See You Out of Court

A Speech by Nick Boechler

A lot of people instinctively go to an attorney with a dispute. ———That’s almost like taking a headache to a surgeon —— you’ll end up under the knife!

Our nation’s businesses are mired in more than 19 million lawsuits each year. While our global competition is focusing on research, development and infrastructure, we’re battling each other in court.

Many U.S. leaders believe that if we reduce the amount of litigation in this country, we can redirect billions of dollars towards becoming more competitive in the world marketplace.

With Alternative Dispute Resolution —— commonly known as ADR —— we’re going to see a virtual explosion of dispute resolution options. In 10 years, almost everyone will utilize at least one form of ADR. I think more businesses would use it right now if they knew it existed.

It comes as no surprise to anyone that our courts are totally clogged. We produce more lawyers per capita than any other country in the world. We need to —— Americans sue more often than any other people in the world.

It’s no surprise, either, that while lawyers were once considered among the elite of society, they are now the subject of jokes on late night television.

Of course, it was William Shakespeare who said, “The first thing we do, let’s kill all the lawyers.”

And that British statesman Lord Brougham —— who died in 1868 —— is quoted as saying, “A lawyer is a learned gentlemen who rescues your estate from your enemies and keeps it for himself.”

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Are lawyers problem solvers and counselors who try to avoid litigation? ——— Or are they promoters of that litigation and controversy?

The question may be over-generalized and unfair, but the widespread existence of the question is a fact that cannot be ignored.

And I’m not here to blast lawyers.

The logjam in our courts is not just the fault of lawyers. A lot of it is caused by the greater education of our society. With education comes a greater understanding of one’s rights. ——— An injured party knows to seek redress.

And the huge awards granted to individuals and small businesses —— especially in cases against corporations —— make headlines around the country —— and encourages more people to sue.

The logjam in the courts has increased the stakes. Federal cases normally take more than two years to come to trial, and businesses often can’t wait that long to have their disputes resolved.

How does alternative dispute resolution answer the call for judicial reform? First, it is expedient. Mediation, for example, normally takes only a day, and isn’t dependent on a judicial calendar. Arbitration seldom takes longer than two weeks.

We know that more than 90% of civil lawsuits are settled before a verdict is reached. So why go to trial in the first place? ——— That’s the question more and more attorneys, business people and advocates of alternative legal solutions are asking.

The reality is that businesses in the United States spend an inordinate amount of time and money in litigation. I’ve seen projections of

85 billion dollars for legal fees between now and the year 2000. That staggering sum doesn’t include in-house legal counsel or the costs of awards and judgments.

More lawsuits —— greater defense costs —— long delays waiting for a trial date —— and potentially large adverse judgments have dramatically changed the landscape of litigation. The sheer quantity of litigation tends to threaten the quality of the administration of justice.

But there is a alternative to gridlocked courts and long delays for justice. ——— It’s called Alternative Dispute Resolution —— ADR.

And ADR isn’t new. ——— After all, nations —— and baseball players —— have been using mediation and arbitration for years. In fact, that famous American baseball player, Yogi Berra could have been talking about the courts when he said, “No wonder nobody comes here — it’s too crowded.”

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Numerous players in such diverse fields as real estate, insurance, mortgage banking and construction are expanding their use of ADR techniques to solve their disputes. The results have been good enough to create a ground swell of interest in mediation, arbitration and negotiation.

Earlier I kidded the lawyers. So it’s important for you to know that lawyers increasingly support ADR, because it often allows them to serve their clients more effectively —— charging lower legal fees and achieving better settlements.

Litigation polarizes —— ADR brings the parties together.

ADR facilitates communication and explores settlement options. ——— Litigation doesn’t allow for that constructive discussion.

ADR is largely a healing process. ——— Litigation is a war-like process.

ADR —— especially mediation —— is a consensual process. ———Litigation is adversarial.

Litigation is public —— ADR keeps private business private.

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Alternative dispute resolution takes many forms.

Mediation requires that both parties voluntarily agree to enter a negotiation facilitated by a mediator. The parties have to reach an agreement on their own, and either side can withdraw at any time.

Arbitration, on the other hand, involves a similar process of presentation, but is assisted by an arbitrator who has the authority to reach a decision.

An arbitrator’s decision is binding, whereas a mediator will not make the decision for the opponents.

Med/Arb is a combination of both mediation and arbitration. If one or more parts of a dispute resolution are not acceptable to all parties during mediation, the mediator assumes the role of arbitrator and makes the decision.

Negotiated settlements use tools such as written correspondence and telephone calls to attempt an agreement between parties. This approach is used most often when the parties are already involved in litigation and want to explore possible legal alternatives.

An obvious advantage to alternative dispute resolution is the amount of time saved as opposed to going to court. ——— Another advantage of ADR is the cost. The filing fee and optional hearing fee are very economical when compared to high legal fees that can be incurred when going through today’s litigation processes.

Finally —— and maybe more importantly —— settling disputes through ADR enables participants to continue a working business relationship while the dispute is ongoing —— and afterward.

A couple of years ago, Siemens Energy and Automation of Georgia found themselves in a dispute with one of their distributors —— Orange Coast Electric Supply in California. Siemens manufactures electrical equipment and Orange Coast Electric buys and sells the equipment to contractors.

When the two companies could not come to an agreement over $13,000 in expenses, the last thing they wanted was to terminate their business relationship.

They couldn’t agree on a settlement —— but wanted to continue to do business. The amount of money involved in the dispute was too large for Small Claims Court —— and too small for litigation. It would have cost at least the disputed amount in legal fees alone to litigate the case.

Going into the hearing, both sides might have been a little wary because they had never used arbitration to settle a dispute before. After the process was explained —— and they knew what to expect —— they were ready to proceed. In a single meeting, they settled the dispute to the satisfaction of both companies. And more importantly —— they were able to continue doing business without any damage to their vendor/customer relationship.

Here’s another example:

In Oregon, a woman bowler going after a 7-10 split at her neighborhood bowling alley slipped on a slick spot on the floor. She fell —— causing injuries that resulted in more than $60,000 in medical expenses. The woman sued the bowling alley.

Faced with huge legal costs, she asked the other side if they would be willing to attempt a settlement. They agreed.

After just three hours, the case was settled. They were able to close a $300,000 gap in settlement proposals and, in doing so, saved each side at least $10,000 in legal fees. The cost: $750.

Corporations use alternative dispute resolution methods, too. ———Motorola has cut their legal costs by greater than 70% simply by mandating that in-house legal counsel always pursue mediation before resorting to court.

And in San Francisco in 1992, a costly and time-consuming legal dispute seemed inevitable. The founder and majority owner of a small office chair distributing company had discovered that one of his executives and stockholders was on the verge of opening a competing firm —— apparently with the help of unauthorized use of company funds.

The company’s founder fired the executive and sued him, alleging misuse of corporate assets and unfair competition. The executive counter-sued, claiming —— among other things —— wrongful termination.

If the case had gone to trial it would have entailed 10 separate claims and counterclaims. An additional matter —— what to do with the executive’s $100,000 worth of stock —— could be addressed only after these issues were resolved. Lawyers in the case figured each side faced at least $35,000 in legal fees.

The lawyer representing the company suggested submitting the matter to mediation. The other side accepted this suggestion.

In the resulting agreement, the founder got the stock back while taking sole responsibility for repaying a loan that he and the former executive had co-signed. In addition, the executive agreed not to use trade secret information—— and the owner dropped his suit.

The matter was resolved in one day. The total cost to both parties amounted to $2,000, divided evenly.

Mediation is also helpful in resolving neighborhood conflicts —— domestic arguments —— a variety of business problems ranging from consumer-merchant and real property disputes to employment disagreements —— environmental issues and homeowner association disputes.

In any dispute —— whether settled in or out of court —— one party will win and one will lose. Although no one is happy with an unfavorable ruling, most people who participate in ADR would recommend it —— because along with being quick, economical and uninhibiting, mediation and arbitration are very impartial.

Mediation differs from arbitration. An arbitrator usually has the power to make decisions that are binding on the parties. The mediator seeks to persuade them to agree.

The alternative method of dispute resolution that is least used for resolving business disputes is private mediation. ——— That’s too bad because the opportunity for resolving a dispute promptly and inexpensively is greatest with mediation.

In our society, people —— when they have a problem of any sort —— turn to someone else to settle the dispute for them. Mediation forces the participants to take charge of their own problems.

Mediation techniques vary, but they all facilitate discussion between the parties. One reason mediation is so effective, is that it gives all parties a chance to be heard —— and it gives them a chance to listen. The goal of mediation is not to have everyone agree —— but to understand the other’s point of view.

And mediation is very effective. ——— Many advocates say mediation produces positive agreements more than 80% of the time.

Mediation also allows all parties the opportunity to discuss settlement in a structured environment without making their allegations public. This private process allows people to preserve business relationships that might be destroyed through litigation.

Although a mediator can be an attorney, retired judge or private citizen trained in ADR techniques, a mediator does not represent anyone’s legal interests. ——— He or she is just there to facilitate the process.

Another way to think of mediation is the resolution of disputes outside a courthouse —— and only with the consent of all parties. No agreement —— no deal. The beauty of mediation is that both sides work hard to reach compromise —— so both sides play a crucial role in the decision-making process.

Because of their staggering workload, courts like mediation. It takes many disputes out of the courthouse and into conference rooms —— where they probably should have been in the first place.

In mediation —— helped by the diplomatic skills of a trained mediator —— the parties often find common ground to resolve their differences and walk away relatively content.

Arbitration proceedings are more formal than mediation sessions. In arbitration, each side presents its case —— usually with witnesses —— and a stenographer may transcribe the proceedings. Both parties take off their boxing gloves and let an outside party settle the disagreement.

The arbitrator makes a decision —— typically within two weeks —— and appeals are usually prohibited.

People and businesses who have used arbitration usually prefer it to formal litigation. ——— For one reason, it might result in a more predictable decision than may be the case in a jury trial.

Arbitration often results in lower and more realistic damage awards —— because the arbitrator is less likely to be swayed by emotions or anti-corporate sentiment and normally hesitates to award punitive or compensatory damages —— except in the most outrageous cases.

Because of its speed and informality, arbitration is less costly than litigation. Expensive motion practice, discovery and costly procedures related to a jury trial are largely avoided. Because the result in arbitration is more quickly attainable, the actual damages are normally lower.

And like mediation —— arbitration proceedings are private.

The parties present their evidence to an arbitrator or panel of arbitrators who decides the case. Discovery is allowed, but it is limited.

Unless the parties agree that depositions of the parties may be taken, they are generally not allowed.

The hearing is structured like a trial. Opening statements are made. Each party presents her or his case through witnesses who may be crossed-examined by their opponents.

When a party rests, the other one is given the opportunity to present his or her case. After both parties have presented their cases, they are given the chance to present rebuttal testimony. Finally, both sides are allowed to make a closing argument.

Arbitrators usually admit most of the evidence that is offered and determine what weight —— if any —— should be given to that evidence.

A decision is generally rendered within 30 days. ——— And reasons for the decision are usually not given. The arbitrator simply notes whether the claimant prevailed —— and if so, the amount of the award.

The costs of the arbitration may be awarded by the arbitrators to the losing party as well.

Arbitration is as binding as litigation. ——— Except for cases involving fraud —— corruption —— bias —— or a manifest disregard for the law, there is no judicial means for setting aside an arbitration award.

For ADR to be successful, the arbitrator or mediator needs to be highly skilled and diplomatic. I —— for example —— have undergone extensive ADR training and certification. I’m an active member of the Alternative Dispute Resolution Section of the American Bar Association —— National Panel of Consumer Arbitrators for the Better Business Bureau —— American Arbitration Association —— Society of Professionals in Dispute Resolution —— and American Debt Arbitration Institute. I’m not a lawyer and I don’t offer legal advice.

Beyond my professional training and the numerous certification programs I’ve completed, I have a commitment and passion to ADR. Strengths I bring to the table are my 25 years of experience in business and the financial services field and 8 years arbitration and mediation experience.

My forthright, honest approach —— and commitment to helping people resolve their issues while saving time and money —— makes me an effective mediator, arbitrator and negotiator.

If you find yourself in need of someone to help you with alternative dispute resolution options, be sure you learn about the ADR professional’s experience and training. Find someone whose personal and professional style makes you feel comfortable.

Mediators and arbitrators must be well trained for their work. Currently, there are no legal or professional training standards for mediators, so learning as much as possible about a prospective mediator or arbitrator is very important.

Some lawyers might be threatened by ADR, but most apparently aren’t. The American Bar Association is promoting ADR education to help lawyers rethink their normal adversarial approaches and broaden their views.

You can find a professional mediator, arbitrator or negotiator through a variety of non-profit and for-profit arbitration firms. ——— Some private law firms are getting into the act, as well.

Remember, the alternative to mediation or arbitration is generally a trial —— which can entail uncertainty and costly litigation.

Should one side later break an agreement made in arbitration or mediation—— which is extremely rare —— the other side can easily obtain a court order to enforce the original agreement.

Mediation sometimes sidesteps financial issues and focuses on something as simple as encouraging one party to issue a formal apology to another. And it helps the parties get at the real problem.

As author G.K. Chesterton said, “It isn’t that they can’t see the solution. They can’t see the problem.” ADR helps all parties see —— and understand —— the problem.

In one case, the stated issue was the failure of a family business to pay adequate dividends. But the real, hidden issue was the anger one man felt toward the perceived failure of his brother —— the company’s president —— to help look after their aging mother. The argument could only be settled after the real issue was identified and dealt with.

A lot of psychic needs get filled during a mediation. These include the need to be heard —— to get some respect —— and to have your position weighed and considered —— whether it’s ultimately accepted or not.

The most wonderful thing about mediation is that at the end, most people are happy. Whatever happens in a mediation, it’s something they’ve agreed to. It’s theirs. They own it. With a lawsuit, you’ve turned control over to somebody else.

Mediators and arbitrators handle virtually the entire range of civil cases. They usually involve an individual on one side and a business —— large or small —— on the other. Or a dispute may pit one business against another.

Mediators and arbitrators are commonly used to resolve construction cases, personal-injury cases, partnership disagreements, commercial-contract disputes, employment conflicts, real estate disputes and landlord/tenant fights.

Mediation and arbitration are often used to resolve product-liability cases and to settle disputes between stockbrokers and their clients.

ADR allows creativity and flexibility to play an important role in the resolution of legal disputes. Procedures other than mediation are preferable only when the client’s primary interests are in establishing a precedent, being vindicated or maximizing —— or minimizing —— recovery.

Why is ADR such an effective tool for business? ——— ADR gets everyone to the table. Mediation allows relationships to continue avoiding the hostility a lengthy courtroom battle can foster. In ADR, both parties are in control. If either party is dissatisfied, they can simply walk away.

The bottom line is, people who use alternative legal options have everything to gain and nothing to lose —— it’s win/win.

Increasingly, arbitration clauses are included in professional and employment contracts. ——— As a result, most arbitration arises from those types of agreements.

Increasingly unhappy with the outcome of slow, costly lawsuits, industry associations, companies and their attorneys are tying other ways to work out their disagreements. ——— Alternative dispute resolution is the answer.

The more I do ADR work, the more I realize this approach is tremendously constructive —— not only to the parties involved, but to the entire court system —— perhaps to our nation.

To quote Ernest Hemingway, “I like to listen. I have learned a great deal from listening carefully. Most people never listen.”

And Yogi Berra said, “You can learn a lot just by watching.”

The comments from these men help me explain why highly skilled ADR specialists are so effective in alternative dispute resolution.

Not all cases can be resolved with ADR. Trials are still necessary in cases where a party wants to establish a legal precedent —— publicize facts or particular complaints —— create new law or recoup punitive damages. And in some cases, mediation fails. But the bottom line for business is that alternative dispute resolution works. It saves time. It saves money.

It’s amazing that when you get people in a room —— and talking to each other —— how quickly they can reach an agreement.

And remember —— ADR is not just for baseball players anymore!

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I’ll be happy to answer your questions.

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