A new pilot program sending one out of every five cases assigned in Manhattan’s Commercial Division to mediation is set to take effect July 28, court administrators have announced.
While the program’s launch has been expected, proponents hailed the official approval as a significant leap towards establishing the court as an innovative, prompt and effective forum to address business disputes.
“I’m thrilled that the court system is pursuing this and I’m encouraged by the widespread support that came from the bar through the comment period,” said Paul Sarkozi, a partner at Tannenbaum Helpern Syracuse & Hirschtritt who drafted the proposal as member of a Commercial Division advisory council that submitted the idea back in December.
The pilot, to apply in New York County alone, will last 18 months. By then, officials will be able to gauge the level of receptiveness among the bar to modify or expand the program to other counties’ commercial divisions or to cancel it altogether.
The initiative is meant to stem expenses for corporate clients by introducing an alternative dispute resolution technique earlier on—upon a request for judicial intervention based on a motion filed, a request for a preliminary conference or other relief sought.
The idea for mandatory mediation in the Commercial Division was driven by the needs of a business community exasperated by the mounting costs of litigation and delayed resolution when certain issues could be ironed out more quickly and cheaply.
“We have been told forcefully by lawyers who work for corporations that this is what they want—they want more mediation, and want it at the beginning of a case, and they don’t want it to be left to chance,” said Robert Haig, a partner at Kelley Drye & Warren who chairs the advisory council. “We had to find a way to do it.”
The idea, as reported in December, was to address the uneven rate that judges currently send cases into mediation and the reluctance by parties to voluntarily enter into the mediation process.
“Quite often, neither side will request mediation because if they do so, they’ll see it as a sign of weakness. The original rule which allowed judges to [refer mediation] allowed neither party to look weak, but the [task force] commission felt it wasn’t being done enough,” said Bernard Fried, a retired New York County Commercial Division judge who is now an arbitrator and mediator at JAMS New York Resolution Center.
The program has a fair degree of flexibility—parties can opt out or seek exemption from the assigned judge upon a showing of good cause. Pro se cases are automatically exempt. Otherwise, the terms of the program, laid out in a new Rule 15, are relatively clear.
Cases set to enter automatic mediation will be designated as such by notice in the New York State Courts Electronic Filing System. Within four months of the judicial intervention request, parties must inform the court’s alternative dispute resolution coordinator that they have agreed upon a mediator, or request one from the court.
Following that confirmation date, the standard alternative dispute resolution rules already in place would apply: the first mediation session must be concluded within a month.
The pilot gives parties up to seven months from the filing of the judicial intervention request to reach a resolution.
Office of Court Administration spokesman David Bookstaver said the July 28 launch date “gives us time to prepare for implementation.”
In an area of law where the vast majority of cases settle, “the mediation process in complex and sophisticated matters is not onerous,” Sarkozi said.
“We’re doing this for 18 months and let’s see what the reaction is,” he said in an interview Wednesday. “How many parties choose to opt out, how many applications are not granted? That’s the whole purpose of the project so we can see, does the bar find it useful?”
“I expect that the bar will enthusiastically support the mediation program and that the participation in the mediation project will be high,” Sarkozi added.