mediator with a better ability to help the parties brainstorm potential remedies and solutions.  The types of creative resolutions available in construction matters can be different than those in an employment law case and altogether different than those that might be proposed in a divorce mediation.  In essence, a mediator with subject matter expertise in the particular dispute at hand is likely to be more effective in assisting the parties reach a resolution.

Given the frequency with which workplace disputes arise, employers and other organizations are wise to learn more about the subject of conflict resolution.  Regardless of the size of the organization, unresolved conflicts in the workplace can have serious and expensive repercussions.  Disputes that are allowed to fester can end up leading to external complaints or litigation, not to mention the collateral damage caused to the morale and efficiency of the workplace while the conflict continues.

Creative Dispute Resolutions offers training programs and services throughout Maryland and Washington, D.C. that help equip businesses with the tools and skills needed to identify, address, and resolve the various forms of conflict that most frequently arise.  Training options include discussions on these types of topics: conflict management, workplace communication skills, internal conflict resolution methods, negotiation skills, relationship-building, establishing grievance and dispute resolution procedures, and how to utilize the various forms of alternative dispute resolution.

Please contact us for more information and to see how we can be of assistance.

Post by: James B. Astrachan, Esq, Astrachan Gunst Thomas, P.C., Baltimore, MD

Mediation is an interesting concept. It can precede or follow the filing of a lawsuit, and is supposed to involve a totally neutral third party as the mediator. It is held confidential by contract and what is said will not be used against the speaker if the case does not settle. Say, for example, that you have been sued for copyright infringement. Maybe you are an architectural firm and you have purloined, quite by accident you assert, another’s plans. The owner is angry because it believes you have stolen from it, and it wants compensation for your infringement.

There is no contract that requires mediation between you and the plan’s authors, so it is up to you and the author to each agree on mediation. Is it a worthwhile process and how do you get there? What are you looking for in a mediator?

This isn’t the garden variety of neighborhood dispute where one neighbor doesn’t cut her grass and the person next door is trying to get her to do so. Here, there is money at stake and a potential federal lawsuit that will be very expensive to resolve if it goes all the way (copyright cases can only be filed in the U.S. District Courts).

But as the case progresses it may become more difficult to settle at a reasonable price. The parties will be spending money on lawyers and feelings will become more frayed.

When I learn of a suit filed against my client, or threatened, I almost always call the other side’s lawyer just to introduce myself…eventually, we will be required to confer on electronic discovery and other preliminary issues anyway. So this is a good chance to say hello and begin to establish a rapport. Depending on how the conversation goes, I sometimes ask whether the other side will consider early mediation. Sometimes they do, and sometimes they do not. Some of the reasons for not doing so at that stage might be: lack of discovery; lack of expert’s opinion regarding money damages; the desire to stay with the case and not settle it; the desire of the plaintiff to punish the defendant; the feeling that “free” discovery will occur.

Sometimes, however, the plaintiff is looking for a quick resolution and the lawyers can help that resolution along with mediation.

Mediation is non-binding. It helps each side learn about its case. Sometimes it is desirable to conduct a little discovery before mediation to help flesh out the claims and the defenses. The mediator is supposed to be a neutral who really facilitates the process, but there are times when a person experienced in the subject area, whose been around the block…and has come back…can be helpful in interjecting a dose of reality into the discussions. That’s for the lawyers to decide.

The parties and lawyers will meet with the mediator who should have requested a somewhat comprehensive briefing that might include what the parties think they can prove if the case goes to trial, strengths and weaknesses, and the history of any settlement discussions. Following the mediator’s introduction, likely each party will make an opening statement about its perceptioon of its case, and it’s not a bad thing for the plaintiff and defendant to hear the other side’s view. A mediator might restate this view point to reinforce it. Perhaps it is being heard for the first time.

The mediator may or may not break the parties out into seperate rooms and shuttle back and forth. Realism is very important if the case is to be resolved in mediation, and the mediator if experienced in the subject area can add that realism if both sides agree that the mediator should do this. I like to hear the mediator’s perspective, and where cases can’t be settled, the mediator’s perspective may cause me to change my strategy. For example, if I am making no headway with the mediator in explaining an issue, or convincing the mediator, why should I think I will do any better with the judge or jury?

If the parties are able to reach agreement, it is very wise to document the agreement with enough detail that the agreement can be enforced if a party goes back on its agreement. Even if the parties can’t reach full settlement, they may agree to a resolution of certain aspects that will streamline the case, for example, a range of money damages. And they can always return to the mediation table in the future.

Oh yes. Don’t fret that the judge who is assigned this case will feel left out if this case does not reach her court room. Likely, she has more than enough to keep her busy. I have even received thank you notes from judges.

Jim Astrachan is a principal with the intellectual property law firm Astrachan Gunst Thomas, P.C. in Baltimore, Maryland, an adjunct professor teaching trademark and unfair competition law, a co-author of the 6-volume legal treatise The Law of Advertising and Mass Communications, published by LexisNexis Matthew Bender, and frequent columnist and national speaker.  If that weren’t enough, Jim also serves as a mediator with Creative Dispute Resolutions for intellectual property disputes.

One of the best ways to ensure the timely use of ADR is to make it a pre-dispute, contractual obligation between the parties.  This can be accomplished by inserting mediation and/or arbitration clauses directly into the underlying contracts as part of a mandatory dispute resolution procedure.  In essence, the clauses make clear that the parties agree to use ADR either before, or in lieu of, proceeding with an action in court.  These clauses can be used effectively in virtually any type of commercial, construction, financial, or employment contract. 

It should be noted that there are bills currently in Congress that may strike down certain types of pre-dispute arbitration agreements.  That does not mean, however, that the use of ADR clauses — especially those requiring mediation – is unwise or unenforceable.  In fact, when drafted properly, these clauses can be highly effective because they standardize an ADR process that can provide numerous benefits for all involved.  Sample ADR clauses can be found on our website (linked here), or feel free to contact us should you have questions about their use.

The Office of the Register of Wills in Montgomery County, Maryland has recently launched a new mediation program for probate disputes.  Parties who file objections to the administration of a decedent’s estate are immediately provided notice of the program and all of the benefits associated with mediation, and then asked whether they will agree to seek a resolution of the dispute through mediation.  The disputants must return forms noting their decisions to the Register of Wills, who, in turn, will then notify the assigned judge of the parties’ intentions.  In situations when one party agrees and one does not, a scheduling conference with an Orphan’s Court Judge will be held to determine the reasons why mediation is not being utilized.  The program allows the parties to select whomever they want as the mediator, thereby giving the parties the opportunity to select someone with subject matter expertise and the appropriate style for each particular situation. 

Our panel of mediators consists of several very experienced probate attorneys who can assist with these types of disputes.  Please click the Mediators/Arbitrators tab above for more information.

This year has brought the prospect of big changes in the viability of some arbitration agreements, especially when it comes to various consumer transactions.  The House of Representatives and the U.S. Senate both have similar bills in the works entitled, “Arbitration Fairness Act of 2009,” which are designed to address the unequal bargaining power and rights afforded certain individuals who are forced to agree to arbitrate any future disputes.  If passed and signed, these bills would amend the Federal Arbitration Act and prohibit the use of pre-dispute arbitration agreements in the context of consumer, employment, franchise, and civil rights disputes (it does not include pre-dispute arbitration provisions in collective bargaining agreements).

The biggest impact of this putative legislation would be felt in the arena of consumer debt collection actions, where pre-dispute arbitration agreements in credit card applications and cable and telephone company packages are ubiquitous.  With such a prohibition in place, those claims would all head into the court system, and further flood an already overtaxed system.  If this occurs, mediating these types of claims might be a great option, or the parties can voluntarily agree post-dispute to send the case to a neutral and respected arbitrator of their choice.

This legislation is designed to address a real problem in the consumer and employment arenas, but it shouldn’t be interpreted as a rap on the entire arbitration process.  When designed properly and administered fairly, arbitration can be a very effective means of resolving disputes without the time and expenses associated with protracted litigation.

There is no doubt that, like other industries, the legal industry has been affected dramatically by the recent turmoil in our economy.  One of the more substantial changes among lawyers has been the increasing shift away from the traditional, billable-hour model most law firms use.  For decades, law firms and private attorneys have billed their clients based on the number of hours (in increments of six minutes) spent per project per case.  The recent economic squeeze, however, has caused more and more clients to question whether this model is really in their best interests, or whether it incentivizes inefficiency and drawn-out legal processes. 

An alternative has started to gain more widespread use — a project-based fee agreed to up front.  The attorneys present a budget or proposal for how much they believe their representation will cost in total right from the start, and the client either agrees or looks elsewhere.  Once the representation begins, the economic incentives of the attorney and the client are in greater alignment than under the old, traditional system.

This move away from the billable hour is also welcome in the ADR community.  Some attorneys seem resistant to early mediation because a settlement at the start of the case translates into fewer billable hours and fees.  With a project-based fee arrangement, everyone is in tune with what should always be the objective for attorneys and clients alike — reaching a resolution that takes into account all of the client’s interests.  The hope is that more and more attorneys will suggest mediation to their clients from the outset, thus maximizing the potential benefits that can be had.

The past year or so has seen a definite increase in the attention given to alternative dispute resolution, primarily mediation.  Much of this stems from the fact that the economy has soured dramatically.  More and more businesses, individuals, in-house attorneys, agencies and the like are embracing alternatives to protracted litigation because they can no longer afford to spend years and hundreds of thousands of dollars marching their disputes towards trial.  While the cost-savings mediation can provide will certainly attract newcomers to the process, the numerous additional benefits associated with ADR will hopefully convince them to continue using mediation even when the economy picks back up.  Those benefits, along with significant savings in time and money, will never go away.  Over the course of the next month or so, we will examine each of the benefits of mediation in more detail.

One of the primary benefits associated with ADR (mediation and expedited arbitration, in particular) is its ability to save the disputing parties considerable time and money.  Without a resolution, disputes often end up in protracted litigation, which can cost each side hundreds of thousands of dollars and take years to conclude.  Even in good economic times, the amount of time and money it takes to shepherd a case through trial can be obscene.  Fortunately, there are alternatives out there that are not only designed to help parties avoid the harsh realities of litigation, but that also prove extremely successful in resolving disputes in a more satisfying manner.  One of the mediators and arbitrators in our ADR group — Hon. Edward G. Ketchen (Ret.) — recently wrote an insightful article on the types of ADR available and how each type compares to litigation.  A copy of his article can be found here.