Presuit Mediation – A Missed Opportunity?

By Leonard Frankel

Why do parties mediate disputes? Some common reasons given are to save litigation costs, reduce risks, save time, maintain confidentiality and sometimes because a judge says you have to. If those reasons are valid months after a lawsuit is filed and thousands of dollars are spent on discovery, logic dictates that the same reasoning applies in many cases prior to filing that lawsuit. Note, I said many and not all cases. Of course there are those cases where discovery is truly needed to establish the facts. But how many instances have you been involved in where after discovery is completed there are still facts in dispute? And how frequently do you have cases where there truly are no disputed material facts and both sides know that prior to commencing discovery?

Answer this question: have you ever discussed with a client the possibility of trying mediation prior to filing suit? If not, are you missing an opportunity to be of service to your clients?

Is Presuit Mediation Required by Supreme Court Rule?

Missouri lawyers are familiar with Rule 17.02(a), Mo. R. Civ. Pro., that requires in every civil action to which alternative dispute resolution applies a notice of alternative dispute resolution services be furnished to all parties to the action. How often do you actually discuss that notice with your clients? But even more to the point are you familiar with subsection (b) of that rule?

Rule 17.02 (b) provides that: In addition to the provisions of Rule 17.02(a), counsel shall advise their clients of the availability of alternative dispute resolution programs.

If subsection (a) requires notice of ADR services to be given to litigants when does subsection (b) come into the picture? Does it require an attorney to advise their clients of ADR programs prior to filing suit?

Of course convincing your client that the dispute would be appropriate for presuit mediation is only one-half the battle. The other side must also agree to enter into this voluntary process. What if the barrier to participation is a perceived need for discovery? There is nothing to prohibit an agreement for a voluntary exchange of documents presuit including expert reports if they exist. The documents would be provided in the discovery process in any event.

If there is a deposition that one or both sides believe is critical prior to engaging the mediation process, you can agree to the taking of the deposition prior to mediation. During one of the mediations I conducted both parties told me of a critical witness who had not been deposed and said he would testify in their favor on a critical point. Because of the importance of this disputed testimony the lawyers for the parties agreed to allow me to call the witness with them present and ask the necessary questions. Following the call the case settled. If we could accomplish this during a mediation reasonable lawyers could agree on a way to obtain the needed information before filing suit. The focus should always be on how to efficiently and economically resolve the problem for your client.

Is Presuit Mediation Successful?

Speak to any experienced mediator and I believe he/she will tell you that 75% or more of the cases are settled. Does the same apply to presuit mediation? Some years ago (1999 – 2000) the St. Louis office of the EEOC, in conjunction with Pinnacle Arbitration and Mediation Services, ran a presuit mediation program. As a mediator who participated in that program I was quite skeptical. I did not think lawyers would settle many of those cases without engaging in discovery. Six of the cases were assigned to me and, much to my surprise, all of them settled.[i]

The U.S. Equal Employment Opportunity Commission website publishes its mediation statistics. (See below). It currently covers fiscal year 1999 through fiscal year 2010. In FY 2010 there were 12,755 mediations conducted in the EEOC system prior to suit being filed and 73.4% settled with an average closure rate of 100 days. Since FY 2005 the settlement rate has been over 70% each year.

EEOC Mediation Statistics FY 1999 through FY 2010 *

  FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
Resolutions 4,833 7,438 6,987 7,858 7,990 8,086 7,900 8,202 8,649 8,840 8,498 9,362
Mediations Conducted 7,397 11,478 10,588 11,457 11,595 11,658 11,278 11,314 11,956 12,254 11,692 12,755
Resolution Rate 65.3% 64.8% 65.9% 68.5% 68.9 69.4% 70.2% 72.5% 72.3% 72.1% 72.7% 73.4%
Average Closure Rate 86 days 96 days 84 days 82 days 85 days 82 days 81 days 97 days 88 days 97 days 106 days 100 days
Monetary Benefits $58.6 million $108.4 million $90.3 million $111.5 million $115.9 million $112.5 million $115.1 million $109.5 million $124 million $124.1 million $121.6 million $141.9 million
Persons Benefited Monetarily 4,271 6,175 5,897 >6,967 6,896 6,882 6,826 6,917 7,400 7,638 7,512 8,245
Persons Benefited Non-Monetarily 993 1,034 927 1,002 1,005 1,204 1,095 1,285 1,047 976 986 1,117

http://www.eeoc.gov/eeoc/mediation/mediation_stats.cfm#note


* The sole non-monetary benefits calculation reflects the number of individuals that have obtained a benefit provided by an employer under the provisions or terms of a mediated settlement that are not current, retroactive, or projected monetary payments or adjustments. Examples of sole non-monetary benefits include: policy changes, change of work hours or job responsibilities, reasonable accommodation (disability or religious), training, job referral and posting of an anti-discrimination notice in the employer’s workplace. Mediated settlement agreements may include either monetary or non-monetary benefits or a combination of both types of benefits.”

But I also submit that settlement is not the only measure of success. If through sitting with your opponents you are able to narrow issues and reduce discovery costs the process is still successful. “At minimum, pre-suit mediation can build a bridge over the risks, known and unknown, which can consume resources and have a destructive force that prudence would tell all parties to avoid”.[ii] And there would be nothing to stop you and your client from returning to the mediation table at a later date when you believe that mediation will help to finally resolve the dispute.

Types of Disputes Appropriate for Presuit Mediation

In the event you have the impression that presuit mediation is only for employment disputes let me dispel that idea. Some examples from my personal practice come to mind. In one my client had a claim against a trust company for breach of fiduciary duty and the parties agreed to presuit mediation that resulted in a settlement. In another I represented a company that leased printing equipment and a dispute arose with the lessor. We agreed to presuit mediation and successfully resolved that dispute. As a mediator I’ve had a number of presuit mediations including an attorney malpractice claim, lawyer to lawyer disputes under the Missouri Bar Program, employment disputes other than the EEOC program mentioned above, personal injury and many family mediations, which for the most part are presuit.

Transactional Attorneys – Pay Attention

Lest you think that this subject is only for litigators let me suggest that transactional attorneys should consider putting presuit mediation clauses in many of their business documents (contracts, employment agreements, shareholder/partnership agreements, covenants not to compete, etc.). One of the sample clauses found in WestlawNext,[iii] states:

In the event of a dispute involving interpretation or application of this agreement, the parties hereto shall meet in a good faith effort to resolve this dispute through

mediated negotiation pursuant to the mediation procedures of __________________

prior to initiating any adjudicatory procedures.

Business clients do not like being parties to lawsuits. You can offer them a process for dealing with disputes before suits are filed and with little, if any, downside. Mike Christiansen wrote in The Florida Bar Journal reasons for building presuit mediation clauses into business contracts.[iv] (1) Presuit mediation is fast; (2) presuit mediation is cheap; (3) presuit mediation is informal; (4) presuit mediation is empowering; and, (5) presuit mediation is confidential. As Christiansen states:

Business deals are not made in court. Business deals are not public. Business deals are not normally made with lawyers. They are struck between businesses thinking (more or less) rationally, with an eye on the bottom line. Ordinarily, only after a deal is struck do the parties seek out counsel to “write it up.” Why do we as lawyers conclude that our business clients cannot do the same with disputes? Who are we to substitute our judgment for that of our clients and assume that mediation too early in the timeline will be of no use? How can we as a Bar advance dispute resolution and more peaceful settlements among parties if we do not begin to encourage mediation with our own clients? It’s time we started.

Conclusion

The five reasons proffered by Christiansen are the same reasons that presuit mediation makes sense in other than just business disputes. The next time you’ve analyzed a situation and you are getting ready to file a suit stop and think: is this a matter that would be appropriate for presuit mediation? If so, discuss it with your client and, if given permission, present the option to the other party or counsel, if you know who that is. Do your client and yourself a big service and don’t become a victim of a missed opportunity.


[i] I have attempted to locate the results of that program for this article through both the EEOC and Legal Services of Eastern Missouri, through which Pinnacle was operated, but due to the age of the program no records were available.

[ii] Richard M. Williams, Gray Duffy, LLP, The (Overlooked) Advantages of Pre-Suit Mediation, The Recorder (April 1, 2011).

[iii] WestlawNext, Forms, § 5:36 Sample mediation clauses-Sample contract clause #1

[iv] Mike Christiansen, Five Compelling Reasons to Build a Presuit Mediation Clause In Business Contracts, 84 The Florida Bar Journal No. 1 (January, 2010).

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