mediation strategies for success...linda m. hopgood is a 1979 summa cum laudegraduate of western...
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MEDIATION STRATEGIES FOR SUCCESS
CLE Credit: 1.0 Thursday, June 19, 2014 10:50 a.m. - 11:50 a.m.
Ballroom C Northern Kentucky Convention Center
Covington, Kentucky
A NOTE CONCERNING THE PROGRAM MATERIALS
The materials included in this Kentucky Bar Association Continuing Legal Education handbook are intended to provide current and accurate information about the subject matter covered. No representation or warranty is made concerning the application of the legal or other principles discussed by the instructors to any specific fact situation, nor is any prediction made concerning how any particular judge or jury will interpret or apply such principles. The proper interpretation or application of the principles discussed is a matter for the considered judgment of the individual legal practitioner. The faculty and staff of this Kentucky Bar Association CLE program disclaim liability therefore. Attorneys using these materials, or information otherwise conveyed during the program, in dealing with a specific legal matter have a duty to research original and current sources of authority.
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TABLE OF CONTENTS The Presenters ................................................................................................................. i Mediation Strategies for Success .................................................................................... 1 Good Faith Follows Self Interest ..................................................................................... 9
THE PRESENTERS
Terrence L. Brookie Frost Brown Todd, LLC
201 North Illinois Street, Suite 1900 Indianapolis, Indiana 46204-4236
(317) 237-3851 [email protected]
TERRENCE L. BROOKIE is a member of Frost Brown Todd, LLC in Indianapolis where he concentrates his practice in the areas of construction and surety and fidelity law. He is also a mediator of construction disputes. Mr. Brookie received his B.A. from Denison University and his J.D. from Indiana University School of Law. Mr. Brookie is included in The Best Lawyers in America® 2005-2014 and was selected for inclusion in Indiana Super Lawyers® 2007-2014. He is a member of the Indiana and American Bar Associations, and the American College of Construction Lawyers. Buckner Hinkle, Jr. Stites & Harbison, PLLC 250 West Main Street, Suite 2300 Lexington, Kentucky 40507 (859) 226-2334 [email protected] BUCKNER HINKLE, JR. is a member of Stites & Harbison in Lexington where he practices exclusively in the areas of construction industry and business litigation. He currently chairs the firm's Construction Service Group and is a member of the Sustainability & Emerging Technologies Practice Group and the Business Litigation Service Group. Mr. Hinkle is a graduate of Sewanee: The University of the South where he received his B.A. in Political Science, and the University of Kentucky College of Law where he received his J.D. He is currently a member of the American, Kentucky, and Fayette County Bar Associations as well as the American Arbitration Association, Panel of Construction Mediators.
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Linda M. Hopgood Attorney at Law
771 Corporate Drive, Suite 450 Lexington, Kentucky 40503
(859) 223-3422 [email protected]
LINDA M. HOPGOOD is a 1979 summa cum laude graduate of Western Kentucky University and a 1982 graduate of the University of Kentucky College of Law. She began her practice in Paducah and returned to the Lexington area in 1984. Since that time, she has concentrated her practice in the areas of personal injury, products liability, medical malpractice, mediations and arbitrations. In 1992, she became one of the first mediators and arbitrators in the Commonwealth of Kentucky. Ms. Hopgood has been an AV rated trial lawyer in Martindale-Hubbell for the past fifteen years. She was selected as a Super Lawyer in 2013; admitted to the Bar Register of Preeminent Women Lawyers for 2014; and was elected as a Top Lawyer in Kentucky for 2013-2014 in the area of Alternate Dispute Resolution Law. Ms. Hopgood serves on the Board of the Fayette County Bar Association and the Board of Trustees for Baptist Health Lexington. She served as the Chair of the Kentucky Bar Association's House of Delegates, as well as its Board of Governors. In addition, she is a past Trustee of The Lexington School. Ms. Hopgood is a frequent lecturer at the University of Kentucky College of Law in the area of alternate dispute resolutions. C. Michael Shull Frost Brown Todd, LLC 400 West Market Street, Suite 3200 Louisville, Kentucky 40202 (502) 568-0239 [email protected] C. MICHAEL SHULL is a member of Frost Brown Todd, LLC in Louisville and focuses his practice in the areas of construction law and litigation. He received his B.S. from the University of Kentucky and his J.D. from the University of Kentucky College of Law, where he served on the Moot Court Board and was the recipient of the CALI Award for International Law. Prior to pursuing his legal career, Mr. Shull was a research engineer for the Kentucky Transportation Center. He is a member of the Atlanta, Denver, Colorado, Georgia, and Kentucky Bar Associations. Mr. Shull has been recognized by Kentucky Super Lawyers® 2013-2014 and Chambers USA®.
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Christi L. Underwood Circuit Court Judge
Ninth Judicial Circuit Court 425 North Orange Avenue
Orlando, Florida 32801 (470) 836-2228
[email protected] JUDGE CHRISTI L. UNDERWOOD has served as Circuit Court Judge for the Ninth Judicial Circuit in Orlando, Florida since 2013. Prior to taking the bench, Judge Underwood was in private practice from 2002-2013 primarily as a mediator and arbitrator. From 1992-2002, she practiced with Foley & Lardner as a commercial and construction litigator, and from 1989-1992, she practiced with Maguire, Voorhis & Wells. Judge Underwood is a board certified construction lawyer. She received her B.S. and J.D. from the University of Florida. Judge Underwood is a recipient of the AAA’s “2010 Outstanding Director Award;” included in The Best Lawyers in America, and Super Lawyers of Florida in the alternative dispute resolution practice area as well as being an “AV” rated attorney by Martindale Hubbell. John R. Van Winkle Van Winkle Baten Rimstidt 111 Monument Circle, Suite 302 Chase Tower/Circle Building Indianapolis, Indiana 46204 (317) 231-6320 [email protected] JOHN R. VAN WINKLE has been involved in ADR since 1985, acting as mediator, arbitrator and trainer. His primary focus is mediation of complex commercial, contract, insurance coverage, and class action cases. In the fall of 2005, Mr. Van Winkle was appointed by a State Court Judge in Birmingham, Alabama, to mediate the various HealthSouth Corporation state court cases alleging massive accounting fraud and involving multiple securities cases, derivative cases and insurance coverage rescission actions. Prior to establishing VanWinkle • Baten • Rimstidt Dispute Resolution, Mr. Van Winkle was engaged in the private practice of law as a trial lawyer. He began his trial practice in 1970, trying cases for both plaintiffs and defendants. In the last ten years of his trial practice, Mr. Van Winkle had primary responsibility for complex commercial, insurance coverage, and personal injury litigation and was chief trial counsel in several leading shareholder dispute cases. He received his B.A. from Butler University and his J.D. from Indiana University’s School of Law, where he was the Associate Editor of the Law Review. Mr. Van Winkle is a member of the Indianapolis, Indiana, and American Bar Associations as well as the Association for Conflict Resolution and a Fellow of the International Academy of Mediators.
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MEDIATION STRATEGIES FOR SUCCESS Buckner Hinkle, Jr.; C. Michael Shull III, John VanWinkle, Terrence L. Brookie,
Judge Christi L. Underwood and Linda M. Hopgood
WHAT IS THE GOAL OF MEDIATION?
• A win-win outcome with a focus on interests?
• Or is it all about the money with little opportunity for a win-win outcome?
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WHAT ISTHE MEDIATOR DOING?
• Early stages–Develop trust of lawyers and
decision makers–Learn the case
• Facilitative stage• Evaluative stage
–Should the Mediator evaluate?2
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EVALUATIVE MEDIATION
• Evaluation of litigation risk• Evaluation of litigation cost• Economic position of parties
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WHAT SHOULD COUNSEL DOIN THE PRE-MEDIATION PHASE?
• Assure confidentiality– Is confidentiality protected under rules of evidence
(KRE 408)?– Do local rules help?– Protecting confidentiality through the mediation
agreement. Paul Lurie and Sharon Press, “Protecting Confidentiality Information in Commercial Mediation,” Dispute Resolution Magazine (Winter 2014)
– What can go wrong? Carles Const., Inc. v. Travelers Cas. & Sur. Co. of America, 2011 U.S. Dist. LEXIS 92817 (S.D. Fla., March 31, 2014) 4
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• Educate the Mediator• Identify main issues and obstacles to
settlement• Discovery
– Make sure both sides have sufficient information
• Identify decision makers• Discuss prior negotiations• Make sure all necessary parties are
present
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• Define what is needed in the mediation submissions
• Make sure logistics are adequate• Make sure adequate time is set aside
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SHOULD THERE BE MEDIATIONSUBMISSIONS?
• Should there be any?• Exchange?
–Enough time in advance to allow evaluation
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WHAT SHOULD BE INCLUDED IN THE MEDIATION SUBMISSION?
• Purpose–Educate Mediator and decision
makers• Basic facts• Risk factors• Costs in dispute
–Provide roadmap to Mediator6
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WHAT SHOULD BE INCLUDED IN THE MEDIATION SUBMISSION?
• What should the submission to the Party and Mediator include?– Key facts – Timeline– Key legal issues and arguments– Key contract provisions – Computation of damages
• What should the submission to the Mediator only include?– Prior negotiations– Assessment of strengths and weaknesses– Stumbling blocks to settlement
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SHOULD THERE BE JOINT SESSIONS AND OPENING PRESENTATIONS?
• Is there value, despite emotional levels?• Purpose
– Educate Mediator and other parties’decision maker about:• Risks• Damages
• Who should make the presentation?• How adversarial should it be?• Should you use a power point?
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WHAT SHOULD YOU DO IN THE CAUCUS SESSIONS?
• Provide the Mediator with a roadmap to settlement• Be reasonably honest and professional with the
Mediator • Trust the Mediator• Gain the trust of the Mediator• Provide ammunition for the Mediator• Use the Mediator• Ask questions • Continuously reassess the risk and cost of litigation• Listen to the Mediator• Always be looking ahead
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OFFERS AND COUNTEROFFERS
• Does it make a difference who makes the first offer?
• How should you select your first offer?• Individual settlement offers vs. global
offers• Setting the goal posts • Last and final offers• Should you tell the Mediator your bottom
line and, if so, when?11
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WHAT ARE THE MAIN REASONS FOR FAILURE TO SETTLE?
• Unsettleable dispute• Lack of knowledge of basic facts• Lack of an available, true decision maker• Unreasonable decision maker• Unprepared party• Spinning the Mediator – lack of honesty• The failure to listen• Unrealistic expectations or analysis• Lack of ability to pay• The mediation is just the first step in a longer
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HOW DO YOU GET THE BEST RESULT FOR YOUR CLIENT?
• How do you define best result?– Highest or lowest dollar amount– A settlement– Best Alternative to Negotiated Settlement
("BATNA")• Risk• Cost
• Always consider non-monetary solutions
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HOW DO YOU GET THE BEST RESULT FOR YOUR CLIENT?
• Select the right Mediator• The three Ps
– Preparation– Patience– Persistence
• Bring the right people and make sure the other side does the same
• Client Participation: Bring a persuasive decision maker
• Realistic client expectations14
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HOW DO YOU GET THE BEST RESULT FOR YOUR CLIENT?
• Maintain credibility• Recognize and address difficulties with your
case• Exercise control and maintain professionalism• Compromise• Use the Mediator• Leave the spin doctor at home• Be ready for the Mediator’s tactics including
Mediator’s proposal, splitting the lawyer from his client, coercion, etc.
• Be prepared to leave without a settlement15
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HOW DO YOU HANDLE THE END GAME?
• Understand the end game• Know when it has begun• Understand the possible tactics for
closing• Be patient• Be honest• Be reasonable
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THE SETTLEMENT AGREEMENT
• Prepare the settlement agreement before the mediation
• Execute a mediation agreement before you leave the mediation
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WHAT ATTRIBUTES DO YOU WANT IN THE MEDIATOR?
• A Mediator the other side wants and you trust
• Since the decision to settle is the parties’, should you be concerned about the neutrality of the Mediator?
• Type– Facilitative– Evaluative– Coercive
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CHOOSING THE MEDIATOR• Are mediation skills or subject matter knowledge
more important in the Mediator?• Traits of a good Mediator
– Ability to negotiate– Ability to analyze quickly– Respect– Ability to listen– Ability to persuade– Patience and persistence– Innovative– Ability to withstand pressure
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SHOULD YOU CONSIDERCO-MEDIATORS?
• Add area of expertise–Judge?
• Large number of parties
• The panel expresses its appreciation to James D. O’Connor, Adrian Bastianelli III, and the University of Kentucky College of Law for their contribution to these materials.
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"Protecting Confidential Information in Commercial Mediations" by Paul
M. Lurie and Sharon Press
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GOOD FAITH FOLLOWS SELF-INTEREST John R. Van Winkle
Most mediators and mediation participants have been involved in sessions in which one party accuses the other of negotiating in "bad faith." It is not feasible or necessary to legislate, require or define some aspects of "good faith" mediation. Parties can be expected – and required – to submit information, attend the session, send the right parties, and comply with objective process requirements. But when the concept of "good faith" moves into the parties' negotiation practices, their receptiveness to settlement, their willingness to "keep an open mind," the rules have veered into a non-productive area. A court can appropriately order – and enforce an order – for a party to attend a mediation but it cannot practically enforce an order to keep an open mind, to actively listen, to be receptive to change previously held positions. A party sued for selling a defective product has a right to refuse to settle to vindicate the product; a party who alleges employment discrimination has a right to a trial because of the underlying social and personal benefit an adjudication can produce. Insurance companies have a right to make a policy decision to try minor impact soft tissue cases. Mediation was never intended to force parties to settle. Attempting to frame rules which tell these parties that notwithstanding their previously held position not to settle to keep an open mind and be willing to change that position is a fool's errand and one beyond the original purpose of the rules. Any attempt to legislate such subjective requirements simply invite disingenuousness, with only those parties openly defiant, mentally oblivious, or procedurally suicidal likely to engage in conduct clearly violating objective standards. Surely parties will learn to simply state what defense counsel stated in the Stocker case, supra; that they had previously decided not to settle but would listen with an open mind and be willing to change their position if appropriate. Saying it, of course, doesn't make it so. And "requiring" an open mind, besides being practically impossible, misses an important mediation process really; with the real decision maker in the mediation session, a well-conducted mediation will present that decision maker with the information, arguments and reasons why the other party believes the previously held position should be modified. If, after hearing same, the decision maker chooses not to change the position, so be it. That party has now been presented with the information to fully and completely evaluate his or her position. That is the key. Two process requirements well enforced will eliminate much of the good faith controversy; those requirements are the attendance of the decision maker and the previous exchange of sufficient information to make reasoned judgments. I. MANDATORY PARTICIPATION AND GOOD FAITH
As Dr. Iur Ulrich Boettger argues in "Efficiency versus Party Empowerment –Against a Good-Faith Requirement in Mandatory Mediation," 23 Rev. Litig. 1 (2004), the requirement that parties mediate in good faith is an outgrowth of court-ordered participation in mediation.
"In voluntary mediation, good faith is already present because parties, educated by attorneys and judges, have participated voluntarily." 23 Rev. Lit. at p. 13
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It is only when parties are ordered to attend a mediation that the requirement they mediate in "good faith" really becomes relevant. Some observers noted that a good faith requirement would be necessary so that reluctant parties would not simply go through the motions, engage in "pro forma mediation." Kimberlee K. Kovach, "Good Faith in Mediation – Requested, Recommended or Required", a New Ethic, 38 S.Tex.L.Rev. 575, (1997). Professor Kovach writes:
If good faith is not present, all we will be left with is a pro forma mediation, one more procedural task to be checked off of the long list of items to be covered in order to get to trial. Id. at p. 595.
It is submitted that the right parties, adequately informed, personally attend the mediation, together with the exercise of discretion to exclude certain cases from mediation will resolve most of the concerns raised by those seeking objective good faith requirements.
II. SOLUTION TO GOOD FAITH? SELF-INTEREST
A several pronged approach is suggested to address the underlying goals which the good faith requirement was intended to address. First, the good faith requirement should be retained in the rules but with an acknowledgement of its limited practical utility and narrow application to two basic classes of cases: those in which objective mediation process requirements were violated and those cases in which more subjective requirements, such as mediating "with an open mind" were violated in circumstances which clearly demonstrated "conscious doing of wrong because of dishonest purpose or moral obliquity." Although this evidentiary finding of dishonest purpose seems to be a requirement for sanctions even in cases of violation of clear objective process requirements, the finding is clearly of greater significance in cases involving subjective requirements. These cases – those involving allegations of such elements of good faith "keeping an open mind" – were presumably few in number not because of their infrequent occurrence but because of the ease in avoiding sanctions. One would almost need to imagine, for example, a case involving the discovery of an internal memorandum directing a party representative to attend the mediation, to pretend to listen with an open mind, but to in reality use the session to intimidate the elderly and frail plaintiff.
Courts, parties and advocates should, however, address the important subjective mediation requirements by procedural means independent of the good faith requirement: specifically aggressive promotion and monitoring of the exchange of adequate information to enable parties to evaluate their cases and an aggressive insistence that the ultimate decision maker be personally present at the mediation session. Unlike those instances in which parties with no desire to settle are ordered to mediate, parties mutually agreeing to mediate are inherently pre-disposed to be willing to listen, to change positions if appropriate, to bargain in such a manner so as to encourage the other party to negotiate reasonably. Parties wanting to
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settle are not likely to engage in negotiation tactics which are so extreme that the negotiation process breaks down. It is in their own self-interest to conduct themselves in a manner which will maximize the potential for settlement.
How then can this dynamic of the party's self-interest as a built-in good faith policing force be created or encouraged in those cases in which parties potentially or specifically adverse to settlement are ordered to participate in mediation? Several points need to be made. Initially, it should be noted that the mediation process is not as "broke" as the volume of the debate and discussion surrounding "good faith" would seem to indicate. Most experienced mediators conducting mediation in all types of matters will report that in the vast majority of cases, "bad faith" participation is simply not an overriding or even significant concern. Cases are getting resolved and parties and lawyers seem to remain reasonably satisfied with the process. There are problems and abuses, however, and there are ways outside of the "good faith" requirement to address them. First, in a limited and specific type of case, courts should be more willing to grant objections to mandatory mediation. Take, for example, automobile cases involving minor impacts and only soft tissue injuries. Such cases, unless they have other complicating factors, can generally be tried in a day or a day and a half and if insurance companies charged with defending them make a business or policy decision not to settle such cases, even for nominal amounts, so be it. The trial courts should consider granting a limited number of objections to mediation in such cases. An important caveat is needed here: every experienced mediator has hundreds of examples of cases in which one or both parties were ordered to mediate and one or both had no intention or perhaps even desire to settle before the mediation and yet a settlement resulted. With that proviso, however, it is probably sound practice not to force plaintiffs to the expense of mediation in simple automobile or premises cases in which insurers have made their pre-mediation intent not to settle clear.
Also, if history is instructive, such practices and policies of insurers are cyclical. Insurers, after all, were one of the groups most vocal in the 1980s in favor of mediation. In the category of being careful what they wish for, insurers should realize that they may find once again – even in several automobile and premises cases – that there are economic and practical benefits to mediation. Good plaintiffs' lawyers are resourceful and creative and may succeed in convincing juries that even soft tissue injuries can be significant, life altering conditions. In the meantime, however, trial courts should consider honoring some insurers' current policy to try certain classes of cases. These generally are not the type of cases – simple as they are – which can benefit from some of the secondary positive results of mediation, such as clarification of issues, etc.
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III. GOOD FAITH VERSUS SELF-INTEREST IN MORE COMPLEX CASES
In complex cases which do not fit simple models, such as the "minor impact – soft tissue" case, it will be more difficult for trial courts to exercise discretion in deciding whether cases should be ordered to mediation notwithstanding a party's pre-mediation stated intention not to settle. Indiana's experience since 1992 seems to indicate not only that the great majority of cases submitted to mediation settle, those that do not still benefit from the process. These additional benefits, together with the generally accepted view that most cases settle in mediation, would indicate that trial courts should be reluctant to grant objections to mediation in case outside the narrow group of simple cases described above. Having said that, these more complex cases should be submitted to mediation, the question remains as to how the integrity of the process can be protected. If a simple legislated good faith requirement is not likely to insure an effective process, what measures can be taken? The most effective way to insure that a productive mediation session will occur is to insure that fully – or at least adequately – informed decision makers are present at the mediation session. If the ultimate decision maker, armed with adequate information to evaluate the matter, is present at a mediation session, an experienced and skillful mediator can insure that all possibilities of settlement have been thoroughly and fully explored. In that process, the party's self-interest will work to insure "good faith" negotiation. Imagine, for example, a small closely held corporation manufacturing widgets, one of which was allegedly defective and caused serious injuries to a plaintiff. The majority shareholder, the ultimate decision maker, made a policy decision shortly after the suit was filed to try the case and not to settle. Perhaps the company wanted to discourage frivolous suits brought for nuisance value; perhaps it was simple pride in the product. Whatever the reason, most observers would agree that the company had the right to take the position that it did; that the ADR Rules should not be interpreted to ever require or mandate that a party settle, even if a settlement could be reached for less than trial expenses.
Under circumstances such as presented by this hypothetical case, best practice suggests that defense counsel for the corporation should inform plaintiff's counsel – and perhaps the court – that the company had made a decision prior to the mediation not to offer any settlement proposal at the upcoming mediation session. The plaintiff would then have the option of objecting to the referral to mediation, citing one of the factors stated in the rule, "the willingness of the parties to mutually resolve their dispute." The trial court could then exercise its discretion and exclude the case from mediation, or not. Again, prior experience has shown three important facts which should mitigate against granting the objection; most cases settle, it is difficult to
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ascertain which are not likely to settle and even if they do not settle, there are ancillary benefits to be realized from the mediation.
Best practice next dictates that the advocates, the trial court and the mediator cooperate to insure that the real decision makers are personally present and that there has been enough information exchanged or discovered to enable both parties to make informed evaluations. Referring again to the hypothetical case, the goal should be to insure that the majority shareholder of the corporation, the decision maker, is personally present and that he or she is adequately informed. Once present in the mediation, the decision maker will be confronted with the other side's position, with the weaknesses in his or her own position, with the details of the various expert reports and relevant pieces of evidence and, perhaps most importantly, he or she will sit across the table from and see firsthand the effect upon the person injured using the company's product. If, after a full and thorough mediation session, the decision maker decides to still not make a settlement offer, so be it. The trial court does not have to go through the futile exercise of ordering him or her to have an "open mind." His or her overriding self-interest and goal of preserving the company will work to insure that positions are evaluated, options explored, arguments reconsidered. If the decision maker becomes convinced that a settlement is preferable to going forward, the pre-mediation decision not to settle is alterable when it might not be if a non-decision maker had been sent to the mediation as a party representative. Further, if a decision to explore settlement seems prudent, an effective mediator can explain and even demonstrate how "unreasonable" or harsh bargaining tactics might make reaching the most advantageous settlement less likely. Again, in such an instance, self-interest is a better guarantee of "good faith" negotiation than a simple requirement.
The mediation process can focus the company's decision maker on the reality that the company has only two options; settle for the best result, which only the crucible of the mediation negotiations can produce, or continue with the litigation process, exposing the company to the panoply of possible results also developed and discussed in the session. These litigation risks and potential results are often spread out graphically in the form of a decision tree or illustrated bell curve and can crystallize and clarify the choices presented. Often, the pre-mediation decision to try the case was not made after such a full and complete comparative analysis. Rather, the decision not to settle could have been made on the basis of the answer to this question: should we cave into the spurious claims of the plaintiff's lawyer or should we defend our company's product? At a properly conducted mediation, the question should be shifted and be framed differently: how do the terms and conditions of the proposed settlement compare to the risks presented by going forward with the litigation? The first question, involving the integrity of the company's product and reputation, is contained in the latter mediation analysis but the mediation balancing between real alternatives is not present in the pre-mediation inquiry. Even if a pre-mediation analysis attempts a comparative analysis, it will miss a crucial element; the best alternative to
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continuing the litigation – the negotiated agreement – will only be known after the intense negotiation session.
Lawyers and judges with significant trial experience prior to the institution of mediation will report almost uniformly that this hard mediation comparative analysis was routinely previously not seriously made until the eve of trial. With the jury coming in on Monday, all the pros and cons were fully explored and debated and often what was once black and white got a little gray. These resulting settlements, made sanctions too literally on the courthouse steps, were driven by the same basic self-interest analysis which a well conducted – and much earlier – mediation session can produce. A "good faith" rule will never be a better motivator than the simple self-interest of a fully informed party.
Foregoing adapted from Mediation – A Path back for the Lost Lawyer, Second Edition, by John R. Van Winkle, American Bar Association Section of Dispute Resolution.
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