In recent years, as courts have become more congested and business dealings have grown more complex, mediation and arbitration have grown in both prevalence and popularity as alternatives for civil litigation, both locally and across the country. In the interest of settling conflicts quickly and efficiently, more judges in Kentucky are encouraging—and sometimes requiring—parties to resolve their civil disputes outside of the courtroom.
Perry M. Bentley
“My experience is that not even 5 percent of civil actions filed are taken all the way to trial,” said Perry M. Bentley, a member at Stoll Keenon Ogden. “That means the other 95 percent of civil suits are settled by non-judicial methods—most being private negotiation between the parties, settlement conferences with the court and/or negotiation using a mediator.”
With a few exceptions, arbitration and mediation are generally favored by the courts, Bentley said, and judges in Fayette Circuit Court can often order parties to mediation prior to setting a trial date, even if neither party wants it.
“During litigation, judges have also begun to recognize that cases, while presenting valid legal arguments, don’t necessarily require a legal interpretation of the law that a judge provides, to reach a resolution,” said Angela C. Evans, an associate at McBrayer. “In an effort to avoid rulings being overturned and relitigating cases, judges are wisely encouraging mediation and requiring parties to actively work to resolve matters, instead of simply relying on a judge to determine a ‘winner.’”
Weighing the Advantages
Angela C. Evans
When compared with the time and expense of a protracted legal battle, bringing in a third party to reach a mutually acceptable agreement can be an attractive option. Arbitration refers to the process in which one or more outside parties, or arbitrators, are brought in to resolve a dispute through a legally binding decision. Through mediation, the involved parties seek to arrive at a mutually agreeable resolution with the help of a third-party mediator.
“Clients and attorneys are becoming more sensitive to the high cost of litigation and are much more willing to engage in mediation to reduce its financial impact,” Evans said.
And mediation can also bring parties to the table for more open and forthright negotiation to settle their differences.
“Unlike judges, mediators do not make any decisions or take positions on a case, reducing the defensiveness people inherently feel when being judged,” Evans said. “As a resolution-focused activity, mediation requires parties to be more forthcoming about the strengths and weaknesses in their case than they otherwise might be when arguing before the court.”
Effective mediation also means that the parties can often get back to business more quickly, said Grahmn Morgan, partner at Dinsmore & Shohl and co-chair of the firm’s commercial litigation practice. “A skilled mediator can help parties recognize the value in working their problems out as opposed to protracted litigation, which can be a drain on the company financially, in the form of legal fees,” Morgan said. “[Litigation] can also often require key employees to devote their time and attention to those matters, instead of the business matters that they were hired to do.”
Mediation can also allow the parties to be more involved in crafting and accepting the eventual resolution.
Clarke Keller
“A mediation gives the parties the primary role in constructing a settlement, and while it demands compromise, it avoids the risk of an adverse jury verdict,” said Clarke Keller of Stites & Harbison. “I have found that most businesses have some aversion to risk and find value in a compromise settlement to their dispute.”
“The courts are full. There’s a lot of litigation happening, but I also think there’s a practical reality for judges and lawyers,” said Morgan. “A skilled mediator can help parties see the light in whether to try to resolve this or leave it in the hands of judges or juries. The mediators we have in Lexington and surrounding areas are all very good at that.”
In addition to pursuing mediation, many businesses are also relying more on arbitration to settle their legal differences. Unlike mediation, arbitration is typically built into business contracts on the front end, with both parties agreeing to abide by the arbiter’s binding decision. But while a resolution will be reached, the process can still be costly for companies.
“Discovery is usually much more limited in arbitration, making the arbitration process less expensive,” Bentley said. “That said, arbitration can be expensive because, unlike civil litigation where the judges are public employees, the parties must pay the arbitrators.”
“The actual cost of arbitration varies and is often based on the length of the proceeding,” Evans said. “Many people believe arbitration favors the drafter of the contract requiring arbitration, usually a corporation. Therefore, the opposing party will often attempt to litigate the actual agreement requiring arbitration. Obviously, such challenges will result in additional legal fees beyond the arbitration process, so cost efficiency is often lost.”
Investing in Alternatives
As the demand for mediation grows, local law firms report that they are emphasizing and expanding their services in helping clients to settle their cases, providing mediation training to their attorneys, counseling clients on the pros and cons and including more experienced mediators and arbitrators on their teams.
Calvin R. Fulkerson
“We’ve been devoting marketing efforts to positioning mediation as a premiere service offered by the firm,” said Calvin R. Fulkerson, a member at McBrayer. “From print advertising to digital content marketing and blogs, we are working to make sure our clientele and potential clients understand that we have experienced and capable mediators available to resolve disputes in different venues and focus areas.”
While no licensing or special certification is required for mediators, most are generally licensed attorneys with some level of specialized training in mediation.
“I always think the best mediators are the ones with the most experience, the ones that have had the opportunity to litigate cases in the past—and then, of course, the mediators who have had the opportunity to see a bunch of cases come across their desk and know how to get the parties unstuck from their positions,” Morgan said. “Sometimes parties can get their heels dug in a little bit, and the best mediators are those that communicate well and that understand the complexities of litigation, along with the complexities of running a business.”
Good mediators are experienced, Keller said, and they have a firm grasp of the subject matter for the case. They also know how to negotiate and persevere.
“Although the art of persuasion is a common denominator for an advocate in both a mediation and a trial, an advocate needs to approach a mediation with a more nuanced and less adversarial presentation,” Keller said. Whereas the goal of an advocate at trial is to persuade the jury to side with his or her client, an advocate best serves his or her client at mediation by combining both the art of persuasion and of negotiation.”
Clients seeking to resolve their legal disputes should make sure the legal counsel they select is both skilled and open to mediation options, local attorneys said.
David J. Guarnieri
“Clients should be looking for willingness to mediate in a legal counsel. The legal process otherwise will almost certainly take longer and generate a larger bill, which can be more in the attorney’s best interest than the client’s,” said David J. Guarnieri, a member at McBrayer. “Clients should be looking for legal counsel who is focused on the absolute best outcome for the client and who has the experience to give credible, candid advice on what that outcome looks like and how it is achieved.”
And when clients are weighing their mediation options, timing can make all the difference, Morgan said.
“If there’s a dispute that arises, they are going to want to work with their counsel to decide: Is pre-suit mediation right for this particular case? Is it better to have some litigation, where you can have some discovery and learn a little about the other side’s position, and then mediate? To me, timing is critical,” Morgan said.
Local attorneys also note that working with an able and knowledgeable mediator doesn’t necessarily mean that anyone will be particularly pleased with the outcome.
Some say that a good mediation is where everyone leaves the mediation happy. I have not often found that to be the case,” Bentley said. “One party will have paid more than they thought they would before the mediation started, and the other party will have taken less than they wanted before the mediation began. But if everyone is unhappy, then it is likely that the final settlement was ultimately fair to all the parties involved.”