Out-of-Court Mediation Takes off Many Would-Be Litigants Use Alternative Dispute Resolution to Avoid Judicial Tie-Ups, Costs

Article excerpt

WHEN an underwater oil pipeline ruptured in January 1990, releasing 567,000 gallons of heating oil into the Arthur Kill, a waterway between New York and New Jersey, pipeline owner Exxon could have expected to spend years settling civil suits over the damages.

But the New Jersey judge hearing two of the suits against Exxon decided to call Eric R. Max, an experienced mediator with the state of New Jersey. Mr. Max was named the mediator of the case by court order and rounded up Exxon and the parties with claims over the spill. He untied a knot of differences to arrive at a mediated settlement just five months later.

Not only was the settlement reached quickly, it included terms that would be impossible under a litigation award, according to Max. The settlement - announced concurrently with a guilty plea and $5 million fine on a criminal charge - included $10 million from Exxon to be divided up among specific environmental restoration and preservation projects, as well as agreements to share data on the pipeline and the spill and to train government workers for handling future spills. (See story in Nov. 14 Monitor, Page 10.)

As public courts are increasingly inundated with criminal cases, the promise of a quick and less-expensive settlement is driving would-be litigants into the welcoming arms of alternative dispute resolution (ADR).

"If the public wants to pay for the courts, let them pay for the courts and make them better by giving them enough funding," says former Washington State Supreme Court Chief Justice Keith Callow, now with Orange, Calif.-based Judicial Arbitration and Mediation Services Inc. (JAMS). "ADR is a stopgap, it's a safety valve, it's a release" for court systems with a crush of criminal cases that "sit there like a great white shark gobbling up judicial time," he says.

California was among the first states to officially sanction ADR; a 1979 move to clear court backlogs farmed out about 5,000 cases to arbitrators in one fell swoop. This was the impetus for the founding of JAMS, which began hearing these and other cases in 1979 with three retired judges.

Today, JAMS has more than 150 judges and justices, an expansion that shows the large and growing popularity of mediation. Similar growth is reflected in the success of the New York-based Center for Public Resources Inc. (CPR) in promulgating a pledge encouraging corporations to try alternatives to litigation. Forty-six companies initially signed the pledge in 1983; today, 647 companies (including Apple Computer, Raytheon, Xerox, and Coca-Cola) and 1,800 of their subsidiaries have signed up.

The privacy of records, which draws many to ADR in the first place, can make it difficult to determine just how effective the pledge has been in replacing litigation with negotiation. But CPR claims to have saved 142 participating companies more than $100 million in legal costs for disputes resolved in 1990.

Large private providers like JAMS and Philadelphia-based Judicate Inc. are probably the most conspicuous of ADR's many faces. Such firms have similar features: cost savings (despite hourly rates of $150 and up), tailored procedures, experienced personnel, quick resolutions, and privacy. Clients choose their own judge, the type of proceeding, and the rules under which it will operate.

The less-confrontational methods of ADR may contribute to some resistance from within the legal establishment, however. "Lawyers have adversarial personalities," says Carrie Menkel-Meadow, professor of law at the University of California, Los Angeles. "You're asking them to adopt a whole different mind-set when they do this sort of work."

Jim Henry, CPR's president, says lawyers sometimes oppose alternatives when they feel their clients' interests are best served through traditional litigation or simply because they are unfamiliar with new techniques.

"It's just inertia and ignorance more than a conviction that it's not a good thing," concurs Dana Freyer, ADR coordinator for Skadden, Arps, Slate, Meagher & Flom of New York, one of more than 150 signatories of CPR's new "Law Firm Policy Statement on Alternatives to Litigation," a companion to its corporate pledge. …