ADR: mediation with a twist


By Martin C. Weisman

Several attorneys have recently requested that the Court enter an order directing the mediator to issue a Case Evaluation Award in accordance with MCR 2. 403 in the event that a settlement had not been reached during a scheduled mediation. This award would be subject to sanctions against those who fail to accept the award. I call this process "Mediation With A Twist."

Statistically Case Evaluation Awards have a low settlement rate, and do not effectively promote settlement. Using a hybrid format allows the parties and their counsel to select a mediator/case evaluator who has subject matter expertise, and with whom they have confidence. However, this is not a one shoe fits all procedure. Mediation With a Twist is more likely to be successful in commercial disputes than, for example, in a family law dispute.

This approach saves time and money. Most commercial advocates are not huge fans of case evaluation to start with, and, would like to have the option to avoid it. Mediation With a Twist offers a more trusted alternative to the standard case evaluation. In the past I have, as have many other mediators, provided the parties with a non-binding mediator recommended settlement in cases in which a settlement was not reached during the mediation. However, unless the parties and counsel specifically request the mediator to issue a Case Evaluation Award pursuant to MCR 2.403, and the Court issues an order to that effect, the mediator's recommended settlement has no force or effect. Additionally, these non-binding recommended settlements, are rarely accepted by all of the parties and more often than not lead to more unsuccessful back and forth attempts by the mediator to bridge the objections of the parties and counsel.

When the sanctions component added is to the recommendation, there is a greater chance for resolution and acceptance. Mediation With a Twist combines mediation and case evaluation in one proceeding at no additional cost to the parties. It streamlines the process because no additional briefing nor additional appearances by counsel are required. This process results in a more thoughtful and reasoned recommended settlement. A request for this approach requires the mediator to ensure that all potential disclosures regarding relationships between the mediator, the parties and their counsel are made and waived before going forward. Additionally, the mediator must be confident that he or she can remain independent and unbiased during the mediation process and comfortable with issuing such an award if required. In two recent cases I was requested to conduct Mediation With a Twist. I had previously mediated several matters for both sets of attorneys, and had litigated in the past with both sets of the attorneys on the same or opposing side. In each case, I had also been hired by one or both attorneys as an expert witness in the past.

The subject matter of these cases, involved legal and factual issues about which I had a substantial experience and knowledge. At the commencement of each engagement I asked Counsel why they chose this process. Their responses were not unexpected. They advised me that they would rather have an individual who heard all sides of their arguments, thoughts, and strategy during the mediation phase provide a case evaluation award, rather than having an evaluator try to divine what was happening in a standard 15-minute case evaluation. In their opinion they were not worried about providing me with confidential information, nor did they change their approach to the mediation. They believed that their clients, knowing that the mediator would be making the case evaluation award in the event a settlement was not reached during the mediation, actually made it more likely that a mediated settlement would occur. In one of the cases, the attorney further indicated that they preferred an evaluative approach to mediation with some force behind it. The attorney said it "took them off the hook in giving the client information or advice that the client did not want to hear from their own counsel."

Normally, I start my mediations using a facilitative approach, but as the day progresses, and the parties need a little push towards resolution, I become more evaluative. However, if I am going to be issuing a case evaluation award, I believe it is imperative that I stay facilitative for the entire mediation. I remain facilitative because I do not want the parties to try to determine what my leaning would be in crafting a case evaluation award by virtue of any evaluative comments made during the mediation and then try to use that information to craft their strategy. Carefully maintaining neutrality during the mediation phase is important to ensure the parties retain self- empowerment when deciding whether or not to settle.

Mediation with a Twist allows more flexibility in the nature and scope of the award. In talking with counsel, I also learned that they did not want me to issue just a settlement number. They wanted me to consider any appropriate creative or equity concepts in an award that are normally not available in a standard case evaluation. For example, in a shareholder dispute, as part of the award, you can require that one party buy out the interests of the other party at a determined price. In the standard case evaluation, the evaluators can only issue an award with a number, but cannot require the transfer of the shares as a condition of being paid that number. Counsel also wanted the inclusion of the reasons or justifications why I made the award.

Although the above conversations did not take place until after I issued the awards in case, my standard practice was to include some equitable relief and the reasons and justifications for the awards. Both cases did not settle during the mediation. When issuing the case evaluation awards, I give each side 14 days from the issuance of the award to either accept or reject the award. I required their responses be submitted to me by e-mail and it was agreed that same would be kept confidential. All I could tell counsel is that there was a rejection or if both parties accepted. In the two sample cases, I never expected that the parties would accept the award I made during that 14-day period because they were just too far apart and strident during the mediation phase. I thought no matter what I suggested as a settlement, both sides, or at least one side, would reject. But surprisingly, in both cases, both sides accepted my awards and before the 14-day period expired.

In looking back on this experience, I concluded that in both cases, the attorneys had a general understanding of the area where the case could and should settle. However, either the attorneys could not get their clients to consider a settlement in that sweet spot, or they did not want to push or persuade their clients to do so. I also believe that the explanation or reasoning I included with the award, allowed the attorneys to tell their client that this was a settlement that an "independent and knowledgeable" third party advised. It took them "off the hook."

After the cases were concluded, I conducted follow-up conversations with some of the attorneys. I asked them why they accepted the award, and how their client reacted to the award. I was advised that they appreciated the detailed explanation and the inclusion of the equitable relief. They also indicated that the risk of sanctions, if they failed to accept the award, was also a significant factor in determining whether or not to accept the award. Counsel also advised me that including in my explanation references to the potential costs their clients might face in terms of dollars, effort, time, and emotion in going forward with the litigation, played a significant part in convincing them to accept the award. These were not small dollar value cases. In my experience, however, small dollar value cases are often harder to settle, and even using the Mediation With a Twist approach may not be as effective.

I have served as a Wayne and Oakland County Business Court Case Evaluator on numerous occasions. Sitting on a three- person panel, handling multiple cases a day with only allowing approximately 15 minutes per case does not make for informed, knowledgeable and comprehensive awards. Also, often, my co-case evaluators or I would not have experience with the type or nature of some of the cases we were evaluating.

I have also had the privilege of serving as a mediator on matters pending in both jurisdictions. These experiences provided me a good perspective on how combining a mediation with a case evaluation award would work and where it would be the most helpful. Is this an approach that I would or could recommend? The answer is a strong YES. I would definitely recommend "Mediation With a Twist" particularly in commercial, business court cases. The mediation portion was the same as any standard mediation. I received confidential information, the parties and attorneys contributed as if it this was a normal mediation. But the ultimate outcome resulted in resolution. Without the Case Evaluation Award, both cases would not have settled at that juncture.

I believe that Mediation With a Twist is likely to be used more often in the future. So, for the advocates who may be intrigued by this process, consider using this approach for your next case. Use the opportunity to select a mediator who both attorneys or sides have confidence in, and who would have some topic specific expertise. Make sure you advise the mediator what you would like to be considered and included in the Award. After you have experienced Mediation With A Twist, please e mail me and share with me your experiences with the process.
Martin Weisman has served as a neutral and party appointed arbitrator, mediator, and/or case evaluator in numerous commercial matters where claims were in the millions of dollars. These have been court and/or party appointed positions as well as AAA and/or PREMi ( matters. He has been named a Michigan Top Lawyer by DBusiness magazine each year since 2009, a Michigan Super Lawyer by Michigan Super Lawyers each year since 2007, a Martindale & Hubbard Preeminent and AV rated attorney, a member of the National Academy of Distinguished Neutrals, and served as the chair of the Alternative Dispute Resolution Section of the State Bar of Michigan for 2014-2015 after serving on its Council for 7 years. Weisman has been designated as a mediator and as an arbitrator for the American Arbitration Association's complex commercial panels. He has also served extensively as an ADR trainer, lecturer, and author.