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In light of the cost of litigating employment disputes, along with the disruption and financial risk to the employer and the emotional and financial toll on the employee – not to mention the impact of statutory fee-shifting provisions – mediation is becoming the preferred form of resolution and is being increasingly used by employees, employers, courts and administrative agencies.

In that regard, the federal and state courts all have formalized mediation programs. Recently, legal experts have pointed to the increase in alternative dispute resolution, including mediation, as a reason for a decrease in the number of civil cases tried.

In mediation, the parties select a neutral party who assists them in reaching a mutually agreed upon settlement. The benefits of mediation are cost-effectiveness, elimination of the unpredictability of court determinations and jury trials, confidentiality, and the ability of the parties to exercise a significant degree of control over the outcome of their case.

With respect to most employment disputes, the earlier the matter proceeds to mediation, the more likely the chance of success. For example, at an early stage, when attorney fees and expenses are at a minimum, those issues are less likely to be impediments to settlement. It is difficult to settle a case that has a value of $50,000, for example, where the matter has proceeded through the litigation process, including written discovery, depositions and experts, and the attorney fees incurred significantly exceed the value of the case.

In addition to the issue of fees and costs, the longer an employee remains unemployed, the higher the potential damages. The appropriate stage at which a dispute is submitted for mediation often depends upon the nature of the dispute and the parties. An experienced mediator can explore the issue of timing with the parties to maximize the potential for success.

Other factors that can affect the outcome of mediation include the selection of the mediator, the parties’ understanding of the process, preparation for the mediation, and the willingness of the parties to compromise.

Selecting the Mediator

Selection of the mediator is often a determining factor in the ultimate outcome of mediation. Employment law is constantly evolving, and the mediator must be familiar with relevant statutes, current case law and jury trends.

Parties who have not been involved previously in litigation or mediation need an experienced mediator. Mediators familiar with the issues that arise in employment disputes can more readily and creatively assist the parties in evaluating their case, recognizing strengths and weaknesses, and examining potential exposure and risks. Impartiality and flexibility are also essential characteristics to look for in choosing a mediator.

Understanding the Process

It is important that the parties come to the mediation session with a clear understanding of the process, recognizing the difference between arbitration and mediation. A party may be under the mistaken impression that the mediator will ultimately determine which side is right or wrong or the entitlement to damages and the amount thereof.

Attorneys should explain to their clients that the mediator, unlike an arbitrator, will not determine these issues but will attempt to facilitate a mutual, voluntary resolution of the dispute. The parties should be made aware that, unlike an arbitration or other court proceedings, the mediator will conduct ex parte communications with the parties and, at times, may meet with only the attorneys. They must understand that no inferences as to the mediator’s view of the case should be drawn from the amount of time spent by the mediator with any of the parties.

It should also be explained that the mediator may, during the course of the mediation, address with the parties the weaknesses of their case and, possibly, the strengths of the other party’s case – and that this is being done for all sides. Although a good mediator will explain these aspects of mediation, reinforcement by the attorneys is always helpful.

The confidentiality of the process must be stressed to encourage parties and the attorneys to freely share information with the mediator and to realistically explore settlement positions. Attorneys should discuss settlement issues and damages with clients before the mediation as well as funds available for settlement, including insurance if applicable.

Exploring these issues prior to mediation can eliminate the time and effort involved in fruitless discussions or unrealistic expectations. Attorneys should also determine, prior to the mediation session, the appropriate individuals necessary to participate, the choice of which can often facilitate or impede settlement.

With rare exception, the employee should always be present, as often the mediation session can provide an opportunity for the employee to explain to a neutral third party his or her version of and feelings about what occurred. If there is someone who will be present to assist the employee in making settlement decisions or to provide moral support, it should be determined in advance if there are any objections to that individual’s presence or participation in the mediation session.

With respect to the employer, an individual with settlement authority must be available, either in person or, if necessary, by telephone. Finally, the nature, timing, extent and exchange of submissions to the mediator should be addressed prior to the mediation.

During the initial telephone conference, the mediator should discuss with the attorneys the mediator’s procedures for the hearing to determine if there are any objections or alternative suggestions. For example, while most mediation sessions involve a short presentation by the attorneys, there may be cases where the attorneys feel that it is not necessary or that it could have a negative impact upon the potential for settlement.

Finally, issues such as timing, the mediator’s fee, scheduling, location and deadlines for written submissions should be resolved in advance.

Preparation for Mediation

Attorneys participating in the mediation process must be familiar with the relevant facts of the case, including disputed and undisputed issues, applicable law and claims for damages recoverable.

Regardless of the complexity of facts and issues in the case, submissions to the mediator, unlike trial and arbitration submissions, are usually concise; accordingly, careful selection and presentation of facts, issues and documents are important. If there are novel legal theories or recent court decisions relevant to the issues in the case, it is often helpful to address those issues in the mediation submissions. If a demand has not been made, the employee’s attorney should be prepared to make one at mediation.

Both sides should consider and explore nonmonetary resolutions such as reinstatement, letters of recommendation, an apology, etc. If discovery has not been exchanged or has been limited, it may be necessary to determine whether, prior to the mediation, it is feasible and/or necessary to exchange information such as witness statements, the contents of investigative reports, prior administrative determinations, documents reflecting current employment status or claims of additional damages.

As many employment cases proceed to mediation at a very early stage, preliminary agreements to exchange information and/or documentation can be extremely beneficial in eliminating barriers to settlement.

If formal oral presentations are to be made at mediation, they should reflect a comprehensive summary of the partys’ position and the partys’ intention to mediate in good faith, and they should emphasize a realistic and nonconfrontational assessment of partys’ strengths as well as any perceived weaknesses.

Necessity for Compromise

Some of the barriers to settlement in employment disputes are an unrealistic demand or evaluation of potential exposure, a desire for retribution or vindication, emotional attachment to the litigation or outcome, attorney fees and costs that have been incurred, and the lack of control of clients by attorneys. Sometimes attorneys reach consensus on resolution of a case only to discover that the client has a completely different viewpoint than the attorney.

An effective mediator can assist attorneys in working with their clients to minimize the hardening of positions or miscommunication. Participants must recognize that mediation, by its very nature, requires a willingness and ability to compromise disputed claims. The employee must understand that as part of a compromise, he or she will most likely not be made whole nor obtain everything that is desired.

Mediators should never ask the employee to consider what he or she wants but rather what it will take for the employee to walk out of the mediation with the case settled and the matter resolved. The employee’s attorney must recognize that, as part of the resolution, there may need to be a compromise of attorney fees in order to resolve the matter – particularly where the employee is anxious to settle.

Conversely, no matter how strongly the employer believes that there is no basis for the claim, it must be recognized that in mediation, some form of compensation will be necessary to resolve the case and that summary judgment is rarely a foregone conclusion.

Settlement

Once a settlement is reached, it is crucial that all parties understand and agree to the terms of the settlement before concluding the mediation. Whenever feasible, the mediator and the parties should convene in a joint session to reiterate the terms of the agreement, to ask questions and/or to seek clarification.

Particularly with settlement of employment claims, there are issues that, if not initially addressed, can ultimately undermine settlement. Issues such as tax treatment of the settlement proceeds; the terms and timing of payment; the circumstances of re-employment, if applicable; the specifics of confidentiality provisions; and the resolution of any pending administrative charges or proceedings are common to employment disputes.

Who prepares the release and the method of resolving any disputes relating to the terms of the release should be discussed, including the feasibility of having the mediator retain jurisdiction until execution of the written agreement. If preliminary written documents are going to be prepared at the mediation by the parties or the mediator, this should also be addressed.

Finally, the mediator should end the mediation with positive comments addressed to the parties, commending their commitment to the process, recognizing the good-faith efforts at negotiation and compromise, reinforcing the parties’ control over the process, and emphasizing the positive outcome of resolution for all sides.



MICHELE M. FOX is a partner in the litigation department and a member of the labor and employment group at Ballard Spahr Andrews & Ingersoll of Voorhees, N.J.

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