The Legal Intelligencer Blog

Isolation as a Strategy in Mediation

By Charlotte E. Thomas
Special to the Legal

Almost every mediation has both joint sessions attended by all principals and counsel as well as separate breakout sessions for single-party conferences. The joint session is intended to bring the parties together for a full exploration of claims and defenses to a dispute. In addition, a principal who feels unheard can speak out directly to another principal or principal’s counsel. A joint session also presents the opportunity for counsel to speak directly to an opposing principal about an intended trial strategy, the expense of litigation or any issue counsel believes the principal may not fully comprehend. Open communications between the parties and counsel facilitate the flow of information and may foster a conciliatory relationship, which can be helpful in reaching dispute resolution and possibly even a future business relationship.

Sometimes, however, the relationship between the parties to a dispute prevents them from prolonged interaction or even from being together in the same room. Where there is animosity between the parties, separating the principals can divert the focus of negotiations from the parties’ adverse relationship toward reaching a business compromise. In such instances, the need for separation goes well beyond the use of private breakout sessions. Indeed, the only way to bring some parties together is to separate them and maintain the separation throughout the mediation. An observant mediator will recognize the interparty dynamics and structure the mediation to separate the sides. Attorneys always should explain the nature of the interparty relationships to the mediator before the mediation and, if appropriate, suggest separation. Communications between the separated sides can be accomplished through the mediator or representative of the principal.

There are times when an attorney should elect strategic isolation by retreating with the principal into the breakout room. The self-imposed separation could be for symbolic reasons, such as the disapproval of the progress of negotiation, or to highlight the insignificance of the principal’s role in the negotiations or the underlying dispute. Another reason for an attorney to strategically retreat into isolation is if the principal is speaking or acting in a way that is detrimental to reaching compromise. Isolation allows the attorney to camouflage or control the flow of a principal’s comments and behavior.

What is said in mediation is absolutely critical in moving a dispute to resolution. Equally critical is what is not said. Isolation – through either a mediator’s active intervention or self-imposed – is one strategy for focusing the mediation on business solutions rather than the relationship between the parties.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial adviser arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983 and the defense of class actions. She can be contacted by emailing [email protected].

New Commonwealth Court Rules for Insurance Rehabilitations and Liquidations

By Charlotte E. Thomas
Special to the Legal

This summer, the Commonwealth Court of Pennsylvania adopted Rules 3771 through 3784 (Chapter 367) of the Pennsylvania Rules of Appellate Procedure, effective July 30, 2012. Some of the rules reflect changes to summary and formal proceedings in insurance rehabilitations and liquidations, while others merely memorialize current practice.

One change is to the organization of the dockets for insurance rehabilitation and insolvency proceedings, which now resembles the organization of dockets in federal bankruptcies. Previously, all insurance rehabilitation or liquidation proceedings (except certain affirmative actions) were docketed under one omnibus docket. New Rule 3777 establishes an “administrative docket,” initiated by the filing of a rehabilitation or liquidation petition and, similar to bankruptcies, an “ancillary docket” for adversary proceedings and objections to proof of claim determinations.

Intervention under new Rule 3775 is another area of departure. Because the Appellate Rules previously addressed intervention in only limited contexts, the prior practice was to apply the intervention standards in Pa. R. Civ. P. 2326-30, under which the intervener had “all of the rights and liabilities of a party to the litigation.” Intervention by leave of court under new Rule 3775 is permitted where the party shows a “direct and substantial interest in a proceeding.” Rule 3775 anticipates two types of intervention: (1) “general intervention,” permitted on a showing of an ongoing interest in the administration of the insurer’s business or estate; and (2) “limited intervention,” where the applicant’s interest involves a discrete controversy relating to the administration of the insurer’s estate. Rule 3775 also enumerates reasons for intervention, including relief from the stay of litigation in 40 Pa. Stat. §221.26.

Proof of claim procedures have also undergone change. Objections to a claim determination that previously were submitted to the liquidator are now filed with the prothonotary by the claimant, which commences an ancillary docket proceeding. The liquidator then attempts settlement of the claim and files a response if settlement efforts are unsuccessful. Rule 3781 continues to anticipate the appointment of referees and a recommended decision by the referee after consideration of the record submitted, as was the prior practice. The rule also further prescribes exceptions within 30 days should any party disagree with the referee’s recommended decision.

Rule 2776, which expressly addresses response times for motion-type relief, is a welcome addition. It clarifies that motion-type relief shall be sought by application under Appellate Rule 123. Previously, many practitioners believed that motions or requests for relief were due within 14 days after service, as prescribed by Rule 123(b). The response time for applications under Rule 2776 is 30 days. Rule 2776 adds that applications and responses must be accompanied by memoranda of law.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial adviser arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983 and the defense of class actions. She can be contacted by emailing [email protected].

Is There an Ethical Duty to Convey Offers to Mediate?

By Charlotte E. Thomas
Special to the Legal

Recently, Harrie Samaras and Judy Weintraub outlined in The Legal Intelligencer “Ten Ways to Introduce Mediation to Opposing Counsel.” I confess that I do not have difficulty extending an invitation to mediate, but given some of the “RSVPs” that I have received, I sometimes wonder whether our professional responsibilities include relaying to clients the fact of an invitation to mediate. From time to time, my offers to mediate have been declined with the off-the-cuff response, “Mediation is too expensive,” or, “Why can’t we settle this ourselves?” When the response is immediate, it is pretty easy to conclude that the client has not been consulted in declining the mediation offer.

There are several reasons that lawyers should convey offers to mediate to their clients, thereby allowing the clients to evaluate the pros and cons of mediation before it is declined.

First, choosing mediation as a dispute resolution process is as significant as selecting a jury trial or arbitration, and it certainly could affect cost. Rule 1.4(a)(2) of the Pennsylvania Rules of Professional Conduct requires lawyers to “reasonably consult” as to the means by which the client’s objectives are to be reached. Since mediation certainly is a process that could effectuate a client’s objectives, it follows that clients should be consulted about an opposing counsel’s mediation offer. Sure, we can all dream up instances when an offer to mediate would be “unreasonable,” thereby obviating the need for client consultation, such as after a jury has concluded deliberations and is about to read its verdict. Normally, however, offers to mediate occur during litigation “windows of transition” – such as after discovery but before dispositive motions. In such “normal” situations, Rule 1.4(a)(2) can be read to require client consultation.

Second, the fact that the adversary wants to discuss settlement in an organized process is important information. It can convey the adversary’s appetite for litigation and inform a client’s litigation cost-benefit analysis. As such, it should be a part of the information explained to permit the client to make an informed decision regarding the strategy for the representation under Rule 1.4(b).

Finally, an offer to mediate is an offer to try to settle a dispute – almost but not quite a settlement offer. Everyone knows that lawyers have the duty to convey settlement offers to their clients and to abide by their client’s decision whether to settle. (Rules 1.2(a), 1.4(a).) To be sure, Rule 1.2(a) does not expressly govern invitations to mediate, but maybe when read with Rule 1.4(a)(2) we should just say “it’s close enough.”

The rules may require the disclosure of offers to mediate without any added gloss. But in the final analysis, consultation with a client is simply the right thing to do.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial adviser arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983 and the defense of class actions. She can be contacted by emailing [email protected].

So You’re Telling Me There’s a Chance: Assessing the Likelihood of Compelling Arbitration in Federal Court

By Charlotte E. Thomas
Special to the Legal

Who doesn’t appreciate a good Jim Carrey quote when gauging the chances of success or failure in moving to compel arbitration? We all know that there is a strong presumption in favor of arbitration under both the Federal Arbitration Act (FAA) and Pennsylvania common law. But I thought it would be interesting to look at some actual judicial outcomes to uncover – all things being equal – just how often motion practice results in orders directing parties to proceed in arbitration.

It was tough going trying to count up the judicial outcomes on motions to compel arbitration. Most published court statistics do not drill down to the level of motions to compel arbitration and certainly not to the detail of how many such motions resulted in an order compelling arbitration. But some services – like Bloomberg Law – allow word searches through the text of documents filed on PACER. So I reviewed the information about compelling arbitration available on the dockets in the Eastern District of Pennsylvania for the last two years to get the count.

Once ensconced in the search, I found the decisions ranged beyond a simple yea or nay vote on arbitrability. Some motions had been withdrawn, some mooted, some not yet decided, and sometimes complaints were dismissed for lack of subject matter jurisdiction. In addition, a number of cases were wrapped up in lockstep with the U.S. Supreme Court’s decision in April 2011 in ATT Mobility LLC v. Concepcion, which held that the FAA pre-empted a California Supreme Court ruling that class action waivers in adhesion contracts were unconscionable. Those district court decisions would not be particularly telling, because any preliminary decision would be later informed by Concepcion. So I excluded the Concepcion cases, though they would tilt the scales in favor of arbitrability, and I limited my search to judicial rulings granting or denying motions to compel arbitration.

Based on the numbers, the presumption in favor of arbitration is definitely alive and kicking. Out of 30 cases, 20 were directed straight up to arbitration, with five motions being granted in part and denied in part. Only five motions were denied. Perhaps more interesting were the 3rd U.S. Circuit Court of Appeals results. Of the seven appeals reviewed, four were vacated with instructions to proceed to arbitration; one order in favor of arbitration was affirmed; one order of waiver was affirmed; and one order denying arbitration was affirmed. Notably, some of the decisions vacating district court orders were included in the thirty-odd district court decisions reviewed, thereby increasing the number of cases that eventually were judicially ordered to proceed to arbitration.

All told, those opposing motions to compel arbitration would be well served to remember Jim Carrey’s response in “Dumb and Dumber” when Lloyd is told that his chances of marrying Mary Swanson are “one in a million.”

“So you’re telling me there’s a chance.”

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial adviser arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983 and the defense of class actions. She can be contacted by e-mailing [email protected].

The 2011 Edmund N. Bacon Prize and Student Design Competition

By Charlotte E. Thomas
Special to the Legal

Each year, the Philadelphia Center for Architecture, the Philadelphia chapter of the American Institute of Architecture, awards the Edmund N. Bacon Prize to a visionary design professional and seeks out talented students around the globe to compete in the Edmund N. Bacon Student Design Competition. The winner of the 2011 Edmund N. Bacon Prize is Janette Sadik-Khan, Transportation Commissioner for New York City and former Federal Transit Administration Deputy Administrator under President Clinton. The theme for this year’s competition is “Intersect,” reflecting the friction between cities and transportation corridors. The competition challenged participants to explore the ways in which the I-95 highway corridor between the Benjamin Franklin and Walt Whitman Bridges could be redesigned to better serve both commuters and residents on Philadelphia’s eastern edge by the Delaware River.

As executive director of the Philadelphia City Planning Commission from 1949 to 1970, Edmund N. Bacon was a Philadelphia original and transcendent force in planning and urban design. It was not just his ideas about design, per se, but also his views on the public role in planning for private property that in his day made him radical, but seem visionary in retrospect. Those ideas – juxtaposed against the “Takings” and “Public Use” clause jurisprudence – foreshadowed both the evolving role of government in planning and the ongoing debate about the role of government and private development. Bacon expressed his commitment to design ideas both professionally and through academia. In fact, those of us lucky enough to have been his graduate students cannot forget the stories of Bacon’s daily 30-mile bike rides, the comparisons between Parisian boulevards and the Parkway in Philadelphia, and the need for community interaction in public planning.

Sadik-Khan is also the 2011 winner of the Rockefeller Foundation’s Jane Jacobs medal (with other winners, Robert DeNiro, June Rosenthal and Paul Steely White) for her creative visions for the urban environment. She is known for her views and programs for fostering sustainable transportation and access to open space in urban planning. Like Ed Bacon, she has been both criticized and acclaimed for installing some 250 miles of biking lanes in New York City, creating pedestrian plazas in parts of Broadway and eliminating parking spots. Also like Bacon, her transportation designs are the consequence of community interaction and have spawned legal challenge.

The Bacon Prize and the winners of the Student Design Competition will be awarded on Feb. 1 at 6 p.m. at the Philadelphia Center for Architecture, 1218 Arch Street, Philadelphia. Tickets for the event are available through the Philadelphia Center for Architecture – 215-569-3186 or [email protected]. A special thanks to Reeder Fox and my firm, Duane Morris, for being among the many sponsors for this year’s event.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial adviser arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983 and the defense of class actions. She can be contacted by e-mailing [email protected].

Mandatory Mediation Clauses: Can You Make the Horse Drink?

By Charlotte E. Thomas
Special to the Legal

The other day, I was reviewing a production contract for a client from Delaware. When I reached the dispute resolution clause, I had to chuckle.

The contract had an arbitration clause calling for arbitration in Philadelphia. No problem there, provided the client understands the parameters of arbitration. The contract also contained a clause calling for mandatory mediation as a condition precedent to the arbitration. Again, I had no conceptual difficulty with agreeing to mandatory mediation. The sticking point was that the mediation was supposed to take place in Dublin, Ireland. Calling for mediation in Dublin may have made some sense if the production company had been Irish. In fact, its principal office is in Philadelphia. I interpreted the clause as an impediment to dispute resolution, since it would have required Delaware and Philadelphia companies to incur significant overseas travel expense before even commencing the mediation.

This got me thinking: How successful are the mandatory mediation clauses in practice? Typically, such clauses call for a good-faith effort at mediation before one party to a contract in dispute can demand arbitration, although conceivably the mediation condition could precede litigation as well as arbitration. I decided to ask my partner, Richard “Rick” Lowe, who is a Fellow of the American College of Construction Lawyers, both a mediator and arbitrator in Philadelphia and New York, not to mention the Mayor of Swarthmore. He is fresh from teaching a CLE course on the do’s and don’ts of arbitration clauses.

According to Rick, clauses requiring mediation as a condition precedent to dispute resolution have been around for almost a decade. One of the principal benefits of these clauses is that they protect a party that might otherwise suggest mediation from being perceived as “weak” in the context of the dispute (See Exploring Early Settlements: A Sign of Weakness or Ethical Duty?). Of course, both sides can always elect to pump their chests, waive the mediation clause and proceed to arbitration, but mandatory mediation protects the party that prefers to avoid broken ribs. There are limitations, as Rick allowed. A carve-out from a mediation clause for injunctive relief may be advisable in some substantive areas, such as restrictive covenants for employee competition or proprietary customer lists. Injunctive carve-outs are less likely to be needed in other fields, such as construction contracts.

The purpose of the mandatory mediation clause is laudable. The real question is after leading the parties to a good-faith mediation, can you make the horse drink? Do disputes resolve through mediation without resorting afterward to the adversarial tribunal? According to Rick, the clauses do actually promote settlements before arbitration or litigation. While there are no peer-reviewed studies, in Rick’s experience upwards of 80 percent of disputes arising out of contracts with mandatory mediation clauses settle at mediation.

That’s good enough for me. To my client, however, I recommended before signing the agreement that it request a change in the location of the mandatory mediation to Philadelphia, unless, of course, it was looking for an excuse to see Ireland.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial adviser arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983 and the defense of class actions. She can be contacted by e-mailing [email protected].

The Quick Fix: Can Settlement Be Reached at a Three-Hour Mediation?

By Charlotte E. Thomas
Special to the Legal

We all can recall the settlement conference with a judge or magistrate judge that took three hours and seemed endless. So it is reasonable to ask whether settlements can be accomplished in a three-hour mediation, particularly since most court-mandated mediation is scheduled for just three hours. Judicial settlement conferences, however, are different than mediations in that judges have leverage over the parties. After all, a judge can deny that recently-filed summary judgment motion, or affect those intangibles like jury instructions read in a tone unfavorable to your client. Incidentally, I am not sure that these things actually happen in practice, but the fact is that lawyers believe they do. That perception of leverage is probably more important than actual judicial leverage, exerted or otherwise.

Mediation differs in that it is predicated on the use of advocacy to motivate parties to settle, not because a claim's value will be affected by judicial action, but rather because it is the rational thing to do under the circumstances. Mediation involves the combined persuasion of party and mediator directed toward the opposing party, while simultaneously the opposing party and mediator attempt to persuade the original party to settle. There is no "hammer" of judicial wrath if a settlement is not achieved at mediation.

Without the "hammer," mediations do take time, and in most instances, more time than a judicial settlement conference. Three hours just may not be enough time, depending on what needs to be done at the mediation. In any given mediation, a range of areas may need to be explored, including: (1) the substance or merits of the dispute; (2) the costs/expenses in advancing the dispute through the alternative of litigation; (3) the psychology of the parties to the dispute; (4) the available assets to fund dispute resolution; (5) raising additional funds for the settlement; and (6) crafting the settlement terms. Can all that be done in three hours? The answer is undoubtedly "yes," but unless the dispute and settlement terms are straight forward, three hours may be insufficient to explore all of the areas described above.

As litigators we are acutely aware that mediators' fees can be hefty, and the longer the mediation goes on, the more it costs. The costs of the mediation, however, can be reduced through the cooperation of counsel in identifying the needed areas for exploration and to the extent possible sharing information - including the pre-mediation memoranda - in advance of the mediation. For example, if available assets are an issue, financial statements could be shared in advance of the mediation. That way, more pointed inquiry can be made during the mediation about specific aspects of financial condition. If the parties have engaged in pre-mediation fact discovery, further exploration of that area at the mediation may be unnecessary and the mediator should be so advised in advance. The process will progress quicker if the parties can work through as many issues as possible prior to the mediation session. The pre-mediation telephone conference with the mediator is an excellent time to identify the issues that can be addressed by the parties before mediation and the areas that are better explained at the mediation.

I still maintain that the one three-hour mediation session is not long enough for most disputes to result in settlement. Like all aspects of mediation, however, the parties are in the position to control how much time is required. Those who work hardest in advance will be rewarded with settlement at lower cost.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial adviser arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983 and the defense of class actions. She can be contacted by e-mailing [email protected].

 

Fresh Ink: Inside Today's Legal (and PLW)

By Jaime Bochet
Of the Legal Staff

Welcome to your daily round-up of stories in today's edition of The Legal Intelligencer. Click the links below to access stories directly, or head to The Legal homepage.  (Some stories may require registration or a paid subscription.)

As is the case every Tuesday, today's paper is especially full, because it includes our Pennsylvania Law Weekly section, which includes analysis pieces, our Verdicts & Settlements section, and contributed columns by Samuel Stretton (Ethics), Gilbert P. High (Municipal Law), Kevin Greenberg and Greg T. Kupniewski (Liquor Law) andJoel Rose (Law Firm Management).

Today's paper ALSO includes our "Construction Law" supplement, so be sure to check that out.  But let's begin with the Legal.

U.S. Courthouse Correspondent Shannon P. Duffy writes that a law firm accused of malpractice for allegedly turning down a $25 million settlement offer has lost its bid to take the deposition of the chief mediator for the 3rd U.S. Circuit Court of Appeals who, the firm claims, would testify that no such offer was ever made. The malpractice suit stems from McKissock & Hoffman's representation of the plaintiff in Polymer Dynamics Inc. v. Bayer Corp., a case that resulted in a $12.5 million verdict in June 2005. Both sides were unhappy with the verdict and filed appeals. Polymer Dynamics argued in its appeal that it was hampered in it efforts to secure about $500 million in damages. Bayer argued that the jury's award was excessive.

Sharing the top of the page, senior reporter Gina Passarella writes that Villanova Law School was publicly censured by the ABA for misreporting admissions data, but was not fined or placed on probation given the ABA's findings that the school acted openly, honestly and in a remedial way to correct the problems. The school is now giving some more detail as to what happened.

Below the fold, Gina also has the second article in her weekly series examining the effects e-discovery has had on the practice of law. Today she reports that sanctions and taxing costs in e-discovery are more of a fear than an actual reality.

Our Page 3 Regional News story today is by reporter Ben Present, who reports on the Pennsylvania supreme Court's decision to televise its proceedings.

As always, our People in the News section is on Page 2, and the top stories from our sister publications across the country make up the Page 4 National News section.

The Legal's contributed columns begin on Page 5, with a "Legal Marketing" column by Richard Alonso: At a recent seminar on "Understanding How Operations Affect a Firm's Ability to Build Value," the Philadelphia chapter of the Legal Marketing Association (LMA) explored the link between a law firm's business decisions and its ability to deliver client value. 

Today's second contributed article is a "Litigation" column by Charlotte E. Thomas of Duane Morris, who writes about effective mediation.

Today's Pennsylvania Law Weekly section begins with an article by reporter Zack Needles, who examines the long-term consequences of last month's orders by the Pennsylvania Court of Judicial Discipline  to officially remove former Luzerne County Common Pleas Court Judge Michael T. Toole and former Superior Court Judge Michael T. Joyce from the bench and bar both men from ever holding judicial office in the state again.

Also on the PLW front page, Ben Present has a criminal practice case in which a Pennsylvania ex-convict who admitted to writing a letter that threatened a Beaver County judge is back in prison after the state Commonwealth Court affirmed he engaged in assaultive behavior and, therefore, violated his parole.

The PLW has much more, so head to the main website of that section to check out even more.

Have questions or comments about any of today's stories, or our coverage as a whole? E-mail me or any of the reporters directly. We hope you'll enjoy today's Legal!

Jaime Bochet is the Magazines & Supplements Editor for The Legal. Follow her on Twitter at @JaimeBochetTLI or e-mail [email protected].

Exploring Early Settlements: A Sign of Weakness or Ethical Duty?

By Charlotte E. Thomas
Special to the Legal

Some time ago, a client asked me to explore the possibility of an early settlement with opposing counsel just after he had filed an answer and counterclaim. I was happy to do this. In chatting with a colleague about the approach, he cautioned that opposing counsel would probably view the call as a sign of weakness. I disagreed. How could trying to make a prompt resolution of a lawsuit be a sign of weakness?

Undeterred, in accordance with my client's instructions, I called opposing counsel and asked if he wanted to talk settlement. His response: "Most people would interpret the call as a sign of weakness." That case did not settle early.

Actually, the case stormed on for five years through bitter discovery battles, expensive summary judgment motions, and motions for sanctions. In the end, the resolution was one that easily could have been crafted in that initial telephone call before the vast expenditures by both camps.

It is not a sign of weakness to try to settle a case early. It doesn't mean that a lawyer views her case as tenuous and has decided to throw in the towel. Nor does it mean that a lawyer is scared of a prominent opposing counsel or the thought of a jury trial. After all, most of us chose litigation for the thrill of trial, not because we are afraid of it. Rather, trying to settle a case early usually is the right thing to do for our clients to save money, time and the psychological commitment of litigation.

In the vast majority of cases, an early settlement is in the client's best interest. Take, for example, the instance of a "wasting" insurance policy or whenever fees and expenses are borne directly by a business or individual. To be sure, in some types of cases -- the pro bono defense in mortgage foreclosure actions, for example -- delay in and of itself is the "best result" for the client. Such a broad stroke, however, cannot always be prescribed, even for the category of "delay is the best result" litigation. All clients must eventually close the book and move on, and usually it is in their interest to do so earlier rather than later. 

While it may be very much in a client's interest to settle early, some litigators prefer to allow a case to develop before settling it. These attorneys may justify their stance by claiming that some fact development is critical before exploring settlement. At some subconscious level, however, the lawyer may also want the legal representation -- and the attorney fees -- to continue.

The Rules of Professional Conduct can be read to prescribe an ethical duty to explore early settlement options in litigation. Rule 1.4 directs lawyers to "reasonably consult" with a client as to strategies to accomplish the client's objectives. An attorney-client discussion about settlement is a necessary component of any discussion of litigation "objectives," since settlement is the outcome -- if not the express objective -- of most litigation. Rule 2.1 adds that a lawyer's duty to provide independent professional judgment and candid advice should take into account economic facts that may be relevant to the client's situation.

The interplay of these rules counsel that lawyers should speak to their clients early about crafting a settlement strategy for litigation. An attempt at early resolution of litigation is pragmatic and cost-effective, but it may also be past and parcel of a lawyer’s ethical duty to represent his or her client.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial advisor arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983, and the defense of class actions. She can be contacted by e-mailing [email protected].

Mediation: Early and Often for Cost-Effective Litigation

By Charlotte E. Thomas
Special to the Legal

Litigators always are on the look out for strategies to help reduce litigation costs. After all, we are service providers -- and typically that service boils down to dollars and cents -- achieving the best result at the lowest cost. In seeking out cost-effective strategies, one universal rule holds true: the sooner the lawsuit concludes, the more likely it is to be cost-effective.  

I recently mediated a case in another jurisdiction that resulted in settlement. Some jurisdictions have a long tradition of court-ordered mediation, with the process and results more structured than here. This is not to suggest that the mediation was an easy go. The case was difficult and expensive with capable opposing counsel. Nevertheless, the case was resolved before expenditures for depositions, expert discovery, motion practice or intensive trial preparation.

Much can be learned from the way others mediate disputes. Here are some pointers from my recent jaunt in mediation.

Timing: It's Not Too Early. 
From my earliest days in practice, lawyers complained that settlement conferences were held too early, before all the facts had been aired in discovery. Lawyers tend to obsess about fact development. By contrast, business people are able to make decisions -- often involving far greater sums than at stake in litigation -- without taking 20 depositions.

Due diligence is important. Knowing all facts on sworn knowledge may not be, particularly when the cost of nailing down those facts fails to increase or decrease settlement value. In some cases, the ideal time for mediation follows an initial document production but precedes depositions and motion practice. Besides, factual unknowns can be explored in the mediation itself. 

Learn About Your Case Through the Mediation. 
Mediation briefs directed to the mediator are confidential, but they should be shared among the parties. The brief will provide a blueprint to your opponent’s legal and factual arguments. For greatest effect, the mediation brief should be shared two to three weeks in advance of the mediation. Take the time to explore the arguments; some will hold water and some will not.  Challenge the weaker arguments at the mediation. Learn from the rebuttal -- or lack thereof -- at mediation.     

More can be learned when principals attend a mediation. A knowledgeable party in attendance can provide substantive information about the merits or available assets to satisfy a judgment, or they can instruct that the source of information lies elsewhere. The litigator can learn how anxious a party is to settle, observe the relationship between the party and her lawyer, and hear the party's responses to "soft-spots" of the litigation. Even if unsuccessful, the mediation provides a preview of the party's potential performance as a witness in advance of the deposition or trial.

Be Creative. 
Remember, this is your mediation. Litigators who live and die by court rules may be less adept at using mediation's flexibility. Mediation allows the parties to "control their own destinies" through crafted solutions that could never be obtained through a complete victory at trial. For example, I was involved in one unfair competition lawsuit that settled with the acquisition of one business by the other.

The Mediator as "Birdie on Your Shoulder."
Good mediators are the key to a successful mediation, and sometimes it pays to pay the mediator for his work. Good mediators are quick to grasp the essence of the dispute, garner trust from all sides, and are keen amateur psychologists and observers of body language. Once the trust is established, the mediator is privy to a wealth of information, such as sensing a party’s breaking point and assessing the weakness of a party's response to a legal argument. 

Let the mediator be the "birdie on your shoulder." Use him or her as a sounding board and to convey counter arguments to the other side. Most importantly, take advantage of the mediator’s inside knowledge of the other side's "bottom line." Obviously, the mediator cannot favor one side over the other with information, but he or she may have valuable suggestions or insight that if shared can move the matter toward resolution.

Don't Give Up. 
Mediation takes time, but it takes much less time than to go to trial. However, an artificial limit to the mediation -- say, 3 hours -- is not a recipe for success. Often, arguments need time to "set in." Or, a party may need the psychological space to adjust to paying more or receiving less than planned. In fact, a second mediation session often is more effective than the first.

Just when it seems like further progress is impossible, give it a rest for two weeks and then revisit your mediator. Someone could have received a bill for legal services in the interim, or fears an upcoming deposition, resulting in a change in the settlement dynamics. 

Don't Release Your Mediator After You Agree on a Number. 
Once the parties agree on a number, the rest should be downhill. But sometimes the non-monetary terms of a settlement are more difficult to craft than reaching monetary agreement. Again, use the mediator as the "birdie on your shoulder." He or she can suggest alternative language or terms. They may have a more trusting relationship with the other side and can advocate challenging settlement terms.

Mediation is not a panacea. But it does provide the opportunity for parties to control their respective destinies in litigation. Litigators should embrace its benefits early and often for greatest effect.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial advisor arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983, and the defense of class actions. She can be contacted by e-mailing [email protected].