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  • Changes are coming in Arizona…


    CHANGES ARE COMING CONCERNING ARBITRATION IN ARIZONA

    By David C. Tierney

    1. ANCIENT HISTORY:

    In 1962, just before the Vietnam War began to escalate, the State of Arizona (which was smaller and less busy than today) adopted the Uniform Arbitration Act, A.R.S. §12-1501 – 1518.  The UAA[1] had been conceived in 1956 and quickly adopted in 35 states in the Nation (and in substantially similar form in 14 more states).  For 45 years, the UAA provisions have controlled the arbitration of construction disputes, business disputes, and the like, which are held under Arizona State Statutes.

    In 2001, the State Bar of Arizona’s Alternative Dispute Resolution Section began urging that Arizona adopt the update to the UAA.  The Revised Uniform Arbitration Act (“RUAA”) had been finalized by the Uniform Laws Commissioners (after three years of study) in 2000 and was slowly being adopted in states across the Nation.  To this date, the RUAA has been adopted in 14 states and 7 other states are in the process of adoption.

    There are several reasons why the ADR Section had to return to the Arizona Legislature eight out of nine years since 2001 to obtain the enactment of this new legislation.  In the past decade, our Legislature has become very wary of adopting uniform laws.  The State Bar is viewed with suspicion by the legislators in many respects.  The insurance lobby was concerned about one or two provisions.  Then, the banking lobby became concerned about aspects of the RUAA.  Finally, the 2008 – 2009 budget crises led to a year hiatus in the ADR Section’s pressing for the bill.  However, due to a compromise with the insurance and securities and banking sectors, the RUAA was adopted in April 2010 by the Legislature and made part of our state’s statutes by the Governor’s signature that month.  The law will become effective on January 1, 2011, as explained below.

    The new law will “co-exist” with the old law, as the old law continues to apply in insurance / securities / banking disputes.  The new law is responsive to a number of trends and modernizations of arbitration, which have occurred over the last 45 years, as you will see below.

    The new law will also have to co-exist with the Federal Arbitration Act (“FAA”)[2].  The FAA applies to essentially all arbitrations that impact in any way interstate commerce.  Unless parties act to make their arbitration subject to the RUAA, the FAA will likely apply to any disputes.  The provisions of the FAA carefully deal with front-end rights (such as the right to have access to arbitration) and with back-end issues (such as the right to vacate an award procured by fraud).  The FAA generally leaves the managing the process of arbitration to state laws, so long as the state laws do not impede a federal provision.  So, if the FAA applies, there may still be scope for the RUAA to apply, if the RUAA provisions as to the processing of an arbitration are not inconsistent with the FAA.

    The RUAA has been endorsed by the American Bar Association’s House of Delegates, the American Arbitration Association, and the National Academy of Arbitrators.

    Now, let’s go to the specifics as to how most arbitrations in Arizona (the ones subject to the RUAA) will be regulated by our state statute after January 1, 2011.

    1. THE “JUDICIALIZATION” STRUGGLE SETS THE STAGE:

    During the 45 years that have passed since Arizona adopted the UAA in 1965, the use of arbitration has expanded throughout the United States.  More issues and more disputes are being submitted to arbitration each year, and more and more of those disputes involve increasingly complex (and larger dollar) problems.  At the same time, Arizona has grown from a state economy based essentially on the six “C’s” — copper, cotton, citrus, climate (tourism), construction and cattle — to an Internet-age economy.  Now, computer chip manufacturing, bio-medical research, aircraft manufacturing, and international trade in electronic devices dominate Arizona’s business climate in a way that they did not in 1962.

    While the economy was changing and arbitration was supplanting courthouse litigation, trends were evolving concerning arbitration procedures.  Discovery (depositions and document disclosures), motion practice, lengthening hearings, interim and provisional remedies, punitive damages, appellate review possibilities, arbitrator disclosure, and subpoena powers were all being modified and addressed in rules being adopted by organizations, such as the American Arbitration Association and JAMS.  These developments were arcing over our 1962 UAA state statutes on arbitration — and it was time for Arizona to deal with these new aspects of arbitration.  The struggle over these modern aspects of arbitration is one that writers in the field have termed the attempted “judicialization”[3] of arbitration.

    In crafting the RUAA a decade ago, the Uniform Laws Commissioners were going to have to “walk a line” between adherents of the old theory (i.e., arbitration must be an informal, speedy, cheap, quick process to resolve disputes, with no right of appeal) versus those who seek to import into arbitration some of the due process safeguards present in courthouse litigation in order to instill greater confidence in arbitration, as it is used in increasingly complex cases.  The clash between informal, cost-effective versus more deliberate and thorough process has occupied authors in the field of Social Policy for Arbitration for the last two decades, at least.

    1. THE SEVEN KEY PROVISIONS IN THE NEW RUAA
      (AND FOUR FOOTNOTES):

    In a 15 year old opinion, First Options of Chicago, Inc. vs. Kaplan, 514 U.S. 939, 115 S.Ct. 1920 (1994), the U.S. Supreme Court considered the FAA and stated that, unless the contract of arbitration itself decides[4] the question, when the arbitrability of a dispute is challenged, a court, not an arbitrator, decides the question of whether the dispute is, in fact, one that is arbitrable, as opposed to one that will be resolved in the courthouse.  Only if the contract clause directs such to occur will an arbitrator decide on arbitrability.  Key in all of this is that state statutes on arbitration are in a default position.  They are relevant only when the FAA does not apply.  For the last decade, the FAA has been seen as reaching into nearly every walk of life, since it reaches every activity that bears upon interstate commerce.

    State law only reaches a dispute, such as a business dispute, when state law (i) is expressly made applicable, and (ii) is not in conflict with the FAA.  The Uniform Law Commissioners attempted to fashion the RUAA in such a way that it did not conflict with the FAA.

    1. The First Key Provision – Who is Deciding Arbitrability?  Courts Will!

    In the Arizona version of RUAA, §12-3006 (B) states that, when challenged, a court (not the arbitrator) shall decide whether an agreement to arbitrate a particular dispute exists, and whether a particular controversy is subject to a binding agreement for arbitration.  However, questions as to whether the binding agreement to arbitrate is enforceable or whether a condition precedent to arbitration has been fulfilled are expressly left to the arbitrator by the RUAA.

    The upshot of this important provision in the RUAA is to set up the process under the RUAA so that cases will likely see more court involvement as to the question of arbitrability, if arbitrability is challenged.  There is some reason to believe that there may be an attempt to revise this portion of the RUAA by our Legislature during 2011.

    1. The Second Key Provision – Non-Waivability:

    You may have thought, as you read just above about the court deciding arbitrability, that it is not often going to be an issue, as the AAA rules will just put the arbitrator back in the position of deciding arbitrability.  See AAA Commercial Rule No. 7.  Unlike the UAA, the RUAA has a prominently placed provision (§12-3004 (B)) which neuters any such possibility.  A.R.S. §12-3004 (B) says that many provisions of this new state law cannot be waived in a contract clause by the parties.  The non-waivable provisions of the RUAA include:

    §12-3006 regarding who decides arbitrability;
    §12-3008 regarding the right of arbitrators to grant interim remedies, like temporary restraining orders or prejudgment garnishments;
    §12-3017 regarding the right of the arbitrator to allow discovery, issue orders controlling discovery, and issue subpoenas in state and out of state; and
    §12-3026, regarding the state’s right to enforce arbitration awards in                                                 §12-3005,            its courts.
    §12-2101

    The purpose behind labeling these requirements as non-waivable seems to have been to avoid the problems created by powerful retailers, who were including in consumer contracts arbitration clauses which incorporated waivers of fundamental rights, thereby harming consumers.  See Armendariz v. Foundation Health Psycare Services, Inc., 24 Cal. 4th 83, 99 Cal Repts. 2nd 745, 6 P.3d 669 (2001).

    1. The Third Key Provision – Interim Remedies and Interim Awards.

    For the last 30 years, debate has raged over whether arbitrators have the right under the UAA to issue interim awards (before final award), whether an arbitrator can grant or order attachments and garnishments, restraining orders, and (if it is done) how can such orders be enforced?

    A related question has been, if a party goes to court to get a needed interim remedy, for example, to enforce a Mechanic’s Lien, does the party thereby waive and abandon the right to go to arbitration?

    In §12-3008, the RUAA addresses this.  It expressly provides that, in the period before an arbitrator is first appointed (or after appointment, if there is some reason – practical or legal – creating an impediment to a party getting speedy or adequate interim relief), the party may go into court to get interim relief, and such foray into the courthouse will not to be a waiver of the party’s right to arbitrate.

    1. The Fourth Key Provision:  Disclosures By Arbitrators, Pre-Appointment and After:

    RUAA §12-3012 codifies the results of over a decade of consumer litigation in California and other states.  Before accepting appointment, a selected arbitrator must make a reasonable inquiry and disclose to all involved in the arbitration any known facts that a reasonable person would view as likely to affect the impartiality of the arbitrator in the proceedings.  The obligation to disclose continues as the arbitration proceeds, in the event that the arbitrator learns of such facts when evidence or a witness, etc. is placed before him.  Failure to disclose a relationship with a party, a witness, an issue, etc. can be grounds for vacating the award.

    1. The Fifth Key Provision:  Discovery, Depositions, Motion Practice, Etc.

    An extensive (but waivable) section of the RUAA, §12-3015, empowers the arbitrator to:

    • hold pre-evidentiary hearing conferences, so as to reduce or focus the issues or the evidence presentation, for example;
    • consider a Motion for (partial or complete) Summary Judgment; and
    • rule out certain hearing evidence.

    These are all means by which to shorten the time to get to an evidentiary hearing; to reduce the expense of proceeding to hearing; and to reduce the expense of a hearing.  As part and parcel of these powers, the arbitrator can allow, under §12-3017, depositions and discovery, enforce his discovery orders, grant protective orders, and take other actions to make the arbitration hearing fair, expeditious, and cost effective.

    This is a step in the direction of “judicializing” arbitration.  It was hotly debated by the Uniform Laws Commissioners and the theory was that this set of tools would permit arbitrators to keep down the costs and lessen the delays in getting to and through hearings.

    A side-effect of this move may be to reduce the use of non-lawyer arbitrators or to encourage organizations to train more intensively those arbitrators who are not lawyers.

    1. The Sixth Key Provision:  Attorneys’ Fees and Punitive Damage Awards

    These two clauses, principally, sparked resistance to the adoption of the RUAA in Arizona, as the insurance industry, the banking industry, and the securities industry all feared that the provision of §12-3021 (B), which allows an arbitrator to award lawyers’ fees, for example, as if the arbitrator were a court under A.R.S. §12-341.01 (regarding contract claims), or §33-420 (false liens), or §33-998 (attorneys’ fees) would hurt the industry.  In addition, for years, judges and authors have debated whether an arbitrator could award exemplary (punitive) damages under the UAA.  RUAA §12-3021 (F) now resolves that question by allowing such punitive damage awards, if law and fact findings are made, showing that punitive damages were allowable by a court.  This is another feature of the RUAA that may require less use of, or more training for, non-lawyer arbitrators.

    1. The Seventh Key Provision:  Subpoenas

    For years under the UAA, a disadvantage inherent in taking matters into arbitration (rather than to the courthouse) has been that subpoenas issued under the UAA by arbitrators were only operable inside Arizona, and only for the purposes of bringing a witness and his documents to the evidentiary hearing.  It is expressly stated in §12-3017 (D) and (F) that, an arbitrator can issue subpoenas and Subpoenas Duces Tecum for depositions and enforce those subpoenas.

    Better yet, ending a controversy (and a huge practical problem), §12-3017 (G) permits an arbitrator in an Arizona arbitration under the RUAA, to issue a subpoena to an out-of-state witness to attend a deposition there and to bring records to that deposition.  In the event that the distant witness fails to comply, a party in the Arizona arbitration may go to a court and get the court to enforce the arbitrator’s subpoena, subject to the court’s setting conditions to make the Arizona arbitration fair, expeditious, and cost-effective.

    This feature makes feasible the use of RUAA arbitration in multi-state disputes, something that used to present a host of legal and practical problems.

    1. Four Footnotes and Caveats

    Many of the features of the UAA are, in effect, kept in place by the RUAA, such as the obligations of impartiality, the process for initiating an arbitration, the limited five channels through which any award can be attacked, the correction of an erroneous award by the arbitrator, the ability of the parties working with the arbitrator to sculpt the procedures to be used in arbitration, as long as due process is assured, etc.  In the RUAA, there are included some new provisions providing for a form of judicial immunity for arbitrators.

    1. What is odd is that we will now have two separate statutes in Arizona governing arbitrations!  The old UAA continues in effect for the categories of disputes that are excluded from the RUAA:
    • Banking disputes between a national banking association or federal savings association and the customers;
    • Disputes related to insurance contracts;
    • Arbitrations involving certain securities and commodities acts.

    It will be interesting to see if, in two or three years, some of these industries will want to see the RUAA (instead of the UAA) apply to these sorts of disputes.

    1. Second, as I have written elsewhere before, there is a struggle between forces seeking to turn arbitration into “arbigation;” forces seeking to over-judicialize arbitration.  Even under the RUAA, the arbitrator has great discretion in allowing motion practice or discovery games to take over the arbitration.  Clients and practitioners will need to be educated to evaluate the arbitrators whom they select by rating the arbitrators on a continuum of “hostile to discovery and motion games” to “too easy on allowing discovery and motions.”
    1. Third, the airwaves and e-mail servers are full of the news of E-Discovery these days.  Every lawyer is studying Rule 26.1 (a)(9) of the Rules of Civil Procedure, and the costs of electronic discovery are soaring.  A.R.S. §12-3017 (C) and (E) permit an arbitrator to fashion novel and cost-effective ways of dealing with electronic evidence, e-mails, text messages, and the like.  This feature of the RUAA may militate in favor of using computer-savvy arbitrators or training arbitrators in E-Discovery, now that such discovery is becoming more common in litigation and in arbitrations under the RUAA.
    1. Fourth and finally, there is likely to be some friction or slippage along two fault lines.  Exactly how the RUAA interfaces with the FAA and how the RUAA interfaces with contract clauses incorporating rules like the AAA Commercial and Construction Rules may provide practitioners the opportunity to make some small caliper adjustments as time goes on.

    For now, we are on the cusp of new procedures for the great majority of the commercial and construction arbitrations that will be handled in Arizona concerning the garden-variety commercial and construction business problems with which our community grapples.

    [1] The Uniform Act, the UAA, had first been created in 1956 by the National Conference of Commissioners on Uniform Laws.

    [2] See 9 U.S.C. § 1

    [3] Stipanowich, Arbitration and Choice:  Taking Charge of the ‘New Litigation?” 7 DePaul Business & Commercial Law Journal.  401 (6/30/09); and

    Stipanowich, Arbitration, the ‘New Litigation’ 2010 Univ. of Illinois Law Review, 1 (1/11/10)

    [4] For this reason, many arbitration providers then inserted in their rules (to be incorporated in contracts) a provision that the arbitrator was empowered to decide questions of arbitrability.  See AAA Commercial Rule No. 7 (6/01/09).

  • Arbitration Developments in Arizona…

    Arbitration Developments in Arizona During 2000-2009

    By David C. Tierney, Esq.

    In Arizona, the last decade has produced no “game changing” decisions regarding arbitration.  Rather, our seven key cases reflect seven nationwide trends.

    A. Litigation Will Be Stayed for Arbitration:

    The first trend is the appearance of cases in the Nation wherein someone asserts that only one small part of the multi-count case is arbitrable — and argues that the entire case must therefore be heard in the courthouse, since the small arbitrable portion will be “controlled” by the litigation results.  In Hallmark Industries, LLC vs. First Systech International, Inc., 203 Ariz. 243, 245, 52 P.3d 812, 814 (App.2002), Hon. John Pelander writing, our Court of Appeals followed the U.S. Supreme Court’s reversal of a Ninth Circuit Court of Appeals’ Decision[1].  Hallmark struck down the concept of “if it is intertwined with litigable issues, the arbitrable issue gets tried in court.”  Instead, our Court of Appeals said that, where there is a non-severable issue that is to be arbitrated, the rest of the court case will be stayed under A.R.S. § 12-1502 (D) while the arbitration is concluded.  The Court noted that our statutes require the courts to “validate arbitration agreements” and “to make the arbitration process effective.”  The Court said that any risk of “inconsistent results” or “inefficiency” is the result of the parties having bargained for arbitration as the method for resolving disputes.

    1. Usually, Arbitrators Decide Arbitrability:

    This early “sortie” in favor of defending arbitration clauses and giving them full effect was followed by Brake Masters Systems, Inc. vs. Gabbay, 206 Ariz. 360, 367, 78 P.3d

    1081, 1088 (App.2003).  Without citing to the struggle at the National level[2] (over whether courts or arbitrators decide arbitrability), our Court reached out to declare how it is to be determined that a matter is or is not arbitrable.  Our Court noted that when facing a question of whether or not a dispute is arbitrable, the Arizona citizen has two options.  He can go to court and seek a court order under A.R.S. § 12-1502 (A) compelling his adversary to arbitrate (and the court will determine arbitrability); or he can simply commence arbitration and the arbitrator can determine all issues, subject to a later attack on the award, claiming that there was no jurisdiction in the arbitrator and that he “exceeded his powers” under A.R.S. § 12-1512 (A), thus, that the award must be vacated.  In this case, the applicable rules for the arbitration were AAA Commercial Rules, which stated that the arbitrator (under Rule 7) would rule on all questions of arbitrability.  The Court of Appeals ruled that this provision in the AAA Rules satisfied the First Options requirement.  The arbitrator’s decision on arbitrability was described as one to be upheld, unless there was clear error by the arbitrator.

    1. Due Process Does Not Preclude Arbitration in Adhesion Contracts:

    At the mid-point of the decade, our State caught the edge of the wave of cases coming out of California attacking contracts of adhesion containing arbitration clauses, seeking to invalidate the contract’s arbitration clauses as inherently unfair to consumers.  In Harrington vs. Pulte Home Corp., 211 Ariz. 241, 250, 119 P.3d 1044, 1052 (App.2005), the Court of Appeals (through Judge Barker) wrote that our state’s “reasonable expectations” doctrine did not mean that all arbitration clauses were void; that inserting bold print about arbitration resulting in a loss of jury trial was not required, and that AAA case fees were not substantively or procedurally unconscionable.  The Court found no fraud, duress, or unconscionability in the mere inclusion of an arbitration clause.  The Court distinguished the earlier Arizona case involving an arbitration clause that had been included without explanation in an abortion clinic’s admission papers.  The court noted that the case had involved a young woman, under stress, who was seeking an abortion — as opposed to involving homebuyers in a commercial transaction.  See Broemer vs. Abortion Services of Phoenix, Ltd., 173 Ariz. 148, 149, 840 P.2d 1013, 1014 (Ariz.1992).  This Harrington opinion sets limits in Arizona for the national trend to investigate abuses of substantive and procedural due process, which trend was heralded by the California Supreme Court in Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83, 99 Cal. Repts. 2nd 745  6 P.3d. 669 (2001).

    1. No Magic Words Are Needed to Incorporate An Arbitration Clause:

    In 2007, a different sort of attack on arbitration clauses was attempted in Weatherguard Roofing Co., Inc. vs. D. R. Ward Construction Co., Inc., 214 Ariz. 344, 349, 152 P.3d 1227, 1232 (App.2007).  Here the General Conditions to the Construction Contract between the owner and the general contractor were incorporated by reference into a subcontract.  The subcontractor argued that, without the language of incorporation having expressly mentioned the arbitration clause, that clause could not be made part of the subcontract.  The subcontractor insisted that he had not specifically agreed to employ arbitration.  Our Court held that no magic words related specifically to dispute resolution (or to a loss of jury trial rights) were required and that the Construction Contract’s “flow-down clause” had imported the arbitration requirements into the subcontract.

    1. “Summary” Proceedings Will Be Employed on a Motion to Compel

    Arbitration:

    A nursing home case next dealt with a litigant’s attempt to escape from an arbitration clause.  Citing the Brake Masters case, the court stated that when a litigant places before the trial court a question of arbitrability, the court shall dispose of that question in “summary proceedings,” i.e., upon affidavits and memoranda, as if the issue is one for summary judgment, UNLESS a party petitions for an evidentiary hearing, asserting an issue of material fact.  In Ruesga vs. Kindred Nursing Centers West, LLC, 215 Ariz. 589, 595, 161 P.3d 1253, 1260 (App.2007), our Court repeated that arbitration is to be  a “speedy” remedy and to be dealt with speedily if an interruption in arbitration is attempted.

    1. The Procedural Rules Adopted Will Control:

    All across the Nation, arbitration awards are being attacked based on claims that the arbitrators acted in such a way as not to “give a fair hearing” to the parties before them.  In FIA Card Services, N.A. vs. Levy, 219 Ariz. 523, 525, 200 P.3d 1020, 1022 (App.2008), the respondent in an arbitration attacked the process employed by an NAF arbitration.  A one-day late response had, in effect, led to a default against the credit card holder who had challenged a balance claimed due on his credit card.  Following the lead of the U.S. Supreme Court in Mastrobuono vs. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57, 115 S.Ct. 1212, 131 L.Ed. 2d 76 (1995), our Court said that, essentially, the procedural rules agreed upon by the parties are the rules in force for that arbitration.  Thus, the Court upheld the application of the rules of the NAF and the default entered by the arbitrator.

    1. Public Policy Vaguely Stated Will Not Bar Arbitration Clauses:

    Finally, in Mathews ex rel. Mathews vs. Life Care Centers of America, Inc., 217 Ariz. 606, 608, 177 P.3d 867, 869 (App.2008), Judge Irvine writing, our Court held that the agreement of a vulnerable adult’s representative to arbitrate his claims was binding.  The Court found that the public policy stated in our vulnerable adult statutes (A.R.S. § 46-455 (O)) did not bar the use of arbitration.  The representative of the elderly patient had wanted a jury trial and had tried to get the court to block arbitration.  Judge Irvine found insufficient proof of legislative intent to bar the effect of private arbitration clauses designed to resolve disputes between the nursing home and the patient.

    The decade finished as it had commenced.  Arizona courts have shown a strong inclination to keep open and functional the arbitration channel, so that it can take matters out of the courthouse.  They have shown a desire to keep the arbitration channel free from litigation over the procedures contracted for by the parties.  They have not been eager to pull back into the judicial channel decisions about what is to be arbitrable.  They have been unwilling to make it easy for litigants to attack arbitral awards.  In short, in Arizona, as in the rest of the Nation (except for California), arbitration is encouraged and protected.

    However, having failed to “clip the wings” of arbitration in the courts, the foes of arbitration have gone to Congress.  This next year will likely determine whether the FAA will be altered and whether large classes of disputes will be declared incapable of being made subject to pre-dispute arbitration agreements.  See Arbitration Fairness Act of 2007, H.R. 3010; S.B. 1135, 110th Congress (2007), and Arbitration Fairness Act of 2009, H.R. 1020, 111th Congress (2009).

    [1] Dean Witter Reynolds, Inc. vs. Byrd, 470 U.S. 213, 217, 105 S. Ct. 1238, 1240-41, 84 L.Ed. 2nd 158, 163 (1985) reversed Byrd vs. Dean Witter Reynolds, Inc., 726 F.2d 552, 554 (9th Cir. 1984).

    [2] Rule 7(a) of the AAA Commercial Rules reads as follows:  “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections to the existence, scope, or validity of the arbitration agreement.” (Emphasis added.)  This rule in the AAA Commercial Rules (and the analog Rule 8(a) in the Construction Rules) was designed to overcome a situation created by the U. S. Supreme Court in 1995.  The U. S. Supreme  Court ruled in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920 (1995), that if an arbitration clause placed the arbitration under the FAA (9 U.S.C. §1), then unless the parties “clearly and unmistakably” provided otherwise, a court would determine the arbitrability of the particular dispute.  The AAA Rules are designed to “neuter” the First Options decision and to require that the arbitrator (instead of the court) deal with the question of whether some or all or none of the parties’ disputes be arbitrated.

  • Starting Mediation Process with ADR West

    If you are in need of mediation, or need additional information on members of our panel, please download, fill out and submit the form below. You may also contact us via telephone at 719.337.7560 or send us an email.

    ADR West Stipulation to Mediate

  • Advantages of Non-Litigative Dispute Resolution

    Mediation Advantages

    Non-litigative dispute resolution has a number of significant advantages over traditional litigation.
    • Resolving disputes creatively can save time and money.
    • If 95% of cases are going to settle anyway, they should be settled as early as possible.
    • Innovative dispute resolution strategies give the parties control over both the process and the outcome of the dispute.
    • Creative dispute resolution can give the parties confidentiality and preserve their future relationship.

  • Why Mediation?

    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.

    – Abraham Lincoln

    Traditional dispute resolutions processes are failing to meet today’s needs.  Courts are overcrowded, disputants are angry, litigation costs are skyrocketing, relationships are being destroyed, the complexity of commercial litigation seems endless, and injured parties refuse to settle.  Disputants are frustrated with the litigation process and the procedural issues, and posturing for the best negotiation position. They are angry with protracted negotiations, long court delays and discovery processes that consume huge chunks of time and legal budgets.

    Disputants want their conflicts resolved quickly and fairly.  Instead they get protracted, intrusive and expensive litigation which they do not understand and cannot control. To meet these demands, dispute resolution professionals are rediscovering and developing resolution strategies that provide ways to resolve disputes with creative dispute resolution processes.

    Reduced Legal Costs

    The traditional pre-trial settlement model places settlement “on the courthouse steps” or in a judicially mandated settlement conference within weeks or days of trial.  Unfortunately this is after the parties have already expended considerable sums on discovery. The parties should ask themselves, “If we’re going to settle anyway, why not make it earlier rather than later?” Any number of creative processes can make early settlement more likely.

    As much as fifty percent of the cost of litigation can be saved through creative dispute resolution.  A recent study conducted by Pepperdine Law School found that two-thirds of non-litigative process users were able to save money by using such processes.

    Reduced Time Spent on Litigation

    Dispute resolution processes involve summary or abbreviated implementation. A summary trial or a mini-trial often takes a day or less. Virtually all innovative dispute resolution processes take less time than trial. Because non-litigative processes can operate outside the court system, a dispute need not wait its turn on an overcrowded court docket. The presence  of a contractual dispute resolution procedure may also provide impetus to resolve a dispute without even using the process.  Even if a dispute is not fully resolved prior to litigation, the process is often helpful in narrowing the issues for ultimate litigation.

    Control Over Who Decides the Dispute

    Disputants can choose who their mediator will be, and thereby retain the power of decision-making.

    Increased Party Involvement

    The constraints of typical courtroom procedures often reduce meaningful problem-solving communication to a minimum. Creative processes, on the other hand, allow for more informal communication, reducing posturing and the exploitation of procedural rules.  Innovation can short-circuit the escalation of hostilities often associated with formal litigation.

    Potential for Creative Problem-Solving

    Courts can provide only a limited range of remedies, usually involving money damages or narrow injunctive relief. Often the parties’ interests lie in other areas, such as recognition or in an apology. In the creative process, the parties can explore these options.

    Confidentiality

    Almost all litigation is public. Parties prefer the privacy of a non-litigated solution, for example where reputation or trade secrets are involved.

  • Mediator Ethical Code of Conduct

    ADR West and its mediators are subject to the codes of ethics as crafted by the American Bar Association, Association for Conflict Resolution and the American Arbitration Association. The standards were revised in 2005 and are set forth in the following link.

    Model Standards of Conduct for Mediators

  • Disclaimer

    Please be advised that the contents of this web site and any other statements contained herein are for informational purposes only and are not intended to be represented as legal advice in any way.

  • MEDIATION: The Most Effective Forum to Resolve Your Case

    The Golden Rule: Preparedness, Preparedness and Preparedness

    A major consideration in considering Mediation is whether you have enough information about your case to fully and fairly evaluate it. Unfortunately, many lawyers go to mediation with their clients, and at the end of the day walk out frustrated, embarrassed and finding themselves frantically trying to explain to their clients why the matter did not settle. Why does this happen?
    The simple rule of the three P’s applies here: Preparedness, Preparedness and more Preparedness. You can never be overly prepared. Coming to the Mediation having completed significant discovery is crucial. If you are defense counsel, discussing the case in detail with your client or the handling adjuster prior to the mediation cannot be overstated. Client control plays a significant role during the mediation process, as well. Have you discussed the important issues with your client/principal? Have you prepared your case such that you will be able to discuss all the issues of contention?

    If it is a personal injury matter, issues of causation and extent of injury are sure to be ripe issues. Without client control, you will undoubtedly encounter numerous hurdles in your efforts in convincing your client to agree with any settlement proposal. If you are defense counsel, being prepared means having spent time with your principal in discussing the strengths and weaknesses of your case and how best to communicate this to the mediator, who can assist you in your strategy in the negotiation process.

    Being prepared also means coming to the mediation with a realistic outlook of the merits of the case. What is the value of your case given your best scenario vs. your worst scenario? What is your comfort zone for a realistic settlement? Are you willing to exit your comfort zone in the spirit of compromise if it means the case will settle?

    As part of your preparation, you need to consider these important questions prior to mediation. Providing a brief to the mediator prior to the mediation is extremely helpful, so that the mediator will have a good idea as what the areas of contention are and will be apprised of the parties’ respective positions prior to the negotiation.

  • Pre-Litigation vs. Post Litigation Mediation?

    Can a case go to mediation if the matter is not in suit?  Absolutely.  However there are some guidelines and limitations that must be first considered by both parties and their clients.

    Particularly in personal injury cases if there is insurance coverage, an insurance adjuster may consider mediating a case in the early stages after a claim is submitted to the carrier.  Even though the matter is not in suit, many times the handling adjuster is willing to take the matter to a pre-litigation mediation to resolve the case short of having to go through the litigation expense.  However, pre-litigation mediation is  generally for those smaller non-complex cases where the adjuster feels that sufficient information has been provided to properly evaluate the case.  For example, if you’re representing a plaintiff in an auto related and  liability is uncontested, you’ve provided photographs of the property damage and police reports to the adjuster,  the claimed  injury is minor, all treatment has been conducted, the plaintiff is now pain free, and the billings and complete medical records having been forwarded to the adjuster, than there may be a good opportunity for a pre-litigation mediation.  The adjuster may still require a statement  from the plaintiff before the mediation to find out the details of the claimed injury and/or to find out what type of witness the plaintiff will make. The adjuster may also want to confirm any lost earnings claim and/or residual complaints.  A simple stipulation between the parties can easily address any pre-litigation discovery issues prior to the mediation.

    If the case  involves business matters or employment disputes such as sexual harassment or wrongful termination, it is likely that considerable formal discovery will be needed to flush out the issues and alleged damages. These types of cases generally are not resolved by way of pre-litigation mediation forums due to the sensitive and complex nature of the claims that generally require considerably more information to properly evaluate the case.

  • “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.”

    –Abraham Lincoln

Additional information

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