"Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser -- in fees, and expenses, and waste of time. As peacemaker the lawyer has a superior opportunity of being a good man. There will be business enough." ¹

These contemporary sounding words by Abraham Lincoln were recently borne out by the New York County Lawyers Association Committee on Arbitration and ADR (the "NYCLA ADR Committee"), which recently had good news to report on the success of the alternative dispute resolution ("ADR") program that has been implemented for the last five years in the United States District Court for the Eastern District of New York (the "EDNY"). The NYCLA ADR Committee's statement was issued to the Committee on Civil Litigation of the EDNY, in response to its July 21, 1997 request for public comment on the Court's implementation of its Civil Justice Expense and Delay Reduction Plan, which was adopted on December 7, 1991. ²

The ADR Committee found that the EDNY ADR programs, with a greater than 50% settlement rate, necessarily reduced the time and cost involved in those cases and were received by parties to those cases with greater satisfaction than were cases outside the ADR program. The ADR Committee observed that parties and their counsel not only found the ADR processes and the neutral to be fair and appropriate for their case but also were happy in general with ADR and recommended that the program be continued.

In preparing its evaluation of the EDNY program, NYCLA's ADR Committee reviewed results of studies by RAND Institute for Justice ³, the Federal Judicial Center⁴, and by the EDNY Advisory Group⁵. In addition, the Committee drew on the experience of its members -- many of whom serve as neutrals on court-annexed panels of the EDNY and the United States District Court for the Southern District of New York ("SDNY") --, interviews with the ADR Administrator, and other anecdotal sources.

In commenting on the EDNY program in particular, the ADR Committee highlighted RAND’s finding that, of the six pilot districts with ADR programs studied by RAND, the EDNY program had by far the lowest commitment of full time equivalent ("FTE") personnel annual cost⁶ and lowest total annual cost⁷ of all six pilot districts, but had the second highest settlement rate -- second only to the settlement rate in the SDNY. The EDNY’s high settlement rate might be attributable, in part, to the initial resources it committed to provide training for neutrals on its panel. By contrast, the programs with the highest FTE personnel annual cost⁸ and highest total annual cost⁹ -- the SDNY and Southern District of California ("SDCA") -- had a lower per case cost than the EDNY. RAND observes that this is likely due to the high volume of cases in the SDNY and SDCA, as compared with the relatively low volume of cases that has been sent into the EDNY program. All of this indicates that the EDNY ADR program has great potential, but is being under-utilized and could benefit from greater commitment not only of cases but also of resources in order to achieve maximum efficiency and provide the greatest service to cases pending in the EDNY. Accordingly, the NYCLA ADR Committee recommended an increased commitment of resources and cases to the ADR program in the EDNY.

The recommendation to increase both judicial commitment to sending cases into the ADR program and a monetary commitment to beef up staffing to support the ADR Administrator comes in the shadow of the sunset of the Congressional Act which provided the impetus for these programs: The Civil Justice Reform Act of 1990 (the “CJRA”). The CJRA , which mandated court experimentation with differential case management and ADR programs, creating pilot districts and demonstration districts towards this end, sunsets at the end of this year. When the CJRA directives evaporate, the separate funding that has been earmarked for these courts’ programs will disappear, and courts will have to rely on the general funds of the judiciary, as dispensed by each district court.

These favorable findings and recommendations of the NYCLA ADR Committee and the imminent elimination of the CJRA should be significant to Manhattan-based corporate counsel for several reasons.

First, rare is the corporation, these days, that has not found itself entering the portals of federal court in the Eastern or Southern Districts. Based upon the success to date in these courts’ ADR programs, in-house counsel should consider encouraging their litigators to obtain orders of reference to mediation.

The EDNY program began as either mandatory early neutral evaluation ("ENE"), without cost to the parties, or voluntary mediation, at a charge to the parties. Under these conditions, most parties ended up in ENE. While ENE is designed to utilize a neutral who may predict case outcomes and evaluate cases for the purpose of encouraging parties to assess strengths and weaknesses and consider settling the cases, the EDNY ENE program became a hybrid of ENE and the less evaluative ADR process of mediation. While a mediator also encourages parties to assess their best and worst alternatives to a negotiated settlement, including likely costs, risks and outcomes if they proceed through motions, trials, appeals and collection efforts, the mediator generally avoids expressing his or her own evaluation of the case, leaving it to the parties to draw their own conclusions. The mediator’s chief role is to facilitate communications between the parties, to help them understand one another’s perspectives, explore their underlying interests, and generate options and creative solutions for resolving the parties’ dispute.

After observing a leaning toward the mediation model in the EDNY, the EDNY Advisory Group recommended and the EDNY implemented a change from ENE to mediation in its ADR program. Currently EDNY cases may be ordered to mediation without cost to the parties, although resort to a private provider of mediation services is still permitted. The SDNY program has been from the start, and remains, mandatory mediation, without cost to the parties. Corporate counsel seeking information on the federal courts ADR programs may call the ADR Administrators, Gerald P. Lepp, Esq. of the EDNY (718) 260-2577 or George O’Malley, Esq. of the SDNY (212) 805-0643.

Secondly, in light of the benefits available through these mediation programs, corporate counsel might encourage the continuation of these programs locally and, to the extent one’s business is national, encourage continuation of all ADR programs commenced under the CJRA. A number of bar association groups are in the process of preparing statements to the Federal Judicial Conference calling for continuation of the court-annexed ADR programs initiated by the CJRA. Among these groups are the ABA Litigation Section’s ADR Committee and NYCLA’s ADR Committee. Both groups are soliciting comments from local counsel, which could be directed to the undersigned.

Thirdly, counsel should keep ADR in mind as an option even when a court- annexed program is not available. While some disputes reportedly need "ripening" in the sun of litigation before the pummeled parties see the benefits of settlement, some studies, and anecdotal evidence of mediators, indicate that the earlier a dispute goes to mediation, the better -- in part because there are fewer "sunk costs" discouraging parties from settling for less. Private providers of mediation services have long been available in California, Texas, Florida and other states, and they are on the rise here in the New York City area. Not only does mediation offer to save time and reduce cost, but it can protect sensitive relationships, spread an umbrella of confidentiality over potentially embarrassing disputes, result in greater party satisfaction, and, with a consensual settlement, increase chances of collection or adherence to the terms upon which the dispute was resolved.

Finally, counsel might consider learning more about ADR through the NYCLA ADR Committee. The NYCLA ADR Committee holds monthly luncheon forums, held at the alternating venues of NYCLA and the American Arbitration Association, with guest speakers on topics relating to all forms of ADR -- including arbitration, mediation and neutral evaluation -- as applied across the gamut of legal fields, such as employment, securities, intellectual property, construction, real estate, commercial disputes and other areas. The Committee independently, and in conjunction with Courts and other bar associations, also presents evening forums and other programs, such as advocacy skills in mediation, arbitration and mediation training, and selection of the appropriate ADR mechanism for the resolution of one's dispute. The Committee lends support to the local Courts in connection with their ADR programs and also reports on legislation and prepares public responses on issues of significance to ADR. Counsel with further interest in NYCLA's ADR committee or upcoming events should contact Harriet Astor at NYCLA (212) 267-6646, ext. 212.

1 The Library of America, Lincoln: Speeches and Writings 1832 - 1858, "Notes on the Practice of Law" (1850).

RETURN TO ADR News