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Insights into the Mediation of Employment Disputes In Arizona

Published in Arizona Industrial Relations Exchange, 2001
By Dick Fincher

How has employment mediation been accepted in Arizona? What mediator qualifications do the parties value? How successful is the process?

In the past few years, mediation has become a predominant means to resolve employment disputes. The classic advantages to mediation include a quicker resolution, confidentiality, flexible remedies, reduced litigation fees, and the opportunity to preserve relationships. But what is happening in Arizona? Are we following the national trend? In the past year, the author conducted an extensive survey to determine how the Arizona legal community views this development in the practice of employment law. Described below are the results.

Survey Scope, Participants and Protocol
The research focused exclusively on the use of private, fee-based mediation for tort and statutory claims involving claimants and employers represented by attorneys. The survey did not include the EEOC mediation program, internal corporate systems, or court-annexed mediation programs.

Participants in the research included attorneys licensed in Arizona with a significant practice in employment litigation, and Phoenix-based neutrals on the employment roster of the American Arbitration Association. A common protocol of questions was asked of each participant.

When do parties seek mediation?
In the past, mediation was typically pursued after completion of discovery or just before trial. This practice ensured that the parties fully understood the facts and were making fully informed decisions as to the economic value of the case. The research confirmed a significant change to this practice.

Today, mediation in Arizona is considered during the full continuum of litigation. Ten percent of disputes are mediated pre-filing (at the demand stage) and 15% are mediated after filing but prior to the start of discovery. Fifty percent of disputes are mediated between the start of discovery (typically the plaintiff's deposition) and the decision on Summary Judgment, and only 25% of disputes are mediated within 60 days of trial. Two respondents noted that they have twice mediated the same case on its way to trial.

How do Employers view mediation?
In the past, most employers resisted settlement due to the fear of becoming a target for future claims. Their creed was "not a penny for tribute, all for defense." Today, most employers view mediation as a legitimate element of the litigation process, and usually in their self-interest. Only 10% of the defense attorneys reported that their clients resist any form of mediation.

What types and sizes of cases are mediated?
In the distant past, executive employment agreements were the common type of case submitted to mediation. The research confirmed a reversal of that practice. Today in Arizona, 75% of mediated disputes are a form of statutory (age, race, gender, etc.) discrimination, 10% of mediated disputes are torts, and 15% are executive employment agreements.

Does the size of claim affect the acceptance of mediation? Today in Arizona, the research confirmed that 25% of the mediated disputes are asking up to $100, 000. Another 55% of disputes are asking from $100,000 to $250,000, and 20% of disputes are asking for above $250,000.

What motivates the parties to mediate?
In the past, the proposal to mediate a dispute by one side was viewed as a sign of weakness. No more. Today, there is a consensus among plaintiff and defense attorneys that there are legitimate motivations to mediate regardless of the chance of prevailing at trial. For both plaintiff and employer counsel, the reasons to mediate include retaining control of the process, determining settlement options, provide a reality check for clients, preempting hardening of positions over time, and of course, to settle the case with favorable terms. For plaintiff-attorneys, additional reasons to mediate include allowing client venting, obtaining some recognition of the issue, and the effective economics of a contingency practice. For employer counsel, additional reasons to mediate include preempting difficult or embarrassing issues, avoiding negative publicity, reducing client fees, and avoiding adverse judicial precedent.

Who first proposes mediation?
In the past, neither party preferred to propose mediation for fear of showing weakness. Today, the research confirmed that there is no perception attached to the first proposal. Fifty-five percent of offers to mediate come from employers, and 45% come from plaintiffs. An overwhelming 90% of attorneys reported that there is no negotiating leverage gained through proposing mediation first.

What qualifications and attributes do parties prefer in a mediator?
A crucial step in selecting the optimal mediator is recognizing "what there is to choose from" concerning mediator skills and styles. Does the case require strong substantive knowledge of the law, or greater process skills to draw out underlying interests, or both? What qualifications and attributes do Arizona attorneys consider?

Today, most Arizona advocates require that mediators have strong subject-matter expertise in employment law. It is rare to select a non-attorney. Sixty percent stated a preference for a full-time attorney-mediator, and 40% stated a preference for a practicing employment attorney with mediation skills. The majority of advocates believe that a full-time mediator contributes significant experience and process skills to the process, while other advocates believe that part-time mediators in current practice provide equally valuable evaluative skills. There is mixed opinion as to the effectiveness of retired judges as mediators, especially if the case contemplates ongoing relationships.

Finally, the research revealed that the majority of the employment bar prefers the evaluative style of mediation. There was little knowledge or value placed on the facilitative style of mediation. There was limited understanding of the difference between evaluative mediation and a settlement conference.

How do parties develop their short list of mediators?
The research confirmed that the vast majority, or 70% of attorneys, selects their mediators from personal experience or from a short list of recommendations provided by peers. Plaintiff employment attorneys reported using the local National Employment Lawyers Association (NELA) chapter to exchange opinions. Management attorneys reported having their own networks to exchange opinions. Some defense law firms now use a website to track their experience with each mediator. There is little interest in trying out emerging mediators until there is a "track record on the street."

The remaining 30% of attorneys confirmed that they select their mediators from the national ADR providers such as the American Arbitration Association. Each panel provides a list of qualified neutrals and administrative support, in return for an hourly fee.

How common are pre-mediation briefs?
In the past, the use of pre-mediation briefs was inconsistent. Some mediators requested a brief, others never did. Some parties submitted lengthy briefs, while other parties just copied the pleadings. Most parties exchanged the briefs with opposing counsel.

Today, the research confirmed a much more consistent pattern. Eighty percent of the parties reported that the mediator requests pre-mediation briefs. Only 20% of counsel reported that briefs can be a waste of time and are not used by the mediator. Forty percent of the parties reported that their brief is exchanged with opposing counsel, while 60% reported that their brief was not exchanged and instead was held in confidence by the mediator. Most attorneys now view the confidential brief a valuable tool in the process.

Do Mediator Fees Affect Selection?
There has been great speculation that hourly or daily fees of mediators influence the selection decision. Are the most expensive mediators selected less often because of their cost? The survey suggested that is not the case. In Arizona, only 10 % of the attorneys in the survey reported that fees influence their selection decisions. This minority example was with small business owners who are highly sensitive to their dispute resolution costs, and prefer to use no-cost magistrates. Otherwise, hourly mediator fees are not a factor in the selection process.

What is the range of mediator fees in Arizona? Most fees are $150 to $300 per hour. A few of the highest priced mediators are at $4000 per day.

What is the success rate of mediation?
The parties reported that around 80% of all employment mediations result in a settlement. This number includes settlements that may not have been achieved in the initial process but were achieved by ongoing negotiations in the few weeks after the mediation session. The 80% settlement rate is consistent with the national average.

Why don't some cases settle? According to the survey, reasons include a) a party is seeking to establish a legal precedence, b) one party believes there is a potential for a large recovery, c) there are stark differences over interpretation of facts or law or d) the case law is evolving and not yet clear.

The use of mediation as a settlement tool is exploding in Arizona. Employment attorneys routinely screen all employment cases for ADR. Mediation is being used earlier in the discovery process, in all sizes of cases, and with significant success. The parties increasingly select mediators without significant rancor. Attorneys periodically meet to discuss their results in individual mediators.

However, most Arizona attorneys view mediation largely from the evaluative or settlement conference perspective, and do not yet value when a facilitative style may yield better outcomes for the clients. Most counsel select mediators from a small list of proven players, and are very reluctant to try out emerging neutrals. Additionally, most layers do not seek employment mediators with special expertise in compensation, benefits, human resource practices, etc. Finally, Arizona attorneys claim they strongly prefer subject-matter expertise in employment law, yet they select mediators with little career expertise in modern employment practices, such as stock options, succession planning, and diversity.

What is next to survey?
The parties were receptive for the author to conduct a second round of survey questions concerning employment mediation. This will be completed in 2001. The questions suggested for further inquiry include; a) how effective are multi-party mediations, b) should gender be a relevant selection criteria, c) can apology be a element of resolution, and d) how is employment liability practice insurance (EPLI) changing the dynamics of employment mediation?

The Author
Richard D. Fincher is a full-time mediator and arbitrator of commercial, employment, and class-action litigation. He is also the Managing Partner of Workplace Conflict Resolutions, a Phoenix-based ADR consulting practice law. Dick is a frequent CLE speaker on "Employment Dispute System Design", and "Emerging Uses of ADR in Class-Action Litigation" He teaches ADR in the College of Business at Arizona State University in Tempe, Arizona. Dick can be reached at 602-953-5322 or rdf@workplaceresolutions.com


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