Mediation vs. Litigation - When to Turn Swords into Ploughshares or Vice Versa
Mediation and other forms of alternative dispute resolution (ADR) play a critical role in bringing many disputes to successful or at least reasonable conclusions. In fact, studies show that nearly 90% of disputes in the United States settle before going to trial. Our firm has championed the ADR cause for many clients in hundreds of disputes. But even with all the advantages of ADR, some disputes are more appropriately addressed in litigation and even should go to trial.
At least four important types of cases lend themselves to litigation: a dispute with no middle ground for compromise, a case with parties who are firmly committed to different positions even if compromise is possible, a dispute with parties who believe one must be right and the other wrong, and a hostile situation with parties who care less about winning or losing than they do about having a public “say so.”
The courts, of course, do not always resolve disputes “on the merits” and determine who was right and who was wrong. The court may resolve the case on a technicality or other issue that has nothing to do with the merits. Moreover, an important witness may be unavailable, or freeze up while trying to testify, or even die before trial. The lawyers may not be evenly matched, the judge may have a bad day, or the jury may not fully understand the case before it. A party may simply run out of money or tire of an arduous legal process. In many situations, litigation may end without the real dispute being resolved or even addressed. Still, litigation may be the right choice because there are no practical alternatives.
The methods for dispute resolution can be analogized to the food pyramid. At the bottom is negotiation, the measure that should be used for most disputes. Mediation, negotiation enhanced by the help of a neutral mediator, is a step up. Above that is arbitration; when negotiation and mediation are not effective, the parties may present their dispute to an arbitrator for a binding decision based on rules that can sometimes be set by the parties themselves. Litigation in the public courts, subject to all the legal requirements, is perched at the very top. Like sweets in the food pyramid, litigation must be chosen carefully and sparingly. It is costly, time-consuming and aggravating — if you win. It is all that and more if you lose.
In short, a variety of methods from negotiation to litigation are appropriate for the circumstances of different disputes. In fact, more than one method may be appropriate for a particular claim at different stages of the claim. Litigation is the method of necessity in situations when no practical alternatives exist to help the parties achieve their objectives. The skillful lawyer recommends the method or methods that show promise of advancing the client’s objectives.
The tipping point
Nearly all disputes begin with some form of ADR. When these efforts are ineffective, or at least not effective enough, disputes head to court.
So when exactly do disputes reach the “tipping point” where going to trial takes precedence over ADR, specifically mediation?
We asked several members of the firm’s litigation practice to share their views. The collective experience of members of the practice ranges from serving the litigation needs of Fortune 100 clients to private company entrepreneurs and not-for-profit organizations. Please note that the individuals’ views of ADR are their own.
Jim Serritella is a 1971 graduate of the University of Chicago Law School. During the first part of his career he worked as a litigator for the trial and appellate levels as well as before public agencies. Later he moved into other areas of practice and received mediation training from the National Health Lawyers Association and advanced mediation training from the CPR Institute for Conflict Prevention and Resolution and the Program on Negotiation at Harvard University. Jim has worked as a consultant on alternative dispute resolution, a party representative in mediations and a mediator for most of his legal career. Jim can be reached at 312/840-7040 or email@example.com.
The question: “When do you abandon mediation and proceed to trial?” must be preceded by “do you mediate at all?” You mediate to obtain an independent assessment of your client’s case; to learn your opponent’s theories or spin; and to explore whether the litigation can be settled without further time and expense on economically acceptable terms. You abandon mediation and proceed to trial if the mediator’s assessment is distinctly favorable for your client; your opponent’s theories or spin pose a measurably reduced risk in a trial; and the opposing side’s offer to settle is unacceptable. The analysis is never this simple, but these points represent the basic boundaries.
Steve Voris is a partner in the firm’s Litigation practice and has litigated cases in state and federal trial courts, as well as in the appellate and supreme courts. His recent experience includes a jury trial in the State Court of Oklahoma as well as several arbitrations.
There is a saying among prosecutors, “the People always answer ready”— meaning ready for trial. In other words, while prepared to discuss a plea bargain, the People are also ready to try the case. The same should be true for a party in mediation. A client opting for mediation should know their threshold: what am I willing to offer/accept to resolve this dispute short of trial? That calculus is informed by a variety of economic and non-economic factors, and may change during the course litigation. But at the end of the day, if the parties cannot agree, the client and their counsel must be prepared to answer ready.
Susan Horner is a partner in the firm’s Religious & Not-for-Profit Organizations and Litigation groups. Before joining the firm, Ms. Horner served as a prosecutor in the felony trial division of the Cook County State’s Attorneys Office. She has tried more than 25 jury trials and litigated hundreds of bench trials. In addition, Ms. Horner has handled appellate matters and has argued before the Illinois Court of Appeals.
We focus on mitigating risk for employers. Whether a litigation matter can be resolved is dependent upon the facts, the law, and the expectations of the plaintiff, the plaintiff’s lawyers, and our clients.
From a defense perspective, immediately following the plaintiff’s deposition is often the high water mark in determining whether an employment case can be settled. Any case with unreasonable plaintiff demands and baseless claims is likely going to trial. Even so, a trial involves substantial risk for employers. While jurors may assume that the employer has done something wrong, convincing them otherwise depends upon the facts and an honest straightforward approach by its lawyers and witnesses.
Marty LaPointe is chair of the firm’s Labor & Employment practice. He concentrates his practice on the defense of employers. With more than 20 years experience, Marty has represented clients in 12 trials and has prevailed in every one.
With class action, it’s a different calculus. Plaintiff lawyers purport to be working on behalf of a class rather than one individual. Because a settlement would not be binding on any purported class member without a court approving the settlement, settling wouldn’t happen until after plaintiff has filed the class action. Once the complaint is filed, you’re always looking for settlement options while always preparing for trial.
Victoria Collado is a partner in the firm’s Litigation and Class Action Defense practices. She joined the firm in 2009 and previously practiced at Mayer Brown LLP in Chicago. She was recently involved in an arbitration before the London Court of International Arbitrations (LCIA) involving a dispute between a manufacturer and a distributor of pharmaceutical products that resulted in a multi-million euro award for the claimant.
There’s a standard provision in settlement agreements stating that the parties are settling “solely to buy their peace.” It’s boilerplate, but it provides an important insight into what causes parties to mediate or continue litigating. A party is willing to mediate a claim if he or she can never be at peace with the risk of an unknown verdict, as well as the many costs of ongoing litigation: not just legal fees, but also the diversion of human resources, invasive discovery (that may reveal skeletons in the closet), time-consuming depositions, expert witness and consultant fees, bad press, and being forced to continue to live with a painful experience. On the other hand, if a party will never rest easy wondering whether it paid too much or accepted too little to settle, then it must continue to litigate. It is ultimately a question of which path will buy the most peace. And, sometimes, knowing that you got — or at least tried to get – every last ounce of vindication possible is the only thing that will allow a litigant to be at peace with himself.
Jay Dobrutsky is a partner in the firm’s Litigation practice and Religious & Not-for-Profit Services group. He also represents clients in employment matters, real estate and construction claims, and other business and commercial disputes. Mr. Dobrutsky has tried cases in both state and federal courts, and has represented clients in arbitrations, mediations, and before appellate courts.
Courtrooms are graveyards for egos. Abraham Lincoln cautioned: “Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser — in fees, expenses and waste of time.” Lincoln was a trial lawyer before he became President, and a very good one. He was not afraid to try a case, but having done so, as have the litigators at Burke, Warren, MacKay & Serritella, he understood how unpredictable and costly trial can be. Yet, sometimes you have no choice but to do what you have trained to do because your opponent is unreasonable. As President John F. Kennedy said, you “should not negotiate out of fear, but never fear to negotiate.”
Gerry Ring chairs the firm’s Litigation practice. With over 20 years of experience, Gerry focuses on commercial and business litigation, will and trusts litigation, real estate litigation and bankruptcy matters on behalf of creditors. Gerry has represented clients in mediation and arbitration and before judges and juries.
As a litigator, would I or do I recommend to clients that they include an ADR provision in contracts, agreements, etc. with third parties? My answer is no. While I understand the purported time and money savings alleged to be provided by ADR, I have found that the time restrictions and the restrictions on discovery imposed under the ADR rules are counter productive. I believe when a matter is ripe for either ADR or litigation, the options provided by litigation are much more beneficial and usually result in a settlement of the matter.
George Lynch has been a partner in the firm’s litigation practice since 1981. Prior to that, he was a prosecutor with the Cook County State’s Attorney’s Office. He has represented numerous clients in civil, bench and jury trials and also handled numerous criminal trials, both bench and jury on behalf of the People of the State of Illinois.
I am a firm believer in the mediation process for a number of reasons. First, it is far less costly than trial. Second, it allows clients to liquidate a risk under controlled circumstances rather than to gamble. Third, it is (or can be) a confidential process that allows for the vetting of sensitive information for settlement purposes without exposing that information to the public. For parties that expect to continue to do business with each other, it offers the added benefit of avoiding some of the hostility inherent in any litigation. For these reasons, I don’t have any arbitrary rule about cutting off a mediation -- so long as it serves the client’s interests, it is worth pursuing. Even on the eve of trial, the parties may find that an agreement on a certain outcome is preferable to the risks of trial. The real question is whether there is anything to be gained by allowing a mediator to explore settlement. So long as you do your work and really know your case, there is no downside to this.
Jim Geoly is a partner in the firm’s Litigation practice and Religions & Not-for-Profit Services group. He has broad experience representing religious, social services, health care and commercial organizations. He has successfully litigated in state and federal courts at every level. He has extensive appellate experience and has filed numerous briefs in the Supreme Court. Mr. Geoly has litigated a variety of issues, concentrating on constitutional law, religious liberty, not-for-profit corporate control, professional and clergy misconduct, insurance coverage and privilege and confidentiality.
One of the things I like about the Firm’s creditors’ rights practice is that we send litigators to bankruptcy court, not just bankruptcy attorneys. Since ADR is not readily available in the bankruptcy courts, it’s an advantage to have litigators involved rather than just bankruptcy lawyers if we have to go to trial. That having been said, the expense and disruption to a client’s business that occurs in the litigation process can easily make a win seem like a loss. So in the absence of ADR in bankruptcy courts, we have to stay particularly attuned to and explore any opportunities to reach common ground and resolve matters short of trial.
Ed Lesniak is a partner in and former chair of the firm’s Litigation practice. He concentrates his practice on creditors’ rights, bankruptcy and banking issues. He has represented numerous creditor and other no-debtor clients in bankruptcy court.
In my view, mediation, or any other ADR procedure, are simply tools in the “tool kit” of an experienced litigator that should be used when needed, just as any other tool in one’s tool kit. In a recent case, I rejected the advances of the defendant to resolve a case short of court action, as my objectives (consistent with those of the client) were to shut-down a certain line of business of the defendant (improperly selling the goods of the client) and to obtain a million dollar judgment — both of which were accomplished but would not have been in mediation or through some ADR procedure. So, ADR was the wrong tool for that case. The views of all of the litigators show, in my view, that mediation, like any ADR remedy, is part of a litigator’s strategy, to be worked into the game plan depending on all of the facts and circumstances.
Fred Mendelsohn is a partner in the firm’s Litigation and Labor & Employment practice groups. He has been trying cases for two decades. His first 20 plus trials were as an Assistant State’s Attorney in the Cook County State’s Attorney’s Financial Crimes Unit. Recent experience includes successfully arbitrating labor disputes for a nationally recognized insurance company, as well as obtaining a wholly favorable jury verdict for the same client in Illinois state court. He has taught trial advocacy at the National Institute for Trial Advocacy for the past seven years.
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