ALTERNATE DISPUTE ALTERNATE DISPUTE RESOLUTIONRESOLUTION

(What it Really Means to You and Your Risk Pool)

ROB CUTBIRTH, Esq.135 Main Street, 7th Floor, San Francisco, CA 94105(415) 617-2235 -- Robert.Cutbirth@TuckerEllis.com

SAMANTHA TISDALE, Esq.515 South Flower Street, 42nd Floor, Los Angeles, CA 90071

(213) 430-3220 – Samantha.Tisdale@TuckerEllis.com

WHAT IS ADR?Alternate Dispute Resolution includes

– Mediation — Arbitration (Binding and – Binding Mediation non-Binding “mini-trials”)– Early Neutral Evaluations– Judicially Supervised Settlement Conferences

That can be pursued– Before Litigation (voluntarily or by agreement)– During Litigation (often required by court rules)– As an Alternative to Litigation (voluntarily or by agreement)

What is the Purpose Voluntary ADR?WHEN ITS VOLUNTARY:

– TO FIND A SAFE WAY TO DISCUSS SETTLEMENT“Mediation” and “Settlement” Privileges, or Agreement for ADR, Prevent the Use of Disclosed Information

– TO FIND A WAY TO OPEN SETTLEMENT DISCUSSIONSHaving a Third Party Manage the Discussions Creates an Opportunity for Dialogue that Might Not Otherwise Exist

– TO OBTAIN THE OBJECTIVE VIEWPOINTWhether its Entrenched Client, or The Overly Vested Counsel an Objective Viewpoint by a Respected Third Partycan Bridge Impasses and Lead to Successful Resolution

– TO AVOID THE “YOU FIRST” DILEMMAWhen Counsel or the Parties are afraid to open a dialogue out of fear that it is a sign of weakness

– TO AVOID THE COSTS OF LITIGATIONWhen done right, it’s a Faster, Cheaper Way to Reach Resolution Before Extended Attorneys’ Fees are Incurred and the Parties Become Entrenched in their ViewsWhen set up correctly, costs can be reduced by:•Reduced “Discovery,” •Reduced “Law and Motion,” •Reduced Trial Costs

You may be paying the Mediator/Arbitrator, but the process can still be expedited and less than daily trial costs

– Handled More “Privately”• Not “Confidential,” but “Private”• Information/Outcomes Can Still be Obtained Through

Public Records Act Requests

– Leads to More “Thoughtful” Decisions• You are Paying the Mediator/Arbitrator

• Passion/Prejudice has less of an Influence

Do You Want Arbitration …?(Still and “Adversarial Process”)

• You have to pick the right arbitrator• Almost No Rights of Appeal [But, you can

change this result]• Better (?) Control of Proceedings• Better Control of Costs

• Most Effective When:– Clear Contractual Standards– Not in a Bureaucratic Setting– A Single Arbitrator is chosen, rather than “panels”

Do You Want Mediation?(It’s a Conciliation Process)

• You have to pick the right Mediator• Do you need: Tough/Rough, “Hand

Holder,” “Legal Scholar,” • Do you need: One-Time/Multi-Session

Mediator• Most Effective When:

– The Parties Really Want toResolve the Dispute, but need helpto get there

– Someone just needs to be able to“tell their story,” and then settle

Do You Want to Request or Await a Judicially Supervised Settlement Conference?

• It’s Free … But Almost Always You have Already Incurred the Costs of Litigation

• You Probably Cannot Determine the Judge or Assigned Pro-Tem Attorneys

• One-Time/Multi-Session – Getting “Time” Before the Court May be Difficult

• If it’s your Trial Judge …..• Judges Are Often Better at “Courtroom

Management,” not Dispute Resolution• You May Need them if you Require an

“Enforceable” Change in Conduct

What are the Risks/Benefitsof Non-Binding ADR?

• You Incur Costs, Without a Guarantee of Benefit– But, you may obtain a “surprising” settlement

• You/Your Client Hear Too Many Positive/Negative Comments and Become Further Polarized– You/Your Client Hears New Facts that May Better Support Future

Settlement Negotiations

• The Other Party is not Truly Interested in a “Reasonable” Settlement Further Polarizing the Parties– You can Often Get Past “Posturing” and Get to the “Real”

Decision makers

What are the Risks/Benefitsof Binding ADR

• Early Resolution (if you set it up right)– Court Budget Cuts Are Extending Judicial Resolution by Years– But Sometimes You Want a Delay ….

• Relationship Protection– Faster, Limited, Thoughtful Resolutions can Protect Relationships– But Sometimes the Relationship is Already Too Damaged

• Mistakes by the Arbitrator– Potential for “Dislike” of Clients or Case – One person/One Bias– Mistakes of Law (Although you can contract around this result)– But, many parties want only “binding” arbitration, with no

review, to ensure true “finality”

Picking the Mediator/Arbitrator• Who do You Know?

– A Personal Relationship/History of Success is Often Best

• What Style Do you Need?– “Hard” “Empathetic” “Wise Old Guy”

• What is their Specialty?– Do they Know the Subject Matter? Is it Necessary?

• Are They Dedicated and Successful?– Do they get claims resolved? Will they Work Through “Difficult” Claims or

do they “Give Up”_____________________

Who will the Other Side Accept?

Preparing to Make it Meaningful• What do you Need to Know?

– Sometimes you can ask the Mediator/Arbitrator for Help Gaining Information or an Advance Exchange of Briefs

• What do you Need to say?– How Are You Going to Present Your Case?– How are You Going to Respond to their Arguments?

• What are you Afraid to present?– What Information do you not want to Discuss?– What happens if it gets raised?

• What are You Looking for the Mediator/Arbitrator to Say?– Especially with Mediations, “ex parte” communications in advance of

the Mediation and Greatly Enhance the Chances for Success

In any dispute arising in any manner from the formation or performance of this Agreement, the parties shall first use their best efforts to discuss and resolve the dispute. If they are unable to reach a resolution of the dispute after thirty (30) days of good faith effort, either party may give notice to the other party of a request for arbitration. The arbitration will be conducted by a mutually agreeable arbitrator, or an arbitrator appointed by a court of competent jurisdiction if the parties cannot agree, who shall have a primary business location within __________________.

Potential Contractual Arbitration Clause

The arbitrator shall conduct the arbitration in the most expeditious and cost effective manner possible, with all substantive and procedural aspects of the arbitration governed by [State’s] law except that the arbitrator shall be empowered and directed to reduce, limit, or control discovery, the retention or use of experts or consultants, and law and motion and other proceedings in order to promote and expedite the cost-effective and expeditious resolution of the case.

[There shall be no right of appeal or review, except for declaratory relief proceeding asserting that arbitrator has, or plans to, use a clearly erroneous legal standard, for which an expedited declaratory or injunctive relief proceeding may be instituted to correct such an error.]

The arbitrator may award reasonable attorney’s fees and costs to the prevailing party if the arbitrator determines that the opposing party, with respect to a claim, part of a claim, or a procedural motion or proceeding, did not proceed in good faith or on a reasonable belief in the factual and legal validity of its position.

Notwithstanding these provisions, as may be necessary to protect its rights and interests, the Parties may seek immediate intervention from a Court of competent jurisdiction in order to seek a temporary restraining order or injunctive relief order, which the parties agree to have heard on an expedited basis.

Potential Risk Pool/Member Clause for Coverage Agreements

[Risk Pool] or a Covered Party may request that the [Governing Board] determine whether a coverage denial should be withdrawn, altered, or affirmed, or [an assigned modification/risk factor] or [or an assigned contribution payment] by modified. The request for review must be promptly made in a writing submitted to the [Executive Director]. The request will be placed on the agenda for the next available [Governing Board] meeting. The involved Covered Party must participate in the meeting and present a reasonable and good faith basis for its requested action. The [Governing Board] shall then determine whether to grant the request, in whole or in part, and on such terms as are just and reasonable under all circumstances.

If the Covered Party does not accept an adverse determination by the [Governing Board], within 10 days after the [Governing Board’s] determination, the Covered Party may submit a written demand to the [Executive Director] for arbitration. ….

Compliance with this dispute resolution process, coupled with the Covered Party’s compliance with all other Conditions of Coverage, is a condition precedent to any right of monetary recovery or benefit under this [Coverage Agreement].