mediation matters: states, insurers focus on adr for katrina relief

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INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION VOL. 24 NO. 3 MARCH 2006

Alternatives

Published online in Wiley InterScience (www.interscience.wiley.com).Alternatives DOI: 10.1002/alt

VOL. 24 NO. 3 MARCH 2006 ALTERNATIVES 59

association beat out in both states sev-eral national and regional ADRproviders, including the Florida-basedCollins Center for Public Policy Inc., anonprofit organization that designedand administered last year’s Floridahurricane relief efforts. Florida’s fourADR offices and processes served as theregulatory model for the new Louisianaand Mississippi facilities, as well as Al-abama regulations which are expectedto produce a similar ADR program.

• Kenneth Feinberg, a Washington, D.C.,neutral best known for his work as spe-cial master for 2001 Victims Compensa-tion Fund, was signed on by Schaum-burg, Ill.-based Zurich North America,and Boston’s Liberty Mutual InsuranceCo., for those companies’ systems de-sign and ADR administration work.

At Alternatives’ press time in the thirdweek of January, the state insurance pro-grams had begun operations, though media-tions hadn’t yet occurred. Louisiana officialsreported that about 100 people showed up tomake claims during the first week of opera-

MEDIATION MATTERS:STATES, INSURERSFOCUS ON ADR FORKATRINA RELIEF

Hurricane Katrina relief efforts are includ-ing a hefty dose of commercial alternativedispute resolution processes.

At the end of 2005, state governmentsin the devastated Gulf Coast region wroteand adopted emergency regulations that setup special ADR systems to deal with dis-agreements over homeowners’ insurancepolicies.

Two big insurers, with the states’ bless-ings, constructed their own ADR facilities.One of the corporate insurance programsdeals exclusively with commercial linespolicies, putting the resolution of businessoperations claims at the core of the disasterrelief processes.

The programs all heavily emphasizemediation. State and business officials saythat the facilities provide the best tool forgetting compensation into the hands ofhomeowners and small business ownerswho have lost their homes and workplaces.

The programs’ goals take into accountthe broader relief efforts that are focused onrebuilding local economies that literallyhave been washed away.

The mediation cases are expected to in-volve complex proof issues on the damagecaused by hurricane forces such as windand rain, rather than flooding, which iscovered by separate federal government-sponsored insurance policies for those whohave purchased it.

In fact, government officials won’t evenbe at the mediating tables, leaving privateinsurers to wrestle with profound eviden-tiary issues to determine the reach ofhomeowner policies that exclude flooddamages.

That issue sparked litigation soon afterHurricanes Katrina and Rita hit. Missis-sippi has filed suit against insurers askingfor an injunction against coverage denials.

The tough mediation issues, however,took a backseat to logistics in Decemberand January as the new programs geared up.Top state officials, nationally known ADRpractitioners, and high-profile local neutrals

set to participate were busy searching for re-sources that they normally take for grantedin their respective operations and practicesin order to conduct the mediations.

At the top of the lists of problems werefinding accessible, local mediation loca-tions. Mississippi Insurance Commis-sioner George Dale says that “one of thelocal talk radio shows with all the answerssaid that if we have a space problem, wecould do it in tents.” Dale won’t rule itout. He says that he has been callingSouthern Mississippi state and local agen-cies, colleges, businesses, and political sub-divisions trying to find meeting space con-venient to coastal residents.

Facilities are “difficult to find,” he says,and adds that the destruction is so wide-spread that the state’s mediation program“would consider [temporary shelters], aftereverything else is checked out first.”

At the heart of the post-disaster media-tion activity are two of the nation’s bestknown ADR brand names:

• The American Arbitration Associationwon the contracts for the facilities inLouisiana and Mississippi from thestates’ insurance commissioners. The

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“Just how much travel expense can one incur crossing the road?”

ADR BRIEF • ADR BRIEF • ADR BRIEF


VOL. 24 NO. 3 MARCH 200660 ALTERNATIVES

Both programs require good faith ne-gotiation. The regulations include this lan-guage: “A party will be determined to havenot negotiated in good faith if the party ora person participating on the party’s behalf,continuously disrupts, becomes unduly ar-gumentative or adversarial, or otherwiseinhibits the negotiations as determined bythe mediator.”

There is no fee under either program tothe policyholders, though Mississippi In-surance Commissioner Dale says his de-partment considered and rejected charginga $25 fee. Insurers must pay a $250 fee tothe mediators, and a $100 administrationfee to the association.

Insurers must pay a higher mediationfee—$525—in four Louisiana parishes.

While there is a volume potential forsubstantial fees for individual neutrals andin the aggregate for the AAA, even at thecomparatively low rates, everyone involvedsees the low fees and expedited processes asa public service designed to get homes re-built and lives repaired as fast as possible.“Everyone wants to help,” says Atlanta-based AAA senior vice president India John-son, who is spearheading the association’s re-lief efforts. “I think everybody felt helplessand unable to do anything, and now some-thing comes your way that you can make acontribution to, and it’s very satisfying.”

Jennifer Coffman, an association seniorvice president in New York, points out thatthe organization’s fee is less than one-thirdthe $325 administrative under its commer-cial arbitration rules. “We’re putting a feestructure in that hopefully can provide ex-pedited accessible resolution for these dis-putes,” she says.

Coffman adds that under the DisasterRecovery Claims Mediation Proceduresthat the AAA is offering outside the stateprograms, the administration is $50, risingto $100 if a party-selected mediator isused.

In Mississippi, “many see this as a pub-lic service project and will donate some oftheir fees to relief efforts,” says mediationpanelist James Roberts Jr., of Jackson,Miss., a former state Supreme Court Jus-tice named by state insurance commis-sioner Dale as one of the program’s key

lot, and kicked off officially in January. Af-ter one week, it had “almost 100% resolu-tion” of the 35-40 cases that had gone intothe program in the first-step negotiationprocess, says Christopher E. Barnes, the in-surer’s senior vice president for field officeoperations.

But despite the success of the adjustersand the program’s negotiating efforts,Barnes says that some of the initial casesstill might need mediators.

States’ Similarities

The Louisiana and Mississippi state pro-grams share similar process characteristics,beyond their choice of the American Arbi-tration Association as administrator, andthe restriction to homeowners’ claims.

Both are the result of emergency medi-ation regulations, which will stay in effectindefinitely. The regulations required in-surers in the respective states in early Janu-ary to send out notice forms to policyhold-ers announcing that the claims disputesystem is available.

A disputed claim in both programsmeans that the insurer and the policy-holder differ by at least $500.

The programs are mandatory for insur-ers, but at consumers’ election. Policyhold-ers can request a mediator if they don’t liketheir adjuster’s determination. Both pro-grams allow the insured to contact theircompanies, agents, or the American Arbi-tration Association via a toll-free numberto begin the mediation process.

The programs build in periods after amediation request and scheduling is made inwhich the insurer and the policyholder areexpected to try to settle their differences. Ifthe parties are unsuccessful and need a neu-tral, Louisiana mediators will be drawn fromthe State Bar’s certified mediator list, whilethe AAA will pick mediators from Missis-sippi’s court-annexed mediators’ list. In Jan-uary, the AAA was meeting with neutralsand holding orientations.

Policyholders have three days to re-scind a mediated agreement, and seek totry to strike a better deal in mediation, orhead to court.

tion in January at the AAA’s existing NewOrleans office, and at a state office in BatonRouge. About 100 Louisiana program-entryrequests also were received by the insurers inthe opening days.

The AAA also reports receiving an av-erage of 20-30 telephone inquiries perhour requesting information and entryinto the mediation program. The calls werebeing fielded by its Dallas case manage-ment center.

About 700,000 insurance claims hadbeen filed in Louisiana as of Jan. 12.

The AAA is exploring the possibility ofdoing telephone and Internet mediationsto increase access to people driven awayfrom the Gulf Coast who may not be ableto return easily for mediations.

The association, which is based in NewYork, also has a Disaster Recovery ClaimsMediation Procedure for business claimsbelow $75,000, and homeowner and prop-erty claims falling outside the parametersof the state programs. It has assembled aspecial panel to deal with the matters,many of whose members are offering towork pro bono or at reduced rates, say as-sociation officials.

The company insurance programs inJanuary also were receiving calls, and as-sessing possible exposure, while Feinbergassembled panels and readied mediatortraining courses. Sean B. McSweeney, Lib-erty Mutual’s senior vice president anddeputy general counsel, reports that theprogram could aid as much as 20% of thecompany’s Katrina claimaints.

So far, McSweeney emphasizes, mostclaims—about 80% for Katrina, and about90% for Rita—have been settled in the ad-justment process. He says that he expectsmost claims will continue to be finalizedby adjusters.

Under both insurance ADR programs,the adjustment process will precede a Fein-berg-designed three-step ADR process.

McSweeney says that Liberty Mutualhas had about 32,500 Katrina- and Rita-related claims by personal lines customers.

Meantime, Zurich’s commercial linesADR program began with a December pi-

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crack at the insurers after they signed off,or, worse, encouraging fraud. He explainsthat a more significant factor is that grief-stricken policyholders accepted claims set-tlements before they knew or understoodthat rebuilding costs would soar. Local sup-pliers and workers have disappeared, ex-plains Donelon, making materials and serv-ices hard to get and much more expensive.

“Florida’s experience, which con-vinces us to do this, is that 85% resolvedin mediation,” Donelon says. “Folks in-clined to go through the trouble to go tomediation . . . ultimately would be en-ticed by a lawyer . . . and would find away to take their claim into litigation.”That’s why, he says, insurers support theregulation’s provision allowing closedmatters into the program.

“Litigation,” he says, “I’ve always beentold is what drives insurance premiumcosts upward.”

Wind or Flood?

The mediation sessions will be needed be-cause of the key issue that started the liti-gation and sparked the insurance commis-sioners’ moves—the question of whatcaused property damage, wind or floods.Homeowners policies don’t pay for flooddamage—but homeowners are arguingthat the wind drove the flooding.

The negotiations over the disputedclaims will suffer from brutal evidentiary is-sues. If a concrete foundation is all that isleft of a policyholder’s home, establishingthe proportion of the building’s destructionto the various elements will be difficult.

Mississippi Insurance CommissionerGeorge Dale says that the mediators will beforced to find middle ground on twopoints: the approximate percentage of winddamage, and the wind-versus-water issue.

But in Louisiana, says CommissionerDonelon, the losses’ actual quantificationwill be even more difficult than the windand flood issue. Donelon says that the in-surance industry “is probably stuck on pre-Katrina numbers, and the insureds know

surers into state court to deal with issues onpolicy terms and limits.

While the litigation efforts could take alot of time, the state ADR programs, on theother hand, potentially could reopen someclosed cases. Both Louisiana and Mississippirequire insurer notices to policyholders evenwhere cases already have been settled by ad-justers and paid by the companies.

James J. Donelon, Louisiana’s chiefdeputy insurance commissioner, isn’t con-cerned about people trying to get a second

neutrals in his program announcement.Both state programs also emerged from

the hurricanes’ wake because of deep dis-satisfaction with insurers’ payouts, or, insome instances, no payouts at all. Frustra-tion over the extent of homeowners’ poli-cies erupted into litigation soon after Kat-rina hit on Aug. 29. A suit by Mississippistate Attorney General Jim Hood thatwould force insurers to pay claims awaitedfederal court action at press time. Plaintiffs’attorneys would like to get the national in-

CALIFORNIA RULES DON’T PERMITWAIVERS REGARDINGARBITRATOR’S EMPLOYMENT

SAN FRANCISCO: I represented CathySchulman on appeal in the case of Ovitzv. Schulman [B179978 (Cal. App. 2dOct. 26, 2005) (available at www.croutin-for.ca.gov/opinions/documents/B179978.PDF)], which is the subject of an articlein your December 2005 edi-tion. [See “California AppealsPanel Backs Arbitrator EthicsStandards—And OverturnsOvitz’s Big Award,” 23 Al-ternatives 189 (December2005).] I am quoted there asstating that the arbitratordidn't know what the dis-closure standard was (under Califor-nia's Ethics Standards for Neutral Arbi-trators) and “never figured it out.” Ibelieve that is correct.

Then I am quoted as saying: “Evenwith his belated disclosure, all he neededto do was announce it and get a waiver.”That is incorrect. I never would have saidthat since one of the more significantpoints on appeal was that a waiver wouldnot have cured the problem. The rules donot permit it.

Ethics Standard 12(b) requires a neu-tral arbitrator to notify the parties in writ-ing within 10 days of his or her appoint-ment “if, while that arbitration ispending, he or she will entertain offers ofemployment or new professional relation-ships in any capacity other than as alawyer, expert witness, or consultant from

a party or a lawyer for a party, includingoffers to serve as a dispute resolution neu-tral in another case.” [The ethics stan-dards are available at www.courtinfo.ca.gov/rules/appendix/appdiv6.pdf.]

If the arbitrator informs the partiesof his intention to entertain such offersat the outset, he need not disclose whenhe later receives or accepts such an offer.

If the arbitrator does not in-form the parties of such inten-tion at the outset, he cannotthereafter accept or even en-tertain such offers for the du-ration of the arbitration. Hecannot seek a waiver from theparties. The drafters did notwant to put the parties in theawkward position of refusing

to give a waiver and thereby denying thearbitrator an opportunity for additionalemployment.

So it is incorrect to say that in theOvitz case the arbitrator had only to an-nounce his other employment offer andget a waiver. If an arbitrator thought thatwas the case, he could put the arbitrationin serious jeopardy. If the arbitrator hasnot disclosed his intention at the outset,as required by Standard 12(b), he cannot“entertain” other offers—period. If thearbitrator sought a waiver, he wouldprobably be deemed to have “enter-tained” a new offer, and that by itselfwould be grounds for disqualification.

—WALTER T. JOHNSON

The author is a partner in the SanFrancisco office of Nixon PeabodyLLP.


LETTER TO

THE EDITOR




Both panels will contain about 25-30mediators from the region, who Feinbergwill assign to matters. The insurers andFeinberg also expect that he will conductsome of the mediations, in addition to hisadministration work, similar to his 2001Victims Compensation Fund special mas-ter work.

Business’s Claims

The Zurich/Feinberg ADR facility takes abig step, focusing on businesses’ insurancepolicies, rather than homeowner-insurerdisputes. “These are fairly complicatedclaims,” says Zurich Senior Vice PresidentBarnes. “You have property claims, busi-ness interruptions, civil authority issuesand, sometimes, multiple locations for thesame policyholder.”

Barnes says that the Zurich claims pro-gram currently is limited to Louisiana andMississippi, where the bulk of its customerlosses are. He says the company could ex-pand the program throughout the regionif needed.

Zurich officials are not sitting backand waiting for claimants to ask for theADR program. The program materials saythat the company is monitoring claims,and the adjustment process, and will“identify those files that satisfy the pro-gram criteria.”

Even “completed or substantially com-pleted,” adjusters’ files will be recom-mended for the program, which is volun-tary for policyholders, if there is a disputedissue “that will hinder the resolution of theclaim,” the program materials state. Agentsand brokers also can submit claims for theprogram, but policyholders must havetheir agents or brokers submit their claimsafter they have discussed the dispute.

Christopher Barnes says the program isa measure of heightened sensitivity becauseof the disaster’s magnitude. “Zurich usesADR on a regular basis,” says Barnes.“We’re always open to that, if appropri-ate. . . . What makes this situation uniqueis . . . the magnitude of this natural disas-ter. . . . It is unparalleled in terms of thescope of the impact on both the industry

claims to settle before the ADR programsare needed.

The insurers each have a three-stepprocess involving heightened negotiation,followed by mediation. Then, if the matteris unresolved, policyholders and insurerscan agree to binding arbitration. The in-surer programs also are open-ended ontiming, and people involved in theprocesses expect them to continue as longunresolved claims come in.

The biggest common thread betweenthe insurers’ independent programs is theirchoice of system designer and administra-tor, Kenneth Feinberg, who heads theFeinberg Group LLP, a Washington, D.C.-based law firm focusing on neutrals serv-ices. “As a result of his experience and ku-dos [earned because of his] 9/11 work,”says Liberty Mutual’s Sean McSweeney,“individuals can have trust and confidencein him.”

Says Zurich’s Christopher Barnes, “Wewant policyholders to have confidence thatwe have an independent third party with areputation for handling complex issues.”

For his part, Feinberg says the hurri-canes’ Gulf Coast destruction is “like noth-ing I’ve seen in my life.” He is approachingthe work with a strong endorsement formediation’s wide application. Says Fein-berg, “The broader vision is that home-owners and businesses—the insureds in theregion—will have an accelerated mecha-nism for promoting fair and comprehen-sive resolution of their coverage, and anycoverage issues, rather than [running] tothe courthouse, with all of the attendantdelay and costs and uncertainty.”

He says that the state insurance regula-tors have been “extremely helpful and co-operative,” They are “recognizing the real-ity that any credible ADR program is to bewelcomed if it will accelerate the process-ing of claims,” says Feinberg.

At press time, he says, both ADR pro-grams are in the design stage. He was train-ing mediators for the Liberty program, andstaffing New Orleans and Biloxi, Miss., of-fices. Zurich, Feinberg says, was targetingtraining for the beginning of last month asit continued to process claims up throughthe negotiation stage.

that in the devastated areas, you just can’tget things for what you could get them forbefore” the storms.

The programs are “a very positivemove on the part of those commissioners,”says William Bailey, managing director ofthe Hurricane Insurance Information In-stitute, a Flowood, Miss., affiliate of theindustry-sponsored Insurance Informa-tion Institute. He adds, “It worked ex-tremely well in Florida,” where 93% of themore than 12,000 mediation cases havebeen settled successfully.

Still, India Johnson of the AmericanArbitration Association says that the newADR programs are “not going to mirrorthe Florida experience. . . . [The GulfCoast] is permeated with difficulty upondifficulty, from location to location.” Thesettlement rate, she predicts, won’t be ashigh since the Florida mediators “had a lit-tle more to work with” on the flood andwind issue.

Says Johnson, “The mediators are throw-ing themselves into something where theemotions will be very high.”

Johnson says that at one of the Decem-ber meetings in the region, a state courtjudge told colleagues and officials, that “forthe rest of our careers, this is all we willdeal with until we retire.” The devastation,says Johnson, is comparable to parts ofpost-World War II Europe.

State Encouragement

The states have backed the insurers’ effortsto develop their own ADR programs todiscourage litigation. Zurich North Amer-ican and Liberty Mutual in early 2006were in the beginning stages of administer-ing ADR facilities similar both to eachother’s, and to the state-American Arbitra-tion Association setups.

Officials at the companies mirror stateofficials’ views that the programs coexistwith, rather than supplant, the standardadjusters’ claims processes. Both industryprograms indicate in their materials or viaofficial statements that they expect most





and the people. As a result, we want to cre-ate the dedicated resources necessary to re-solve any disputes for our policyholders asquickly and effectively as possible.”

The bottom line, Barnes explains, isthat “dealing with the claims ad hoc didn’tmake sense.” He says Zurich isn’t sure howmany claims will be disputed, but it wantsto “be as ready as possible to meet our pol-icyholders’ needs.”

Similarly, Liberty Mutual’s Sean Mc-Sweeney, says, “This is really an effort by Lib-erty to be customer friendly, and make sure[policyholders] are treated fairly, and effec-tively resolve disputes.”

“The real aim in life isn’t negotiation, butrebuilding,” says Bill Bailey of the industry’sHurricane Insurance Information Institute.He adds that the programs will “open up log-jams and get more settlements in the handsof customers.”

The American Arbitration Association,like the insurer programs, at press time hadn’tyet done any mediations on business casesunder its Disaster Recovery Claims Media-tion Procedures, but it was ready for whenthe adjuster processes into ADR matters.Commercial cases “are going to be the slowclaims,” says the AAA’s India Johnson.“They will be cropping up for years,” sheadds, noting that, for example, hotels nowhousing evacuees may have delayed claims.By contrast, homeowners’ claims usuallywere more readily apparent, and usually lim-ited to one location.

Johnson also notes that the ADR pro-gram likely would be new for a lot of smallbusinesses. “The insurance companies arelong, broad, and deep users of ADR mecha-nisms,” she says. “A lot of the businessesmaybe never thought they would end up ina forum like this.”

Worst Ever

For insurers like Liberty and Zurich, theGulf Coast hurricanes are the worst disas-ters ever.

Hurricanes Katrina, Rita, and Wilma,which slammed into South Florida in lateOctober, have produced more than 20,000claims at Zurich, according to Christopher

Barnes. Liberty Mutual told investors that itestimates $658 million in losses due to thehurricane claims. Industry estimates are ashigh as $51 billion in insurance losses, and2.75 million claims.

State Farm, the largest homeowners’ pol-icy issuer in Louisiana, with 33% of the mar-ket, has received 642,000 Gulf Coast claims,according to media specialist Jeff McCollum,at the insurer’s Bloomington, Ill., headquar-ters. The tally, as of Dec. 23, the most recentdata he had at Alternatives’ deadline, com-pares with more than 237,800 claims stem-ming from Hurricane Andrew more than adecade ago.

McCollum says the current workload in-cludes more than 75,000 car insuranceclaims for damage related to HurricaneWilma.

But while State Farm isn’t contemplatinga special mediation facility for Gulf Coastclaims, McCollum says ADR processes arestandard procedures. “We use it any timethere is any kind of claim, problem or dis-agreement,” he says.

In January, State Farm was complyingwith the Louisiana and Mississippi regula-tions requiring insurers to send out notices tohomeowner policyholders offering media-tion resolution procedures, McCollum says.He says that company expected to send out72,000 notices the week of Jan. 16.

“Even though we have programs in placealready,” he noted, “we followed that order.”He says State Farm is working with theLouisiana state insurance department to dealwith the company’s large volume of claims inthe state.

Alabama’s Regulations

Alabama, like Louisiana and Mississippi,adopted emergency regulations requiring me-diations for disputed homeowners’ claims atthe end of 2005. At press time, the state wasstill working on administration issues, andhad not yet begun implementing an ADR fa-cility, which the regulations contemplate. Thestate insurance department was working on arequest for proposals that would address therules’ administration, according to depart-ment spokesman Regan Ingram.

Like the other states, the Alabamastate insurance department’s regulations,published at Chapter 482-1-135, apply todisputed noncommercial claims exceed-ing $500. They also include a good-faithrequirement.

The Alabama regulations require insur-ers to offer mediation via the state insur-ance department, which will select a medi-ator subject to policyholder and insurerapproval. Other regulatory logistics, in-cluding the fee to be paid by the compa-nies, and the timing, are similar to theLouisiana and Mississippi programs.

No Feds

Meantime, the federal flood insurance pro-gram is staying away from the ADR facilities.Butch Kinerney, a public affairs specialist forthe Federal Emergency Management Agencyin Washington, explains that since the ADRfacilities are set up by states, the settlementprocesses raise jurisdictional issues for theNational Flood Insurance Program, whichFEMA oversees.

“We’re certainly supportive of state ef-forts to try and bring insurance companiesand policyholders together,” he says, but thefederal insurance program by law can’t par-ticipate. He notes that the flood insuranceprogram, which Congress set up in 1968,wasn’t involved in the Florida mediations lastyear.

“Certainly, we have been very lucky,”Kinerney says. “We have not had manycomplaints about the flood insurance pro-gram this year.” He explains that the pro-gram administered about 231,000 policyclaims in 2005. He adds that the flood in-surance program has an appeals process forcomplaints that can be appealed “all the wayup to the [National Flood Insurance Pro-gram] administrator.”

“If the feds would participate,” sighsLouisiana chief deputy insurance commis-sioner James Donelon, “it would truly makethe mediations much more effective.”Donelon says he has raised the issue withLouisiana’s congressional delegation.




Resolution’s home page at www.cpradr.-org, under “CPR Featured News andEvents.”

The brief mediation submission form,in both English and Mandarin, allowssubmission of transnational disputes tomediation via the Internet.

Coinciding with the CPR AnnualMembers Meeting in January 2004, CPRannounced the business mediation center’sformation to serve companies doing busi-ness in China.

cane Andrew relief. The disasters are so large, he explains,

that they must expand to include publicparticipation, because the recovery extendswell beyond the means of even the largestprivate insurance carriers. Rubin says thatADR facilities’ deployment comes not onlyfrom the scope of the natural disasters, butalso that the profession is on notice of thepotential for such programs for man-madeevents, such as terrorism or Chernobyl-stylenuclear accidents.

Depending on the occurrence, says Ru-bin—who will speak on disaster mediation ina seminar billed to cover cutting-edge ADRtopics this month at Loyola UniversitySchool of Law in Los Angeles—“ADR orsome kind of legislation is going to have tocome down the pike. The private sector isn’tgoing to be able to handle the entire loadwithout some sort of governmental interven-tion or assistance.” �

DOI 10.1002/alt.20118

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professionals, and there are three symposia

(and counting) in legal publications on it, as

well other law review articles about it.I submit that the Vanishing Trial is a

myth—and not a particularly helpful one at

that. To say that it is a myth is not to suggest

that the facts or analysis in Prof. Galanter’s

report are fictional or inaccurate. Rather, it isa myth defined as a “popularbelief or story that has becomeassociated with a person, insti-tution, or occurrence, especiallyone considered to illustrate acultural ideal.” Human soci-eties need myths to help pro-vide meaning for life. Social sci-entists find that myths are

powerful in modern societies as popular sto-

ries are integrated into individuals’ and or-

ganizations’ core values and beliefs. This arti-

cle argues that TPKATVT is a misleading

and counterproductive myth and suggests al-

ternative myths and methods for addressing

the ideals embodied in TPKATVT.THE MYTH’S CONSTRUCTIONThe vanishing trial myth has three ele-

ments: (1) The, (2) Vanishing, and (3) Trial.

“The” implies, inaccurately, that there is a

single uniform phenomenon of trial. “Van-

ishing” implies, inaccurately, that “the trial”

is on the verge of disappearance. “Trial”

evokes many images, most of which are

highly idealized and unrepresentative of the

vast majority of trials.Focus first on the mythical aspect of

“trials” in TPKATVT. TPKATVT has great

mythic power because of the mythic charac-

ter trials themselves have in our popular and

BY JOHN LANDEUniversity of Wisconsin Law School Prof.

Marc Galanter has set much of the legal and

dispute resolution worlds abuzz with his re-

port, “The Vanishing Trial: An Examination

of Trials and Related Matters in Federal and

State Courts.” 1 J. Empirical Legal Studies

459 (November 2004).He marshals a massiveamount of data to documentan apparent paradox: The pro-portion of cases going to trialhas dropped sharply during thepast 40 years despite substan-tial increases in many other le-gal indicators, including thenumber of lawyers, the num-ber of cases filed, and the amount of pub-

lished legal authority. The most stunning

fact is that the civil trial rate in the federal

courts steadily dropped to 1.8% in 2002,

from 11.5% in 1962.“The Phenomenon Known as the Van-

ishing Trial,” or TPKATVT, has taken on a

life of its own that transcends empirical real-

ity. In TPKATVT’s short career, starting in

2002, the American Bar Association Litiga-

tion and Dispute Resolution Sections estab-

lished task forces to study it, there have been

numerous sessions about it at conferences of

judges, lawyers, and other dispute resolution

INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION VOL. 23 NO. 10 NOVEMBER 2005

DIGEST

AlternativesTO THE HIGH COST OF LITIGATION

LITIGATION

LITIGATIONBemoaning the decline in the number of

trials in the nation’s justice system isn’t

productive, contends John Lande, of

Columbia, Mo. He describes why “The

Phenomenon Known as the Vanishing

Trial” fails to recognize dispute resolution

efforts. ..................................Page 161CPR NEWSThe International Institute for Conflict

Resolution will get a new home this

month, and more. ................Page 162NEGOTIATIONJudith P. Meyer, of Philadelphia, shares

stories from art and literature–specifical-

ly, a Bible passage, a Philip Roth short

story, and a Chinese film–that show the

use of mediation skills in everyday life,

and serve as examples for maximizing

negotiation effectiveness. ........Page 163INTERNATIONAL ADRTwo “Hot Topic” sessions are excerpted

from CPR’s Annual Meeting earlier this

year–one on patent dispute manage-

ment, and the other on commercial

mediation. ...............................Page 167ADR BRIEFA wrap-up of the early conflict resolu-

tion efforts related to Hurricanes Katrina

and Rita between and among insurance

companies, home and business owners,

bar associations, government agencies

and officials, and national ADRproviders. .............................Page 171

DEPARTMENTSCPR News............................Page 162

Index Info...........................Page 166

Online Info.........................Page 166

ADR Brief............................Page 171

Cartoon by Cullum................Page 173

Replace ‘The Vanishing Trial’With More Helpful Myths

(continued on page 169)

The author is an associate professor and director of

the LL.M. Program in Dispute Resolution at the

University of Missouri-Columbia School of Law. This

article is based on his article, “Shifting the Focus

From the Myth of ‘The Vanishing Trial’ to Complex

Conflict Management Systems, or I Learned Almost

Everything I Need to Know About Conflict

Resolution From Marc Galanter,” which was set for

publication last month in 6 Cardozo Journal of

Conflict Resolution (2005). The author also wrote

on this subject in “‘The Vanishing Trial’ Report: An

Alternative View of the Data,” Dispute Resolution

Magazine 19 (American Bar Association Section of

Dispute Resolution Summer 2004).

5

Former Mississippi state bar associationpresident Richard T. Bennett says that oncethe ADR program is up and running, “Wewill have the capacity and competence toappropriately handle these claims to the sat-isfaction of all parties in interest.”

Says Bennett, who is name partner inJackson, Miss.-based Bennett LotterhosSulser & Wilson P.A., current worries arefinding buildings where the mediations canbe held, and dealing with things like acces-sibility, parking, and security. “The kinds ofthings you take for granted must be plannedto a ‘T,’” he says, adding,”Ultimately, it willbe a successful project.”

Future Disasters

More broadly, the disaster-related facilitiesshow “now, more than ever, the value ofADR or mediation,” says Melvin Rubin, aMiami attorney who has worked on design-ing and implementing the Florida hurricanemediation programs, including the Hurri-

Referring to FEMA, Bill Bailey, of theHurricane Information Institute, says, “I canunderstand the positions they’re taking,”quickly adding that resolving disputes isn’tthe flood insurance program’s biggest prob-lem. “One in four in New Orleans didn’t haveflood insurance,” he says, “and an even biggerquestion is that the whole program is in needof retooling, revamping, and [being brought]up to date. The numbers are shockingly lowin light of today’s real estate values and costs.”

High Hopes

In the meantime, the neutrals who will beworking the Gulf Coast cases uniformly havehigh hopes for ADR’s ability to help clean upsome of the mess. “Some of the hard ones,”says former Mississippi Supreme Court Jus-tice Jim Roberts, “will need litigation.” But,adds Roberts, who is chairman of the statebar association’s ADR committee, the ADRprogram “will be successful.”


CORRECTION

In the credit line to the front page January 2006, article, “Analyzing the Potential forADR in Estate Planning Instruments,” by John R. Phillips, Scott K. Martinsen &Mathew L. Dameron (24 Alternatives 1 (January 2006)), a membership in the Amer-ican Colllege of Trust and Estate Counsel was incorrectly attributed. Scott K. Mar-tinsen is a fellow in the college. Alternatives apologizes for the error. �

The center operates in New York andBeijing in association with the ChinaCouncil for Promotion of InternationalTrade, which works to increase businessopportunities for foreign investment inChina. The center offers a private methodof resolution that is speedier and less ex-pensive than courts. �

DOI 10.1002/alt.20116

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mediation matters: states, insurers focus on adr for katrina relief

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