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February 13, 2024 Feature

Alternative Dispute Resolution Options

K. William Gibson
The author reviews alternative dispute resolution options such as negotiations, mediation, judicial settlement conferences, and arbitration.

The author reviews alternative dispute resolution options such as negotiations, mediation, judicial settlement conferences, and arbitration.

Andrii Yalansky via Getty Images

When I was in law school—a very long time ago—I had an opportunity to work as a courtroom clerk for a state court judge. I spent two years watching jury trials, both civil and criminal. It was the civil trials that I found to be of particular interest. I spent two years trying criminal cases after I passed the bar, but eventually, I settled on a career handling plaintiffs’ personal injury (PI)cases.

I still handle PI cases, but mostly I serve as an arbitrator and mediator in the state of Oregon. As a plaintiffs’ lawyer, I had to deal with the risk management issues that are baked into virtually every PI case. My clients all wanted a full measure of justice and often expressed a willingness to go to trial if the other side wouldn’t pay what they wanted to settle the case. Eventually, when the clients came to realize how long it would take to get to trial (often two or three years), how much it would cost for expert witnesses and other case expenses, and how much time they would need to invest, they usually decided to try to negotiate a settlement, even if it was for less than they had originally thought the case was worth. (One client rejected settlement offers until he realized that he would have to take three days off work.)

A big part of risk management involves assessing whether you think you can “beat the offer” by going to trial. As I wrote in an ABA book some time ago, “Your client expects you to spend as much of your time and your money as is needed to fully vindicate their rights” (How to Build and Manage a Personal Injury Practice (3d ed. 2013)). Spending a lot of time and money on a bad case will not turn it into a good case. Likewise, if you don’t spend enough time and money on a potentially good case, you may not get the result that you were expecting. Wisdom and experience (i.e., bad results at trial) help you know whether you are spending your time and resources wisely.

Back when I was working for the judge, I saw any number of lawyers and clients in civil cases come away disappointed with the jury’s verdict. Usually, the bad verdict resulted from facts that caused the jury concern, such as a long history of car wrecks that made the jury skeptical about causation and motive, severe claimed injuries resulting from a minor accident, or misrepresentations during discovery that could not be explained away at trial.

Back then, alternative dispute resolution (ADR) was not widely used. Part of the problem was the culture at the time. Trial lawyers tried cases. Settling was seen as an unwillingness to go to trial. Many lawyers truly believed that their skills in the courtroom would be enough to overcome defects in the case. That was rarely true.

Over time, the culture changed. My unscientific opinion is that when the Baby Boomers began practicing in the 1970s, they brought a different point of view with them. They were less aggressive. They were less focused on winning at all costs. This is only my opinion, but it is based on two years of watching trials as a clerk and 40-some years of practicing law. What I have seen as a full-time arbitrator and mediator for the past 30 years has reinforced that view.

Not only did the culture change regarding the use of ADR in civil cases, but laws and court rules changed as well. Until the 1960s, many states had “contributory negligence” statutes that provided that a plaintiff who was as little as 1 percent negligent in a case would be barred from any recovery. Imagine how that emboldened defense attorneys and struck fear in the hearts of plaintiffs’ lawyers. Most state laws eventually changed to a “comparative negligence” model where plaintiffs who were found to be comparatively negligent would have the verdict reduced by their percentage of negligence. Those laws made it easier for a plaintiff to prevail. Many states use the “pure comparative negligence” approach so that a plaintiff found to be 90 percent at fault would still receive 10 percent of any damages assessed by the jury.

Another major change came about when courts began requiring that cases filed for damages in an amount below a certain threshold would have to go through some form of ADR before being eligible for a jury trial. Where I practice, that amount is $50,000. In some jurisdictions, the required ADR can involve either mediation or arbitration, but in other jurisdictions, only arbitration will satisfy the ADR requirement. Courts across the country also began to require what are known as judicial settlement conferences (JSCs), in which a sitting judge attempts to mediate a settlement. My view from attending a number of JSCs is that, frequently, the judges were not trained mediators but instead relied on the authority that came with their black robes to force the parties to settle.

ADR finally came into its own in the 1980s, when attorneys began to set up their own arbitration/mediation practices. In many cases, retired judges did the same after reaching retirement age and went into arbitration and mediation full- or part-time—usually with a preference for mediations.

Negotiations

When we speak of ADR, we usually mean arbitration or mediation. ADR can also be as simple as face-to-face negotiations, where the parties and their attorneys meet in person to see if a negotiated settlement can be reached. Although not always the case, negotiations generally take place after discovery has been completed but before large sums have been expended on experts. I have spoken to many attorneys who prefer to negotiate without the assistance of a mediator. Most of these attorneys explained to me that their powers of persuasion are so good that the other side will usually capitulate. “I’ll just go to lunch with opposing counsel and get the deal done,” is how one lawyer explained it to me. Some of us need a little help.

In the world of PI litigation, most cases, particularly smaller cases, are negotiated between the plaintiff’s lawyer and the claims adjuster. Only after settlement discussions break down does it become necessary to get some help from the court or a mediator. Because many cases settle before a lawsuit is filed, the courts will usually not intervene in settlement discussions, and it becomes necessary to ask for help from a mediator.

Mediation

Sometimes, attorneys will hesitate to enlist the aid of a mediator, thinking that doing so will give the appearance of weakness or of not believing in their case. With so many cases going to mediation, this is less of a factor now than it might have been in the past.

As mentioned earlier, the mediator may be a private attorney or even a non-attorney, or the mediator may be a retired judge. Some defense attorneys, especially those representing a large company, will insist that the mediator be a retired judge. Often, the client will insist on using a judge, believing that a retired judge will be more credible.

Different mediators will have different approaches to mediation. Some mediators, especially judges, will encourage the parties to “cut to the chase,” while others will spend a great deal of time getting to know the parties. In one case where I represented a party, the mediator spent four hours getting to know the parties before she would allow anyone to begin talking numbers. Another mediator wanted to spend a full day with each party before the formal start of mediation. That approach struck me as very expensive.

Sometimes, the mediator will give a “mediator’s number” for the parties to respond to. The mediator’s number is meant to show the mediator’s evaluation of what the case should settle for. This, sometimes, will spur movement in the case, while other times, it will not. I never do that as a mediator.

I have found that the greatest benefit of mediation comes when the parties and their lawyers are forced to evaluate the strengths and weaknesses of their case. Often, as a mediator, I see that the plaintiff’s lawyer, particularly, has not discussed the weaknesses of the case with the client. Often, when the lawyer expresses some doubt about the winnability of the case, the client is surprised.

One recurring problem that I see in mediation is that the plaintiff’s lawyer has not determined if there are any liens or repayment obligations. Those may include workers’ compensation liens, health insurance liens, PI protection subrogation, or unpaid medical bills. Without that information, it is difficult to settle the case.

The only real disadvantage of mediation is that it can become expensive, especially in smaller cases. A full-day mediation can often cost $3,000 to $5,000 or more. Not every case merits spending that much.

Judicial Settlement Conferences

If a lawsuit has been filed, a judicial settlement conference might be the preferable ADR option in some cases. The biggest advantage is that it is usually free. The disadvantage is that you might draw a busy judge who is unfamiliar with the issues in the case or who is busy on other matters while mediating your case. My view is that it is worth trying. I’ve often found that, as a litigator, I have gained insights into my case by meeting with a judge, even if the case does not settle.

Arbitration

Arbitration is more formal than mediation, and a favorable result in arbitration may encourage the winning party to “dig in their heels.” Parties don’t always understand that an arbitrator’s decision may not always reflect what a jury would decide after hearing the case. In most jurisdictions, court-mandated arbitration decisions are not binding, and either party has the right to a de novo appeal involving a jury trial.

That being said, many cases get settled after arbitration and before a jury trial.

Arbitration rules are designed to keep costs down by allowing experts’ reports instead of live testimony. I had an arbitration hearing last week where the insurance company called an accident reconstruction expert to testify live, and the plaintiff called a medical expert. Those costs raise the stakes in even a small case.

Since the COVID-19 pandemic, most of my arbitrations and mediations have taken place over Zoom. It is not perfect, but it saves a lot of driving. Everyone seems to have gotten comfortable holding hearings remotely, and no one is clamoring for a return to in-person hearings.

Conclusion

As a plaintiff’s lawyer for most of my career, I have found mediation to be an excellent way to get cases settled, and, as stated above, I have learned a lot about my cases by simply going through the mediation process.

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K. William Gibson

Solo Practitioner

K. William Gibson is a Portland, Oregon–based lawyer who has been primarily engaged in arbitration and mediation for the past 30 years. He is the author of the best-selling ABA book How to Build and Manage a Personal Injury Practice, first, second, and third editions. He served as Chair of the ABA Law Practice Section in 2001–2002. He was honored with the Samuel S. Smith Award for lifetime achievement in 2013 by the ABA Law Practice Section.