Sanns Mediation World of ADR

Part of being an effective mediator is having a good understanding about how people make decisions.  After all, a mediator is assisting people in making decisions.  We all like to think we are making rational decisions.  However, that is not always the case (despite our best efforts to the contrary).

Professor Daniel Ariely (Duke University and MIT) conducts extensive research on human behavior and has written a fabulous book on this topic, Predictably Irrational.  He looks at how free! really isn’t free and how morality disappears when we’re emotionally (or sexually) aroused.

In game theory, there is a game called the Ultimatum Game.  One person is given an allotment of money, say $1000, and is told to offer a certain portion of it to another person.  If the other person accepts, they both get that amount of money.  If the second person declines, neither party gets the money.  Rationally, the second person should accept anything offered to them as any dollar they receive is more than they had previously. Studies done by Professor Ariely and his collegues have shown that most people will not accept less than 30% of the total pot.

There are a number of theories as to why the second player would act seemingly irrationally.  One is that the second player is making a “fairness” judgment:  it’s not fair that the first player is getting more than 70% of the money thus they should get nothing (while the first player gets nothing either).  Another is that the second player is setting themselves up for a better payout just in case there is a second round of the game (while there is no guarantee that there will be).

To test this further, the experimenters went to a bar where they were likely to find drunken (and hence “more rational” people who focus more on short term goals, versus the longer term goal of a better second round).  They found that most drunks would turn down deals for less than 50% of the money.

There is an interesting parallel to negotiations (and mediation discussions).  Parties to a negotiation often will get lost in the emotions of the conflict and instead of seeing their own best interests are taken care of, they become more interested in “hurting” the other party even though it hurts them as well.  If fighting over a fixed pot of money, anchoring (the first offer made by each side) becomes that much more important.

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Arbitration is an alternative to a court making a decision on an issue in dispute by having an arbitrator, or private judge, make a decision on a matter. The benefits of arbitration include a quicker and less expensive trail to a decision. The disadvantage is that the ruling of the arbitrator cannot be appealed, except on very narrow grounds. Those grounds include an award procured by fraud, corruption, or undue means; evidence of partiality or corruption among the arbitrators; the arbitrator(s) were guilty of misconduct that prejudiced the rights of a party; or the arbitrators exceeded their powers. Some parties try to argue “manifest disregard of the law” as a way to vacate an arbitration award, but this ground is not specifically mentioned in the Federal Arbitration Act (FAA), which governs arbitration award vacature by courts.

The US Supreme Court recently ruled in Hall Street Associates LLC v. Mattel Inc. that manifest disregard is not among the grounds for vacature and thus cannot be used to vacate an award of an arbitrator — even if the parties agree to allow this ground for vacature by a court in their private arbitration agreement.

In November 2009, the 10th Circuit handed down an opinion which not only upheld Hall Street, but also awarded counsel fees as a sanction to the respondent of the appeal. The case is DMA International Inc. v. QWest Communications International, Inc. The court said, in part, “[U]njustified, protracted attempts to vacate arbitration awards destroy the ‘promise of arbitration’ and will not be tolerated….Thus, one who ‘assumes a never-say-die attitude and drags the dispute through the court system without an objectively reasonable belief that it will prevail’ does so at the risk of being sanctioned.”

The take-away: understand that an arbitrator’s award is likely final and has limited grounds for appealing a decision you do not agree with. If you want to limit your risk, build in a high-low scenario which limits awards in both directions or an upside-downside.

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Much of what happens in a lawsuit is gamesmanship, especially during the discovery phase.  Discovery comprises much of the pre-trial phase of litigation where each party seeks to understand what the other side(s) know, what documents they have pertaining to the litigation, what they will say under oath, etc.  Discovery can be expensive.  A Rand Corporation study found that 80% of litigation costs are incurred in the discovery phase.  Since less than 2% of cases filed actually go to trial, discovery ends up being THE cost of litigation for the vast majority of cases. As a result, gamesmanship during discovery can be used as strategic or tactical tool — or abused — depending on how one views it.  Some examples:

• Asking for voluminous or tangentially relevant documents
• Taking depositions from an excessive number of people
• Repeated last minute canceling of depositions
• Asking inappropriate questions in an interrogatory
• Refusing to provide requested documents
• Refusing to answer interrogatories
• Filing a lot of motions with the court (motions to dismiss, for summary judgment, to compel, etc.)

The goal of the gamesmanship is to create addition expense or agita for the other side, causing them to want to abandon their case or to settle on more favorable terms.  Unfortunately, the usual result is a lose-lose scenario where it creates the same problems for both sides.

In a recent case in California, the court in Clement v. Alegre , 09 C.D.O.S. 12126 imposed a monetary sanction of more than $6600 on one side for abusing the discovery process.  In this case, the plaintiff had objected to answering 20 of 23 interrogatories.  A retired judge acting as discovery referee noted that plaintiff’s objections were “unreasonable, evasive, lacking in legal merit and without justification” and he imposed the monetary sanctions.  Justice J. Anthony Kline for a unanimous appeals panel wrote in salient parts:

We have no difficulty in affirming the trial court’s determination that in this case plaintiffs forced to court a dispute that was not ‘genuine’.

Indeed the record here strongly indicates that the purpose of plaintiffs’ objections was to delay discovery, to require defendants to incur potentially significant costs in redrafting interrogatories that were clear and that did not exceed numerical limits, and to generally obstruct the self-executing process of discovery.

Ample evidence supports the referee’s determination that plaintiffs deliberately misconstrued the question.

Clearly this was ‘game-playing’ and supports the referee’s findings and the sanctions award.

Kline further chastised both sides for failing to mount any “serious effort at negotiation and informal resolution” and used the ruling to remind all lawyers to avoid a similar outcome.

Mediation can help avoid all of these discovery problems.  Discovery is a means to an end — not the end.  The end is resolving your dispute.  Mediation helps get resolutions on your terms.  Mediation seeks to find win-win solutions. If you’re looking for a resolution to your dispute, call me at 732-963-2299 or contact me online.

Tags: Commercial Mediation, Lawsuits // 1 Comment »

It was reported last week that there may be a error generated by the software family court uses to calculate child support payments.  As a default (i.e. if there is no other agreement in place), NJ uses a formula known as the child support guidelines.  The court uses software to to the calculations on each case where it is required.  It seems that one litigant found an error in the software’s calculations.  The court is investigating the source of the problem.

So, if the court performed the calculations for you, you may want to manually verify the math.

Here is another reason to mediate your divorce and periodic changes.  Mediating keeps the results on your terms.  For more information, contact NJ divorce mediator Marvin Schuldiner at 732-963-2299 or using this form.

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In a previous posting, I discussed the American College of Trial Lawyers task force interim report on trials in America.  The final report is out and here are the highlights as it pertains to mediation and getting your lawsuit settled:

• “Courts are encouraged to raise the possibility of mediation or other form of alternative dispute resolution early in appropriate cases. Courts should have the power to order it in appropriate cases at the appropriate time, unless all parties agree otherwise. Mediation of issues (as opposed to the entire case) may also be appropriate.”
• The task force recognized that this is a controversial conclusion, but one represented in reality.
• “82 percent said that court ordered alternative dispute resolution was a positive development and 72 percent said that it led to settlements without trial.”
• “52 percent said that alternative dispute resolution decreased the expense for their clients and 66 percent said that it shortened the time to disposition.”

In New Jersey, we have a presumptive mediation program in state court.  Most cases are referred to mediation and most settle before trial.  Parties will be even better served by mediating their dispute prior to the expense and hassle of filing suit.  If you are looking to save money in resolving your disputes, please feel free to contact me to discuss your case further and how mediation can help.

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I have written previously about the challenges that the law industry faces.  The Wall Street Journal recently reported on pharmaceutical giant Pfizer’s switch to flat fee invoicing for outside counsel.  This turns on its head the basis of the long term billing model of the legal industry, the billable hour.

In this video, Pfizer’s chief counsel Amy Shulman explains Pfizer’s program:

Companies looking to save on legal expenses should also use mediation.  Mediation is cost effective and seeks win-win outcomes.  For more information on how mediation can help you, please contact me.

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Sprint/Nextel has a humorous new commercial (embedded below) which posits what the world would be like if loggers ran things.  The context of the commercial is loggers making decisions (and carrying them out) in a divorce.  While the commercial is “cute”, the analogues to real life are there. Do you want others to make important decisions for you, or would you rather make them yourself?

A mediator can help the parties communicate and assist them in making their own decisions…unless of course, you want your house/boat sawed in half.

Tags: Commercial Mediation, Divorce Mediation and Law // 1 Comment »

Always remember to update your official records when you get divorced.  These include bank accounts,beneficiaries of investments and insurance policies, and co-insureds.  Many people do not think about these things and it can get you into trouble.  I previously reported about the ex-spouse who inherited money she was not entitled in the divorce decree because the husband forgot to change his beneficiary.  Earlier this year, the mayor of Carlsdadt, NJ and his ex-wife were convicted of health insurance fraud; they forgot to notify the insurance company about the divorce.  This generally must be done within 60-days of the divorce decree being finalized.

Make sure you do everything you need to when you get a divorce.

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I tell all my civil mediation clients the same thing:  If you’re going to settle, settle early.  Why?  That gets to why a litigant should settle a lawsuit in the first place.

When a litigant settles a case, they are essentially “buying off” two costs.  The first is the risk of losing the case.  This applies whether you are the plaintiff or defendant.  As you know from an earlier post, statistically winning and losing in state courts are a roughly 50-50 crap shoot.

The second are transactional costs.  These are the costs for the attorney, court costs and fees (filings, motions, etc.), experts costs, costs for a court reporter in depositions, etc.  In most cases, these are cost that you do not get back regardless of the outcome of the litigation.  80% of the costs to try a case come in the discovery phase. The discovery phase is the pre-trial period when documents are exchanged, depositions are taken, experts are engaged to do studies, etc.  Discovery is essentially the phase where you learn what the other side knows (and vice versa) to be able to value a case.  Settling on the court house steps just before or during trial does not eliminate these costs.

The further litigants get into the discovery process, something call “escalation of conflict” occurs.  In essence, the more you’ve spent, the more you want to spend to get the outcome you want.  Thus, settlements become harder to reach (and most people tell me the later settlements were the same as what they could have had earlier in the process).

How does mediation help?  Mediation gets the parties talking to each other in a structured environment, which accelerates the discovery process by getting the information exchange going early.  If parties need to verify claims made in the mediation, they can do so before the settlement is finalized.

Feel free to contact me if you would like to discuss further how mediation can help you save money and resolve your lawsuits.

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I have previously written about the proposed rules changes by the NJ Supreme court regarding public access to court records here and here. In a nutshell, we have an open and public court system.  Most (but not all) records of the court are public but are currently accessible only at the courthouse.  Justice Albin was charged with reforming these rules to reflect 21st century issues such as internet access and privacy.  As part of the overall rules changes approved by the Supreme Court, most of the recommendations of Albin’s committee were approved and will become effective September 1, 2009 along with other approved changes.  The formal rule is 1:38.  The modifications are as follows:

• Closed or inactive account numbers and information are not considered to be private and thus do not need redaction.
• The court may charge a fee to mass redact social security numbers in already existing records.
• The obligation to redact confidential personal identifiers from documents submitted to the court applies to litigants and attorneys in all cases — and must certify same.
• Financial records of guardians and incapacitated persons shall be confidential and available only to spouses, domestic and civil union partners, and family members of the ward to the third degree of consanguinity. The court thought that making them public would enable exploiting of the most vulnerable in our society.

It is unclear how quickly internet access for court records will occur given the fiscal realities of the state of NJ in 2009 — but the road has been laid out.

What does this mean to you?  Your records in the future (including potentially retro-actively) will be far more accessible to anyone who cares to see it.  Mediation is a confidential process, whether for a divorce. commercial dispute or family dispute.  If you want to keep your information from public view, mediate your divorce or dispute.  If you would like to discuss this further, feel free to contact me at 732-963-2299 or via my website.

Tags: Commercial Mediation, Divorce Mediation and Law, Elder Mediation and Elder Law and Issues, Lawsuits // 1 Comment »