ADR: Do Trials Still Matter?

by Richard L. Zaffiro

As a plaintiff's personal injury attorney for seven years before beginning my current defense practice in 1988, this author has seen a definite change in how the personal injury (PI) world works since alternative dispute resolution (ADR) has caught on in Wisconsin PI practice.

In the "dark days" before mandatory mediation, settlement discussions generally died once a case went into suit, only to be resurrected on the courthouse steps. Once in suit, the parties would conduct all discovery and pretrial preparation, and would settle in the eleventh hour only if the possibility of losing dawned on them as they made final trial preparations.

The problem was compounded by the slow workings of the court system. It was not uncommon for courts to schedule PI trials as much as two or three years after the filing of suit, and then to bump that date several more times or years into the future due to the pressure of other court business.

Perhaps ADR would have come about anyhow, even if courts had not created such an expensive and unpredictable timeline from suit to trial. But the expense of preparing for several adjourned trial dates on any one case created at least some of the cry for a cost-effective way to resolve disputes - leading to mandatory ADR in Wisconsin.

This article presents the ADR experience in Milwaukee County from several groups involved in the process: plaintiff's counsel, defense counsel, ADR providers, and judges. It is hoped that the insights and ideas described below will be thought-provoking and practice-improving for those who experience mediation and arbitration as part of their professional lives.

Plaintiff's Perspective

Richard L. Zaffiro, Rutgers 1981, is a senior attorney with American Family Mutual Insurance Co., Milwaukee. He is a member of the Defense Research Institute. © 2000 Defense Research Institute, adapted with permission.

Atty. James C. Mentkowski has practiced plaintiff's personal injury law in the Milwaukee area for virtually all of his career. As with any solo practitioner, keeping old clients and attracting new clients is the key to survival, and Mentkowski believes that mandatory ADR has helped his practice grow. While the percentage of his cases being settled has not increased, they do settle more quickly.

Mediation provides much that trials do not by involving clients in resolving their own cases. Plaintiffs have the chance to "say their piece" to a mediator, which often proves more cathartic than trial. Mentkowski says that parties actually have apologized to each other as part of the mediated settlement, an act that has on occasion been more valuable to the client than the settlement amount itself. In Mentkowski's experience, clients tend to be more satisfied with the results of mediation because they are more directly involved and feel they have more control over the result.

Satisfaction with the mediation results generally also leads to more satisfaction with the lawyer. Clients seem happier accepting a figure that was recommended by a "judge" (that is, the ADR provider, whether or not actually a former judge) than one that came only from their lawyer, even if the settlement figure is lower than the clients originally wanted.

On what could be viewed as the downside to ADR, Mentkowski has seen less informal negotiation between lawyers. Negotiations have become more formalized, because lawyers have come to rely upon the mediation process instead of picking up the phone and calling their opponent as they used to do.

As with any professional service, ADR comes with a cost. In the Milwaukee area, costs typically range from $100 per hour regardless of the number of parties involved to more than $200 per hour per party. Depending upon the size of the case, Mentkowski finds that the cost of ADR is not a large concern. In a small case where every dollar may be significant as to whether settlement can be achieved, however, a lower-cost mediator is preferred. Sometimes shifting the mediator's bill to the opposing side may facilitate settlement.

Atty. Jeffrey P. Zarzynski, a partner in the firm of Schiro & Zarzynski in Milwaukee, exclusively practices plaintiff's personal injury law. Zarzynski's approach to selecting a mediator is to not select one, preferring to let the insurance company select someone to whom they will listen. He finds that the most effective mediators are not tough arm-twisters, but rather more likeable individuals who can effect the parties' expectations without appearing to force their views on anyone.

Zarzynski agrees with Mentkowski's assessment of mediation benefits. Mediation gives his clients a chance to participate in resolving their own cases, rather than being told by a judge or jury what they are entitled to. It also allows them to "say their piece," which increases their willingness to settle.

From a business development standpoint, Zarzynski finds the mediation process gives him a chance to impress his clients because he talks with the mediator in front of them. His clients see him in action, which in turn results in happier clients and more business for his firm in the future.

The vast majority of mediated cases do settle. Zarzynski's biggest disappointment occurs when the defense comes to the mediation with no more authority than that which was extended prior to mediation, or with no authority to settle at all, or fails to bring the person with authority to the mediation. The latter insults those parties who made the effort to attend in person.

Zarzynski also has seen attorneys become reluctant to discuss settlement figures prior to the formal mediation session. Practitioners are nervous about giving a settlement figure in informal discussions which may be used against them as a floor or ceiling figure at mediation.

Defense Perspective

Atty. Emile H. Banks Jr., founding partner of Emile H. Banks & Associates LLC, Milwaukee, practices primarily defense work, but handles about 15 percent plaintiff's personal injury cases.

Banks prefers a mediator who gets to the heart of the problem without long dissertations of the law and who offers both sides a realistic evaluative view of what a jury will do based upon the mediator's own experiences when the plaintiff is ready to hear it.

Banks finds that his trial calendar has dropped from an average of six to seven jury trials per year to about three or four per year since mandatory ADR was enacted in Wisconsin. He finds that not only are many cases being settled earlier than they did before Wisconsin's mandatory ADR statute, but that many more cases are settling than did previously.

Like most practitioners, Banks finds there is nothing more disappointing than "close but no cigar" settlement discussions, especially when he has paid for them. However, he acknowledges that even in cases where settlement did not happen at the mediation session itself, the process may have laid the groundwork for later settlement. Banks, too, has seen a reduction in informal settlement discussions.

Banks says most defense lawyers still perform full discovery and independent medical examinations before going to mediation (except in more obvious medical malpractice liability situations where liability is clear); thus, the idea that mediation saves defense costs may not always apply.

This author still tries to settle those cases where the presuit offer and demand were close, or where value is small compared to the likely cost of preparing for trial or mediation. However, many mediators want to know the status of settlement discussions. I do not want to be tied to a number before mediation begins; though that number may well be fair, it may be viewed by some mediators as my "starting point." For this reason, my discussions before mediation are in a range of figures I perceive to be reasonable. However, during ADR I may leave myself some "wiggle room" over and above the top of the figure range to settle the case if a few more dollars are needed to get the job done.

Getting the job done - that is, settling the claim - also may involve other factors beyond the likely jury verdict in such a case. Other factors may include negotiating reductions with subrogated carriers or unpaid health care providers, who will pay the mediator's fees, or whether the plaintiff's attorney can reduce her fees. Mediation only magnifies the importance of such factors; for instance, I have seen a mediator pressure a nonparty chiropractor with huge bills not only to attend the mediation but to cut his bill in order to make settlement happen. Such pressure has been applied to others whose stake in the outcome got in the way of settlement.

The best mediator for a difficult plaintiff may well be a plaintiff's attorney (and a high profile one, at that) who the plaintiff will respect at least as much, if not more, than his own lawyer for settlement advice. Former judges and practicing attorneys with good people skills, personal experience with what many juries have done in similar cases, and good legal knowledge on relevant issues make the best mediators.

The cost of ADR has become an issue to many parties and may become increasingly more so over time. The days when a mediator could boast of his status as a former judge and then charge per hour per party are numbered; some providers are offering flat-fee contracts to frequent customers.

Judicial Perspective

The Hon. Charles F. Kahn, a Milwaukee County circuit court judge since 1992, was engaged in the private practice of law for 17 years before taking the bench. Judge Kahn is aware of no statistics on the effect of mandatory ADR in Wisconsin, but believes it has helped bring the parties and lawyers together to work towards resolution and to limit the issues.

Instead of fear that aggressively pursuing settlement will be perceived as weakness by opposing counsel, the parties now recognize that settlement discussions are required and thus are less hesitant to make the opening offer or demand. Settlement discussions tend to happen earlier since the advent of mandatory ADR in Wisconsin.

With few exceptions, mediation has not been a source of problems for the hundreds of cases assigned to Judge Kahn's court. One problem occurred when, at the end of a long day of mediation, the plaintiff's lawyer signed a settlement document that contained language different from what his client thought he had agreed to, and later came before the court seeking to set aside the document due to the several hundred thousand dollars that were lost between what the client thought he'd agreed to and the written settlement document. Judge Kahn upheld the written settlement document, suggesting the party's recourse may be with the attorney who advised him to sign the written agreement. The party could not ask the court to break the statutory confidentiality of the mediation process in order to prove the "true" settlement.

The issue of "good faith" participation by a party in a mediation also has been the subject of motions before Judge Kahn. In a few instances, plaintiff's attorneys have sought to require the insurance carrier or defense counsel to pay for the entire cost of mediation for failure to participate in good faith.

Judge Kahn, in an interview with this author, said he may have denied such requests for sanctions even if there was a demonstrated lack of good faith by a party or lawyer, because he is not convinced the ADR statute in Wisconsin creates a duty of good faith participation. However, he felt his court has the inherent power to assess costs in such a situation as a matter of equity.

Judge Kahn sometimes receives requests from parties that they be excused from mediating a case. If he is convinced a good reason exists to do so, he will order to mediation even a party who has indicated that he or she will not move from a number.

The Hon. Janine Geske has been a distinguished professor of law at Marquette University Law School since 1998, an associate justice of the Wisconsin Supreme Court from 1993 to 1998, and a Milwaukee County circuit court trial judge from 1981 to 1993. She now has a successful mediation practice.

Unlike most ADR practitioners, Justice Geske practices a mixture of facilitative/evaluative mediation. Her philosophy is that in this high-stress life of litigation, there often are missed communications and misunderstandings. She uses mediation as a forum to overcome this situation and to give the parties an opportunity to hear each other and perhaps consider an apology or recognition of hurt as part of the settlement process.

Her approach may be a little unsettling at first to litigators who are used to thinking in terms of winning or losing cases: She encourages the attorneys to convince the other side why they should settle instead of convincing her why they should win.

Typically, Justice Geske uses a premediation questionnaire, and then enters into a written contract with the parties. The questionnaire is an attempt to identify the impediments to settlement and to see if the parties are correctly evaluating the case. The contract clarifies what she will and will not do as a mediator.

Justice Geske's mediation practice often involves more complex cases where liability may be an issue as well as damages. She finds that the lawyers want mediation in order to avoid the high costs of discovery for their clients in such litigation, and often come to her for mediation services even without a court order for ADR.

While she does not see her mediator role as being one to educate a lawyer about the good or bad of a case, Justice Geske may raise a point missed by an attorney by asking "What would be your response if the other side did X? What do you think of that approach?" She also may evaluate the arguments, telling each side which she believes is the strongest argument.

Justice Geske spends time with each mediating party in private caucuses. She often speaks directly to the plaintiff, to see what the plaintiff perceives are the problems associated with the case or injury. For instance: has the plaintiff been losing sleep, suffering from increased stress? She does similar work with the defendants, trying to help the parties reach their own numbers and ultimately their own settlement.

Even in cases in which the parties know where they will end up, the process still takes time. Justice Geske will not walk out on a case in which the parties are miles apart on the numbers; she will persist for as long as it takes.

Justice Geske does not recommend specific dollar figures to the parties. She recalls only one case in which she recommended a dollar figure to the parties, a particularly complex case with several suits filed and numerous attorneys whose permission she first sought and obtained to do so. Her rationale for not giving numbers to the parties is that she fears becoming an advocate for a settlement number and prefers that the parties reach their own figure.

Justice Geske observes that more cases are being mediated before suit is even filed. Although more than 95 percent of filed civil actions always have settled short of trial, Justice Geske sees more cases settling earlier and fewer big cases going to trial. Informal negotiations are decreasing, being replaced by formal ADR proceedings.

Mediator's Perspective

Hon. Willis Zick practiced law for 22 years and was a Waukesha County

circuit court judge before becoming a full-time mediator and arbitrator. Judge Zick's unique blend of a great sense of humor and superb legal knowledge have made him a most effective ADR provider.

While a judge, Zick mediated every civil and divorce case assigned to him as judge. He always had the parties and the lawyers come into chambers to try to work out a settlement. At first he experienced some opposition to this practice, but over time most attorneys got used to it and came to see it as a normal part of civil litigation in his court.

Judge Zick saw settlement facilitation as part of what a judge was supposed to do, and believed the system was deficient for presuming everything would be tried and for not offering a structured way to settle suits.

Although some mediators will break up the parties into separate rooms right away, Judge Zick initially keeps the parties and the lawyers together to analyze the issues, find out what facts are agreed or disagreed to exist, and learn what offers and demands have been made. He believes this approach is more efficient and productive, because it allows each side to hear the other's version of the events.

Judge Zick believes it is his job to point out case weaknesses to both sides so they are aware of the risks. Although his ADR practice initially was more facilitative, he has become progressively more evaluative. He attempts to raise issues and arguments to each side in such a way as to encourage the party to evaluate the risks and/or the significance of the issue or argument rather than to tell a side he or she is "wrong."

Atty. Joe McDevitt came to the business of mediation out of a 30-year defense attorney background with the same firm. McDevitt got into mediation almost on a lark about three years ago when a plaintiff's attorney asked him if he would do a mediation and he was able to settle the case. That same lawyer called him again with work, more and more plaintiff's attorneys began to call him with work and, when he realized that 50 to 75 percent of his time was being spent doing mediation work, his full-time mediation practice was born.

McDevitt's usual approach to mediation does not evaluate the numbers per se; rather, he may tell a plaintiff she may get less or a defendant that he may pay more than the number that is on the table if the case goes to trial. He may tell the attorney proposing the number whether he believes it to be fair, but generally will not share this opinion with the other side. Usually he will discuss only his own position within a range of numbers he believes to be reasonable.

In his use of the evaluative approach to mediation, McDevitt feels very strongly about separating the parties immediately. He does not permit opening statements or anything else between the parties unless mediation is done before suit is filed. He has found that allowing the parties to talk with each other created problems with attorneys "puffing" for the benefit of their client. He separates the parties and asks the questions himself so that they are not framed in an argumentative way, conveys the other side's opening statement in a way that is not puffing, and lets each side "vent" only to him in order to avoid the parties making faces or otherwise antagonizing the other side.

McDevitt never tells the two sides what the other side's number is until the sides have agreed on a number. He just talks about the strengths and weaknesses of cases, perhaps only discussing numbers in vague and general terms, and then moves them together to obtain a settlement with "horror stories" of unfavorable outcomes in similar cases.

As a mediator, McDevitt helps bring about settlement by working with plaintiff's counsel to help reduce the balance outstanding to a health care provider or a subrogated health insurance carrier, and on occasion even will call a health care provider. He even may suggest a plaintiff's attorney reduce his fee in order to bring about settlement, although never in the presence of the plaintiff.

As a means of ensuring that his evaluations continue to ring true, McDevitt tries to follow up with lawyers on cases that do not settle (75 to 80 percent do settle with him). He asks the attorneys to let him know what happened at trial, and so is able to stay current with trends in the local courts that would be of interest to his mediation clients.

Conclusion

Although there is no study establishing cause and effect, the numbers in Milwaukee County show that the number of civil trials has steadily dropped from 263 in 1995 to 190 in 1999, and overall litigation has dropped from 11,352 large claims and 37,352 small claims filings in 1995 to 10,349 large claims filings and 37,897 small claims filings in 1999. Other counties probably exhibit similar trends.

Those few cases that are tried have significance far beyond their numbers, because all of those involved in the ADR process need to cite what real-world juries are doing with similar cases in order to help determine what is fair in a given mediated case.

Anecdotally, everyone interviewed for this article believes that the number of trials are down, and that mandatory ADR has moved settlement discussions from the courthouse steps on the eve of trial to a mediator's office, where lawyers can save some expenses of litigation without losing face with their clients. And that sounds like a win-win proposition for everyone.