HOW HAS THE ECONOMIC DOWNTURN AFFECTED THE MEDIATION PROCESS?

Have our settlement strategies and alternative dispute resolution programs, which are now part of our courts’ case management system, been impacted by the economic downturn? Do the circumstances pose new hurdles to getting cases resolved by mediation?

I have been moderating a series of Webinars on mediation related topics aimed at the trial lawyer and mediation advocate. I have been joined by several colleagues, including my long time friend, Martin Quinn, who is a full time mediator with JAMS in San Francisco. Martin is an outstanding mediator who came to his second career some 10 or so years ago after serving as a prominent litigator in San Francisco with two of its top law firms. Martin has been a mediator in a number of our firm’s cases.

We discussed a number of issues a few weeks ago relating to the impact the recession has had on the settlement process. I realized several observations as a result of our discussion and our dialogue beforehand. These are my views only, and I would not presume to represent Martin Quinn as agreeing with these comments. The information is anecdotal, i.e. it is based on what I have seen and also what I suspect may be the case. I have not done a survey, except informally with many of my colleagues. Here are a few of my observations:

• Has the recession affected how mediations are conducted? From what I hear, it has. Cases are a bit tougher to settle because carriers are cautious about cash. No surprise there as from what I have read, most everyone, even the well to do, are not spending as much and are more cautious in buying. That means that in mediation, a plaintiff has to have the leverage and information to persuade the insurer to pay monies on behalf of its insured now rather than later. Defense costs are a factor as this represents an ongoing expense that can be avoided. Perhaps more emphasis must be placed on this aspect, as well as the exposure.

• Are litigants showing any reluctance to go to mediation? Are they delaying the process? It appears that this has been occurring. Some defendants are not opposed to mediation but want to wait until there is some turn in the economy to ease the uncertainty that a turn around is headed its way. Earlier in the year, defendants were known to stall in agreeing to mediation if not faced with an immediate trial date, saying “maybe late summer or early fall.” So we are almost there; will the defendant be more willing to mediate now?

• Are the parties engaging in more direct negotiations rather than using mediation? I have heard that is the case. My experience is, however, that mediation is still the preferred mechanism for resolving disputes, and I have seen no change in that approach in the cases we have settled this year.

• How has the recession affected a plaintiff’s practice; what am I seeing as to the a) willingness of defendants to go to mediation, and b) defense counsel’s willingness to recommend mediation? I think I have covered this. But I also believe the reluctance is easing a bit. Still, it is important to have your case ready for mediation before approaching the subject and be prepared to use all leverage you can to bring defendants to the mediation table. You also need to do the economic analysis for settlement vs. trial. “Cash is King,” as the saying goes.

• How are litigants approaching the cost of mediation? Are there deals to be cut with mediators? I have not seen any mediators offer or respond to proposals for reduced fees. But I have noted that pre and post-mediation billings are often underbilled or “light.” My colleagues who are mediators, however, tell me that business is business and “deals” are to be made for reduced fees.

• Are the parties cutting back on discovery before mediation to save money, hoping the case will settle? I have not seen this. Indeed, in some cases I have seen defense firms want to hasten certain discovery before the mediation. No comment.

• How has the recession affected the mediation process? Are cases tougher to settle? Does it take longer? See above.

• Impact on multiple defendant cases? Are they tougher to settle? These are always tougher to settle. My experience this year is that the process takes longer with multiple defendants and that it is more difficult to get the defendants to split the settlement “pot” among themselves. Mediators have told me this also.

• What are your suggestions for getting cases to mediation with the economy likely not to show much real, sustained recovery until sometime in 2010? If you are trying to get your case settled early, that may be difficult because you may not have the leverage and the motivation by the defendant and its counsel may not be present. Thus, it may take more work to posture the case for mediation; that is, written discovery, document review and some depositions may need to be taken to gain the advantage and information which will persuade the defendants that now is the time to get the parties to the table. Also, getting a trial date as quickly as possible is important to put pressure on the defendants to settle. That always helps.