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The Mediator Can Be an Advocate’s Strongest Ally
By Robert M. Smith

This article originally appeared in the San Francisco Daily Journal (© Robert M. Smith, Esq. 1998)

The Nuer are a tribe of pastoral nomads who herd cattle along the flat-lands of Ethiopia and the Sudan. The Nuer fight over such things as cattle theft, adultery and watering rights in the dry seasons.¹

The Nuer have as their mediator the leopard-skin chief. He can mediate only if the parties want to, and he cannot stop the parties from ultimately using violence to settle things. The leopard-skin chief has only one power. He can curse the party who refuses to accept a reasonable settlement. The threat is that supernatural forces will help the stubborn party’s enemies if he persists.

American mediators generally lack the power of the leopard-skin chief. That said, the advocate’s strongest ally – if the lawyer can make him an ally – is the mediator. It is the mediator’s neutral voice that is most powerful in carrying the lawyers argument to the other side. This is true even if all the mediator does is ask a lawyer to put on the chalkboard his strongest points, then unveils the board to the other side.

Manipulation

The mediator knows the lawyers could be trying to manipulate. But the mediator is usually aware of such manipulation. Good advocates know when to stop trying to manipulate, show some trust and make a straighter and more reasonable, argument. Honesty can buy an advantage.

When parties go to a commercial mediation, there is statistically something like an 80 percent chance of settling the case.² This means the lawyer should probably act as if the mediation session will be the last step in the case and prepare the client accordingly. To tell the client for example, that “we are just going through the motions” and then encounter a circumstance of serious endgame bargaining is not prudent.

Defining Event

Often lawsuits bobble along like a play in search of a theater; they need a defining event before both parties and lawyers get serious. Mediation can be such an event. If the mediator is effective, everyone will focus on the matter in a way that they haven’t before. That is one reason mediations are successful. Cellular phones are impolite; authority is – or should be – present; executives are burning up time; folks are spending money for the time of the mediator and the lawyers.

The mediation is the time for the lawyer to do his or her best brief. Mediators read them; they get paid to. And this is all they know about the case before the lawyers troop in. The mediator is likely to ensure that the parties, as well as the lawyers, see the briefs and consider the most forceful arguments, or what a neutral sees as the most forceful arguments. It may be worth considering the impact on the other side when sections of the brief are pointed out to them.

Exchange of Briefs

The lawyer should consider whether to give a copy of the brief to the other side, as well as to the mediator. There is no requirement that the parties give each other their briefs. The decision of whether or not to exchange briefs involves weighing many considerations: free discovery vs. the power of the client’s case or the weakness of the other side’s; disclosure of expected testimony, a preview of the jury summation. The advocate can give only a portion of the brief to the other side – or the whole brief, but with a “secret” annex going to the mediator and discussing material that the attorney does not want the other side to know. The process is what disputants and lawyers make of it. Flexible, it bends to imaginative sculpting.

Sometimes mediations do not immediately end in resolutions. The advocate ought not to give up. The mediator won’t if the mediator is worth his salt Since the lawyer can just pick up the telephone and call the mediator without the other side knowing – or the mediator can privately call the lawyers – the negotiations can continue until another session or until resolution. Good mediators continue to keep trying to assist the disputants to reach a resolution.

The Stage

The mediation can be the stage for displaying the hurt, credibility, charm and jury appeal of the client. And the clients can talk directly to one another across the table. Like trial, this is a lawyer’s drama; scripts and rehearsals are available. But so are first night jitters.

Sometimes during a mediation the lawyers and the client will find themselves in some particle-board and tubular-steel room with coffee and newspapers, just waiting. This is time well spent. Timing, rhythm and pace are all important in mediation. Catharsis can take a while; so can acceptance.

The mediation experience can bring to the surface issues that are not in the pleadings. Sometimes these are the true issues between the disputants. The mediator works hard to keep sitting and find what is really going on. It takes time to release meticulously suppressed issues. But when they surface, the mediation can on the fast track to a satisfying resolution.

Non-economic Concessions

While money is to this society what cattle and water are to the Nuer, non-economic considerations can play a remarkable role in commercial mediation. Some have pointed out the power of an apology, appropriately timed and tendered. But advocacy may also involve asking for a non-economic concession – even one the advocate knows he likely will not get. It may put other demands in a new, or re-framed, perspective.

Once discussions have foundered, the mediator knows that, of the people in the room, the parties are not likely to move on their own. It is up to the mediator to step back and find a new perspective or approach. The lawyer should anticipate the possible re-framing, or the mediators new perspective may be suddenly unfamiliar and disconcerting.

When discussions bog down after hours of negotiation – usually about 5 p.m. – the role of imagination is sometimes called into play in mediations. The mediator had best not have lost his or her imagination in the second year of law school; part of what the disputants are paying for is creativity. But when the clock strikes or beeps – in a soundless room, the lawyer’s own imaginative suggestion may prove sublime advocacy.

Shifting Perspectives

Finally, the suggestion has been made that even commercial mediation can be a transformative experience for the parties. By allowing the parties to understand, through the mediator and the process, the positions of others, and by shifting their perspectives – not to mention their demands and offers – the dispute resolution process may have taught not just chastened.

Advocacy in mediation is likely to become more important probably in the near term, certainly in the longer term. This is because business people forced the development of arbitration; they are now likely to compel the further development and wider use of mediation. The software industry already appears to be leading this effort with the Software Publishers Association’s new Software Industry Mediation Service.

Following Commerce

Mediation will therefore likely follow trends in commerce. Since business is increasingly transnational, mediation will be so too. This means mediation will become increasingly cross-cultural. Business people say they often have trouble making cross-cultural deals; anyone in Silicon Valley has the equivalent of a laptop full of war stories. Settling problems resulting from those cross-cultural deals can be even harder. Corporate disputants will demand new levels of sophistication, both from mediators and from advocates in the process.

Disputants may increasingly seek out practitioners who have experience with other legal systems, cultures and language skills, a background in the conduct of transnational business and a familiarity with diverse negotiating styles. They may also demand experience and expertise in representing clients in mediation and other forms of alternative dispute resolution, just as they now sometimes ask about trial experience.

Caucusing on the Web

As for the process of resolving disputes, by mediation and otherwise, attorneys may find themselves taking fewer jets hither and yon. Negotiation, advocacy and mediation may begin to mimic telecommuting styles by embracing secure – perhaps simultaneously translated – caucusing on the Web. There already is an online ombuds-site for disputes involving electronic commerce.

The corollary is that this art form – advocacy in mediation – is likely to receive attention in law schools that have in the not-distant past added trial advocacy and clinical courses. As the alternative becomes the corporate norm, what has been seen as faddish will become essential.

1. See Sally Engle Merry, “Mediation in Nonindustrial Societies” in Kenneth Kressel et al., “Mediation Research” (Jossey-Bass 1989).
2. See Jeanne Brett et al., “Research Report – The Effectiveness of Mediation: An Independent Analysis of Cases Handled by Four Major Service Providers,” Negotiation journal 259-69 (July 1996).

Robert M. Smith is a full-time commercial mediator in San Francisco. He is author of “Alternative Dispute Resolution for Financial Institutions” (West Group, 2nd ed., 1998, 1200 pp.). He was Senior Litigation Counsel for Bank of America and Special Assistant to the U.S. Attorney General.

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A Meditation on Mediation
by Robert M. Smith

This article originally appeared in the June, 1999 issue of The California Lawyer. Reprinted by permission. (© 1999 Daily Journal Corp., San Francisco, CA)

The $9.99, gray plastic radio sat mute on conference-room table, an object of affection, disaffection, and despair. The employee played the radio on the Postal Service dock while he was working. He is Hispanic and liked to play Mexican music. The supervisor is not Hispanic and told the employee not to play Mexican music. The result was an EEO complaint – and a Postal Service Redress Program mediation. I was the mediator.

During a two-and-a-half-hour session, manager and employee came to air their differences – which were, of course, only marginally about the music or the radio. They both cried. They both listened to each other, with my occasionally tugging on one sleeve or another, murmuring in English or Spanish that each ought to hear the other side out.

A Radio Solution

They came up with a plan to resolve their differences in the small unit they spent their workday lives in, and they agreed to a solution about the radio – where it might be played, and with whose assent. Then they shook hands, and they were out the door and back to work.

The Postal Service says it is the country’s largest civilian employer. And it has adopted a wholesale program of workplace mediation, training mediators all over the country. But the training is not in normal commercial or employment mediation. It is a genre called transformative mediation, and its goals are to allow the parties to shift their perspectives and bring about a change in their relationship, since generally they are, like it or not, in a relationship.

Transformative

As a plain-vanilla commercial mediator working in fields as diverse as intellectual property and employment, health care and banking, I was skeptical about what is called, somewhat grandiosely, the transformative model. But, hey, these folks were drying, wiping the slate clean, and letting the now-inoffensive radio lead its monophonic life in peace.

The personal injury mediation was related to air transportation and was at what mediators call an impasse; it’s a fancy term meaning “somebody had better do something or we’re all picking up our briefcases.”

We had been going all day. What was keeping folks from a resolution were attorneys fees — the contingent fee due the plaintiff’s lawyer. It seemed that the plaintiff, a pilot, was close to settling, as was the company he was suing, except for this pesky matter of fees.

I met alone with the plaintiff’s lawyer – a bulky, gentlemanly fellow in a rumpled suit and cowboy boots (which I much admired). He was just about to get married. “Wouldn’t you like to go somewhere for your honeymoon?” I asked. “Anywhere? Haven’t you always dreamed of going somewhere?”

“The Greek islands,” he replied.

“How about,” I murmured, “a first-class, round trip flight to Athens for you and your new bride?”

Chapel on Santorini

I knew the trip would cost the defendant much less than retail tickets would cost the plaintiff’s lawyer, and would offer the lawyer not just the equivalent of cash but the fulfillment of a fantasy. Nobody cried, but in my mind’s eye I could see the little white sun-baked chapel on Santorini I told the lawyer not to miss.

Finally, I would be remiss in this maiden Alternatives column if I did not say something, anything, about the Y2K problem and how it may affect ADR (Alternative Dispute Resolution). The New York Times recently said there are only two possible approaches to the Y2K “computer collapse panic story”: It’s nothing, or Hoard ammo. It’s a problem that seems to suit mediation. Consider the pace of technology, the fever for the next deal, and the global nature of the dispute. They all suggest we may be seeing some innovative transnational mediation.

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The Price of Palaver
by Robert M. Smith

Mediation seems to have achieved the universal appeal of popcorn and it probably should have. Like popcorn, it’s quick, it’s cheap, it’s homey and, unlike popcorn, it tends not to raise your blood pressure.

But there are times not to mediate. What I’m going to do here is sum up the pros and cons when to use it and why, and when you might want to scratch your head before sending in the deposit.

Quick. You can get in and out of mediation, if you pick the right mediator, very promptly-but not too quick. Don’t get in before you have a reasonable business valuation of your case-not a legal valuation. (A legal valuation could take a long time-preparing for trial is a lot different from preparing for-and living-life).

Cash and Catharsis

Recognize that lawsuits are often about both cash on the barrel-head and catharsis. Mediation provides a chance for the aggrieved plaintiff to tell his or her story instead of telling it to a judge and jury. The story has got to come out; it might as well come out now.

And letting it come out in a sensitive way may reduce the amount of cash that gets paid. I have noticed in my commercial mediation practice that there is an interplay between cash and catharsis. Listening can have monetary as well as human value.

Imagination

Is sometimes not what lawsuits lend themselves to. The legal process tends to put problems—and solutions—into boxes. Sometimes the best result for the plaintiff, for the defendant, and for the carrier requires an out of the box approach.

With the right mediator, adjusters can bring a powerful lot of imagination to the table and help custom fit a solution to the problem. Often we all see that the real problem is not the problem we’re being told about—and the real answer is sometimes not the one with all the dollar signs at the bottom of the legal complaint.

Setting A Precedent

If somebody, on your side or the other side, wants to make some law that will go into the books, onto the shelves, and shape the way lawyers and their clients duke it out in the courtroom, don’t mediate. The result sets no precedent at all. In fact, the result is—

Secret

Mediation is confidential. That means the press does not get to know what happened during the mediation. And a confidentiality agreement can protect—or try to protect—the result. In sensitive cases this can beat watching the media gather on the courthouse steps.

Cheap—or Is It?

It takes a long time to prepare for trial. You know the dreaded words—motions and discovery and trial prep. And you have to know when enough prep is enough to mediate. But $9,000 a day (the amount that the most expensive mediators charge) may be a powerful lot of money for a day of mediation unless the case rivals the budget of an oil producing state; and even if it does, you need to watch out for administrative fees, cancellation fees, travel fees…

Flexible

You can settle some of the issues, settle with some of the parties, limit the issues, blend ADR processes so that arbitration, mediation, and combinations of the two are considered. But you can bend only so far—

Presence of Power

All the flexibility in the world is not going to work if authority is not present. It’s not just that the person with the bucks for the co defendant isn’t shelling them out; it’s not just that he or she is conveniently in Grosse Point; it’s that the person isn’t there, hearing the arguments, seeing the expressions, following the ebb and flow of the mediation. How can they be persuaded? How can they participate. If they aren’t there, you probably shouldn’t be either.

Patience, or wasting time?

It takes a while—sometimes a heap of waiting—while the mediator, usually in separate caucus—private meeting with one side—pans for the gold of the real issue, the real interests—not just the stated positions. So be patient—just make sure they have laid in a good supply of coffee, tea…well, you get the idea. But make it dear this isn’t a camping trip—there are better uses of time than waiting for the irrational, or the greedy, to become clear headed. Remember, in the end it is your process. That’s what mediation is. So bend it, shape it, tell the mediator what you need, what you want, what you expect. Hey, you’re footing the bill—and it’s your dispute. But remember it’s good to have the…

Mediator as Your Ally

Why? Because the most powerful, the most persuasive voice in the room is the neutral’s … because he or she is neutral. How do you get the mediator to be your ally? Lots of ways, I suppose. But one way that’s on the level that I recommend is to be on the level.

At some point the mediator will ask you for some candor, not necessarily your bottom line. (I’ve heard more bottom lines sometimes in one mediation – than you’d ever believe.) Buy some candor. Give it to him or her. The reward may be greater than you think. But, if you truly think that the mediator the other side is pushing won’t be even handed

Don’t go to a rigged game

Of course, I exaggerate. But during one talk to a group of claim reps, I was astounded to learn about their experience with a mediator who told them, during mediation, that in each of his preceding mediations with the same plaintiff’s lawyer, the carrier had always picked up the plaintiff’s share of the mediation costs. Huh? This didn’t sound good to them, and it doesn’t to me.

Better to give up flexibility, speed, cost savings, imaginative results, and confidentiality than play in somebody else’s rumpus room. Insist on absolute fairness—propose somebody, or a couple of people, you know are fair, and dependably fair. Ask why the other side won’t accept that mediator. Remember: Agreeing to the mediation is low risk-it’s voluntary, you can leave, you don’t have to make a deal. But once you’ve agreed to use mediation, picking the mediator remains the critical step.

Robert M. Smith is a commercial mediator in San Francisco. He is President of The Mediation Society, a Fellow of the International Academy of Mediators, and a Fellow of the American College of Civil Trial Mediators. He can be reached at rms@robertmsmith.com.

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Mediation Musings
by Robert M. Smith

This article originally appeared in the September, 1999 issue of The California Lawyer. Reprinted by permission. (© 1999 Daily Journal Corp., San Francisco, CA)

The first thing you have to understand about the gate at Angel Gate is that it doesn’t work.

Angel Gate is not in a section of London like Oxford Circus or Pall Mall. It is seedy, the gray home of government housing with broken windows. It is also the home of The Chartered Institute of Arbitrators, the only worldwide educational and credentialing authority for arbitrators. It runs — sometimes in a less-than-well-oiled fashion — high-quality seminars and diploma courses in international arbitration.

I have the honor of being a fellow. To become a fellow, one must survive the scrutiny of a half dozen professionals, write a reasoned award in a complicated international case (an award that applies the law to the facts and explains the result), and be vetted by a group of anonymous readers somewhere in the United Kingdom.

Green Eye-shades

So it was that on a recent trip to London as an arbitrator I visited my institute at Angel Gate, expecting green eye-shades and shirtsleeve garters. Instead, I found a fairly young staff administering a number of arbitration plans (“schemes”) in UK industries in a modern building whose computers were occasionally decorated with buxom British pinups.

When I gestured to one example and mentioned we wouldn’t see pinups in the workplace back home, one of the female employees assured me that it was a photo of her male coworker’s wife. I nearly bought that until one of the other women shrieked, “He wishes!”

The institute has a new chair, Neil Kaplan, Queen’s Counsel, with chambers in the Inns of Court and Hong Kong. Neil is a nice fellow and a renowned arbitrator whose intellect can be — and routinely is — described as fierce. I attended Neil’s inaugural speech at an institute luncheon at Ironmonger’s Hall to learn of his plans. Ironically, he wants to increase the number of women members (now 4 percent), reach out to solicitors and barristers, and strengthen ties to the international branches. (There were subdued mutterings in Ironmonger’s Hall.)

St. James

I didn’t come to London just to visit Angel Gate. I was superintending an arbitration in the neighborhood of St. James’s Square, with its wrought-iron manicured greensward, St. James’s Park. A week later I was in another St. James Park, the one in San Jose, California, where I was mediating a dispute involving an alleged breach of a high-tech contract for machinery bound for China.

The closest thing to Europe about the mediation was that part of it was in French. (One of the principals of the exporter came from Quebec.) But when I took the parties out for a leisurely stroll to try to break the impasse, I saw a brown wooden sign reading “St. James Park.”

The San Jose mediation returned me to my London experience. Why is it, I thought, that a neutral does nothing in common — indeed, they are antithetical — except for neutrality? And why is there, relatively speaking, so little mediation domestically in the United States and next to none in international commercial disputes?

The usual reason given is that in complex, high-stakes, transnational litigation, the parties are all represented by sophisticated counsel who don’t need assistance in negotiating. That is specious. The same could be said of many domestic disputes, in which mediation is helpful in speeding a facilitated result.

Robust Marketplace

Nor can the answer be just the hostility of some international arbitrators. The marketplace of litigation tools and ideas is robust, and protectionism won’t keep out the truly helpful. Both the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA) have added conciliation and mediation rules. But the LCIA’s are brand new, and the deputy secretary general of the ICC’s International Court of Arbitration reports that there were a dozen or few conciliations last year.

In the United Kingdom there is a bustling outfit called Centre for Dispute Resolution (CEDR). England is undergoing a sea change in its civil procedure rules, and the new rules have built in encouragement for disputants to try ADR. CEDR is racing around trying to provide commercial mediation services through its panel.

And CEDR is, to my surprise, far more active in international mediations than any other group I have seen, including the American Arbitration Association (AAA). (How many times have Europeans, pointing out why CEDR is more popular than AAA, said, “But, you see, the AAA is American.”) CEDR runs its own training and certification programs and has reached out broadly and aggressively across Europe. We seem to be still fumbling to establish programs in Canada and Mexico.

Imagination for Profit

The Brits Seem to be applying an important ingredient to mediation: imagination. In a sense, mediation can be described as imagination for profit, and the English aren’t doing badly about either imagination or profit. Of course, mediation can also be about principle.

In San Francisco Superior Court, for example, I was involved in a mediation between an elderly African American and a utility company. Trial was coming up fast, and it was going to be about Principle. They were stalled. It was time — if there was to be a resolution — for imagination. I was the hapless mediator, to repeating assurances to both sides that, yes, I did understand their issue.

How about a three-part solution: some money to the plaintiff, some money to his lawyer, and most important, a hefty charitable contribution by the utility in the plaintiff’s name to the plaintiff’s favorite charity. A charity was selected, and the parties and their lawyers marched out the door and away from trial.

I allowed myself to slump in the chair behind my desk and reminded myself once more: You have to listen to what these people aren’t saying.

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The Presence of Power
by Robert M. Smith

The decision makers have to be present. It is only a slight exaggeration to say that if this suggestion is complied with, almost any mediator can facilitate a successful result.

Put Your Wallet Away

Think about whether there are non monetary issues. Figuring out that there is a non monetary element and figuring out what it is may require brainstorming in a group and before people are tired. It may also require input from others back at the client’s office and your office.

Ink It

You and the client might try to figure out on paper how the economic and non economic elements would get written down in a binding settlement document.

In fact, you might bring a draft of a settlement agreement — something short that captures the main elements. It may avoid two or three hours of wrangling when people are tired and cranky.

Docs

Have with you at the mediation documents that are the basis of a contention you are making or that will rebut the other side’s position.

This requires thought: you can’t bring a file box. What documents may prove critical? They probably don’t include the Third Amended Complaint, or an expert report — the kind of documents that people often bring. But they may include a contemporaneous memo, or a copy of a pivotal legal decision.

Prisoners of the Past

The Docs suggestion leads to this question:

Why would folks bring the Third Amended Complaint, but not a document that is hot as an August day in Amarillo? Because people, both counsel and the client, are sometimes so fixed in their positions because they are so close to the claim that they lose sight of the significance of a particular document.

Cell-ing

Consider having at the mediation — or available by cell — anyone who might be an important witness.

Again, you might want to consider carefully in advance to make an intelligent choice as to who should be at the mediation or available by cell phone.

Somebody in attendance can have all the phone numbers pre programmed. Why would you want to push the button? Because —

Just the Facts

Few things are more persuasive to the other side than allowing the mediator to call a witness or expert and say this is what he or she said.

The Guest List

On the subject of folks it would be helpful for you to have at the session, consider people you might want to ask the mediator to request the other side to have present or available. You do not want to find out at the mediation that someone important is missing.

No Offense

It is, surprisingly, not advisable to anger the other side in joint session. It tends to make them not receptive to your reasonable suggestions.

You can also go too far the other way: Being unctuous is not helpful.

You might want to consider something like: “We are going to take our best shot, and we’ll listen while you take your best shot. We’d rather bear it here than before a third party. If you don’t think we’re listening closely enough, say it louder — tell us we aren’t hearing it, or understanding it. We’ll do the same thing.”

The Power of Apology

The power of apology by the client himself or herself or the lawyer in — for example — a sexual harassment case can be considerable, if sincerely and credibly presented. It may be imprudent to say this is the worst thing this company has ever done. It may also be imprudent to suggest this was a minor oversight.

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Tower of Babble
by Robert M. Smith

This article originally appeared in the March/April 2000 issue of House Counsel. Reprinted by permission. (© 2000 Daily Journal Corp., San Francisco, CA)

The insistent phone interrupted my thinking about the arbitral award. To my surprise the callers were the lawyers in the arbitration, which had just finished the day before. They were phoning with an unusual request: Could I mediate the case? Put the award aside and mediate the case? They had plunged into the imaginative use of ADR.

Med-arb is one thing, I thought. That’s when the mediator turns himself or herself into an arbitrator after the mediation has failed. And even that is not without its ethical problems. For example, what do you do with all the confidential information each side has given you during the mediation? But arb-med is rare. What if the parties don’t settle the matter during the mediation? Then you have been contaminated as in med-arb, but you also have a fairly fixed view going in as to how things ought to turn out — you’ve already written an award. And however gentle you may be, your suggestions will carry a lot of weight.

Two Conditions

I told counsel I would do it on two conditions. First, they had to call the court where the matter was pending, get its approval, and write me a memorializing letter. Second, I would finish the award, seal it, bring it to the mediation, and leave it on the table in plain view. If they settled, I would rip the award up in their presence. If they didn’t, I would go to a mailbox with both of them and mail it to the court.

The court said yes and the parities said yes. The mediation lasted about a day, and they settled. What a flexible instrument alternative dispute resolution can be. And how much scope it allows for imagination.

Pathological

Imagination, however, should not be practiced in certain precincts. Some of my arbitrating is international, and I have seen standard arbitration clauses of the International Chamber of Commerce (ICC), the American Arbitration Association (AAA), and the London Court of International Arbitration (LCIA). They are standard clauses with plain-vanilla selections or add-ons, or combination clauses – conciliation and arbitration. And I have seen clauses known in the literature as “pathological.”

Pathological clauses are ones that are diseased; when a dispute arises, they spawn problems unforeseen by their drafters. For example, “In the event of a dispute arising out of or in connection with the present contract, arbitration will be conducted under the American Arbitration Association Rules in Johannesburg or Amsterdam.” This clause raises several questions. (1) Which American Arbitration Association Rules – commercial, international, or employment? (2) Johannesburg or Amsterdam – which? (3) Which language – Afrikaans, Dutch, or English? (4) Which substantive law – South African, Dutch, or some other? (5) How many arbitrators should there be – one, or a panel of three?

This is an example of how counsel typically does not want imagination exercised. And the chances of getting post-dispute agreement on these matters are small.

Joking Drafters

At a recent International Chamber of Commerce conference on the ICC’s rules and administration of an ICC case, there was a presentation on clauses by Baker & McKenzie partner Doak Bishop. He presented this real-life pathological clause: “The umpire shall be a national of Switzerland who is fluent in both English and Spanish, with an engineering degree, substantial experience as an international arbitrator, and at least 20 years’ experience as an executive of an international energy company.” The drafters must be joking. And if they aren’t, what’s the hourly fee when this umpire is found?

Of course, you can have a split clause. Bishop presented this one: “For all claims between the parties, all liability issues shall be decided by a court in litigation, while all damage issues shall be resolved by final and binding arbitration.”

Consolidation

You can also have a consolidation clause: “If a party initiates multiple arbitrations, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligations, the parties agree that all such proceedings may be consolidated into a single arbitral proceeding.” But there’s more: “The parties do not agree by this provision to authorize a class action or mass action.”

You might also want to address head-on the issue of interim measures – injunctions, attachments, and conservation orders. May the arbitrators grant them? May a party apply to a court for interim measures without waiving the right to arbitrate? In an emergency, may the presiding arbitrator acting alone grant interim measures?

Discovery

You might also think about addressing the bugbear of international arbitration: discovery. Most arbitrators and all but American and British counsel, are dead set against discovery as it is known in American law firms and legal departments and the storage spaces they rent. Do you want to explicitly authorize document production? Oral depositions? Written interrogatories? Audits? Interview?

On the subject of discovery, anyone who practices in this area, including arbitrators, owes a debt of gratitude to David W. Rivkin, a partner with Debevoise & Plimpton in New York and chair of the International Bar Association’s (IBA) committee on arbitration and ADR. With Rivkin’s leadership the IBA recently approved Model Rules of Evidence.

Fishing Expedition

These folks have tried — skillfully — to blend Anglo-American and European legal concepts to deal with discovery in international arbitration. There is nothing like having a French avocat or German Rechtsanwalt remind you that “fishing expeditions” are against public policy to make you appreciate these rules.

Will the other contracting parties agree to various ADR clauses? And how will executive react to lawyers who are tying to anticipate “unlikely” disputes with reams of technical clauses?

Going back to the arb-med example, when the project or deal is big enough, you can build into international contract clauses a sequence of ADR procedures: for example, an independent expert followed by mediation (conciliation), followed by a dispute review board, followed by binding arbitration.

CEDR

The United Kingdom is undergoing a sea change in its civil procedure rules, and the new rules have built in encouragement for disputant to try ADR. There is in the United Kingdom a bustling outfit called the Centre for Dispute Resolution (CEDR). CEDR is scurrying to provide commercial mediation services through its panel.

And CEDR is far more active in international mediations than any other group, including the American Arbitration Association. CEDR runs its own training and certification programs and has reached out broadly and aggressively across Europe. Last June it hosted a forum on global ADR development in London, which I attended. Victoria Wilson, director of legal services for Eurostar UK Ltd., described a mediation from the client’s viewpoint. Eurostar is the train that runs under the English Channel. According to Wilson, the company had endured five years of disputes and three years of litigation between English and French parties. Eurostar UK wanted to continue using the equipment and services of its adversary, and the parties decided to try mediation. But the first problems were “where” and “who.”

Eurostar UK wanted the mediation to take place in the United Kingdom, in English, with a very experienced mediator. The French party wanted a French-speaking mediator with a technical background. In the end, the mediation took place in the United Kingdom, with two bilingual mediators, one with a lot of mediation experience, the other with a technical background. Though the results are confidential, the process apparently worked since Eurostar is now rewriting all of its contracts to include mediation clauses.

Tenderness

The Brits seem to be applying that major ingredient of mediation: imagination. Another English mediator reported on a dispute that took place in South America, with insurance in the United Kingdom, and litigation in New York. The British mediator went on to report with a straight face that the lawyers in New York were “not known for their tenderness.”

But the French are entering the arena, too. I have been asked by a French mediation service to be one of two mediators in a bilingual mediation in Paris. I am hoping our disputants, a French company and a California company, will be pleased as those in the Eurostar matter.

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Symmetry Alchemy
by Robert M. Smith

This article originally appeared in the Summer, 1999 issue of Cyber Esquire. Reprinted by permission.

The legal system is not constructed for litigation of international intellectual property disputes. With mediation, parties can bypass foreign courts, and experience more control over the outcome.

The number of intellectual property actions is rising; the law is complicated; and litigation — particularly discovery — is expensive.

The traditional legal system is just not geared for intellectual disputes, and it is not constructed for transnational disputes.

Speed, Expertise

We all know why. It doesn’t move fast enough to deal with copying or interference with technology life cycles. It may not have the expertise.

It makes you put your secrets on the table for everyone — including your competitors — to ogle. It sends your international disputes to foreign courts that may appear less than trustworthy or channels them to arbitration, which can in some circumstances be as time-consuming and expensive as litigation.

Knowledgeable in-house lawyers and canny outside counsel have developed an alternative to all this: mediation of international intellectual property matter.

Getting it Done

That we all know. What we don’t know is the alchemy of getting it done.

The Center for Public Resources estimated at one point that 61 companies that used alternative dispute resolution saved a combined total of nearly $50 million, with an average savings of more than $800,000 per company.

One patent arbitration expert has opined that through ADR, a party in a fairly complicated patent-infringement suit can get a final decision and a permanent injunction in one year, as compared with six years through trial and appeal.

But one year is, of course, too long. Christian Buehring-Uhle wrote in his new book on international ADR: “(I)n a micro-electronics patent or a computer software copyright dispute, litigation or arbitration can take longer than the life-cycle of the product (and) a preliminary injunction can ‘kill’ an entire product line.”

Like Litigation

It is also too much like litigation. As Buehring-Uhle acknowledges with candor, “The formality, the costs and the duration of international commercial arbitration . . . can reach extreme proportions.”

That’s why a former general counsel of the Bank of America called international commercial mediation the “sleeping giant.” That’s why it has stimulated so much domestic competition between the American Arbitration Association and JAMS/Endispute, and why national court systems and arbitral authorities in Latin America and Asia are moving to encourage it, if not compel it.

Harmonious Relations

The Stanford Law Review noted last year that former Socialist and East Asian countries favor ADR, while Arab countries have traditionally opposed it. A Japanese commentator pointed to the “Asian ideal of harmonious human relations.”

In Hong Kong, Beijing, Shanghai and the rest of China more than 2,100 new international arbitration cases are now instituted annually. China’s caseload is reported to exceed the total cases of the International Chamber of Commerce in Paris, the London Court of International Arbitration and the American Arbitration Association’s International Center.

Universe of Staircases

A French academic at the Sorbonne, Guy Olivier Fauré, said that confusion about the negotiating process itself is one of the main reasons why negotiations between Chinese and non-Chinese fail. This confusion, the academic said, “leave(s) the negotiator feeling like a prisoner in a universe of staircases leading nowhere.” Is there a better set of circumstances for a neutral facilitator — a mediator — than this kind of universe?

What we have are a series of intersecting trends: increasingly difficult technical questions; clogged domestic courts; mounting legal fees; a need for confidentiality and speed; worldwide impact and worldwide threats; cross-cultural misapprehensions and misunderstandings; an impatient world so linked electronically that a stop at a roadside stand is a major pause.

WIPO

An entity like the World Intellectual Property Organization in Geneva, one of the United Nations’ specialized agencies, seems to stand squarely in the middle of the intersection of technology and multinationalism. It has panels of both mediators and arbitrators to choose from.

But WIPO does not have the clause-driven business of the American Arbitration Association. There are tens of thousands of clauses in contracts that specify the AAA as the arbitral authority, but presumably far fewer for the relatively new WIPO.

On the other hand, there were few clauses specifying JAMS/Endispute when it began, and JAMS seems to be doing a good deal of mediating. And the AAA sometimes tries to “flip” cases from arbitration to mediation in circumstances that seem appropriate.

Choosing a Mediator

So you can choose your mediator. What are the considerations? The same, I submit, as in the familiar exercise of selecting your lawyer:

• Don’t pick a vendor, just as you don’t pick a firm. Choose an individual mediator as you choose an individual advocate.
• Consider process expertise. As if the person is an excellent mediator, not whether he or she was a good judge or a good litigator.
• Select a style. Some mediators are more evaluative than others. Be candid with yourself and the mediator about what sort of process you want. You are, after all, paying for it. Good mediators have a range of styles, just as good litigators do. Some styles are better for some disputes than others.
• Look for multinational sophistication. Does the mediator know languages? Other cultures? Other legal systems? Can he or she bend an elbow easily at the polished table in private caucuses with your advocate? More important, with the other side’s?
• Think about expertise. How much does the mediator have to know about the technology? Many mediators will tell you that mediating a family dispute is not wildly different from mediating a business dispute or that a foreign letter-of-credit matter is not strikingly dissimilar to mediating the alleged breach of a software agreement.

Co-Mediators

But you ought perhaps to ask: Are these anachronisms based on what is familiar to the organization – and perhaps corporate and outside counsel? Too much is made of expertise. You can also hire co-mediators – one skilled in the particular technology, the other in mediation.

• Reconsider the old boys. There grew up in international arbitration a cadre of people in each major geographic center and within each vendor of arbitration services a network of candidates to resolve your dispute.

Sometimes you chose them; sometimes they were chosen for you. Risk aversion, if nothing else, suggested a level of comfort with the tried. You might wish to consider other practitioners if they can bring you the most important virtues a mediator can bring to the conflict, especially imagination.

Creative Solutions

Mediation allows creative business solutions; that is one of its hallmarks. Find people within your organization who have creativity. Employ a mediator with judgment and imagination. Look for both in near-biblical proportions.

• You control the process. You choose, or help choose, the mediator. You make the rules. You make the time frame. You cap the expense. You set the boundaries. You decide when enough is enough.

Maximize your chance of success, in just the same way some lawyers research a forum or attempt to “deselect” jurors through voir dire.

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The Minitrial:
An Alternative to a Lengthy Lawsuit
by Robert M. Smith

This article is taken from a chapter of Mr. Smith’s book Alternative Dispute Resolution for Financial Institutions (West Group, 2nd ed. 1998, 1200 pp.)

Summary

A minitrial is not a trial, but a voluntary, nonbinding settlement technique. Each side makes a summary presentation of the case to a joint panel made up of a senior management person for each side. There are two parts: an information exchange and intensive negotiations. The theory is that the problem is primarily a business problem, not a legal problem. A danger is the disclosure of possible evidence and future trial strategies. The process can be expensive and requires the participation of high-level executives, but these executives understand the business and may be able to cut to the core issues quickly.

In the quest for cost-effective alternative to litigation, those involved in mediation and alternative dispute resolution are coming to appreciate the benefits of the minitrial.

A minitrial is not really a trial at all, but a voluntary, nonbinding settlement technique. At the minitrial, each party to a dispute makes a summary presentation of its case to a joint panel made up of a management person from each side. The panel members must have the authority to negotiate and approve settlements.

Two Parts

A minitrial has two distinct parts; the first is the information exchange between the parties (both before and during the minitrial itself), and the second intensive negotiations between the parties.

A minitrial is a sophisticated form of settlement conference, combining elements of private negotiation, mediation, and adjudication. The theory behind minitrials is that many disputes are primarily business problems and not legal problems. These disputes are best settled through prompt negotiation involving executives of the disputing businesses.

30 Minutes

One of the first reported minitrials involved a dispute with a computer terminal patent. The plaintiff was asking for $6,000,000. The litigation had gone on for three years and had cost the parties $500,000 in legal and expert fees. After a two day minitrial, the dispute was settled in 30 minutes of negotiation.

Minitrials are most effective and most frequently used in disputes involving large corporations with relatively equal bargaining power.

Minitrials are a good method for resolving disputes in which the underlying law is settled.

Legal Precedent

On the other hand, parties should generally not consider a minitrial when the underlying legal issues are uncertain or when they want to create legal precedent for other cases.

Minitrials may be expensive because they often involve development of each party’s case through discovery before the case can be presented at the minitrial hearing, even in a shortened form.

Because of the potential expense, minitrials may not be appropriate for personal injury and other tort cases, or cases involving small amounts of money. When speed and expense are primary considerations, parties should consider mediation as an alternative to a minitrial.

Executives

One advantage of a minitrial is that it requires high-level executives on each side to become involved in resolving the dispute at an earlier stage than usual in litigation. They hear the opposing side’s story, perhaps for the first time, not through their own counsel’s words, but directly from the opponent. This can deepen their understanding of the problem and its roots, and possibly clear up any misconceptions or misunderstandings as to the other side’s actions and positions.

Generally, executives do not become deeply involved in litigation until the case reaches the courtroom steps. At that time, after considerable time and money have been spent on legal fees and costs, the executive must confront hard questions about the chances of success, the cost of a full-scale trial, the outside possibilities of the corporation’s liability, and the effect of a loss on the business.

Early Stage

The answers to these questions often motivate settlement of a dispute. A minitrial can give executives an opportunity to become involved in resolving a dispute at an earlier stage, potentially saving the corporation significant time and money.

The use of high-level executives also requires that the lawyers present a reasonable and fair representation of their client’s case in layperson’s terms; the lawyers do not want to embarrass their clients in front of a counterpart from the other company. A minitrial could be considered as a dry run for a later court trial.

Advance Warning

This aspect of the minitrial procedure also gives rise to one of its disadvantages: It may give the other side advance warning of future trial strategies and important, undisclosed evidence.

However, a dry run also allows parties to weed out unimportant, collateral or technical problems that may be obscuring the real dispute and to eliminate areas in which the parties are in agreement.

Focus

In this respect, even if the dispute goes to trial before a judge and jury, a minitrial may focus the issues, saving time and money in the trial.

Other advantages to minitrials are similar to those of negotiation and mediation: their non-binding and confidential nature, the preservation of business relationships, and the savings in time and expense over a full court trial.

Industry Customs

Another advantage stems from the use of experienced knowledgeable business executives on the panel. Executives already have an understanding of industry customs and practices and of the technical underpinnings of the dispute.

The parties may be able to craft any resolution to fit within prevailing industry customs and practices. When was the last time your business encountered a judge or jury who really understood the financial intricacies of your business?

Experienced business executives may be able to quickly cut to the core issues for the corporation and avoid spending too much time on collateral issues that are important only to the lawyers.

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ADR: Unlimited Possibilities
by Robert M. Smith

This article is taken from a chapter of Mr. Smith’s book Alternative Dispute Resolution for Financial Institutions (West Group, 2nd ed. 1998, 1200 pp.)

Summary

You can combine ADR processes — for example, mediation and arbitration. The process and result are limited only by the imagination of the disputants and the neutral.

Combinations are a safe-cracker’s dream. They may be equally useful in ADR to open the settlement door.

In earlier editions of this newsletter, I have written about different types of ADR. (“ADR” stands for alternative dispute resolution– alternatives to the civil justice system.)

The subjects have included mediation, arbitration, the minitrial– a few of the types of ADR. But one thing I haven’t discussed is the possibility of combining different types of ADR.

Different ADR processes can be– and often are– tried in succession in the hope that when one is unsuccessful, another may be successful.

One advantage to a multi-step process is that it keeps the parties in a settlement mode. If one settlement process is unsuccessful, another automatically begins.

One, Two

A common technique is to begin with a non-binding settlement process– like mediation or minitrial– and, if that is unsuccessful, follow it with a binding, adjudicatory process like arbitration or private judging.

This assures the parties that a resolution to their dispute will be achieved, either through mutual agreement or through an enforced decision.

Another common technique is to begin settlement facilitation and adjudicatory phases with a first step requiring face-to-face negotiations. “Med-arb” describes the process by which a dispute is first submitted to mediation, and, if the mediation efforts fail, the dispute is submitted to binding arbitration.

Just as Solid

One advantage to this is that any agreements reached in the mediation may be included within the final arbitration award. These mediated agreements will be enforceable as an ordinary arbitration award.

A controversial aspect of med-arb is whether the mediator will also act as the arbitrator. This is left up to the wishes of the parties and the mediator; it is, obviously, agreed on in advance.

One side argues that if the parties know that the mediator will act as an arbitrator, this gives the mediator more leverage in the mediation process.

The other side argues that this arrangement compromises the integrity of the mediation process and may also reflect on the arbitrator’s neutrality.

Another technique to avoid any potential problems with the mediator’s also acting as arbitrator is to appoint the arbitrator at the beginning of the mediation phase. This technique is known as “co-med-arb.”

The arbitrator sits in on the initial joint mediation session, but withdraws during the private caucus phase.

Parties may provide for med-arb (or any other hybrid or multistep ADR process) in a pre-dispute contract clause. They may also agree to submit an existing dispute to med-arb.

Mediation First

Parties that have an existing arbitration agreement may decide that they would like to try mediation before arbitrating. In this situation, they may modify– formally or informally– their existing agreement to provide for the mediation.

The med-arb agreement should discuss who has the authority to declare that the mediation phase is at an impasse and that the arbitration phase will begin.

It may be dangerous to leave the decision as to when the mediation has failed to the parties. This may allow one party to force the proceedings prematurely into arbitration when there is still a chance of a mediated settlement.

On the other hand, the principle that mediation must be voluntary to be successful may dictate that the mediator consider declaring the process at an impasse and suggesting that the parties begin the arbitration phase.

Agreed

The arbitration phase may differ from a single-step arbitration hearing in that some of the facts may have already been uncovered in the mediation phase and need not be presented again.

Any facts that the parties agree on and that are uncovered during the mediation phase should be the basis for stipulations between the parties before the arbitration phase.

Variations on hybrid or multi-step processes are bounded only by the parties’ (and the neutral’s) imaginations.

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