Friday, August 15, 2008

Settling > Trial

The New York Times is reporting that it's better to make a deal than to sue. Jonathan Glater writes that a study to be published in next month's Journal of Empirical Legal Studies offers staggering statistics.

  • Defendants who proceed to trial, instead of settling, were wrong 24% of the time;
  • Plaintiffs who proceed to trial, instead of settling, were wrong 61% of the time;
  • Only in 15% of the cases were both sides right in proceeding to trial: that is, the defendant paid less than the plaintiff had wanted, but the plaintiff got more than the defendant offered;
  • When plaintiffs got it wrong, it cost them $43,000 on average; and
  • When defendants got it wrong, it cost them $1.1 million on average.

The study claims to control for factors such as an attorney's experience, rank of the attorney's law school, and size of law firm. None of those factors were as important in making a decision to go to trial than the type of case. On the plaintiff's side, error is higher in contingency fee cases; on the defense side error is higher where there is no insurance coverage.

Obviously the study's methodology needs to be closely examined. But the central tenant that parties do better by settlement than by taking the case to trial is consistent with the anecdotal comments made by practitioners.

Why are parties so wrong so often? The authors provide several possible answers (none of which can be quantified). The possible explanations are:

  • Attorneys giving poor advice to the client; and
  • Clients thinking they have a slam-dunk case.

Does the financial system for the attorney/firm provide incentives to go to trial? In other words, is a case more likely to go to trial because of the attorney's financial stake in the outcome, rather than likelihood of success (however that word is defined)?

Thursday, August 14, 2008

Peacmaking with religious brokers

A wonderful article in The Economist highlights the role of religious organizations as peacemakers. The article may be found here. Make sure to read the comments section, as well. You should also read the companion article in the Economist about the "discreet charms of the international go-between that can be found here.

Religious institutions may be best suited as peacemakers, according to the article, and it lists several instances in Latin America, Europe, and Africa.

What makes religiously-based peacemakers unique? According to the author,
  • Neutrality, impartiality, and the ability to be an outsider acting as a guarantor of an eventual deal;
  • Long-term commitment and presence on the ground;
  • Contacts with local religious leaders; and
  • Moral and spiritual authority.

I've attended a Christian-based mediation training put on by Peacemakers. It was a wonderful session put on by committed men and women. I'd recommend it. I will say that Peacemakers showed me something more than what I've found in my "secular" conflict resolution training--that it pleases God for us to live in peace with each other.

I'm not sure that all of the reasons for religious-based peacemaking are so very different than secular peacemaking. Being committed to the process, to the parties, and having knowledge are certainly common to both groups. What do you think? Are religious-based mediators better equipped to handle conflict than secular mediators?

The "companion" article is a fascinating read, also. It notes that, in the last 15 years, "military victories have resolved only 7.5% of conflicts, while negotiations have prevailed in 92% of cases....The challenge is thus not being a skillful warrior, but a skillful negotiator." Also, it notes that Kofi Annan, acting as a mediator in the Kenyan conflict, chose to have the parties work through another third party (to establish trust and calm) and had meetings at a secret location at a "game park" to avoid the scrutiny and pressures associated with the media. There are several lessons to be learned here: location matters, you need to get away from distractions, and the parties have to trust you. A mediator friend of mine will take the parties (separately) out to lunch at a nice restaurant to discuss the case and negotiations. He says that it's hard to be upset (he uses other, more colorful language) with someone when you are having a nice meal.

The power of an apology

It's hard to say "I'm sorry." Why is that? Is it a sense of ego? Pride? Fear of being seen as less than perfect?

For a long time, those in the medical profession who have made a mistake have been counseled to not apologize to their patients. The advice has traditionally been "deny and defend."

This mindset is changing.

The New York Times highlighted a significant change in the way the medical community is handling mistakes. Many institutions, such as the University of Michigan, the University of Illinois, and Harvard, are now taking the approach that instead of hiding behind mistakes, medical professions and their institutions should immediately inform the patient of the mistake, apologize, and try to correct the situation.

Those hospitals incorporating the full disclosure and apology model are finding that the number of lawsuits they are facing are down, the amounts paid to patients are down, and the better communication allows processes to be enacted so that the likelihood of the same mistake happening again are diminished.

The power of an apology--and full disclosure--has ramifications in all walks of life, not just in the medical field. Conflict resolution professionals know that a major cause for conflict, whether in the home, in the church, or in the workplace, typically starts and continues because of poor communication.

And, while it is tough to apologize, most folks are reasonable folks, know that mistakes happen (we are all human, after all), and an apology can help diffuse the anger that exists between the parties.

Of course, some legal professionals don't like apologies because it implies guilt or liability that could be used against the "apologizer" later in court, and that's a valid concern. That's why, according to the Times, 34 states have "enacted laws making apologies for medical errors inadmissible in court". Apologies should always be inadmissible in court.

I've been in mediations where I know an apology would do wonders, but folks will not issue two simple words: "I'm sorry" (okay, that may be three words with the contraction; I'm a peacemaker, not an English major). Instead, they'd rather spend months or years in court and spend thousands of dollars in fees and lost productivity than say "I'm sorry."

Certainly there may be the instance where one clearly has not done anything for which to apologize, but in my experience, conflict typically takes two to tango, and an apology, along with a good neutral facilitator, can help transform the apology into a settlement.

Verse of the day

"Therefore my dear brothers, stand firm. Let nothing move you. Always give yourselves fully to the work of the Lord, because you know that your labor in the Lord is not in vain."

--1 Corinthians 15:58

Wednesday, August 13, 2008

Verse of the day

"If it is possible, as far as it depends on you, live at peace with everyone."

--Romans 12:18

Tuesday, August 12, 2008

Litigation Costs

The Wall Street Journal's Sarah Rubenstein blogs today about a new rule being proposed by the Financial Accounting Standards Board. The proposal requires companies to provide a "best estimate of the maximum possible exposure to loss" when a plaintiff sues the company for unspecified damages.

The thinking behind this rule is that stockholders are entitled to know the risk of owning, and continuing to own, stock in a company.

Many companies who have a lot of experience in large products liability defense cases have corresponded with FASB making the case that this type of litigation cost estimate is, at best, difficult. Here's a copy of the letter.

What's this have to do with dispute resolution?

A lot.

This letter outlines the reasons why litigation is so expensive. Cases may take years to get to trial. Discovery is incredibly expensive. And the ultimate risk is found in a fundamental right in our justice system: the jury. The letter points out that in one Vioxx case, the range in value had a high of $250 million (jury verdict) to a low of $0 (overturned on appeal).

Parties certainly need to conduct some level of discovery to have a grasp of the facts and exposure a particular case provides. But the uncertainties of a verdict (whether one is liable or not) and the amount awarded puts control of one's fate in the hands of twelve folks who may or may not be your "peer." And even if you hit it big at the trial level, there's always the court of appeals that you may get to deal with.

Take control of as many of the risks as you can. Seek a qualified resolution specialist to help you manage the inherent risks in litigation.

Monday, August 11, 2008

The Office: PDAs, paperclips, and conflict

With the economy in a place where most don't want it to be, jobs are scarce and some employees may feel that they have to put up with more a the workplace than in the halcyon days of old.

Not so, according to an article in the San Francisco Chronicle.

The article quotes an EEOC mediator as "people who bring up issues may actually be more protected during layoffs."  I suppose the thinking goes that if you, as an employee, have lodged a complaint about something in your workplace, than when it comes time for the RIF, you might not be on the short list because of the possibility that your complaint was protected under law.

Of course, a great way of handling these types of disputes is through workplace mediation programs.  I've posted about the efficiencies of these programs before.

Workplace mediation is great because it improves the lines of communications, cuts down costs, and frees up resources.  Even if the mediation is post-termination (I handled one of those last month as a mediator), I found that the lines of communication were opened, information was shared, and what could have been a costly dispute (money and resources for the company, emotionally for the employee) was resolved in about 12 hours.