Another Arrow in the Quiver: Med-Arb May Be Right for Your Business Dispute

By Scott C. Van Soye‡

In 1998, Professor Thomas J. Stipanowich, then of the University of

Kentucky,1 was asked to chart the future of arbitration in the 21st Century. He suggested then that arbitrators would increasingly be asked to “wear more than one hat.”2 That is, he predicted the growth of hybrid forms of dispute resolution such as “med-arb,” a process in which the same neutral first attempts to mediate a dispute, then serves as arbitrator if agreement cannot be reached.3

Med-arb is a long-standing and robust practice that combines the flexibility and self-determination inherent in mediation with the certainty and finality of arbitration. The purpose of this article is to introduce the med-arb process to those unfamiliar with it, and to suggest that those involved in business disputes explore this alternative with their counsel.

‡ Scott C. Van Soye is a 1988 graduate of the UCLA School of Law, and a 2007 graduate of the LL.M program at Pepperdine’s Straus Institute for Dispute Resolution. He actively litigated in California and Federal courts from 1988-1998, and served as Judicial Staff Counsel to the judges of the San Bernardino Superior Court from 1998-2006, advising them on literally thousands of civil cases. He now mediates and arbitrates full time at the trial and appellate level.

1 Professor Stipanowich currently serves as the academic director of the Straus Institute for Dispute Resolution at Pepperdine University School of Law. 2 Dykema Gossett PLLC, “Arbitration Expert Predicts 21st Century Trends,” http://library.findlaw.com/1998/Sep/1/128936.html (visited 12/09/2007)

3 Blankenship, John T. “Developing your ADR attitude: Med-Arb, a template for adaptive ADR” http://www.tba.org/Journal_Tbarchives/200611/TBJ-200611-medArb.html (visited 12/09/2007) Med-Arb is, and has been, widely used

Professor Stipanowich’s 1998 prediction was right on target. A survey performed the same year by David Lipsky and Ronald Seeber found that an astonishing forty percent of responding Fortune 1,000 corporations had engaged in med-arb in the preceding three years. 4

Med-arb is also very popular in other cultures. In Japan, for example, most cases submitted to arbitration actually undergo “med-arb.” In 2003, less than one percent (4 of 512 cases) resulted in an award without settlement.5

In Canada today, med-arb is used routinely to resolve public sector labor disputes,6 and the arbitration statute in effect in New South Wales, Australia expressly permits resolution by this method as well.7

4 Stipanowich, Thomas J. “ADR and the Vanishing Trial: The Growth and Impact of ‘Alternative Dispute Resolution’” Vol. 1, No. 3 J. Empirical Legal Studies 843, citing David B. Lipsky and Ronald L. Seeber, The Appropriate Resolution of Corporate Disputes: A Report on the Growing Use of ADR by U.S. Corporations.,” at p. 9. Professor Stipanovich suggests at n. 152 that Lipsky and Seeber over-report the use of med-arb, but presents no evidence in this regard. 5 Tezuka, Hiroyuki, “Arbitration World – Japan” http://www.europeanlawyer.co. uk/referencebooks_7_144.html (visited 12/09/07) 6 E.g. Crown Employees Collective Bargaining Act, 1993, S.O. 1993, c. 38, s. 50 (2); Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A, ss. 50(1)-50(10); See also Telford, Megan Elizabeth, “Med-Arb: A Viable Dispute Resolution Alternative,” IRC Press, January, 2000. 7 New South Wales Consolidated Acts, Commercial Arbitration Act (1984), § 27, provides: “1) Parties to an arbitration agreement: … (b) may authorise an arbitrator or umpire to act as a mediator, conciliator or other non- arbitral intermediary between them (whether or not involving a conference to be conducted by the arbitrator or umpire), whether before or after proceeding to arbitration, and whether or not continuing with the arbitration. (2) Where: (a) an arbitrator or umpire acts as a mediator, conciliator or intermediary (with or without a conference) under subsection (1), and (b) that action fails to produce a settlement of the dispute acceptable to the parties to the dispute, Nor is med-arb a new concept. Professor Derek Roebuck indicates that in ancient Greek and Egyptian traditions, med-arb was the norm rather than the exception.8 In both ancient and modern Muslim legal practice, the judge must make serious efforts to bring the parties to agreement before trial.9

Section 1850 of the Ottoman Code (which defined the former Shari’a, or

Islamic law), described a process called solh (“peace”) that sounds remarkably like med-arb.10 Solh has ancient roots -- the Koran still requires its use where marital discord is present.11

In California, Labor Code §1164 requires a mediator to submit a report with binding recommendations to the Agricul tural Labor Relations Board if agricultural employers and related labor unions are unable to reach agreement within 30 days of beginning mediation about their initial collective bargaining agreement. This is clearly a med-arb provision, though the statute does not call it that.12

no objection shall be taken to the conduct by the arbitrator or umpire of the subsequent arbitration proceedings solely on the ground that the arbitrator or umpire had previously taken that action in relation to the dispute. (3) Unless the parties otherwise agree in writing, an arbitrator or umpire is bound by the rules of natural justice when seeking a settlement under subsection (1)…” 8 Limbury, Alan L. “Making Med-Arb Work” citing Roebuck D., “The Myth of Modern Mediation”, (2007) 73 Arbitration 1, 105 at 106. www.strategic-resolution.com (visited 12/09/07) 9 Antaki, Nabil N. “Cultural Diversity and ADR Practices in the World.” http://www.adrmeda.org/romeconference07/materials/ADR_in_Business.pdf (last visited 12/6/2007). 10 Kemachi, Fathi, “The Approach to Mediation in the Arab World” http://www.wipo.int/amc/en/events/conferences/1996/kemicha.html (last visited 12/10/2007). 11 Koran, 4:35 “If you fear a breach between the two, appoint arbiters, one from his family, and the other from hers; if they wish for peace, Allah will cause their reconciliation: For Allah has full knowledge, and is acquainted with all things” 12 CA Labor Code §1164(d). Proponents of med-arb convincingly argue that it eliminates the major weakness of mediation – lack of finality13 – while allowing the parties to use an arbitrator with whom they have built up trust during the mediation process14, allowing maximum flexibility, and saving the cost and time associated with selecting a separate arbitrator should mediation fail.15

Despite the popularity and obvious usefulness of med-arb, it remains controversial, with some arbitrators treating it as “heretical and even unethical.”16

These observers view it as impossible to fairly combine the two processes, believing that the inherent tension between the neutral’s initial role as a facilitator and her potential role as an adjudicator renders the procedure coercive, ineffective, and disruptive of basic due process.17

Additionally, at least one well-known mediator, Jeff Kichaven, has responded to recent developments in California law by almost gleefully declaring that “med- arb is dead.”18

13 Blankenship, supra n. 3 14 Brewer, Thomas J and Mills, Lawrence R. “Combining Mediation & Arbitration” Dispute Resolution Journal, Nov 1999 http://findarticles.com/p/articles/mi_qa3923/is_199911/ai_n8861081/pg_5 (last visited 12/11/2007). 15 Gerald F. Phillips, “Same-Neutral Med-Arb: What Does The Future Hold?,” 60 Disp. Resol. J. 24, at 26 (2005) Mr. Phillips is a practicing neutral as well as an Adjunct Professor at the Straus Institute for Dispute Resolution at Pepperdine University School of Law. His September 19, 2007 lecture on the med-arb process was attended by the author. 1616 Id. 17 See Telford, supra n. 6 and Blankenship, supra n. 3 for summaries of these concerns. 18 Remarks of Panelist Jeff Kichaven to participants in the Southern California Mediation Association Conference held November 3, 2007 at Pepperdine University in Malibu, CA. The author was personally present for these remarks. Mr. Kichaven is a practicing neutral as well as an Adjunct Professor at the Straus Institute for Dispute Resolution at Pepperdine University School of Law. But an analysis of the cases that purportedly undermine the validity of med- arb shows that the process is alive and well in California. Despite Mr. Kichaven’s arguments to the contrary, recent case law supports the process, rather than undermining it.

Furthermore, depriving the parties of the benefits of med-arb is unnecessary, given that the same risks exist, and are deemed acceptable, in other contexts.

Perhaps because of this, Gerald Phillips’ latest research shows that med-arb is gaining acceptance among dispute resolution professionals19 – even those who previously disapproved of the process.20

Recent case law does not undermine the viability of med-arb

As noted above, Jeff Kichaven has argued that recent case law renders med- arb “dead.” 21 The case relied on most heavily to support this conclusion is

Travelers Casualty and Surety v. Superior Court.22 Travelers concerned the settlement of some 90 clergy abuse cases. As a means of putting pressure on the insurer, mediator Peter Lichtman held an evidentiary hearing and made a factual finding that the Church would lose if the case went to trial.

This finding was meant to preserve coverage in the event that the Church chose to settle without Travelers’ consent. The policy would have voided coverage

19 Phillips, Gerald F., “Back to Med-Arb: Survey Indicates Process Concerns are Decreasing,” p. 7 (Manuscript Copy on file with the author.) Forthcoming, Alternatives to High-Cost Litigation (February, 2008) 20 Mr. Phillips reports that three of those who responded negatively to the survey underlying “Back to Med-Arb” (supra n. 19) now have agreed to use it. (Personal correspondence dated 01/19/08, on file with the author). 21 See n. 18 supra. 22 126 Cal App 4th 1131 (2005) in these circumstances, but the forfeiture would not result if an "actual trial" to determine the Church's liability had preceded the settlement.23

The Court of Appeal held that a mediator has no power to make factual findings,24 though he may give his frank evaluation of the value of a case, and may even hold a “mini-trial” to aid in that valuation.25

In his remarks before the SCMA,26 Mr. Kichaven treated the court’s attack on the mediator’s fact-finding as a death-knell for med-arb. The problem with this analysis is that unlike a situation in which parties consented to a multi-step dispute resolution process, in Traveler’s Mr. Lichtman imposed a procedure no one had agreed to, making the settlement unenforceable.27

In everyday practice, the med-arbiter will have transitioned to an arbitral role prior to making any factual finding. In this role, fact-finding is essential (and the parties have consented to it). So Traveler’s is not authority for the idea that med- arb is “dead.” At most, it is authority that the parties cannot be forced into med- arb without their consent.

Another case relied on by Mr. Kichaven is Lindsay v. Lewandowski.28 There, the parties entered into a “stipulated settlement agreement” which provided that

Lindsay would pay Lewandowski $190,000, and that disputes would be subject to

“binding mediation”– what we would call med-arb.

23 Id., at 1136, 1143-1144; Hamilton v. Maryland Casualty Co. (2002) 27 Cal.4th 718, 725- 726 24 Id., at 1138-1140 25 Id., at n. 13, ¶ 2. 26 See n. 18, supra 27 See e.g. Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, at 810-811 28 139 Cal App 4th 1618 (2006) The weakness of the med-arb agreement at issue in Lindsay was that the parties failed to specify what the process entailed. The court refused to imply one, holding instead that there was no meeting of the minds.

This ruling, however, does not preclude parties from agreeing to med-arb.

The Lindsay court expressly said:

“We do not suggest that parties are prohibited from agreeing that, if the mediation fails, they will proceed to arbitration. And, should they so desire, they may agree that the same person may first act as mediator and, if he or she fails in this task, act as the arbitrator. Whether or not this arbitrator (nee mediator) may consider facts presented to him or her during the mediation would also have to be specified in any such agreement.”29 (Emphasis added)

So the Lindsay opinion does not “kill” med-arb; it supports it.

Finally, Mr. Kichaven cited Morgan Phillips, Inc. v JAMS/Endispute30 which, while it does involve mediation followed by arbitration, has nothing to do with the validity of med-arb. In Morgan Phillips, mediator John Bates settled a dispute between the parties. The settlement agreement provided that subsequent disputes would be resolved by arbitration, with Bates serving as neutral.

The settlement agreement fell through, and the parties accordingly returned for arbitration. Mr. Bates willingly mediated the second dispute, but refused for undisclosed reasons to arbitrate it. Plaintiff sued for damages.

The issue in Morgan Phillips was whether defendant Bates was protected by common-law arbitral immunity from liability arising out of his refusal to make an award. The court held that he was not, because the failure to arbitrate was not part of the arbitral process.31 There was no discussion of the validity of the med-

29 Id., at 1625 30 140 Cal.App.4th 795 (2006) 31 Id., at 802-803 arb process per se. Morgan Phillips therefore does not support the proposition that med-arb is no longer viable.

The due process / natural justice issue

Perhaps the most frequently-cited defect of med-arb is that the neutral hears evidence in private caucus that the non-caucusing party cannot respond to, because he has not heard it. This is often referred to as a “due process”32 or

“natural justice”33 violation. Natural justice “has two basic tenets: persons must be allowed to hear and answer an opponent’s case, and any decision affecting a person must be made by a tribunal that is impartial and not biased.”34 Likewise, at its most basic, due process requires only notice and an opportunity to be heard.35

Med-arb detractors doubt that while acting as an arbitrator, the neutral will be able to disregard what she learned in the mediation phase:

“[I]f parties disclose their bottom line, that information cannot be erased ‘but must inevitably affect the award. . . . Thus full- born [sic] mediation may pose both a serious impediment to the independent judgment of the arbitrator and real risk for the parties.’36

32 Jacobs, Pearl and Schain,, Linda “Alternative Dispute Resolution Instead of Litigation: A Better Approach to Conflict Resolution” 14 Proceedings of the Academy of Business and Behavioral Science 826, at 832 http://www.asbbs.org/proceedings/PDF/J/JacobsP.pdf (visited 12/10/2007). 33 See Limbury, supra, n. 8. ”Natural justice” is a concept used in the British Commonwealth. It is similar to what Americans think of as “due process” For a brief discussion of basic principles, see “Natural Justice and Procedural Fairness.” http://www.vu.edu.au/library/pdf/natural%20justice%2015%20OCT%202001.pdf (visited 12/11/2007). 34 See Telford, supra. n. 6 35 Cleveland Board of Education v. Loudermill, 470 U.S. 532, 545- 546 (1985), 36 Kagel, John. 1976. “New frontiers in dispute resolution. Skills and techniques: Comment.” In New techniques in labor dispute resolution, ed. Howard J. Anderson, pp. 185-90. Washington, DC:, BNA, cited in Telford, supra n. 6 If true, this means that a party who was excluded from caucus during mediation has not had notice of “new evidence” presented during that private session, or an opportunity to respond to it. This situation is a prima facie violation of fundamental fairness, whether it goes by the name of natural justice or due process.

As Telford37 points out, concerns about exposure to improper evidence reflect doubts about the neutral’s ability to disregard that evidence, rather than a flaw in the med-arb process itself. These fears may appear to be irrational, in that judges

(many of whom retire to become mediators, arbitrators or both) are expected to routinely disregard inadmissible evidence presented to them for consideration, without any due process concerns being expressed. Indeed, in many jurisdictions, judges are presumed to have disregarded inadmissible evidence.38

But some scholarly work indicates that the facts may be contrary to this presumption – it seems that judges have great difficulty in disregarding inadmissible evidence, including proposed settlement offers disclosed in

37 Id. 38 “Improper Evidence in Nonjury Trials: Basis for Reversal?” Harvard Law Review, Vol. 79, No. 2 407 (Dec. 1965) mediation. This is true despite the fact that the mediation privilege39 clearly applies in these circumstances.

Testing showed that judges’ assignment of value to personal injury claims varied according to the settlement offers made in mediation.40 Judges were

“anchored” by a party’s suggestion as to value.41

However, this testing was unrealistic, in that only one “inadmissible” suggestion of value was presented to the judge. Of course, in a mediation contect, numerous suggestions of value would be made. It seems likely that the presence of so many alternatives would weaken the anchoring effect found by Wistrich,

Guthrie and Rachlinski.

Further, there is not a consensus about neutrals’ supposed inability to disregard inadmissible evidence. Megan Telford, who surveyed med-arbiters

39 The privilege is contained in California Evidence Code §§ 1119 and 1128:

1119 “Except as otherwise provided in this chapter: … (c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.”

… 1128. “Any reference to a mediation during any subsequent trial is an irregularity in the proceedings of the trial for the purposes of Section 657 of the Code of Civil Procedure. Any reference to a mediation during any other subsequent noncriminal proceeding is grounds for vacating or modifying the decision in that proceeding, in whole or in part, and granting a new or further hearing on all or part of the issues, if the reference materially affected the substantial rights of the party requesting relief.”

40 Andrew J. Wistrich, Chris Guthrie, and Jeffrey Rachlinski, “Can Judges Ignore Inadmissible Information? The Difficulty of Deliberately Disregarding,” Cornell Law School Research Paper Series (2005) http://lsr.nellco.org/cgi/viewcontent.cgi? article=1019&context=cornell/lsrp at pp. 1285-1292 (visited 12/12/2007) 41 Telford, supra note 6 working in Ontario’s Greivance Settlement Board. reports that while the natural justice / due process issues raised earlier were a concern, the great majority of the neutrals surveyed felt that the issue was not a practical problem, since they felt able to disregard inadmissible evidence. 42

Because Telford’s work was based on med-arbiters’ self-reports, the results may be doubted by those who prefer empirical data to “unreliable” anecdotal evidence. After all, it is possible that the med-arbiters responding to Telford’s survey were unaware of the subtle effect inadmissible evidence had on their decision-making.

But as Telford points out, the clients of the Ontario Grieveance Settlement

Board are generally sopisticated “repeat players” (unions and employers) who could refuse to use a given arbitrator in the future if he or she was seen as biased.43 Further, violation of the principles of natural justice or due process through the use of evidence obtained in mediation would be an independent ground to vacate the award, unless there had been a waiver.44

Yet, Telford reports that the Grievance Settlement Board runs smoothly. So such challenges must be few and far between; further, there are no reported cases

42 Id. 43 Id. 44 See Limbury, supra. n. 8; see also Cal. Rules of Court, R. 3.823(a) : “All evidence must be taken in the presence of the arbitrator and all parties, except where any of the parties has waived the right to be present or is absent after due notice of the hearing.” on the issue.45 This suggests that the effect of the arbitator’s prior role as mediator is not as serious as Kagel46 and others assert.

Finally, the above-quoted passage from Lindsay,47 referring to the consideration of otherwise-inadmissible evidence as a matter for agreement, shows that the Court of Appeal, at least, believes that the med-arbiter can disregard such evidence.

The waiver issue

The language of Rule 3.823 (a)48 and Limbury’s discussion of the conflict inherent in the neutral’s dual role both suggest the usefulness of a waiver of procedural rights. Phillips49 and Knight, et al. 50 each recommend such a waiver.

Their waivers expressly refer to the risk that the neutral will learn confidential information during the mediation process.

Despite their express recommendation to obtain a waiver, Knight et al. include a Use Note cautioning that such waivers may be unenfoceable, without saying why they do so.51 In fact, what authority there is suggests that the waivers are enforceable.

45 I am aware of one unreported case concerning med-arb, confidentiality issues. In Town of Clinton v. Geological Services Corp., No. 04-0462A, 2006 WL 3246464 (Mass. Super. Nov. 8, 2006), the court held that participation in the mediation phase did not waive the Massachusetts confidentiality statute, which is similar to Cal. Evid, Code § 1119. 46 See n. 33, supra. 47 See n. 28, supra, and accompanying text. 48 See n. 43, supra 49 Phillips, n. 15, supra. 50 H. Warren Knight et al., Alternative Dispute Resolution (The Rutter Group California Practice Guide) Form 17, p. App. D-35. (Thomson West 2003). 51 Id, at “Use Note”. In Baycare Health Systems, Inc . v. Agency for Healthcare Administration,52

Baycare filed a claim against an HMO for millions of dollars in reimbursement.

It chose to utilize a voluntary arbitration process established by statute. It was unsuccessful in arbitration.

Baycare thereafter sued, claiming deprivation of due process. The Florida

Court of Appeal denied its claim, holding that private, voluntary arbitration did not involve due process, and that “one may, under our system, consent to almost any restriction upon or deprivation of right, but similar restrictions or deprivations, if compelled by government, would have to comply with due process.”53

In short, Baycare holds that one may fashion by contract whatever ADR system suits the needs of the moment. Similarly, the American Arbitration

Association’s Consumer Due Process Protocol allows its provisions to be waived:

“Assuming they have sufficient specific knowledge and understanding of the rights they are waiving … [c]onsumers may waive compliance with these

[p]rinciples after a dispute has arisen.”54

Given the holding in Baycare, the clear statement in the AAA protocol, and in the absence of contrary authority, there is simply no reason to believe that an informed waiver of conflicts arising out of the med-arbiter’s dual role is uenforceable, despite the language of the Use Note.

52 31 Fla. L. Weekly 2705 (2nd DCA, October 27, 2006) 53 Id. 54 http://www.adr.org/sp.asp?id=22019 (visited 12/12/2007) A sample waiver is set forth below.55 It addresses the natural justice/due process issue raised by the use of evidence presented outside the arbitration,56 and the violation of mediation confidentiality entailed in the use of caucus information in another proceeding.57 The point is not that the exact language set forth in note 55 must be used. It is that these issues should be discussed with counsel, and that a similar waiver would be a prudent precaution.

The coercion issue

Critics of med-arb claim that it gives neutrals the power to coerce settlement by (at least implicitly) making it clear in mediation that in the event arbitration goes forward, an unfavorable award will result.58

Although such a scenario is certainly plausible, it ignores the reality that professional mediators do not achieve settlement “at all costs.” After all, they

55 The following language is taken from the med-arb waiver used by JAMS/Endispute, the nation’s largest ADR provider: “By their signatures below, the parties waive any right to complain of ex parte (private) contact between [med-arbiter] and the opposing party or counsel, and waive their respective right to have the arbitration award based solely upon information communicated to the mediator [sic, should be arbitrator?; See n. 44, supra.]

The parties hereto acknowledge that information so communicated during mediation may be received by the neutral in confidence, and may not be disclosed to the adverse party. It is further acknowledged that such information, which the absent and adverse party may believe to be false, may influence the decision of the neutral when the neutral acts as arbitrator…[T]he parties hereby waive any defect in the procure and the right to oppose confirmation or to seek vacatur of any award rendered by the neutral [on these grounds].

The parties also acknowledge that the fact that the neutral presided as a mediatior… shall not provide a basis to seek the disqualification of the neutral as an arbitrator…”

[Bracketed material added].

56 See Cal. Rules of Court, R. 3.823(a), supra. n. 44 57 See California Evidence Code §§ 1119 and 1128, supra. n. 39 58 Thomson, Claude “Med-Arb: A Fresh Look..” p. 3 http://www.claudethomson.com/docs/Med-Arb_A_Fresh_Look.pdf (visited 12/12/2007)’; Blankenship, supra, n. 3 want to maintain a reputation for fairness, without which they will get little business.

While med-arbiters admit pressuring the parties on occasion, for the most part they deny a “directive” approach. 59 Telford admits that parties seem more motivated to settle in the shadow of an arbitration, but argues that this is a positive aspect of the process.60 After all, the parties chose med-arb because they wanted the certainty of a result; otherwise they would have chosen pure mediation.

Further, pressure to settle is created by the prospect of a looming trial, just as it is by an upcoming arbitration. Therefore, this weakness of med-arb is actually a weakness of any adjudicative process; it should not be laid at the door of med- arb in particular.

As for the “coercion” that arises from expressions of opinion occurring in mediation, Telford’s data61 shows that med-arb neutrals generally avoid expressing their opinions, unless directly asked to do so. And assuming that the neutral’s opinions are made clear, this situation is hardly unique to the med-arb context. Lawyers are constantly trying to predict what a judge will do based on his or her comments during the litigation of the case.

If, for example, the trend of a judge’s rulings has been negative throught the progress of a case, it takes little imagination to conclude that a bench trial will go ill.

59 See Telford, supra. n. 6 60 Id. 61 Id. In such a case, the pressure to settle will mount quickly even without a coercive intent on the part of the judge. The point is that the same “weaknesses” attributed to med-arb occur, and are deemed perfectly acceptable, in other contexts.

Reluctance to disclose information and posturing for the neutral.

A final criticism of med-arb is that the parties will refuse to disclose information as they normally would in mediation, because they are too conscious of the neutral’s future role as an arbitrator. A related argument is that a party will try to spin the facts to make herself look good in front of the mediator/

(future) arbitrator.

Non-disclosure

Some critics of med-arb suggest that participants are unlikely to share facts with the mediator that might reflect negatively on them, in view of his or her possible role as an arbitrator.62

However, participants may actually be more forthcoming in med-arb than in other contexts, perhaps out of a desire to avoid appearing uncooperative to the potential arbitrator.63

Even if there is non-disclosure, this situation is hardly unknown to experienced mediators. It is not unusual, in the author’s experience, for counsel to withhold extremely useful information – data that would probably settle the

62 Limbury, n. 8, supra. 63 See Blankenship, supra n. 3, citing Neil B. McGillicuddy et al., “Third-Party Intervention: A Field Experiment Comparing Three Different Models,” 53 J. Personalty & Soc. Psychol. 104, 110 (1987)). case -- so that he or she can “save it for trial.” This occurs even if the point is expressly made that the settlement process is designed to avoid trial altogether.

Posturing

Likewise, inflating the merits of one’s case in order to look good to the arbitrator could happen in med-arb, but is not limited to that context. 64 So posturing cannot be attributed solely to med-arb. In fact, there is no evidence that non-disclosure or posturing is more likely in the med-arb context than it is in single-process ADR, such as mediation or arbitration.

Summary

The above analysis shows med-arb has a long history of success, and that despite the numerous criticisms of the procedure, any “defect” in the process has been accepted with equanimity in other contexts. For example, we either presume without thinking that judges can disregard inadmissible evidence, or accept their human frailty with a shrug. Yet we challenge med-arb neutrals for sharing the same frailty.

There is no evidence of coercive behavior by med-arb neutrals that is distinguishable from the general effect of an upcoming bench trial with a skeptical judge. Yet, it is deemed unacceptable for the neutral to have opinions – but acceptable for the judge.

64 Forester, John, “Planning and Mediation, Participation and Posturing: What’s a Deliberative Practitioner to Do?” http://courses.cit.cornell.edu/practicestories/documents/samples_planning/Participation AndPosturing.pdf Finally, the problems of posturing and non-disclosure face every mediator from time to time; yet the med-arbiter is told that these risks are enough to disregard the undeniable advantages of the med-arb process that have been identified by Phillips65 and Flake66 -- flexibility, finality, cost-savings and a high probability that the parties will reach a settlement before the arbitration becomes necessary.

The obvious weakness of critics’ positions is highlighted by Knight et al.’s unsupported claim that the waiver of due process issues – which promotes the usefulness of med-arb – may be unenforceable. As Baycare and CRC 3.823 demonstrate, such waivers are enforceable.

Conclusion

The lesson of the foregoing is not that med-arb is the right answer in every case. No doubt, a thoughtful attorney or savvy businessman can think of plenty of situations in which another dispute resolution mechanism is better suited to a given circumstance. The point is that med-arb is a useful option,67 especially where the business relationship is worth trying to preserve but a speedy resolution is very important.

Certainly, (like any part of business) med-arb has possible pitfalls, which should be carefully considered with competent counsel. But it also has its benefits. Med-arb combines flexibility and possible cost-savings with finality. It

65 See n. 15 supra 66 Flake, Richard P., Nuances of Med-Arb: A Neutral’s Perspective,” in AAA HANDBOOK ON MEDIATION, (Carbonneau, T.E. & Jaeggi, J.A, eds.) at pp. 173-176. 67 For four brief case histories of successful med-arb sessions, see Phillips, Gerald F. “It’s More Than Just ‘Med-Arb; The Case for ‘Transitional Arbitration,’” 23 Alternatives to High- Cost Litigation 9, pp. 141-154 (October, 2005) is a valuable tool for resolution of business disputes. And if well-informed, intelligent business people wish to use it, lawyers and neutrals who refuse are not only behaving paternalistically, they are reducing the likelihood of settlement.68

Just as business executives must learn to navigate the legal system in order to succeed, they need to be familiar with the full spectrum of ADR methods, able to raise their use with counsel, and ready to intelligently discuss their strengths and weaknesses when the time for a decision comes.

Retired judge and neutral Lawrence Waddington has said "[M]ed-arb is a valuable addition to the constantly maturing world of alternatives to litigation ... the increasing use of mediation by the Bar has developed experienced lawyers who recognize a variety of techniques to settle cases and med-arb is one option.

No mediator should ignore this potential for resolution of a dispute."69 Judge

Waddington’s insight is as true for business executives as it is for mediators.

Med-arb is a valuable tool, which should be routinely considered, and never ignored.

68 A study by Australia’s National Alternative Dispute Resolution Advisory Counsel found that business disputants who make their own decisions about ADR procedures settle more often than those who havw procedures imposed on them by third parties. “COURT REFERRAL TO ADR: CRITERIA AND RESEARCH,” at § 6.5 (© 2003, Commonwealth of Australia). See http://www.ag.gov.au/agd/WWW/disputeresolutionHome.nsf/Page/Publications _All_Publications_Court_Referral_to_ADR_Chapter_6 (last visited February 10, 2008).

69 See Phillips, n. 15 supra, at fn. 5