September 22, 1997

Thomas F. Clauss, Jr., Esq.
Winthrop, Stimpson, Putnam & Roberts
One Battery Park Plaza
New York, NY 10004-1490

Re: Comments on Implementation of the ADR Component of the Civil Justice Expense and Delay Reduction Plan of the U.S. District Court for the Eastern District of New York

Dear Mr. Clauss:

The Committee on Arbitration and Alternative Dispute Resolution ("the ADR Committee") of the New York County Lawyers' Association ("NYCLA")¹ writes in response to the notice entitled: "Public Comments Welcomed on Proposed Study of the Civil Justice Expense and Delay Reduction Plan of the Eastern District of New York," dated July 21, 1997 issued by Edwin J. Wesely, Chair of the Committee on Civil Litigation of the Eastern District of New York (the "Advisory Group"). The ADR Committee’s Comments focus exclusively on Part III (Alternate Dispute Resolution) of the Civil Justice Expense and Delay Reduction Plan of the Eastern District of New York (the "Plan") and defer comment on the balance of the Plan to the Federal Courts Committee of the New York County Lawyers Association ("NYCLA").

The ADR Committee fully supports implementation of the ADR component of the Plan, and is grateful to the Court and the Advisory Group for the commitment to offering the public flexible, fair and efficient mechanisms for dispute resolution shown in their adoption and thoughtful implementation of the ADR programs in the United States District Court for the Eastern District of New York (the "EDNY"). Mediations and Early Neutral Evaluations ("ENE") conducted in the EDNY to date demonstrate that these processes work. While they are not a substitute for civil trials where issues require independent resolution, they provide effective mechanisms for parties and their counsel to resolve many disputes on their own which might have otherwise seemed insoluble.

The success of ADR is supported not only by anecdotal evidence, but also by data from the report by RAND Institute for Public Justice ("RAND") published late last year, and by other studies. RAND's statistics, drawn, inter alia, from ADR proceedings in the EDNY not only show party satisfaction and perceptions of fairness, but suggest that a greater commitment of cases and resources to ADR in the EDNY is in order.

Accordingly, the Committee urges continued commitment to ADR in the EDNY even after the sunset of the Civil Justice Reform Act. Judicial officers should be encouraged to send more cases into ADR, and earlier, than has been done to date. The ADR Committee would encourage commitment of sufficient personnel and resources beyond those already involved in implementation of the ADR program. Additional resources should enable the ADR Administrator to conduct speedier and more comprehensive follow-up in reporting to judicial officers on the status of cases in the ADR program and to conduct in-depth statistical analyses that could be useful to future development of the ADR program. At present, there is only one court employee assigned to the ADR program - the ADR Administrator. Additional personnel would create a division of labor enabling the ADR Administrator to spend needed time communicating in depth with neutrals, reviewing statistical information and obtaining the overview required to continue refining the ADR program. Resources should also be made available to offer training to neutrals on the EDNY’s ADR panel, and to supplement training for those who have already received ADR training.

I. Success of ADR in Flexible, Fair and Efficient Resolution of Disputes

While statistics may vary from district to district on the effectiveness of processes like mediation and ENE² in resolving disputes, they uniformly show that cases sent into ADR settle with a significant degree of frequency; that the parties and counsel are satisfied with the process; and that the parties and their counsel perceive the process to be fair.

Late last year, the RAND Institute for Civil Justice ("RAND") published results of the study it undertook, at the request of the Federal Judicial Center, on the implementation of the Civil Justice Reform Act (the "CJRA"). The initial publication of the RAND Report was heralded with exclamations of surprise that RAND’s findings did not support the claim that the ADR programs reduced the time and cost involved in resolving these cases. A closer reading of RAND’s conclusions, findings and statistics, however, shows that the report contains some very encouraging data on ADR³. The ADR Committee would like to highlight certain of these findings, including party and litigant response data presented in RAND’s report concerning the ADR pilot projects in general, and specifically on the EDNY’s ADR program⁴.

Even with statistically inconclusive results on time and cost, RAND produced a statistically significant showing that the substantial majority of parties to ADR were satisfied with the process and perceived the process and the neutral (mediator or evaluator) to be fair. A report issued by the Federal Judicial Center on the ADR programs in the Demonstration Districts created under the CJRA ⁵, went further. This Demonstration District report shows clear statistical support that ADR both saved parties time and expense and also produced greater satisfaction and at least equal perceptions of fairness.

The following five subsections report encouraging data gleaned from the RAND ADR Report, and other sources, on litigants’ perceptions of fairness, satisfaction, savings in time and cost, and the appropriateness of ADR in light of the high number of disputes with nonmonetary stakes.

RAND reported that lawyers in nine out of ten cases felt the mediation or ENE process was fair⁶. In three out of four of the mediation districts studied (the other districts being ENE programs, including the EDNY) a greater percentage of litigants from mediation cases expressed satisfaction than did litigants from comparison cases⁷. A substantial majority of litigants and their counsel felt that the ADR programs were worthwhile in general, worthwhile for their own cases, and that they should be continued⁸. Litigants responding to the question of whether it was appropriate to attempt ENE in their case unanimously answered in the affirmative ⁹.

Further evidence of party satisfaction is found in responses gathered by RAND, reporting that 81% of attorneys in the EDNY ENE cases were satisfied¹⁰ with the outcome of their case as opposed to 64% of attorneys reporting satisfaction with the outcome in the comparison group¹¹. Again, 8% of attorneys in the EDNY ENE cases reported being dissatisfied¹² with the outcome of their case, as opposed to 20% reporting dissatisfaction with outcome in the comparison cases¹³. This is tracked, although with heavier weighting in the dissatisfaction categories, by litigants’ responses. 44% of the litigants in the EDNY ENE cases reported being satisfied with the outcome of those cases, as opposed to a 21% rate of satisfaction with case outcome reported by litigants in the comparison cases. Consistently, 51% of the litigants in the EDNY ENE cases reported being dissatisfied with the outcome of their cases, as compared to 72% of litigants reporting dissatisfaction with case outcome in the comparison group¹⁴.

These findings support the Advisory Group’s own findings of party satisfaction¹⁵.

With a resolution rate of greater than 50% of cases in the EDNY’s ENE program, no complex study is needed to show that the settlement of these cases in the relatively short time spent in ADR has saved the parties time and cost. RAND’s findings on time on the EDNY program further, though somewhat blandly, support this intuition. EDNY comparison group cases (i.e., cases not in the ADR program) took two months longer to disposition than did cases in the ADR program¹⁶.

Lawyers’ opinions on ADR’s effect on time to disposition in the EDNY programs shows a significant belief that ADR sped matters to completion. 45% of lawyers surveyed believed ADR decreased time to disposition, as opposed to 17% finding an increase, with 38% showing no effect at all¹⁷. Somewhat surprisingly, the EDNY statistics show that litigants, too, saved substantially in their own time spent on matters that went to ADR, as compared with those in the non-ADR comparison group: comparison group litigants reported a median figure two and a half times as large as those in the ADR group, and a mean figure nearly four times as large¹⁸.

RAND’s figures show that the mean average of the total fees and costs per litigant in the EDNY ADR program was approximately $13,300, as opposed to the total fees and costs per litigant in the EDNY comparison group of $34,200!¹⁹ This seems to coincide with RAND’s finding that a significantly larger number of ADR cases in the EDNY (13% more) were terminated by dismissal than those in the comparison group, more of which were resolved by trial or summary disposition²⁰. These data appear to support lawyers’ perceptions that ADR in the EDNY expedited resolution and reduced costs²¹.

One of the appealing features of ADR is that it offers disputants a variety of creative options and remedies for resolving their dispute that might not be available in Court. Litigant Responses in the two Neutral Evaluation Districts studied by RAND show that 51.6% of all litigants believed that there were nonmonetary stakes in their case. 30.6% reported a nonmonetary substantive agreement between the parties, and 3.5% reported a nonmonetary order by the court²². This high degree of nonmonetary issues, and nonmonetary means for resolution, shows further reason for making the ADR process available to parties in the EDNY.

A number of the NYCLA ADR Committee members serve as neutrals on the EDNY panel. Their experience, as well as that of litigators who have engaged in ENE or mediation in the EDNY supports continuation, and increased commitment to, the EDNY ADR program. While this evidence is anecdotal, the consistently positive things heard or experienced by members of the ADR Committee support the conclusion that ADR does reduces time and expense, and affords the parties a fair and satisfying process. Neutrals on the ADR Committee, both out of the EDNY program and in other court-annexed programs, such as the SDNY program or the ADR program in the Commercial Division of Supreme New York, frequently report receiving favorable comments and letters of thanks from participants in ADR processes - mediation or ENE - in which they served as neutrals. These expressions of gratitude and the satisfaction of the neutrals themselves confirm that ADR is a process worth cultivating.

The experience of NYCLA ADR Committee members supports the Advisory Group’s findings that the success of mediation and neutral evaluation extends beyond settlements or partial settlements reached at the ADR session. The sessions’ effects have extended to subsequent full or partial settlements effected by such benefits stemming from the ADR process as a narrowing of issues, agreement on discovery and briefing schedules, decrease in hostility and increased flow of communications. Among the recognized benefits of ADR confirmed by the experience of Committee members are its informality and higher level of party participation, including the opportunity this process affords parties both to express their feelings related to the dispute and to explore their underlying needs and interests.

As the Advisory Group is likely to be charged with review and continuing assessment of ADR in the EDNY, the NYCLA ADR Committee would like to suggest a different paradigm for evaluation of the success of ADR programs, other than simply on the basis of time and cost. Future studies of a mediation program should directly take into account the essential elements of the process and seek to determine whether these elements were present and functioned as they should. Thus, e.g., for mediation, there should be inquiry on such issues as: whether the mediator was effective in facilitating communication between the parties; whether the mediator encouraged parties to understand one another’s perspectives; whether the mediator effectively restated parties positions, modeling effective communication methods; whether the parties felt that the mediator helped them explore their underlying needs and interests; whether the mediator helped the parties assess their best and worst alternatives to a negotiated settlement; and whether the mediator helped the parties explore options for resolving the dispute. Assessment of ADR in its own terms is more likely to enable all parties concerned – users, neutrals and administrators – to determine how the process is working and how it can be refined. Of course, any such inquiry must be undertaken in a manner that would preserve the privacy and confidentiality of the process and would not discourage the pro bono neutrals from continuing their efforts on the EDNY panel.

II. More Resources and Cases Should be Committed to EDNY Process

In light of the value of ADR as discussed above, the NYCLA ADR Committee agrees with the Advisory Group’s decision to continue the ADR program beyond the sunset of the CJRA. Not only should the program be continued, but the NYCLA ADR Committee strongly recommends additional commitment of resources - for personnel, space and training - to the program, and a substantial increase in the number of cases sent into the ADR process.

Again, support for an increase in resources and judicial commitment to ADR can be found in data gathered by RAND. RAND reported 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 cost²³ and lowest total annual cost²⁴ 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 panel²⁵. By contrast, the programs with the highest FTE personnel annual cost²⁶ and highest total annual cost²⁷ -- the SDNY and Southern District of California ("SDCA") -- had a lower per case cost²⁸ than the EDNY²⁹. 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 program³⁰. 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 cases³¹ but also of sufficient resources in order to achieve maximum efficiency and provide the greatest service to cases pending in the EDNY.

Accordingly, the NYCLA ADR Committee recommends an increased commitment of resources and cases to the ADR program in the EDNY. Increasing the number of referred cases obviously requires that more judicial officers choose to make such referrals. We believe that, to some extent, this will occur with the passage of time as the court's experience with mediation and neutral evaluation increases. However, we also believe that the bar has the responsibility to educate non-participating judges about the benefits of these forms of ADR. This can be achieved by bar associations such as NYCLA reaching out to judges or representatives of the court in an effort to establish dialogue on the subject. To this end, we offer the services of this Committee, if we can assist in this process.

To aid in increasing the volume of cases in ADR, we endorse the Advisory Group's recommendation that the Eastern District consider adopting a procedure, like that in the Southern District, of authorizing the ADR Administrator to select approximately one out of every twenty facially appropriate cases from the court's docket to recommend for referral. The ultimate referral decision, of course, will be the judge's. In addition, we would encourage implementation of the Advisory Group’s suggestion to encourage individual judges to discuss with the parties, at the Rule 16(b) pre-trial conference, a future ADR referral, taking into consideration counsels' assessment of the discovery or motion practice, if any, that should first be undertaken.

In addition to enhancing the judiciary’s understanding of the benefits available through ADR, we would strongly support this Advisory Group’s recommendation for more training of neutrals. We would encourage follow-up sessions in which the neutrals are able to share experiences and techniques not only because these supplement the neutrals’ initial training but also because they can be useful opportunities for decompression and mutual encouragement for the members this pro bono panel.

To enhance the effectiveness of the ADR process, we recommend that neutrals be authorized to require party attendance at, at least, the initial ADR session. This can be effected by including a requirement of party attendance in every judicial order of reference to ADR, leaving the neutral with authority to excuse attendance by parties. We recognize that mediation, in particular, is a consensual process built upon trust and good will, and that coercion of any kind is contrary to the fundamental principles of this process. Nevertheless, as this is already a court-annexed process where the parties are subject to other orders, the benefit of making sure that the necessary parties have attended the process outweighs the inconsistency of ordering them to the table. Without the presence of the party with genuine authority, the magic of mediation - open communication, exploration of interests and options, and the transformation of party perspectives - is stifled. Neutrals should be trained to exercise this limited authority gingerly, with minimal fanfare, heightened sensitivity and discretion; yet the authority should be available to them by default, through the mechanism of a judicial order. We might add that where mediation is not binding absent a consensual agreement, and where attendance at ADR is not compulsory beyond the first session, the coercive element involved in requiring party attendance is relatively minimal.

While we agree with the Advisory Group that mediation is the process to emphasize in this ADR program, we believe there remains a place for ENE in this program. We would recommend leaving the option of using ENE to the parties, for their selection when the matter is initially sent to ADR, and might keep this option open even after a mediation session has commenced, although a substantial number of ADR professionals would require a second neutral.³²

We also heartily endorse the Advisory Group's recommendations of various administrative controls to track each referred case to insure that the referral does not inappropriately lengthen the life of the litigation. A modest increase in personnel assigned to the ADR Administrator would be necessary effectively to implement the administrative work entailed in this proposal.

The NYCLA ADR Committee respectfully recommends that the Advisory Group consider the following actions, in light of the success of the EDNY ADR program to date:

Increase the volume of cases in the ADR program through encouraging more judges to send more cases to ADR;

Increase the volume of cases in ADR through permitting the ADR Administrator to assign cases to ADR;

Encourage consideration of ADR at 16(b) conferences;

Commit additional resources to enhance and support ADR personnel currently in the office of the ADR Administrator;

Commit greater resources to training and neutral support groups;

Have judicial orders of reference direct party attendance at ADR sessions;

Maintain a diversified selection of ADR processes, at the parties option, including ENE; and

Enhance systems for ADR tracking, administrative controls and post-session statistical analysis.

Respectfully submitted,

Simeon H. Baum, Chair
Committee on Arbitration and ADR

Sub-Committee Chair:
Amy Rothstein

1. The Comments contained herein represent the position of the NYCLA ADR Committee and do not necessarily represent the position of NYCLA, its Board of Directors or its general members.