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Quote of the Day - I'm a typical middle child. I'm the mediator. The one that makes everything OK, puts their own needs aside to make sure everybody's happy. It's hard to change your nature, even with years and years of therapy. - Jennifer Jason Leigh
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Court Strikes Down The ADR Oddity of 'Binding Mediation'

At some point in time during a lawsuit, the parties inevitably ask about the prospects of settlement as a means to avoid continuing legal bills and the "outcome uncertainty" of a decision by the trial judge.  There are a number of ways to approach settlement discussions with the other parties, and those lawyers with as much grey in their hair as me will remember the concept of "private judging,"  which now has been transmuted into the somewhat more sanitized word, "arbitration."

Arbitration then led to other sanitized words like "alternative dispute resolution" and "mediation."  ADR is generally interpreted to encompass virtually all means of resolving disputes through means outside the court system.  The two main forms are arbitration and mediation.  They're very different animals.

In an arbitration, the parties have a form of a trial with the notable exceptions that the proceedings are conducted privately and not in court.  There are a set of evidentiary rules and procedural means to either confirm or appeal an arbitration award in California, so while the process is somewhat less formal than court, it's not by much.  Arbitration, though, has the advantage of being much faster and for that privilege the parties pay a private judge.  That expense is a dramatic distinction from a court trial, depending on the fees, costs and length of the arbitration.  The result can be binding or not, depending on the agreement of the parties. 

Mediation, on the other hand, is a much less formal process where both parties and their lawyers pitch, cajole and negotiate with the mediator (notice I didn't say judge) on the respective merits of their case and try to convince the other side to settle by "using" the mediator.  Mediations have no rules or procedure (at least in California and several other states where I'm admitted to practice) and the information provided to the mediator is usually quite different than provided in an arbitration.   It's different because you're negotiating and trying to cut a deal, not litigate a case.  You're more likely to discuss in confidence shortcomings in your case with a mediator.  Mediation so far has always been considered nonbinding.

Given these differences, you treat an arbitrator quite differently than a mediator, and more like an actual judge.  With an arbitrator (like a judge), you're an advocate, not a negotiator.

A recent California opinion explores the distinctions in these concepts alongside some of the surrounding issues involved with mediation, alternative dispute resolution and a brand-new oddity called "binding mediation."   In the case on appeal, the parties reached a mediated settlement on all but two terms.  The payment terms were left up in the air and the parties also agreed “in the event of a dispute as to the terms of the settlement the parties agree to return to the mediator for final resolution by ..."  There, the communication broke down.  One version said binding arbitration, but had a line through it, and was replaced by the word "mediation." 

Binding mediation is very hard to describe, but in the case in the last link, the mediator described how he intended to resolve the parties' disagreement over the payment terms of the settlement he had mediated:  “[T]he parties have agreed in advance that in the event the parties fail to agree, I then decide these terms and conditions, typically by asking the parties to each submit to me their final offers, accompanied by their oral argument as to why I should select their version over all others. I then select as the final binding provision the term or terms of either one party or the other."

Huh?  If you are as dumbfounded as me, then we're not alone.  Three justices on the Court of Appeal were likewise dumbfounded, and one of the concurring justices called the term "binding mediation" oxymoronic, and a "fuzz PR phrase ... not worthy of us [lawyers and judges]."   That Justice further eschewed legal language "softening" from terms like "private judging" and "arbitration" to "alternate dispute resolution" and "binding mediation" by the MBAs and PR personnel who have businessified the practice of ADR.  The main problem with binding mediation is the utter lack of rules and procedures guiding how to engage in it and then how to interpret what happens when something goes wrong, which it inevitably does, and as it did in this appeal.

Fortunately, binding mediation is still just that:  an oddity.  The Court dismissed it out-of-hand, banning the use of the hybrid form of mediation and arbitration.  Justice Bedsworth, who blogs here, summed up the problem with binding mediation this way, "A case-by-case determination that authorizes a 'create your own alternate dispute resolution' regime would impose a significant burden on appellate courts to create a body of law on what can and cannot be done, injecting more complexity and litigation into a process aimed at less."

Well said.  The parties will have to reach an agreement all over again, but this time include all the terms of their agreement.

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Saturday, June 03, 2006 at 12:57 Comments Closed (0) |
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