“Discourage litigation. Persuade your neighbors to compromise whenever they can. Point out to them how the nominal winner is often a real loser – in fees, expenses and waste of time.”
Abraham Lincoln, July 1, 1850
When the parties are unable to resolve a dispute, their first thought is to litigate, prove that their position is correct and acquire the remedy provided by law. They are focused on how they have been wronged and not on the pain associated with litigation. As we know, litigation involves us, as in-house counsel, and our clients waking up many times in the middle of the night contemplating strategy, wondering if your trial attorney has considered this or that, thinking about money being spent to pursue your case, spending days traveling and preparing our clients for depositions, sometimes being ourselves subjected to depositions, and being frustrated about cancelled hearings and long unexpected delays. You think that the other party must not be getting the message and really doesn’t understand your position. You may spend a lot of time and money to prepare interrogatories and wait months for a response that is so vague or full of objections to the questions that you posed to make the response worthless. You get to talk to your client about why they have to produce documents that they don’t want to produce. Depositions are conducted in which the answers given are not helpful or the parties just answer that they don’t know. In the end you get a decision that isn’t what you expected and get to explain to your client how that happened. You just want way out of this mess.
When people think of alternatives to litigation, they generally first think of arbitration. Rarely, but on occasion, the parties consider mediation. For whatever reason, mediation is only beginning to be more popular in commercial matters. This is not to suggest that arbitration and mediation are mutually exclusive. Parties can agree to mediate a dispute and, if the mediation does not result in a settlement, then the dispute could be resolved through arbitration or litigation.
Litigation tends to strain relationships. Tactics taken by one party in litigation can offend the other party and lead to or increase distrust. While parties can maybe live with that if they had a “one-and-done” contract, it doesn’t help in cementing a long –term relationship that would benefit all parties. Often parties have ongoing relationships and need to continue those relationships long after the litigation is over.
Mediation can be particularly helpful when relationships need to be preserved. Mediation is a process by which the parties and their counsel (assuming that they elect to have counsel) voluntarily meet with an independent third party (the mediator) who is trained to assist the parties in resolving their disputes. Unlike litigation or arbitration, mediation does not require presenting testimony or hiring expert witnesses. Also unlike litigation or the other forms of alternative dispute resolution, in mediation the neutral party works with the parties to reach a mutually-agreed upon solution. The mediator does not reach a decision. The focus of a mediation is not to decide which party has the best legal position. It is to work with the parties to reach a mutually agreeable, and hopefully a win-win, resolution
As we know, there are no iron-clad cases. Do you really want to risk a judge deciding this matter? More than 90% of the cases eventually settle. It is generally a question of how much the parties are willing to go through before they settle, not whether they will settle.
In litigation, the judge is restricted in his decision-making. For example, if a party buys equipment from a second party and is unsatisfied, he may sue the seller. The judge may or may not decide in the buyer’s favor. If he does, he can order the seller to pay money to the buyer. The amount that the judge orders the seller to pay may or may not be satisfactory to the buyer.
Litigation has other inherent problems. At times as in-house counsel, I have seen the client believe strongly in their position. Outside counsel, eager to represent us, agrees. Then, as discovery continues and the trial date is closer, outside counsel has more doubts. No one wants to go back to the client and say that the case no longer looks like a sure winner. Outside counsel may think that doing so jeopardizes their image. A mediator, as a neutral party, can discuss the strengths and weaknesses of a party’s position without concern about repurcussions.
In litigation, information is filtered through the attorneys. The client never hears the other party’s position directly from the other side. In mediation each party, and not just the attorneys, have this opportunity. The mediation may be the first and only time when the businessmen get to listen to the other party. I, and most mediators, strongly prefer that at the mediation the client, and not counsel, present the facts related to the case. Sometimes this gives an “ah ha” moment, where a party finally determines the real reason why there is litigation and then can form a basis for a resolution.
The client also has the opportunity to vent – although while still being respectful. You will need to prepare your client that the other party may need to vent in order to move on and to deal with that occurring.
There may be a better alternative to anything that the judge could order. At times an apology is part of the resolution. Another part of the resolution could be having the seller offering something that is deemed more valuable to the buyer than it is to the seller. For example, there could be equipment that is in inventory and the seller no longer wants but that the buyer needs and the buyer would accept in lieu of the seller paying money to the buyer. Both parties may be happier with this result. Yet, the judge would not order such a remedy. In mediation, the parties would explore various settlement options and could develop such a compromise– a “win- win” solution.
Mediation focuses on what can be done to fulfill the interests of the parties, rather than who is legally correct. Of course, this requires counsel to develop a different approach. Just saying “ we think we have a great case” doesn’t get the case settled. Each party needs to analyze what is important to the other party and see how it can meet those interests in a manner acceptable to both parties.
Litigation is only one way to settle disputes. Given the expense, uncertainty, and time involved in litigation, it is time to consider other alternatives.
David M. Cohen is a former in-house attorney for American Electric Power, where he is specialized in contract law, business law, mineral law and transportation law. He is now providing mediation services as Cohen Dispute Resolution Services, LLC (website www.davidcohenmediation.com).
© 2012 David M. Cohen