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-Oliver Wendell Holmes, Jr.

Benefits of Binding Mediation as an Alternative Dispute Resolution

Benefits of Binding Mediation as an Alternative Dispute Resolution

To most attorneys, alternative dispute resolution means resolving a case through either mediation or arbitration. A third rarely used Alternative Dispute Resolution (ADR) is binding mediation. In the right situation, binding mediation may yield better results for all of the parties. In this article, we discuss the various alternative dispute resolution options and drill down on the benefits of binding mediation.

I was recently involved in a personal injury case that lent itself perfectly to binding mediation. Liability was not an issue. An innocent bystander was injured while waiting at a traffic light. Even though there was disagreement on the seriousness of the injury, the plaintiff had years of treatment with numerous doctors as well as several different invasive treatments and non-invasive therapies. The case had been pending for a few years and the parties knew they were still facing significant medical and expert discovery. There was no doubt the jury would award some damages – the only issue for trial was the amount the jury would award. Complicating the situation, the plaintiff made a policy limit demand against three policies. While we did not believe it was a policy limit case, it was still a factor that had to be considered when settling the case.

This situation lent itself perfectly to binding mediation. The parties agreed on a high/low amount – the high being the policy limits and the low being an amount that the insurers had offered prior to the case being filed. Within a few hours, the case was resolved within the policy limits with all parties being satisfied. Had it not been for the “binding” mediation, we would have engaged in at least another year of medical and expert testimony before going to trial.

Basic Types of Alternative Dispute Resolution

There are three basic types of alternative dispute resolution: mediation, arbitration and the hybrid binding mediation.

Mediation is where the parties present their case to a neutral third party, such as a professional mediator or judge. The parties retain the right to decide whether to agree to a settlement. The mediator cannot impose a resolution but will usually provide a recommendation on value.

Arbitration is where parties give the power to decide the dispute to the arbitrator. Arbitration may occur pursuant to a court mandated arbitration rule, contractual agreements by the party predating the dispute and by agreement of the parties during a dispute. During an arbitration, evidence and argument is considered and an oral or written arbitration award issued.

Binding Mediation is a hybrid of both mediation and arbitration. The parties present the facts and argument to a mediator, the mediator attempts to resolve the dispute in a middle ground where all parties are satisfied, and if that does not occur, the mediator will issue a binding decision.

Advantages of Alternative Dispute Resolution.

Alternative dispute resolution, including arbitration, mediation and binding mediation have many advantages over going to trial. Generally, all types of alternative dispute resolution have the following advantages:

  • The parties choose their “judge”. Unless it is part of a mandatory arbitration or mediation rule of the court, the parties get to choose the mediator or arbitrator to hear the case. This gives the litigants the advantage of choosing someone who has experience and is familiar with the type of law as well as the types of issues in the case.
  • It is private. There is usually no public record other than a recording of the ultimate judgment, and that is only if required by the Court or agreed to by the parties or contract.
  • It is customized. ADR can be tailored to the individual parties’ interests and needs. It can include resolution of non-monetary issues.
  • It is less expensive. More often than not, less discovery is done prior to alternative dispute resolution. The parties usually stipulate to certain records and reports, thereby limiting or abolishing the need for witnesses to testify or appear.
  • It can occur earlier in the litigation and may even occur prior to litigation being filed.

Advantages of Mediation over Other ADR.

One major benefit of mediation is the parties have the final say on whether they will accept the mediator's recommendations and resolve their disputes through mediation or would rather go to trial. The parties retain the power.

Another major benefit is that the parties can resolve non-monetary issues and discuss business type resolutions. This is especially important in the area of commercial disputes and employment litigation. We have been involved in mediations where no or little money has exchanged hands, but the matter has been resolved with business relationships left intact.

Advantages of Arbitration

The most obvious advantage of arbitration is that it is similar to a mini trial, in that the parties present evidence and walk away with their "day in court." The parties may have more of a sense that they got a just result from an arbitration.

In addition, once the judgment has been issued, it is generally a final decision. There are exceptions depending on the type of arbitration and the agreement establishing the arbitration and the applicable laws that govern the arbitration. However, barring a claim of misconduct or claim that the award exceeded the scope of the arbitration, most arbitration decisions are not reviewable.

Benefits of Binding Mediation

Binding mediation has the advantage of incorporating all the benefits of mediation and arbitration into one process, including:

  • The parties can customize how they want the proceedings to go.
  • The parties can agree on the scope of the mediator’s authority as well as agree to non-monetary issues to be resolved.
  • The parties can agree who will be present, whether parties will be able to state their case or speak through their attorneys, and how long they will mediate before they will concede that the issue be decided by the mediator.

Binding mediation has an advantage over both mediation and arbitration in that the parties are not only given the opportunity to be heard, but also an opportunity to discuss the case with a neutral third party. Similar to a mediation, the mediator will normally express to the parties the strengths and weaknesses of their case and make recommendations regarding what the mediator perceives as a best and worst case scenario as well as where the mediator believes a fair result can be achieved. The parties will know that their position was heard. The parties can then weigh the risks before going to a final decision. If the parties cannot resolve it, the parties will walk away with a finite resolution of the issue.

Binding mediation also helps the attorneys. At times, we are faced with litigants, whether the opposing party or our own, who have misconceptions about the value of the case or the strength of the defense. A neutral third-party mediator can assist in dispelling those beliefs and provide a means for even the most stubborn litigant to walk away from a case knowing that it was fairly adjudicated.

Recommendations for Binding Mediation

Choose your mediator or arbitrator wisely. Just because a mediator is busy does not necessarily mean the mediator is good. Oftentimes, word of mouth is a good indicator of the strengths and weaknesses of the individual chosen. A mediator familiar with the type of case is usually necessary, especially if the legal matter involves specialized areas of the law, such as employment or intellectual property, or if it requires a background in scientific or technical areas.

It is the preferred practice to exchange initial letters to be shared with the mediator, setting forth the known facts and status of settlement prior to the alternative dispute resolution proceedings. Included in the submissions are any pertinent non-confidential exhibits that are necessary for the mediator’s review. If there are issues that the mediator or arbitrator needs to address that are non-monetary, these may be included in the submissions or reserved for the confidential discussions with the mediator. Confidential information should be treated carefully to maintain the confidentiality.

On the day of the mediation, make sure your client understands that this is their opportunity to be heard and encourage them to keep an open mind. With binding mediation, they should get a better result if they fully participate in the mediation.

If you have any questions or wish to retain our services to act as a mediator or assist with alternative dispute resolution, please contact Kristin D. Tauras at McKenna Storer.

Categories General Litigation

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