An Open Letter to Judges in Florida: Why Non-Binding Arbitration Stinks and the Role of Early Mediation in Dispute Resolution

by | Jan 24, 2022 | Mediation | 0 comments

The passage of the Florida Mediation Confidentiality and Privilege Act in 1985 (§44.401 et. seq.) and the adoption of new rules of civil procedure in 1987 governing mediation changed the landscape of dispute resolution in Florida. Mediation became a fixture in the dispute resolution process following legislative action and then judicial implementation. However, over the past several decades mediation advocacy in Florida has changed very little.

Change in mediation advocacy and process has not occurred organically. It requires the court to once again provide a helpful nudge to improve the mediation process. To deal with the COVID backlog, some courts have adopted case management orders providing for non-binding arbitration ostensibly as an alternative to mediation. This is a regrettable development that warrants critical commentary. I think non-binding arbitration is a poor choice and argue for a change in the timing of mediation to reduce the COVID backlog.

As opposed to non-binding arbitration, mediation leaves the outcome to the parties who rightfully own the problem. Early mediation is superior to non-binding arbitration on several levels. Cost, efficiency, and the value of self-determination favor mediation.

A non-binding arbitration creates the risk that one side or both will object to confirmation of the arbitration award. This is problematic because disputants (who never agreed to arbitrate at the outset) now incur the cost of a “mini-trial” without the promise of finality. If a party objects to the award, then by rule they suffer the risk of attorney’s fees if they fail to do better in the litigation.

The risk of attorney’s fees created by non-binding arbitration was not bargained for when suit was filed. If the parties wanted to leave decision-making to a sole neutral, they could have chosen that path on their own.

Mandating litigants engage in a sub-optimal, non-consensual, and more costly ADR process is not a trivial problem.  There are hundreds of millions of public and private dollars in play when disputes go unresolved and a concern for public opinion of the judicial system as a whole.

Non-binding arbitration can never rightly be seen as an alternative to mediation because it is adversarial. Why do some courts like it? Not because it increases the frequency of settlement. Not because it is cheaper. Not because it is more efficient. Not because non-binding arbitration quickly reduces court dockets or offers greater finality to litigants.

The answers to the question are several and not obvious. Many commentators note that lawyers are not well-trained in mediation, that mediation does not require “lawyering” in the traditional sense, and it places lawyers outside their comfort zone. It’s no surprise then, there was early resistance by some to mediation in the 1980s who did not understand the financial, emotional, and public policy benefits conferred by mediation.

Perhaps judges (lawyers after all)  subconsciously “favor” non-binding arbitration because it seems more lawyerly, mirrors litigation more closely, and does not require the same emotional intelligence and deal-making ability that are the cornerstones of mediation advocacy. It also creates work for neutrals who have no incentive to object to non-binding arbitration mandates.

Judicial involvement with ADR policy in the past was sensible and necessary to deal with increasing caseloads caused in part by rapid population growth in Florida, and by evolving jurisprudence resulting in more lawsuits (e.g., the growth of products and employment liability, abrogation of the contributory negligence rule, and adoption of consumer protection laws). Now, we have a backlog of cases for a different reason. Once again, the judiciary must play a critical role in shaping ADR policy.

Non-binding arbitration will only provide immediate resolution if all agree (on some level) with the award, that is, both agree with the neutral’s decision. It is not sensible to travel the long way through non-binding arbitration only to hope the arbitrator luckily hits upon a number the parties will agree to confirm without challenge. If the parties do agree to confirm the award, we have simply arrived full circle – a settlement following the involvement of a neutral, which is what a mediation would have accomplished at a fraction of the time and expense. Backing into a settlement after non-binding arbitration is akin to making three left turns on separate divided highways when one quick and easy right turn onto mediation boulevard would have achieved the same result.

There is no logical judicial objection to an early mediation that affords the parties an opportunity to end their dispute before significant fees and costs are incurred. The problem is that pretrial and case management orders frequently and regrettably provide for a mediation deadline months and months down the road at the end of the discovery period.  Why so? Unexamined habit and custom.  Sub-optimal delay in scheduling mediation persists, and that adverse feature remains immune from evolutionary forces.  Judges can and should set a mediation deadline relatively soon after joinder of all parties permitting some short discovery and investigative period.

Instead of the mantra from trial lawyers that they “prepare every case as if it were going to trial,” more savvy advocates will need to ask,  “What is the least amount of information we need to mediate?”  The answer to the question requires recalibration and to immediately focus on information needed to make an informed settlement decision quickly. You need extensive discovery akin to a thick Sunday newspaper to try a case, but you only need read the headlines to mediate one.

Recognizing there can be no economic, public policy or moral objection to early mediation by the judiciary, the case by lawyers against early mediation fails as did objections to mediation in the 1980s. Critics of early mediation say they need extensive discovery because they don’t know what they don’t know. The argument however ignores the considerable direct and indirect costs incurred in deferred resolution. Bills go unpaid. Companies suffer cash-flow problems, and all litigants suffer disruption of their lives or businesses.

Yet, it’s not the client clamoring for more discovery, they want the dispute OVER. It’s the everyday, well-intentioned, but trial-centric lawyer who by habit borne of late mediation deadlines does not default to a settlement modality and who is trying to handicap the case for the client based on what he or she sees as incomplete information. The flawed desire for more perfect information drives this argument against early mediation.

Because of the then existing skepticism surrounding mediation in a nascent 1980s mediation culture, judges did three things that can and should be changed. First, they entered orders requiring attendance of  “lead trial counsel” so that mediation “would be taken seriously” by the Bar. (The more enlightened view now recognizes the client should choose their mediation advocate and it may not be lead counsel).

Judges also anticipated resistance to mediation and recognized (as noted above) that lawyers armed with a traditional law school education had little or no experience with mediation and thus might view it as suspect and a threat to their livelihood. So, not surprisingly, courts added a rule that permitted a party to move to dispense with mediation. (That still exists.)

Third, and most critically, judges set the mediation deadline late in the life of the case. This was smart in one sense, because if mediation is new and going to meet with resistance,  you don’t make it the first order of business much less the centerpiece of any case management order.  Those decisions shaped our current landscape and created a custom and practice among judges that has never changed.

Orders setting mediation are largely unchanged from 40 years ago despite the evolution in our understanding of ADR and the overwhelming success of mediation. By implementing late mediation deadlines in the 1980s that are now anachronistic but the norm, courts unwittingly contributed to the long life cycle of a filed case and crowded dockets, now aggravated by the COVID backlog.

Mediation has rested in the shadows of trial practice for too long and for too many.  So, it is necessary for the court to provide a helpful nudge and to realign expectations by setting an early deadline for the few who fail to see the value of it.  To be sure, some will object to early mediation mandates, but that is a natural reaction to a change in a long-standing custom and practice, even when the change is efficient and justifiable.

Let’s look at it differently. What studies were cited  in the 1980s to then justify the custom of setting mediation deadlines months down the road at the end of the discovery period? There were none. It was a psychological ploy to deflect early objectors. There are no studies today suggesting litigation expense is preferable to early settlement talks or that non-binding arbitration is a superior ADR tool.

By virtue, only of unexamined habit and custom, courts set the mediation deadline toward the end of the discovery period via a case management or pretrial order. This is a bad practice, but easy to remedy with the stroke of the pen. We know early mediation works because some large institutional clients already employ early mediation initiatives for employee-labor claims. Some insurance carriers use early mediation to resolve liability claims. You don’t read about companies walking away from early mediation because people hate it or because it is horribly expensive and routinely fails. Moreover, impasse is not a failure. A mediation will reveal valuable information, crystalize issues, and narrow the scope of the dispute even if settlement is not reached immediately.

A legion of cases hold “Florida has a strong public policy favoring settlement.”  Apparently, what we sorely lack is a strong public policy favoring early settlements. Litigants want the dispute resolved. Courts want to eliminate cases from the docket and shorten the life cycle of filed suits. Therefore, from whom and why would an economic or public policy objection be made to earlier mediation deadlines?

Early mediation has the rare virtue of being pro-business and pro-consumer albeit for different reasons, and early resolution lowers judicial administration expense. Ordering early mediation in lieu of non-binding arbitration is a much more cost-effective and desirable vehicle for resolving the backlog of cases due to COVID. Non-binding arbitration should not be ordered as an alternative to mediation because it is not; it is adversarial, stressful, time intensive, lacks finality, and frankly, stinks. Other than that, I don’t have any strong feelings on the subject.

David Henry

David Henry

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