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Cards on the Table: Resolving disputes quickly and more economically

In Utah, business moves at the speed of light. Innovation and change are the only constants. Unfortunately, dispute resolution and litigation—whether in state or federal court or arbitration—still move at the pace established when the Federal Rules of Civil Procedure were created generations ago. The only questions that clients ask more than “Do we have a good case?” is “How long will it take to resolve it?” and “How much will it cost?”

With many of the young companies here in Utah, especially those that may be dependent upon future funding or even eying a major transaction, the issue is not only that a dispute needs to be resolved, but it is imperative to resolve it quickly and efficiently.

Another path

Here’s the good news: There is a pathway that provides the possibility of a resolution in an accelerated manner that allows the parties to control the outcome of the litigation. It also allows them to avoid spending bundles of money on attorneys and experts and return to focusing on their core business. This path is early mediation. With almost every dispute resulting in settlement, the question that has to be asked is “Why wait?” Even if the mediation fails to resolve the case, the foundation for the settlement is often laid during the mediation session, and at worst, the issues that are really in dispute are identified and potentially refined.

There are three phases in a case where early mediation is most effective: 1) before the parties go to court or retain an arbitrator; 2) right after the parties have entered litigation but before any substantive discovery has been done; and 3) after documents and electronically stored information have been exchanged by the parties but before the costly and time-consuming deposition process has begun.

In my experience, option three is normally most preferable. First of all, by conducting at least preliminary discovery—such as reviewing key documents and interviewing key people—each party has vetted their own case. (They know their warts.) Second, it allows both sides to see the other side’s documents and analyze much of what the other side has recorded, to its benefit or detriment. (They know the other side’s warts, too.) Finally, through the mediation brief both parties are forced to acknowledge those warts by “putting their cards on the table.” With this information, skilled and experienced counsel should be able to prepare their clients for a fruitful mediation.

Skilled counsel

Selection of a skilled mediator is key. (I do not act as a mediator and write this from the perspective only of an advocate.) The mediator should be willing to not just “look for the number that will settle this matter” but rather to analyze the parties’ claims and identify the true issues in dispute. He or she should explain to the parties not only the benefits and risks of early resolution at the mediation but the risks and benefits of continued litigation. Some of the best mediators I’ve seen have had the courage to tell me that I need to “make the other side bleed” before I can resolve the case or that my client’s options are to settle now or get pummeled before the judge in an upcoming hearing. In other words, the mediator should not only give a number but a reason for settling or continuing.

A skilled mediator will present options to each side and, along with counsel, help the parties identify the value of those options and decide whether there is a way to make a settlement work. Or, if the gap between the sides is too wide, the mediator will advise whether they need to invest further resources on depositions and experts to refine the case.

Analytics and experience will often allow the parties to bridge the gap. The analytical tools that businesses have today can allow them to determine the value of the case. Experienced legal counsel can help refine that analysis in light of the governing law and litigation risks.

Time well spent

Even if early mediation does not result in an immediate resolution, it is still time well spent because the parties will have refined the issues in dispute, which in turn will likely lessen fact discovery and the need for experts. More importantly, the parties have seriously opened the channels of communication that often will lead to resolution at a later date. Although a final resolution may not come until after depositions of lay witnesses are complete or even after dispositive motions have been heard or even on the eve of trial, the foundation of that resolution will have been laid during early mediation.

While early mediation may not provide the courtroom drama of A Few Good Men, it will allow litigants to return to their core business and focus on their bottom line.

Stewart O. Peay, a partner in the Salt Lake City office of Snell & Wilmer, focuses his practice on commercial litigation, including trade secret, contract, construction and toxic tort litigation.