Monday, February 25, 2013

Help A Law Student Out - Mandatory Mediation for Business Court Cases?

I received the email below from a Boyd Law student who would like our collective input on a research paper.  I  think its a pretty interesting topic, actually, so maybe we can help 'em out:
. . . I am writing my research paper on mediation in the business courts. My question is whether mediation should be mandatory for all cases filed in the business court. I am aware as part of the expensive filing fee to be in business court, the parties are entitled to a free settlement conference with one of the other business court judges, but my question is do lawyers (in particular those who deal with the business court) feel this should be mandatory rather than an optional? and if so at what point would it be most effective?
My hypothesis is that it would be extremely effective, but really not until sometime into discovery. I theorize that parties are too hot headed to mediate properly until they have seen a couple bills pass their way. And then it may be extremely effective to have them sit down and try to reach a settlement. However, I have to contrast this with the purpose of the business court, which is to get disputes resolved quickly so that business, and people, can go back to work.
My own opinion on this topic (and yes, I do practice in business court), is that I believe mediation is almost always helpful on some level, so I could probably live with the idea of mandatory mediation.  However, as the emailer noted, I also believe that timing is everything. 
 
 
I've found that if you mediate too early in the case, the benefits can be limited by the parties still being too emotional to really look at the situation objectively, the parties often haven't yet realized (through some motion practice), that their claims/defenses might not be as strong as they initially thought they were, and/or the parties haven't yet realized how expensive, exhausting and time-consuming litigation can be. 
 
 
On the other hand, if you wait too long to mediate, the parties can sometimes feel pot-committed and/or there may not be adequate leverage/risk left in the case for one or both of the parties to justify a settlement.  If I had to pick the perfect time to mediate, I would say the parties (or the Judge, after motion practice), should be able to decide when, as long as it was anytime during or right after discovery closes, but before the dispositive motion deadline. 
 
 
What does everyone else think?

6 comments:

  1. I would say if you want to see the results of mandatory mediation / settlement conference, just take a look at how many cases are settled during the mandatory pre-litigation mediation.

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  2. Argh. Bloody captcha. Someone entire sentences got removed. That was intended to say that if you want to see the results of mandatory mediation, you should look at CD litigation, where that is already the case. Number of cases resolved during pre-litigation mediation? Zero.

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  3. I don't think it should be mandatory. I like that Judge Gonzalez orders the parties to be at the Rule 16 conference and makes them aware of the possibilities of settlement conferences and attorney's fees. I think that forcing people to mediation ends up a complete waste of time and a boon for the lawyers racking up fees in the mean time. One surprising thing is how really ineffective mandatory settlement conferences are. You would think that judges would be a little more persuasive, but I've had more luck with hired guns.

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  4. I think if the Business Court Judges decided to use Rule 16Conferences to set up not mandatory mediation but an Early Neutral Evaluation (like Federal Court), they would be much more successful. I also agree that Judge Gonzalez's Rule 16 Conferences (party attendance, substantive discussion of claims and costs of litigation, benefits of offers of judgment) is the most effective use of the Rule 16 Conference by the Business Court Judges (although I have not seen Judge Allf's yet).

    However the Boyd Student asked about mandatory mediation. The answer is that this very concept was brought to the Business Court Judges and was uniformly and unanimously shot down, with the most vocal critic being the one BC Judge who most of the attorney proponents believed would be its biggest supporter (Judge Gonzalez). The reason given is the perception that Business Court Judges are too busy to undertake mediations in matters where the parties are not yet committed to the settlement process and that Business Court does not want to serve to line the pockets of private mediators. If the parties want a Business Court Judge, they can have a Business Court Settlement Conference. If the parties want a private mediator, go hire a private mediator of your choosing. However Business Court will not be adopting mandatory mediation any time soon.

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  5. I don't think a one-size-fits-all mandatory mediation order is helpful. Some cases are ripe for mediation at the inception of litigation and it really is just matter of some dingbat getting sense talked into him or her by a mediator. Other cases are not ready that early. There are often legitimate disputes that need to be ferreted out with discovery. Some cases are not ready until there have been at least 20 contentious discovery disputes. While it would be a boon to us attorneys to sit there with our client reps who have zero settlement authority or zero intent to participate in settlement, it does not promote pushing cases forward. At the right time, most prudent attorneys (and there are a few of them out there) will recommend a case go into mediation, even if for strategic reasons rather than a real intent to settle. Let the attorneys decide when the time is right. Don't force it on anybody.

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  6. Although it is a continuum, there are basically 5 points in time when convening a mediation is most effective: Before litigation starts, just after a complaint is filed, after some discovery, just before trial, and after an appeal is filed, but before briefing. My experience is that it totally depends on the parties as to whether they are ready to settle. That being said, it is amazing to me that there is a settlement 50% of the time in the Supreme Court settlement program.

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