Roundtable: ADR Programs - What To Look For When Selecting A Neutral And Measuring Results

Friday, August 1, 2008 - 01:00

Editor: What should corporate counsel look for when selecting a neutral?

Dreier: Experience . The mediator should have a proven track record aiding parties to settle matters similar to yours. Also, inquire concerning any special expertise required for the subject matter in a particular case. Remember that an adversary's respect for the mediator can facilitate a settlement. Arbitrators should additionally have a reputation for fairness, decisiveness and cost cutting.

Pre-vetting . Check that the neutral is accepted by some recognized ADR organizations, as this can save time-consuming inquiries.

Compatibility with Corporate Goals . The neutral's techniques should not leave the adverse party - possibly a continuing or potential customer, supplier, or employee - harboring ill will towards your company.

Ingenuity. Find a mediator with the ability to formulate outside-the-box solutions. Often, non-cash elements can satisfy both parties.

Brand Protection . When the issue involves an attack on the company's product or public image, the neutral should take care that the image is not tarnished.

Decision Issues . The mediator must be familiar with and be willing to work within the corporate decision-making structure and be flexible with scheduling and adjournments to permit decision makers to analyze proposals. An arbitrator should render clear, speedy and reasoned decisions.

Meanor : If a case is technically complicated, corporate counsel should seek a neutral with qualifications in the subject matter involved. If the case also contains issues of more than elementary law, then a three-neutral panel should be considered with at least one of the neutrals a lawyer.

Editor: How should corporate counsel measure the results of their client's ADR program?

Casey : There is no absolute quantitative measure by which corporate counsel can gauge the effectiveness of an ADR program. Reducing litigation resolution risks and costs, reducing outside counsel fees and in-house resources expended are all variables that float independently based on external factors over which a corporation may have little or no control. Corporate counsel will be well served by considering the ability (through screens or early case assessments) to direct the dispute to the best dispute resolution modality (mediation, arbitration, litigation, etc.). She will witness the positive results (relationships preserved, innovative solutions fashioned, internal clients satisfied) that are achieved through ADR. In essence, the measure of an effective program is qualitative, rather than quantitative. Of course, corporate counsel will be able to see a marked reduction in time and money devoted to defending claims against the company. The main marker of an effective program, however, will be the preservation of relationships that would be destroyed in no-holds-barred litigation and the development of creative solutions to problems. Moreover, the feedback that corporate counsel receive from their constituents will be an expression of those constituents' satisfaction with the company's ADR policy and, ultimately, the most effective measure of its ADR program.

Dreier : Overall cost benefit. To assess a comprehensive ADR program, your company should measure the total direct and indirect costs of mediation versus arbitration or litigation, and of arbitration versus litigation.

Reduce strain on corporate personnel . Mediation or arbitration should substantially reduce the lost personnel time, attorneys' fees, expert fees, and other discovery costs, as well as the anxiety of corporate personnel. Verify that your mediator or arbitrator is substantially reducing discovery and accelerating the decision-making process.

Good will . Withdrawing disputes from a litigation mode should help the company preserve customer, supplier or personnel relationships. Check that your mediator or arbitrator is attuned to this process. You can achieve equitable results while minimizing the destruction of relationships.

Meanor: Clients use arbitrations primarily for privacy, economy and efficiency. Arbitrations should be swifter than litigation. Even paying a neutral for his or her services should not lead to an arbitration that even approaches the cost of litigation. Is discovery kept to a minimum and only allowed to the extent that a fair hearing is ensured? It goes without saying that an arbitration should be kept private unless, unfortunately, there happens to be a judicial challenge that is reported.

Rauer: There is no single measure of effectiveness for a given DR program. The interplay of multiple factors gauges effectiveness. Of prime import should be party perception (and, of course, existence) of complete neutrality and an unbiased process. The key is credibility; all participants must believe in the DR process itself, the chosen forum, and the competence and ethics of their neutral roster. Even should they disagree with the specific outcome (e.g., an arbitral decision failing to award the relief sought), they should retain confidence in the process, their ability to have fairly and accurately presented the facts of their position and at least understand the rationale and basis for the ultimate determination. In a mediation or conciliation setting, often parties may not reach agreement upon all issues in dispute, but may still feel positive about the process, trust in the forum and recognize potential progress that may have been achieved. Simply stated, it's not just about the resolution rate (which itself is not always a definitively measurable statistic); there are myriad factors that must be considered when assessing such figures. This is not to imply that a mediation program with a 20 percent resolution rate is without flaws; pragmatically, such a statistic would certainly warrant close scrutiny and assessment of the neutrals and process employed. Statistics, however, are not the exclusive measuring stick and not necessarily indicative of the true success of a DR program. While I am certainly proud that our New York Better Business Bureau (BBB) has long maintained quite a notable resolution rate, this is but one of many factors that we must continually monitor as we reassess our own effectiveness and assistance to the consumer-business community. We will seek and internally assess party feedback following the close of a hearing, continue to closely track the quality of our neutral roster (providing retraining, if necessary) and monitor our internal structure and policies to ensure optimal efficiency. In our commercial setting, where specifically quantifiable settlements are the norm, it's heartening to assist parties in achieving mutually acceptable resolution and often preserving - and, at times, even enhancing - consumer-business (or business-to-business) relationships in the process. This is bolstered by a streamlined process, limited time investment for the parties, belief in our neutrality and the quality of our DR services, and a consistent willingness of our parties to participate in good faith. Successful programs are able to effectively combine all such factors and instill such confidence; the results naturally follow. Bottom line: It's not merely the resolution rate, but how you achieve it, how parties consistently perceive the fairness, expedience and organization of the program - and the attendant competence of the neutral roster, and whether they would use or recommend such services again.

Rosengard : One of the main advantages of ADR is the parties' ability to select an unbiased neutral - perhaps with relevant legal, industry and subject matter expertise - to either decide the dispute (e.g., binding arbitration) or help the parties resolve their dispute (e.g., mediation). The importance of selecting a good neutral cannot be overstated; the quality of the neutral may be the single most important factor dictating the perceived or actual success of the proceeding. Many organizations, including private ADR providers, bar associations, and others, provide lists of qualified neutrals as well as lists of suggested selection criteria. A partial list of criteria to consider when selecting a neutral includes: (1) training and experience in the ADR proceeding; (2) stature and record (e.g., the number of prior mediations conducted and their outcomes); (3) availability and lack of conflict; (4) favorable references; (5) costs and fee structure; and (6) personal characteristics such as demeanor, discretion and personality (e.g., if there are difficult personalities involved, a strong mediator who can be assertive without offending might be selected). Although these criteria apply regardless of the proceeding, additional criteria are specific to the ADR type. Thus, the mediator's style (evaluative, facilitative, transformative) and the arbitrator's approach to discovery (liberal versus restricted) may be important criteria.