Concerns about litigation costs and burgeoning court dockets are driving clients to seek dispute resolution options, especially mediation, New York attorneys say.
While some courts have long referred cases to arbitration or mediation, lawyers say their clients are voluntarily seeking an out-of-court forum in order to control costs, resolve disputes more quickly and maintain confidentiality.
Mediation, where a neutral assists parties in negotiating their differences, is often cheaper and quicker than arbitration, allows parties to assess the strength of their case, and provides more options for resolving disputes, according to practitioners.
A few ADR service providers in New York reported the percentage of their cases that go to mediation is growing, but all say there is plenty of work in both forms of ADR.
Arbitration, in which a third party imposes a resolution, remains strong in New York, particularly since many business contracts include mandatory arbitration provisions. But complaints have mounted about arbitration over the years as the process has become more akin to litigation, sometimes with extensive depositions, discovery and motion practice.
The size and the complexity of cases in ADR has grown, said Roy Israel, president of National Arbitration and Mediation (NAM).
“It was typical for cases to be relatively small 20 years ago” because the forum was new, he said. “Lawyers now trust it on more significant material matters.”
Israel said about two-thirds of NAM’s cases in New York this year are mediations.
JAMS reported a higher increase in arbitration in New York over the past two years.But Kim Taylor, chief operating officer at JAMS, said about three quarters of all JAMS cases around the country are mediations.
Ryan Hamilton, president of Resolute Systems, said its mediation case filings outpaced those for arbitration from 2010 to 2011 in New York. The group added a New York conference center last year in response to the demand, he said.
The American Arbitration Association (AAA) reports its arbitration case load from 2009 to 2011 increased at a rate greater than did mediation in New York, according to spokesman Michael Clark. AAA’s figures include no-fault automobile insurance cases.
Some courts prefer mediation for certain cases. For instance, in the Southern District some employment discrimination cases are referred to mediation, said spokeswoman Stephanie Cirkovich. And in the Northern District, non-prisoner civil rights, torts and some contract cases are automatically referred to alternative dispute resolution, but parties can opt out with the permission of the court, said Lawrence Baerman, clerk of the court.
Vincent Castiglione, general counsel of Lake Success-based Coby Electronics Corp. and president of the Association of Corporate Counsel’s Greater New York chapter, said that in his experience mediation tends to be less expensive than arbitration.
“Arbitration can be protracted and intense as any litigation,” said Castiglione, who spoke based on his own observations and not on behalf of an organization. “If I’m going to look at arbitration, I’m going to seriously consider whether I’m better off in court.”
In-house counsel are under greater pressure to control spending on outside firms, Castiglione said. Mediation is one way to do that, he said.
‘A Win-Win Scenario’
In the past two to three years, Howard Smith, litigation partner at Olshan, said he has seen “a marked rise in cases going to mediation.”
Almost 80 percent of his cases in the past three years have ended in mediation, Smith said. For instance, he said five of his cases ended in mediation last year.
“We’ve just had more clients tell us their wishes: let’s get this thing to mediation,” he said. “And in some cases, we’ve had judges tell us, before you clog up my docket any further, I’d like you to go to mediation.”
Carol Heckman, a partner at Harter Secrest & Emery in Buffalo, said she sees mediation more in demand partly because parties have more opportunity to negotiate and shape their outcomes.
“In arbitration, you win or lose,” said Heckman, a former magistrate judge in the Western District. “In mediation, you can come up with a win-win scenario” that could involve options that would normally be outside an arbitrator’s power.
Larry Schiffer, a partner at Patton Boggs, said clients are concerned about being “overlawyered” in arbitration through broad discovery, extensive depositions and motion practice more suited to court litigation
“What used to be faster, cheaper has morphed into something extremely similar to going to court,” said Schiffer, who practices in insurance and reinsurance dispute resolution.
Schiffer noted that some clients have decided not to insert arbitration clauses in their contracts because they believe it is no longer the most efficient method for resolving business disputes.
ADR providers have responded to the concerns about the length of arbitration proceedings and the mounting expense. For example, AAA stresses to its arbitrators to move cases along and it notes in its ad campaign that the median time frame for a civil case to go to trial in federal court is 23.2 months, while the median time frame for an AAA commercial arbitration is 7.3 months, according to Clark, the spokesman for AAA.
JAMS on its website says that in order to save clients time and money, it offers expedited arbitration procedures allowing parties to agree to limit depositions, document requests and e-discovery.
Attorneys say effective litigators need to be skilled in dispute resolution to be better advocates for clients. “I would say all of our litigators have experience in both mediation and arbitration. It’s very difficult to be a litigator these days without doing arbitration and mediation as well as courtroom work,” said Richard Ziegler, managing partner of Jenner & Block’s New York office.
Heckman, the Harter Secrest partner, attended in April a four-day mediation training program administered by the Western District court.
Smith, the Olshan partner, said he become a mediator through New York Southern District’s training program. Mediators on the Southern District panel work on a pro bono basis.
Smith said he signed up to provide a service to the court, and to gain insight into how to prepare for his clients’ cases in mediation.
It’s helpful “to hear both sides and to hear what the result is and to understand how the result is fashioned,” Smith said. “It gives you insight into things you may or may not want to do” for clients.
@|Christine Simmons can be contacted at email@example.com.