The Future of Mediation

It is impossible to talk about the future, present or past of mediation without putting some sort of definition to that term.  Clearly, mediation as dispute resolution has been around as long as disputes.  When defined as a process that involves a designated third-party to assist in the resolution of disputes, mediation is almost as old.  Village elders in remote parts of the world continue to be among the most effective mediators anywhere.  For purposes of this article I will focus on mediation in commercial disputes where most parties are represented by legal counsel and where the mediator has established themselves as credible and qualified to function in that role.

Many of the other writings for the Mediation Futures Project have focused on the mediators themselves and the plethora of issues surrounding effective mediation.  Some deal with the desired qualifications and certifications of mediators, while others opine on the techniques that will be the most successful in mediating disputes in the future.  These are all important issues and there are shelves of books to be read about them, but the following observations are aimed at the global trends in the mediation of disputes as an adjunct or alternative to resolving them in court.

Most pundits of the ADR profession agree that commercial mediation in the United States started its formal development in the 1970s, and in particular following the 1976 Pound Conference in Minneapolis.  Of course various forms of institutionalized conciliation, mediation and arbitration had been around much longer.  The first organizations formed to provide mediation services for a fee appeared shortly thereafter.  Today there are hundreds of companies and thousands of individuals engaging in these services, either in for-profit or non-profit companies or working in court-annexed programs.

Commercial mediation in Europe also has fairly deep roots, but again today’s most prominent ADR organizations have only been around for the past few decades, and most are in the United Kingdom.  The European Parliament passed the 2008 mediation directive to encourage the use of modern facilitated mediation in its member countries, but with little effect to date.

So what can the history of commercial mediation in the United States tell us about the future of mediation globally?  I would posit that most developed countries outside of the United States will have an experience similar to the U.S., a slow but steady adoption of facilitated mediation as a faster, easier and less expensive alternative to protracted court cases.

There are many examples where this trend is beginning to pick up momentum around the world.  New commercial mediation centers have been launched in the past year alone in Brazil, Ecuador, Mexico, Egypt, Israel, Kuwait, India, Pakistan, South Korea and China just to name a few.  But the number of cases being handled in each of these locations can be counted by the dozens, where in the U.S. there are multiple ADR providers who routinely handle hundreds or thousands of mediations per year.

The most common driver behind the growth of commercial mediation is the growth of litigation as economies develop, which inevitably leads to court backlogs that can extend cases out to 10 years or more.  In extreme examples including India, it could take as long as 20 years to see a court case to its conclusion.  With around 15 judges for every million citizens and more than 31 million open cases, the concept of “catching up” is not in their future without a massive overhaul of the Indian legal system and courts, and a heavy dose of ADR.

A fascinating example to watch is China, where courts were not widely used for commercial disputes until recent years when the economy was opened up to foreign entities, free trade zones were established and modern court systems were set up.  What followed was a steep increase in the number of lawsuits, leading to the establishment of arbitration and mediation practices in law firms and the incorporation – with government support – of private mediation entities.

There are also examples of developed economies where the legal system is sufficiently well-oiled, access to courtrooms is relatively quick, and the need for third-party mediators is reduced.  This is true in Germany, where most cases are disposed of in a few months and a form of conciliation is an accepted part of commercial legal practice, and in France where there is a relatively large judiciary to move court cases along.

It is only logical that mediation will become one of the primary tools to resolve disputes in a large number of developed and developing countries where the practice has yet to take hold and court cases are slow and expensive.  But there are numerous headwinds slowing the adoption of mediation, including resistance by lawyers who are afraid it will reduce their income, court systems that are seen as corrupt or unfair and do not support mediation or uphold out-of-court agreements, and economics that do not provide sufficient financial incentives for trained mediators to thrive.

Even with these headwinds, commercial mediation will experience a slow but steady growth all over the globe in the next decades.  The result in fairness, cost savings and user satisfaction will create its own momentum.

There’s Always Time for a Second Opinion

The litigation process is full of variables and, no matter how strong a party’s case might be, going to trial is rarely a sure thing. There is also a tendency for counsel and clients to be overconfident in their assessments of their position. Thanks to the evolution of ADR, however, parties have many options available to them to secure an unbiased, neutral evaluation or second opinion about the strengths and weaknesses of a particular case and trial strategy.

There are a full range of circumstances in which a second opinion from an experienced lawyer or former judge might be useful:

Pre-filing assessment: Deciding whether or not to file a case, and what claims to make, is a difficult decision. Input from a veteran law and motion judge, who has likely seen thousands of motions to dismiss, could effectively eliminate the risk of wasting time and money on unproductive pleading wars. An experienced neutral can also provide valuable information for a cost-benefit analyses of going to trial.

Case valuation in advance of settlement discussions or mediation: Second opinions from an experienced neutral about how to value a case for settlement purposes could be especially important for clients and counsel. Sometimes clients and lawyers need a second opinion to feel the confidence necessary to make difficult decisions and an objective assessment of the whole situation can be particularly valuable.

Mock hearings: Lawyers generally reserve mock trials for big cases that will be presented to a jury. However, it can be very valuable to secure a neutral evaluation of any aspect of a case to be presented to a judge or during administrative hearings. A second opinion based on a mock proceeding, for example, could be very useful in advance of a motion to dismiss, for summary judgment, class certification or even on especially significant motions in limine. On a more recently developing front, IP lawyers might find neutral second opinions especially useful when preparing to appear before a panel of administrative law judges in an inter-parties dispute in a Patent Trial and Appeal Board proceeding.

Preparing for an appellate briefing: Lawyers grappling with challenging appeals also can benefit substantially from second opinions about the content and style of their briefs, the manner in which they make oral arguments, and, most significantly, the strengths and weaknesses of their substantive positions. Retired appellate judges can alert counsel to key issues and vulnerabilities and can give lawyers opportunities to practice fielding difficult questions or dealing with difficult judicial personalities – thus both improving their performance and reducing the anxiety they experience when the real show begins.

As ADR becomes a more prominent feature of our legal system, it is important that counsel and clients understand the full range of options available to them. This is particularly true for neutral evaluation or second opinions, which provide valuable insights into the strengths and weaknesses of a case, helping to mitigate uncertainty while saving time and money.

$1B Settlement Reached in Stryker Hip Implant Mass Tort

Hon. Diane M. Welsh (Ret.)

Hon. Diane M. Welsh (Ret.)

Thousands of plaintiffs in New Jersey and around the country who had surgery to remove failed hip implants settled their claims November 3 in a deal that is expected to pay out more than $1 billion. It was reached after four months of negotiations with Stryker mediated by retired U.S. Magistrate Judge Diane Welsh, a JAMS mediator based in Philadelphia.

The global settlement with Howmedica Osteonics Corporation, a Mahwah, N.J., corporation that does business as Stryker Orthopaedics, resolves the claims of about 3,000 individuals who were implanted with Stryker Rejuvenate and ABG II Modular hip stems. Stryker agreed to a base payment of $300,000 to compensate plaintiffs who had to have a Rejuvenate or an ABG II hip implant device surgically removed before November 3, according to counsel. The payment will be doubled for plaintiffs who had devices removed from both hips, the attorneys said, and there will be additional payments for complications arising from the removal surgeries.

Between December 2013 and June 2014, Judge Welsh successfully mediated more than 20 bellwether cases that were filed in state court in New Jersey. She then successfully mediated the global settlement agreement for the federal Multi-District Litigation and the New Jersey litigation covering approximately 4,000 cases and is also open to claimants who have not yet filed suit.  Judge Welsh will now serve as the Claims Administrator to ensure that the settlement is carried out in accordance of the settlement agreement and she will decide appeals from claimants who are denied.

For additional coverage, please click here for coverage in the New Jersey Law Journal or here for Bloomberg coverage.

Experts Predict ADR Will Help Resolve ACA Claims

By Chris Poole

The use of ADR to resolve healthcare-related claims will increase with the implementation of the Patient Protection and Affordable Care Act (ACA).  Experts predict the increase will stem from the need to reduce costs as well as the healthcare groups that will bring new disputes for resolution.

Dr. Leonard Fromer, an assistant clinical professor at the UCLA School of Medicine and a board member of TransforMED, LLC, said the passage and implementation of the ACA is “moving healthcare from a volume-based system to one based on the value of the healthcare provided and their outcomes.”  The establishment and projected growth of Accountable Care Organizations (ACOs) is the main component that comes from the PPACA that will change the types of disputes that will arise and the manner in which they are handled and resolved, he explained.

ACOs are groups of doctors, hospitals or other healthcare provides that come together voluntarily to give coordinated high quality care to patients. ACOs were established by the PPACA to provide quality care while keeping healthcare costs down.

Under the old system, parties brought cases based on billing disputes or the meaning of contract terms, Fromer said.  However, with the creation of the ACA and ACOs, cases will begin to shift toward disputes over the metrics used by insurance companies and the federal government in Medicare cases to determine reimbursement, quality of health outcomes and value.

Michael D. Roth, an attorney and ADR neutral in Los Angeles who specializes in healthcare disputes, echoed Fromer’s suggestion regarding new disputes. “Doctors will have more interaction with providers in the system, which could lead to disputes over payments based on outcome,” he said.

ADR could also be used due to changes in the ACA, which require that a higher percentage of revenue go directly to medical care and not administrative costs, he said.  “ADR could grow in use because it is seen as a cost-saving measure since outside legal costs will count as administrative costs under the ACA,” Roth said.

Katherine Benesch, an attorney with Benesch & Associates in New Jersey, specializing in healthcare law and ADR, said a factor that will encourage the use of ADR more often “is the repeat-business nature of contract relationships in the healthcare sector.

Using mediation or arbitration to resolve a dispute will result in a settlement or decision in “less time for less money,” and the parties will “have had a say in the process,” which goes a long way toward allowing the parties to move on from the dispute and resume their business relationship.

David L. Douglass, an attorney with Sheppard Mullin in Washington, D.C., who specializes in healthcare litigation, said that in his area of practice, healthcare fraud disputes, ADR is often used in civil cases and “has become more popular with industry and government,” he noted.

According to Douglass, “Mediation is the more popular option because it allows parties in very complex cases involving numerous statutes to craft confidential settlements and resolve wide-ranging claims in one process.”