Is It Ever Too Early to Mediate?

Published: October 2022
Written by: Al LaSorte, Jr.

Mediation is mandatory before trial in nearly all courts. This makes sense, since mediation so often results in settlement, negating the need for a trial.

But if you wait until just before trial to meditate, your clients will have already spent many tens, or hundreds, of thousands of dollars on attorneys fees and costs, a potentially insurmountable hurdle to settlement.  This is particularly true in smaller cases, where the fees and costs are frequently higher in proportion to the amount in controversy.

This is why I’m a big proponent of early mediation.  Get in before all that pre-trial money is spent on discovery, experts, etc. – the earlier the better. The longer you put mediation off, the higher the expenses will be for all parties, and correspondingly, the farther apart they will be once they finally meet to search for a settlement number everyone can live with.

But early mediation does have one big drawback: the lack of meaningful discovery beforehand.  Discovery is what most of all that pre-trial money buys. Less of it before mediation means the parties’ costs may still be low at that point.  This is good.  But without discovery, the parties will know a lot less about the other side’s case. And fear of the unknown hurts settlement prospects. This is bad!

So, when is it too early to mediate?  When are your clients better off spending some pre-trial dollars to learn about their case before sitting down to mediate? Here’s my lawyerly answer – “It depends.  Every case is different.”

Now, here’s my mediator answer (and I like to think I’m probably a better mediator than I was a lawyer!): “It’s never too early, if the attorneys can cooperate to educate the parties by voluntary exchange of documents and other discovery.” 

I’m not proposing handing over any evidence a judge is likely to sustain your objections to down the road.  But we all usually have a general idea of the types, and extent, of discovery the court is likely to permit.  Agree with opposing counsel to have both sides exchange that evidence, voluntarily, right at the outset of the dispute.  Then proceed to an early mediation and settle the case.

For instance, in a real estate deposit dispute, agree up front to buyer and seller exchanging all text messages and emails between them and the brokers.  This will be discoverable eventually anyway. Getting it early (and inexpensively) gives both sides a rough idea as to how that testimony is likely to play out at trial, even before lengthy (expensive) depositions are taken.  It’s not perfect, but it helps lessen clients’ fear of the unknown, which is the enemy of successful mediation.  Do everything you can to reduce that fear, right up front, on both sides.  Then go right to mediation, and hurry up, before everybody’s fees and costs go up!

Note – some types of cases require pre-suit mediation (real estate deposit disputes and condominium membership disputes, for example), giving the parties no choice but to mediate before any meaningful discovery can be compelled from their opponents.  But here, too, counsel can increase the chances for mediation success through voluntary exchanges of documents and other evidence.

In some cases, particularly ones with no love lost between the parties, clients may not be willing to turn anything over to the opposition without a court ordering them to.  And there truly are some cases in which the parties won’t be satisfied that their opposition isn’t hiding the ball until having spent large sums to search in every nook and cranny. 

Such cases don’t generally lend themselves to early mediation.  If you size up either side as being so intent on seeing their day in court that early mediation seems futile, by all means save your clients the expense of mediation and dive right in on discovery.   

But such cases are pretty rare. And they are usually the most difficult cases to settle at a later mediation as well. So don’t be discouraged if early mediation is unsuccessful. Go try your case. 

Some lawyers are reluctant to suggest early mediation for fear of making their clients look too eager to settle. Good communication between opposing counsel is key to reducing such concerns. The lawyers can jointly recommend early mediation, rather than it coming from one side or the other, thereby insulating both parties from this concern.  

Bottom line, early mediation is appropriate in most cases. Weed out the hardcore parties hell-bent on having their day in court, and early mediate all the rest. If you and opposing counsel do everything you can to ensure all parties have the information they need, and early mediation will be the way to go.  


For additional ADR tips and resources, go to https://www.palmbeachbar.org/alternative-dispute-resolution-committee/

After a long career at Shutts & Bowen LLP as a commercial litigator specializing in real estate and general business cases, Mr. LaSorte now acts exclusively as mediator and expert witness through his own firm, Alfred A. LaSorte, Jr., P.A. d/b/a LaSorte Mediation.  (www.LaSorteMediation.com).  Mr. LaSorte can be reached at (561) 286-7994 and Al@LaSorteMediation.com.

 

Be a Problem Solver – Plug the Drain

Published: September 2022
Author: Debra A. Jenks, Esq.

This article is inspired by my fellow ADR Committee member and Mediator, Alfred A. LaSorte, Jr., and his prior advice “To Succeed in Mediation, Focus on the Numbers.” 

I do not know about you, but I went to law school to become a lawyer so I would NOT have to work with numbers.  I did not much relate to math – algebra, calculus, differential equations, geometry, trigonometry – and could not wait to get those high school and college classes over with.  The most troublesome of my studies was that awful high school math class (I think it was algebra) and the quest to calculate the rate at which, or volume of, water flowing out of the bath tub given the rate at which, or volume of, water flowing into the bath tub.  To me the cure was always simple:  Put the stopper in the drain and turn the faucet off.  Problem solved!  So much for that career in civil engineering.

As lawyers representing parties in disputes, lawsuits, or arbitrations we should be striving to resolve their problems as efficiently and effectively as possible. While many disputes may not involve money, most do.  You may discuss or debate theoretical results or probable outcomes.  But the fact remains that the resolution will have a finite financial value to it. What that number is can be left to strangers – Judges, Jurors, or Arbitrators – to decide, or can be determined by the parties in negotiated resolutions through qualified Mediators. 

Clients who are not professional litigants may have very limited encounters with our adversarial legal system for civil actions.  They most likely are not in a position to assess what should be a reasonable outcome.  They generally cannot fund their disputes on any side of the “versus” case caption with an open checkbook.  For many, engaging the services of a lawyer is the choice of last resort. 

Frankly, I believe that leaving the resolution of most civil disputes over money in the hands of strangers is the least desirable route.  I say this with no disrespect whatsoever to our fabulous Jurists, Jurors, and Arbitrators of Palm Beach County but with a realistic view of how unpredictable the outcome of the dispute could be months or years after the fact.  While your clients ultimately may be required to mediate a dispute under statutes, court rules, or contracts containing mandatory dispute resolution procedures, there is no reason to delay in the planning for mediation with the goal of making that mediation successful, even if you mediate the matter more than once.

Picking the right Mediator is obviously critical.  Talk to opposing counsel and see if you can agree.  Talk to the potential Mediator and ask for references if you feel the need.  Depending on the complexity of the matter, you may want a Mediator with subject matter expertise.  If your client is a “handful” you may want a Mediator whose temperament is a good fit.  Consider cultural or affinity connections.  If your client representative is an insurance adjuster or corporate type who is not emotionally engaged, you may want a Mediator who can say (and I do just LOVE this part with an indescribable sense of glee), “well, when I was on the Bench here is how I ruled on those arguments.”  There are many great Mediators available so engage one that fits the needs of the case.

As Al pointed out, the numbers are a critical component of money-based claims and therefore the mediation process.  How will you prove your client’s damages?  Can these damages be awarded by law or contract?  How much will your client spend to find out if damages will be awarded at all?  How much will your client spend to defend?  Can your client be awarded or required to pay attorneys’ fees and costs?  Can you collect on a judgment or award for damages?  If you can collect, how long will that take and how much more will it cost?  The Mediator will ask these questions.  Having the answers will go a long way toward bringing the settlement value of the matter into focus. 

Instead of leaving the faucet running while letting the water drain away along with your clients’ money, plug the bath tub and stop the unnecessary drain of your clients’ resources.

 

P.S.  Follow this link to the Florida Courts.org site for some great client focused resources regarding Mediation in Florida

https://www.flcourts.org/Resources-Services/Alternative-Dispute-Resolution/Mediation-in-Florida

The views presented here are that of the author, Debra A. Jenks, Esq., and not of her clients or any organizations with which she is affiliated.  After earning her Juris Doctorate, she ultimately focused her practice in the financial services industry dealing with securities litigation, arbitration, regulation, and registration.  She is an active practitioner in the Alternative Dispute Resolution arbitration arena and sits as an Arbitrator.  As it turns out, she spends a lot of time working with numbers and statistical data.

 

Debra A. Jenks, Esq.

Jenks & Harvey LLP

561-346-9854

djenks@jenksharveylaw.com

www.jenksharveylaw.com

Arbitration Case Law Update

Published: July/August 2022
Author: Donna Greenspan Solomon

Badgerow v. Walters, 142 S. Ct. 1310 (2022).  Employee terminated as financial advisor sought in state court to vacate FINRA arbitration award.  After removal to federal court, the district court denied employee’s motion to remand and granted employer’s application to confirm award.  Employee appealed and the Fifth Circuit affirmed.  The US Supreme Court granted certiorari and a nearly unanimous court reversed on jurisdictional grounds.  The Court explained that 9 USC § 4 of the Federal Arbitration Act (“FAA”) instructs federal courts to “look through” a motion to compel arbitration to the underlying claims and controversy.  Conversely, sections 9 and 10, which pertain to motions to confirm or vacate an award, do not provide for this “look-through” approach to jurisdiction.

Garcia v. Church of Scientology Flag Serv. Org., Inc., 18-13452, 2021 WL 5074465, at *1 (11th Cir. Nov. 2, 2021).  In dispute between two former members of Church of Scientology and church entities, the district court compelled arbitration before a panel of Scientologist arbitrators and subsequently denied the former members’ motion to vacate the award.   The Eleventh Circuit affirmed, finding that the former Church members had “agreed to a method of arbitration with inherent partiality and cannot now seek to vacate that award based on that very partiality.”  Justice Rosenbaum dissented, stating:

If a party to the arbitration can create the rules . . . as the arbitration progresses, it enjoys an insurmountable advantage that effectively guarantees its victory.  That’s not an arbitration; it’s just plain arbitrary. .  . and we should not stamp it with the imprimatur of the federal courts.

Juarez v. Drivetime Car Sales Co., LLC, 21-11972-CC, 2021 WL 5984924, at *1 (11th Cir. Nov. 29, 2021).  Federal court does not allow for an appeal from interlocutory order compelling arbitration; compare with Fla. R. App. P. 9.130(3)(c)(iv) (allowing nonfinal review).

Airbnb, Inc. v. Doe, 47 Fla. L. Weekly S100 (Fla. Mar. 31, 2022).  Vacationing couple sued AirBnb and unit owner after learning that owner had secretly recorded their stay.  AirBnb moved to compel arbitration pursuant to the clickwrap agreement that the couple executed in creating their AirBnb account.  The trial court granted the motion but the Second District reversed.  The Supreme Court quashed, finding that where an agreement incorporates a set of arbitral rules, such as the AAA Rules, those rules become part of the agreement.  And where those rules specifically empower the arbitrator to resolve questions of arbitrability, incorporation of the rules is sufficient to clearly and unmistakably evidence the parties’ intent to empower an arbitrator to resolve questions of arbitrability.

Hayslip v. U.S. Home Corp., SC19-1371, 2022 WL 247073, at *1 (Fla. Jan. 27, 2022).  The Florida Supreme Court answered in the affirmative to the following rephrased certified question:

DOES A DEED COVENANT REQUIRING THE ARBITRATION OF ANY DISPUTE ARISING FROM A CONSTRUCTION DEFECT RUN WITH THE LAND, SUCH THAT IT IS BINDING UPON A SUBSEQUENT PURCHASER OF THE REAL ESTATE WHO WAS NOT A PARTY TO THE DEED?

Palm Court NH, L.L.C. v. Dowe, 47 Fla. L. Weekly D108 (Fla. 4th DCA Jan. 5, 2022). FAA, rather than Florida Arbitration Code (“FAC”), governed arbitration of wrongful death claim against nursing home where resident’s care was paid in part by Medicare, thus involving interstate commerce.

BREA 3-2 LLC v. Hagshama Florida 8 Sarasota, LLC, 327 So. 3d 926 (Fla. 3d DCA 2021).  A “narrow” agreement to arbitrate claims or controversies “arising out of” a contract limits arbitration to those claims with a direct relationship to the contract’s terms and provisions.  In contrast, a “broad” agreement to arbitrate claims or controversies “arising out of or relating to” the contract broadens the scope of arbitration to include claims having a “significant relationship” to the contract, whether founded in tort or contract law.

Lennar Homes, LLC v. Martinique at Oasis Neighborhood Ass’n, Inc., 332 So. 3d 1054 (Fla. 3d DCA 2021).  Homeowner association’s right to proceed in its representative capacity in dispute with developer required compliance with individual members’ agreements to arbitrate.

Gambrel v. Sampson, 330 So. 3d 114 (Fla. 2d DCA 2021).  Where parties agreed to nonbinding arbitration pursuant to section 44.103, Florida Statutes, trial court was required to enter judgment on arbitration award after no party requested trial de novo within statutory 20-day deadline, even though court found paralegal’s calendaring mistake was due to an “excusable and reasonable misunderstanding.”


Donna Greenspan Solomon was the first attorney certified by The Florida Bar as both Business Litigator and Appellate Specialist.  Donna is a Member of the National Academy of Distinguished Neutrals and serves as a Chair on AAA (Commercial Panel) and FINRA arbitrations.  She is also a Certified Circuit, Appellate, and Family Mediator and Florida Supreme Court Qualified Arbitrator.  Donna is also a Member of the Florida Supreme Court Committee on Standard Jury Instructions—Contract and Business Cases.  Donna can be reached at (561) 762-9932 or Donna@SolomonAppeals.com or by visiting www.solomonappeals.com.

Selecting the Right Mediator

Published: June 2022
Author: William J. Cea, Esq.

Pursuant to Rule 10.200 of the Florida Rules for Certified and Court-Appointed Mediators (hereinafter “Rules”), court appointed mediators are mediators selected by the parties or appointed by the court as the mediator in court-ordered mediations. The Rules provide ethical standards of conduct for certified and court-appointed mediators. In my experience, it is the parties who generally select the mediator.

How should the parties select a mediator? Counsel for the parties may look at factors such as availability, professional reputation, subject matter experience, fees and costs, mediation style and the like. Often-times, counsel for the parties may practice in specific areas of the law and have their “go to” mediators that they prefer.

For the most part, the attorneys will circulate a few proposed mediator names and agree on one. I would suggest that counsel take some time to consider whether the proposed mediators are right for the case. While a mediator is not required to have substantive knowledge of the type of case, that is one factor to consider. Other factors that may be more subtle include the mediator’s availability for pre-mediation caucuses, demeanor, and ability to be empathetic, as examples.

On the one hand, the Rules provide that the ultimate decision-making authority rests solely with the parties. On the other hand, the mediator should have the ability to reduce obstacles to communication, assist in the identification of issues and exploration of alternatives, and otherwise act as a facilitator of resolution. For example, as a construction attorney, I may be able to point out impediments to resolution of a case involving alleged defects. It may be the case where parties have expended significant time on liability but not damages. It is helpful to point out potential roadblocks to the attorneys, where possible and without breaching confidentiality, to avoid frustration during mediation. If the defense does not know how much the plaintiff thinks it will take to make repairs, it will create a hurdle to settlement. The Rules permit a mediator to provide information that the mediator is qualified by training or experience to provide, so long as it is consistent with impartiality and preserving self-determination. In other words, impartiality and neutrality are not mutually exclusive with knowledge and experience.

You may want to ask yourself questions, such as: What is the nature of the dispute and who has experience in the area? How much of a factor will demeanor be for the parties? Will the clients benefit from pre-mediation caucus sessions or other conferences to facilitate the process and is the mediator available? Will language or other cultural differences be an issue?

We have all heard attorneys and parties say they want a “strong” or “assertive” mediator, but what does that mean and is that the right approach to selecting a mediator? Perhaps the better question is whether the mediator is the right fit for the case? How will my client feel about the mediator and the process? What are the mediator rates and policies as to minimum fees and/or travel expenses? Does the mediator have the time to commit to parties to the extent necessary?

Another approach is to call prospective mediators to discuss availability and any concerns or priorities that you may have in mind. My presumption is that most mediators would welcome the opportunity to discuss a potential matter, their availability, and what you envision for the process.

The use of alternative dispute resolution procedures is on the rise. Whether mediation is voluntary, required by contract, or court ordered, the pool of qualified mediators has increased along with the demand. My personal bias, if I am allowed to say that, is to locate a mediator that has substantive experience in handling the type of issues and dispute and the availability to commit the time needed to the parties. For the most part these factors weigh more heavily in my mind, however, there are always more unique scenarios where the personality of the parties may require a different type or style of mediator.

The bottom line in my opinion is to expand on the traditional approach of recommending use of the “go to” mediator list and ask some questions, such as those outlined above. You may have a great relationship with a mediator and feel entirely comfortable with the style and costs, but will your client agree?


William J. Cea, Esq. is a Shareholder with Becker & Poliakoff, P.A., and is based in the firm’s West Palm Beach Office. Mr. Cea is a Board Certified Construction Attorney and Certified Circuit Court Mediator. Mr. Cea concentrates his practice in the areas of construction defects litigation, public procurement and mediation. Mr. Cea has lectured for several organizations, on topics such as mediation and construction law, including The Florida Bar, the Florida Association of Public Procurement Officials, Inc., the Construction Owners Association of America, Nova Law School, and the Palm Beach County Bar Association. He may be reached at (561) 820-2888, or via email @ wcea@beckerlawyers.com.

For additional ADR tips and resources, go to https://www.palmbeachbar.org/alternative-dispute-resolution-committee/

I Am a Mediator Because Peace Has a Value

Published: May 2022
Author: Mark Greenberg

12 years ago, I went through a divorce.  It was a long, expensive, and emotionally painful process for both of us. Pamela, my former wife, and I did not hate each other.  We simply were not going to remain married and had a few strong disagreements about how that was going to look moving forward.  Both of us were hurt, worried about our two children, and probably beginning to realize we needed to examine our own shortcomings and how that had contributed to the end of our marriage.  We had to mediate three times, with two different mediators, to settle our case. Finally, we each compromised, signed the settlement agreement, and began to move on with our lives.

Over time our wounds healed, and we made peace with each other.  Without ever expressly saying it (at first), we both acknowledged we had not treated the other person well during the marriage.  Most importantly, we forgave each other.

As we healed, we talked about how the divorce went.  We both realized that we had spent a lot of time, a lot of money, and expended an endless amount of emotion which could have been avoided had we settled earlier.  We realized that the mediator we used for the first two mediations was the wrong person.  She was, and is, a very good mediator, but she was simply the wrong person for our issues and personalities. Finally, when we brought in the right person, that made all the difference. She was able to help us break through the logjams and settle our divorce.  Otherwise, we probably would have ended up in trial, and we certainly would have ended up fighting for a long time after the trial.  That mediator allowed us to break down our barriers and work through the remaining issues to resolve our divorce.  I am not saying it was “amicable”, but rather it laid the foundation for us to become amicable over the next several months.  That mediator therefore provided both a legal benefit in helping us settle, and an emotional benefit for allowing us to recognize where each person was coming from and move forward peacefully over time.  That peace was a huge advantage for our kids, who could at least see us co‑parenting well, even if we were no longer married.

In short, I learned that Peace Has a Value.  The peace that came from the divorce being final, the peace that came from being able to move forward with our lives, and the peace that allowed us to wake up and not have the weight of the case hanging over us every day.  When we left the final mediation, we each of course thought we had given up too much. But over time, we both were happy we had stopped the bleeding and were able to move forward.

It was after that I became certified as a mediator, and that is now all I do.  Mediation is a wonderful way to provide real value to people who come before you, while making a living.  I know that even when people leave a little disappointed in how the case settled, 2 weeks later they are usually very happy to have it off their plate or to have closed that file, and to have moved on with either their lives or to the next case. Attorney’s clients are happy, and that leads to more clients for that attorney.

Financially, we estimate each settled case saves between $200,000.00 and $250,000.00 in legal fees versus going to a jury trial. In 2021, our average mediation cost was $1,500.  $200,000 divided by $1,500 equals $133 saved for every $1 invested. That is a return on investment (“ROI”) of 13,000%. It is the best investment the litigants can make.

I would like to clear up one myth about mediation though.  If a case does not settle, I do not go home, relax, and forget about it as if it never happened.  If I think that case could have settled, I do the same thing I did after I lost a trial or had a big hearing go the wrong way.  I do a complete postmortem on it, thinking about what I could have done differently, how I could have asked different questions, and thinking it through. I do this so I can be better the next time, and most good mediators I have spoken with do the same thing.

Do we spend all weekend preparing for trial?  No.  But we do think through how we could have helped you avoid spending that weekend preparing for trial, and hoping the next time we are able to do that.


Mark Greenberg is the founder of Breakthrough Mediation. He has tried over 100 cases to verdict, representing both Plaintiffs and Defendants. He now mediates cases throughout Florida, saving clients over $25 million dollars in legal expenses during 2021, while helping them find peace in the resolution of contentious disputes. www.btmediation.com

For additional ADR tips and resources go to https://www.palmbeachbar.org/alternative-dispute-resolution-committee/

To Succeed in Mediation, Focus on the Numbers

By: Alfred A. LaSorte, Jr.
Published: April 2022

Litigation is stressful, risky and expensive. A form of civilized combat. Understandably, parties often view litigation, and form expectations as to its outcome, through an emotional lens. They bring all sorts of unhelpful motivations into the mediation room – a desire for revenge perhaps, or a need to prove they were right, or that the other side was wrong, or to prevail as a matter of principle.

Objective compromise, so crucial to successful mediation, requires a different analysis on both sides – one focusing on numbers, not feelings.

An auto accident case about compensation for serious physical injury. A suit between former business partners over profits. A manufacturer’s suit over an unpaid invoice. These cases have one thing in common – the only relief a court can grant is an award of money, not an apology.

At mediation, the plaintiff will rarely ever see an offer as high as their “best day” in court, and a defendant won’t likely see a plaintiff agree to just go away. Mediation is not about “best day” results – it’s about compromise. Objectively analyzing the numbers, on both sides, facilitates this compromise and gets cases settled.

Here’s a simplified example: A plaintiff suing a defendant for $100,000, with a more or less 50% chance of winning. Doing the math, a settlement in the $50,000 range (i.e., 50% of $100,000) should make sense, since that equates to the plaintiff’s odds of winning, and defendant’s odds of losing. (If the odds of winning were 30%, then the $30,000 range would be more realistic.)

I can already hear your objections. “Where’s your crystal ball? Nobody can predict result percentages with any accuracy” and “What about fees and costs? You forgot to factor them in.”

Hey, I did say “simplified” example, remember? And you’re right. Anything can happen at trial. But a case that survives to the point that it’s now in court-ordered mediation has some chance of winning. And no case is such a slam dunk that its chances are 100%. The hard part is reliably determining the range.

After some discovery, most trial lawyers develop a general feel for a case’s chances. Is it 50/50? Better than that? Worse? Do your best to come up with a range.

In my nearly forty years trying cases I had many client conversations where “better than 50/50” or “less than 50/50” chances were discussed. Whatever you conclude, discuss it with your client, whether plaintiff or defendant. And be candid that slam dunks in court don’t exist. Ever.

If your plaintiff/client isn’t willing to discount their “best day” number for the risk of loss, it’s time for a serious discussion about the things that can go wrong in a trial. Let’s face it – few cases have a 90% chance to win or to lose. Or 80%, or even 70%. But clients don’t know this unless you tell them. They all think they’re going to win!

If your defendant/client refuses to pay a single dollar “on principle,” it’s time to explain to them that moral victories are few and far between, and that they are expensive.

Which leads to your other objection – factoring legal fees and costs into the equation. This factor actually makes settlement easier. We commonly mediate cases where the fees on both sides will exceed the amount in dispute if the case doesn’t settle. In my $100,000 example, if the fees will exceed $50,000 on each side, wouldn’t it be crazy not to settle before both sides spend all that money? Everybody “wins” when these $100,000 in extra fees are avoided. (Okay, everybody but the lawyers.)

Even in contingency cases, with a law firm advancing the costs, a well-placed defense settlement proposal exposes the plaintiff to the risk of owing defense fees if they lose. A mediation settlement avoids this risk entirely.

I submit that, as your client’s counsellor, it’s your job to make sure they understand all of this before the mediation begins. How do you persuade them to realistically factor in the risk of loss and their inevitable out-of-pocket costs? It’s not that difficult if you are willing to frankly discuss the case with them.

So talk about risk of losing. About how witnesses forget, or don’t show up. How judges and juries can make mistakes. How there are a hundred things that can go wrong and hurt their case.

Talk about the costs of litigation. Give a frank estimate of the costs through trial. And appeal. Put pencil to paper with your plaintiff/client and estimate the net “dollars in their pocket” from a trial. Or with your defendant/client estimate what a loss will cost them. And do it before mediation starts.

The mediator can help you with this. But it must start with frank discussions with your clients well in advance. A client with unrealistic expectations may not suddenly get realistic once mediation commences.

So do the math with your clients. You will do them a tremendous service if you help them become objective, thereby helping them reach a fair settlement.


For additional ADR tips and resources, go to https://www.palmbeachbar.org/alternative-dispute-resolution-committee/

After a long career at Shutts & Bowen LLP as a commercial litigator specializing in real estate and general business cases, Mr. LaSorte now acts exclusively as mediator and expert witness through his own firm, Alfred A. LaSorte, Jr., P.A. d/b/a LaSorte Mediation. (www.LaSorteMediation.com). Mr. LaSorte can be reached at (561) 286-7994 and Al@LaSorteMediation.com.

Should You Roll the Dice When Selecting A Neutral[1] Arbitrator and Why the Selection Method Matters

By: Daria Pustilnik 
Published: March 2022

We have all been there: an arbitrator looks great on paper but proceeds to dislike your client or make irrational decisions. I arbitrated one client’s identical agreements in two separate proceedings under the same rules and with the same arbitrator. He gave opposite rulings on the same discovery issues. Recently, without any input from the parties, a court appointed a neutral who had made public comments adverse to our position, but the neutral has been fair thus far. Therefore, it sometimes appears that it is easier and cheaper to roll the dice on the arbitrator. However, another school of thought is that the careful selection of an arbitrator is important as it allows the party to retain some control.

Selection vs. unilateral appointment

Agreement of the parties is the most obvious way of arbitrator selection. Otherwise, the basic methods are: (1) selection from a list where the parties strike or rank the arbitrators the institution proposed, and (2) unilateral appointment by the authority (“rolling the dice”).[2]  Widely-used rules use both methods.[3] Generally, U.S.-centric institutions prefer the list selection process, and international institutions and UNCITRAL favor unilateral appointment.[4] Unilateral appointment may save costs because negotiations are minimized, but the downside is the lack of control. If you prefer not to roll the dice, helpful information is available.

Ex parte pre-appointment interviews and considerations in arbitrator selection

The arbitrator’s independence, impartiality, qualifications, willingness to serve, and security measures taken to protect the parties’ data are paramount. These factors either must be disclosed or can be discovered through the institution or pre-appointment interviews. Unless prohibited by the arbitration clause or applicable rules, limited ex parte communications with the arbitrator may be permissible.[5]  These should be relevant to the appointment process and exclude discussions of the merits.[6]  For example, a party may ask whether the arbitrator represented a certain government or party even if they are not in the case, and had past business or professional relationships or current involvement in other arbitrations with the opposing party or counsel.

Other aspects that are harder to discover are also important: efficiency of case management, speed of resolving cases, past discovery rulings, average claim and award amounts, and percentage of pre-award settlements. Services have started to offer reports on arbitrators. As the volume of data increases, these reports will become more useful.

Award enforcement proceedings confirm that arbitrator selection process matters

Inappropriate arbitrator selection may undermine the award. For example, in PoolRe Insurance, the disputes were governed by two contracts, one requiring AAA arbitration, and the other an ICC arbitration with the Director of Insurance in Anguilla selecting the arbitrator. [7] The Director of Financial Services Commission of Anguilla advised that there was no such official and designated the arbitrator acting under the first contract to make the selection.[8] The arbitration proceeded under the AAA rules over objections.[9] The district court vacated the award under both contracts and the Fifth Circuit upheld on two grounds: (1) the arbitrator selection process was not followed, and (2) the arbitrator exceeded his authority by applying AAA instead of the ICC rules.[10] In a footnote, the court addressed the fact that because no Director of Insurance existed in Anguilla, the ICC arbitration clause could not have been followed, and noted that the Federal Arbitration Act allowed a party to ask the district court to appoint the arbitrator.[11] Thus, the proper method of arbitrator selection is critical and mistakes in arbitration clauses can be fixed early.

In sum, there are two schools of thought on arbitrator selection: unilateral appointment by the institution and selection by the parties. Unilateral appointment comes with potential savings but less control. Helpful tools exist for uncovering critical information but failing to follow the proper process will undermine the award. Relatedly, Anguilla is a lovely destination in the Caribbean where rolling the dice may not be too bad.

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Daria Pustilnik is a lawyer with Kobre & Kim, a disputes and investigations firm with offices worldwide. Daria has represented clients in their domestic and cross-border complex commercial disputes in state and federal courts; under the rules of the American Health Lawyers Association, American Arbitration Association, International Centre for Dispute Resolution, and the London Court of International Arbitration; and in arbitration-related litigation, such as arbitration award enforcement cases. Daria is experienced in handling matters involving simultaneous arbitration, bankruptcy, civil and agency proceedings in multiple jurisdictions, such as the U.S., UK, BVI and Russian Federation. Before joining Kobre & Kim, she practiced at Shutts & Bowen LLP, and served as a law clerk for Judges Kenneth A. Marra and James M. Hopkins in the Southern District of Florida. Daria can be reached at daria.pustilnik@kobrekim.com or 347-899-0423.

For additional ADR tips and resources go to https://www.palmbeachbar.org/alternative-dispute-resolution-committee/

 

[1] This brief article focuses on selection of a neutral arbitrator as opposed to nonneutral party-appointed arbitrators.

[2] Another method is for the parties to appoint two arbitrators who then select the presiding member of the panel. This process merits a separate discussion that is beyond the scope of this article.

[3]

Rules Method
American Arbitration Association Commercial Arbitration Rules (2018)

https://www.adr.org/sites/default/files/CommercialRules_Web_FINAL_0.pdf

List

(Rule R-12)

International Centre for Dispute Resolution International Arbitration Rules (2021)

https://go.adr.org/rs/294-SFS-516/images/ICDR_Rules.pdf

List

(Article 13(6))

JAMS Comprehensive Arbitration Rules & Procedures (2021)

https://www.jamsadr.com/rules-comprehensive-arbitration/

List

(Rule 15)

American Health Law Association Commercial Arbitration Rules (2021)

https://www.americanhealthlaw.org/dispute-resolution-services/arbitration/rules-of-procedure-for-arbitration/commercial-arbitration#Section%203

List

(Rule 3.2)

FINRA Customer Code (2007)

https://www.finra.org/arbitration-mediation/printable-code-arbitration-procedure-12000

List

(Rule 12400)

UNCITRAL Arbitration Rules (2010)

https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/arb-rules-revised-2010-e.pdf

Unilateral appointment

(Article 8)

International Chamber of Commerce Arbitration Rules (2021)

https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/

Unilateral appointment

Article 12(3))

London Court of International Arbitration, Arbitration Rules (2020)

https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2020.aspx

Unilateral appointment

(Article 5)

 

[4] In the unilateral appointment cases, a party can usually still challenge an appointment where necessary.

[5] The College of Commercial Arbitrators, Guide to Best Practices in Commercial Arbitration (4th Ed.), James M. Giatis (Editor in Chief) (2017), Ch. 2.

[6] Id.

[7] PoolRe Ins. Corp. v. Organizational Strategies, Inc.783 F.3d 256, 258-65 (5th Cir. 2015).

[8] Id.

[9] Id.

[10] Id.

[11] Id., fn. 12.

In Memoriam: Theodore Anthony Deckert

By: Adam Myron
Published: February 2022

The ADR community and the community at large recently suffered a tremendous loss with the passing of Theodore “Ted” Anthony Deckert at the age of 70.  The Alternative Dispute Resolution Committee of the Palm Beach County Bar Association, of which Ted was an active member, mourns his loss and wishes this month to use this space – typically dedicated to a robust discussion of topical ADR issues – to celebrate Ted’s life.

Born and raised in West Palm Beach, Ted was a product of Palm Beach County’s public school system, having graduated from Forest Hill High School before enrolling at the University of Florida.  There, he earned his undergraduate and legal degrees before returning to Palm Beach County.

In 1976, Ted began his legal practice as a civil trial attorney, and in 2000, he became a Florida Supreme Court Certified Circuit Civil & Family Mediator so that he could help people creatively make peace by resolving their legal disputes.

As a mediator, Ted was prolific, and dedicated much of his time to bettering our profession.  Ted served on the Palm Beach Bar’s ADR Committee for many years (including as its Chair), he was a contributor to the First Inaugural Mediation Mentoring Academy, and he was a frequent contributor to the ADR Corner you’re reading right now. 

And yet, Ted was so much more than the attorney and mediator we knew and loved.  In 1983, Ted became a founding member of The Lord’s Place, an organization committed to ending the cycle of homelessness.  His personal mantra was “embrace the journey,” and he loved travel and adventure.  Whether it was hiking in remote areas of the country, rappelling down the side of the Comeau Building in West Palm Beach to raise funds for The Lord’s Place, or flying around on a water jetpack over the intracoastal alongside Flagler Drive, Ted took every opportunity he could to better not just his own life, but also the lives of those around him.

Ted’s legacy lives on through his wife of 19 years; his father; his three brothers, three children, stepson, and all their respective spouses; his four nephews; and his six grandchildren.  His legacy also lives on through us.  Ted, your absence is tremendously felt, but so is the positive impact you had on all of us.  We will do our utmost to live up to your example.


Adam Myron is an attorney with the law firm of Cagnet Myron Law, P.A., where he focuses on complex civil litigation, including commercial and business litigation and trust & estate litigation.  Adam is also a Florida Supreme Court Certified Circuit Mediator and a Florida Qualified Arbitrator.  You can email him at amyron@cagnetmyronlaw.com.

Managing Client Expectations in Mediation

By: Al LaSorte
Published: January 2022

One reason that mediations fail is parties arriving at mediation with unrealistic expectations about settlement terms. By educating their clients about the mediation process and frankly discussing the strengths and weaknesses of their cases with them, lawyers significantly increase the likelihood of reaching a mediated settlement.

Several reasons for clients’ unrealistic mediation expectations come to mind. First, litigation is stressful.  Whether as plaintiff or defendant, a pending suit can be the most stressful problem in a client’s life. Litigants with little court experience may be hoping the other side will just wave the white flag at mediation and give them the result they seek. This, of course, never happens in the real world.

Second, because lawyers generally like their clients and their cases, it’s understandable that some “preaching to the choir” occurs between lawyers and clients about their cases’ strength. While expressions of case enthusiasm may engender clients’ confidence in their lawyers, they can also make it harder for clients to objectively evaluate their cases’ weak points, thereby overestimating their own cases and underestimating their opponents’.  This, in turn, makes compromise much harder to achieve.  And compromise, of course, is the very heart of the mediation process.

Third, law firm ads on TV, radio, social media and billboards bragging about their clients’ huge recoveries no doubt inflate expectations as to what plaintiffs can expect in their own cases.  The same is true when clients hear anecdotally about all the money Uncle Louie or their next-door neighbor won in their lawsuits.

For mediation to succeed, it is crucial for all parties to objectively evaluate their cases’ strengths and weaknesses, as well as outside issues such as collectibility, before entering the mediation room (or, more likely these days, joining the Zoom conference).

Granted, it’s not always easy for lawyers to be candid with clients about their cases’ weaknesses. Will the client think the lawyer doesn’t believe in their case if she points out its flaws?  Will the client maybe start looking elsewhere?

There is an obvious tension between a lawyer’s roles as advocate and as counselor. But clients need both. A frank discussion of a case’s bad points not only increases the likelihood of settlement at mediation, it also helps with expectations in the event the case ultimately has to be tried.

Clients also may not appreciate how outside variables can impact the result if the case must be tried, regardless of the case’s merits. Witnesses’ memories fade; judges are human, and sometimes make mistakes; many areas of the law are unsettled and therefore uncertain; appeals are expensive and difficult, and can take years to complete. Building an informed and realistic client requires all these issues be discussed and taken into account.

Managing client expectations requires certain steps before, and others during, mediation. Before mediation, be sure to incorporate discussion of the weaknesses in your client’s case, and the uncertainties in litigation in general, into your preparation regimen with the client. This can be done constructively, and doesn’t have to cause your client to doubt your enthusiasm, or your intention to give one hundred percent toward achieving the best possible result for them.

There are so many things that could go right, or wrong, in every lawsuit. Yet, I can’t tell you how many times, as a mediator, a party bragged to me that “my lawyer says I’ve got a ninety percent chance to win.  Why should I settle for less?”

Clients with such high expectations are understandably reluctant to compromise meaningfully. A more candid pre-mediation discussion with the client about what could go wrong would help them to understand the real risks, and to factor them into their evaluation of what a reasonable compromise would look like.

Ideally, your mediator will be someone the client considers authoritative. Retired judges have that gravitas which lends them credibility in a mediation setting. So do litigators with long careers in the particular area involved in the case.  A mediator who has spent years trying similar cases will likely be seen by your client as an expert. With that expertise comes credibility as to the hurdles that the case presents.

During mediation, look to the mediator for assistance with an unrealistic client. In private caucuses, don’t hesitate to ask the mediator what problems they anticipate a trial will present.

Then, when the mediator moves to a different room, take advantage of this private time with your client to discuss the points the mediator just raised. This can be done constructively, and without sounding like you think the case is a loser. Remember, you are not just their trial lawyer, you are their counselor. So, counsel them!

In conclusion, successful mediation depends on your client becoming as objective as possible about the chances of success and failure. Frank discussion in advance of, and during, mediation will help your client develop reasonable expectations, in turn increasing the likelihood of settlement.


For additional ADR tips and resources, go to https://www.palmbeachbar.org/alternative-dispute-resolution-committee/ 

After a long career at Shutts & Bowen LLP as a commercial litigator specializing in real estate and general business cases, Mr. LaSorte now acts exclusively as mediator and  expert witness through his own firm, Alfred A. LaSorte, Jr., P.A. d/b/a LaSorte Mediation.  (www.LaSorteMediation.com).  Mr. LaSorte can be reached at (561) 286-7994 and Al@LaSorteMediation.com.

Arbitration Case Law Update

By: Donna Greenspan Solomon
Published: December 2021 

 

Hamrick v. Partsfleet, LLC, 1 F.4th 1337 (11th Cir. 2021).  Federal Arbitration Act’s (FAA) carve-out exception to final judgment rule, which allows review of some district court interlocutory orders, including orders denying petitions to order arbitration under federal law, does not provide a carve-out for orders denying motions to compel arbitration based on state law.

Calderon v. Sixth Rent a Car, LLC, 5 F.4th 1204 (11th Cir. 2021).  Customer’s class action claims against car rental agency for breach of contract and violation of two states’ consumer protection laws, based on its charge for damages to car that allegedly had not occurred, did not arise out of customer’s contract with online travel booking company, as would support arbitration of claims under Federal Arbitration Act’s (FAA) strong policy favoring arbitration; although customer’s contract with online booker was governed by FAA, dispute in question was not an immediate, foreseeable result of the performance of online booker’s contractual duties.

McLaurin v. Terminix Int’l Co., LP, 20-12904, 2021 WL 4236673 (11th Cir. Sept. 17, 2021).  Under the Federal Arbitration Act (FAA), in addition to the losing party being allowed to oppose the winning party’s motion to confirm the arbitration award, the losing party can also take up to three months from the arbitration award to file a separate motion to vacate, modify, or correct the award.

Laurel Point Care & Rehab. Ctr., LLC v. Estate of Desantis by & Through Desantis, 323 So. 3d 186 (Fla. 4th DCA 2021).  Arbitrator, and not trial court, had authority to decide whether arbitration agreement, which specifically referenced and incorporated American Health Lawyers Association (AHLA) Alternative Dispute Resolution Service Rules of Procedure for Arbitration, was a separate document so as to satisfy requirement in arbitration rules; reference and incorporation of AHLA rules in arbitration agreement was a clear and unmistakable delegation of authority to have arbitrator decide issue, and AHLA rules used mandatory language requiring arbitrator to decide issue.  The trial court exceeded its authority by concluding that the arbitration agreement did not satisfy a requirement in the AHLA rules as that was an issue clearly delegated to the arbitrator under the rules.

Russell v. Hydroprocessing Associates, LLC, 46 Fla. L. Weekly D1352 (Fla. 1st DCA June 10, 2021).  Employee executed two contemporaneous employment agreements with related companies.  One agreement included an arbitration provision.  The other agreement did not include an arbitration provision but included an integration clause stating that the agreement was the entire agreement between the parties and superseded all prior agreements.  The trial court passed the issue of arbitrability to the arbitrator, which was error.  It is the trial court’s responsibility to determine whether a valid arbitration agreement exists especially where, as here, the arbitration clause itself is challenged.  The court’s responsibility to determine whether a valid arbitration agreement exists is not altered by conflicting arbitration provisions.

Leder v. Imburgia Constr. Services, Inc., 46 Fla. L. Weekly D1719 (Fla. 3d DCA July 28, 2021).  Homeowners and construction contractor waived their right to arbitrate change order dispute.  Construction contract’s dispute resolution procedure provided that submission of dispute to agreed-upon Initial Decision Maker (the Miami Shores Village Building Department Official) was condition precedent to mediation, which was condition precedent to arbitration.  However, contractor failed to file claim with Initial Decision Maker after change order dispute, the homeowners filed a complaint in court rather than with Initial Decision Maker, and contractor did not move to compel arbitration in answer to homeowners’ complaint but merely moved to dismiss the complaint, which the trial court granted in error.

Marino Performance, Inc. v. Zuniga, 4D20-1463, 2021 WL 3641855 (Fla. 4th DCA Aug. 18, 2021).  Automobile dealer waived right to arbitrate as to unnamed class members in class-action proceeding.  Dealer, which filed motion to compel arbitration on eve of certification hearing, had done nothing to preserve its right to arbitrate in the event of class certification.  Dealer’s responses to interrogatory and document requests were directed to class representatives and proposed class members, and dealer had attempted, unsuccessfully, to have entire action dismissed on the merits.  It was only after that unsuccessful attempt, and months later, that dealer attempted to compel arbitration.  The key ingredient in the waiver analysis is fair notice to the opposing party and the court at a relatively early state of litigation of a party’s arbitration rights and its intent to exercise them.


Donna Greenspan Solomon was the first attorney certified by The Florida Bar as both Business Litigator and Appellate Specialist.  Donna is a Member of the AAA’s Roster of Arbitrators (Commercial Panel).  She is a FINRA Chair-Approved and Florida Supreme Court Qualified Arbitrator.  She is also a Certified Circuit, Appellate, and Family Mediator.  Donna is a Member of the Florida Supreme Court Committee on Standard Jury Instructions—Contract and Business Cases.  Donna can be reached at (561) 762-9932 or Donna@SolomonAppeals.com or by visiting www.solomonappeals.com.