By Richard L. Hurford
It was so easy when I embarked upon a litigation career in 1978. In that bygone era, many clients expected and demanded aggressive litigation tactics and there was no dearth of extremely talented trial lawyers ready and willing to satisfy the desires of these clients and it was not unusual for these litigators to take two or more cases to trial each year. Litigation budgets were still in the future; a cost-benefit analysis for continued litigation paled in importance to the principle that needed to be established at a trial; ADR was virtually unknown and, in any event, only for the “weak of heart”; and trial courts had not yet been exposed to effective case management concepts, judicial “evidence-based practices” or staged and proportionate discovery.
Let us fast forward 40 years and explore the radically different environment. According to the most recent statistics from the Supreme Court Administrative Office (SCAO), in 2017 the bench and jury trial rate in the Michigan Circuit Courts was less than 1% in all classes of cases, over 50% of all cases were settled, and less than 10% dismissed by the trial court. Medical malpractice cases had the highest trial disposition rate at 5% while employment discrimination, business, products liability and breach of contract trials trailed far behind at 1%, 0.8%, 0.3% and 0.3% respectively.
In this environment, litigators might consider distinguishing themselves by harnessing evolving judicial case management practices (see,e.g. SCAO’s Caseflow Management Guide for judges, https://courts.michigan.gov./Administration/
SCAO/Resources/Documents/Publications/Manuals/cfmg.pdg.) and the appropriate use of various ADR strategies that result in the timely, cost effective, and client centric resolution of disputes (see,e.g. SCAO’s ADR judicial bench book, Michigan Judges Guide to ADR Practice and Procedure, https://courts.michigan.gov/Administration/SCAO/OfficesPrograms/ODR/Documents/ADR%20Guide%2004092015.pdf.
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Litigotiation May Be One Approach
Professor Mark Galanter first coined the concept of “Litigotiation.” He described this process as:
“On the contemporary American legal scene the negotiation of disputes is not an alternative to litigation, it is litigation. There are not two distinct processes, negotiation and litigation; there is a single process of disputing in the vicinity of official tribunals that we might call LITIGOTIATION; that is, the strategic pursuit of a settlement through mobilizing the court process.”
In sum, litigation no longer involves simply preparing for a trial that statistically will not be held in 99% of cases. Rather, the litigator is encouraged to become familiar with and effectively employing new and evolving judicial case management techniques and various ADR processes to augment dispute resolution negotiations. Early evaluation and assessment of the dispute, an early exploration of the client’s BATNA (best alternative to a negotiated agreement), and the early formulation of integrated litigation and negotiation strategies to achieve the client’s BATNA within a litigation budget are now the skill sets that are becoming increasingly important.
Long gone are the days a party will be afforded the opportunity to pursue interminable discovery disputes, complete all discovery necessary to prepare for a trial, then engage in a case evaluation as the first and only ADR process for the dispute. In the new “litigotiation” world, litigators will be far more creative in harnessing the court’s processes to effectively assist the client’s negotiation strategy. At the outset of the case during the case management conference, the litigator, who seeks to achieve the client’s BATNA, will be called upon to tactically address aspects of how best to stage proportionate discovery, the protocols and scope for any needed electronic discovery, the terms of any stand-still agreement, the provisions in any desired protective order, the identification of an effective neutral who can be called upon to address discovery and other sub-disputes during the life of the case, and identify what ADR process(es) (including the timing of those processes) are most appropriate to the potential resolution of the dispute.
Permit just one example that underscores the concept of litigotiation and its potential efficacy in cost effective dispute resolution.
Two business partners (with ownership interests of 51% and 49% respectively) experienced a significant deterioration in their personal relationship over a number of years to the extent they could no longer work together (the final break came when one partner had an affair with the other partner’s wife). The inevitable shareholder oppression lawsuit followed supplemented with the typical add-on claims of fraud and self-dealing. During the case management conference it was clear a critical issue was what business evaluation methodology would be used to determine the departing partner’s compensation. In reality, the evaluation dispute was a placeholder for their mutual animosity. Counsel for the partners, as well as the trial court, recognized the litigation of this dispute could be a very long, costly and hostile exercise consuming the court’s resources and ultimately ending in an unpredictable result.
At the case management conference counsel agreed to the selection of an experienced mediator who was appointed by the trial court. This mediator worked with counsel to establish a standstill agreement and a protective order and also discussed with the parties the potential benefits of an expert hearing, as it was apparent the optimal valuation methodology was going to be a “battle of experts.” The court entered an order approving the standstill agreement, the protective order, endorsed the ADR plan (an expert hearing followed by mediation), and staged the discovery to initially and solely focus on that information and financial data important for an effective expert hearing. The court also entered an aggressive case management order setting time deadlines in the event the expert hearing and subsequent mediations were not successful in resolving the dispute.
The opposing experts essentially agreed on the limited financial and other information necessary to finalize their opinions and counsel cooperated in providing the experts with the information requested. During the subsequent expert hearing the opposing experts effectively and persuasively endorsed the bases of their opposing evaluation methodologies and were able to identify a number of areas of agreement including the impact of the differing models on the payment to the departing partner. Mediation sessions followed that initially focused on how the competing valuation models might be modified to achieve a “fair” evaluation process as well as the terms of the payments to be made. Once the parameters of the business evaluation methodology were generally discussed (but not yet agreed upon), the mediation proceeded to address a number of underlying issues that proved to be an impediment to a global resolution. The case was ultimately resolved after three mediation sessions that spanned six months.
The total litigation savings to the parties were significant and enabled the remaining partner to “sweeten the deal” to a limited extent in exchange for a non-compete agreement from the departing partner. Judicial involvement in the dispute was minimal although the time deadlines set forth in the court’s case management plan were extremely helpful in incentivizing the parties to complete the mediation process in a timely fashion. Although the personal animosity of the former partners was not resolved, counsel followed a creative “litigotiation” path harnessing judicial procedures to augment a negotiation approach that achieved the BATNAs of their respective clients in a very cost effective and timely manner.
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Conclusion
The vanishing jury trial is not a passing phenomenon and litigators and their clients need to adapt to the evolving dispute resolution landscape. While there will always be a number of disputes that need and should be tried, and the trial will always play an extremely important role in dispute resolution, not every case can be tried and litigotiation may be a viable option. In the vast majority of disputes that will not result in a trial, the issue is how best can the litigator leverage the ever expanding and changing court and ADR processes to support negotiations that achieve a resolution in the client’s best interests. This new and evolving environment requires creativity, flexibility, and familiarity with the judicial case management protocols of each court and the evidence based practices outlined in the Caseflow Management Guide. It will also be important to become familiar with all of the ADR processes outlined in the Michigan Judges Guide to ADR Practice and Procedure and to creatively harness and stage the most appropriate process(es) to negotiate a resolution of the litigation.
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Richard L. Hurford is the vice chair of the Summary Jury Trial Task Force, president of Richard Hurford Dispute Resolution Services PC, a member of Professional Resolution Experts of Michigan (PREMi, https://premiadr.com), chair of the Macomb County ADR Committee, Chair of the Oakland County ADR Committee, and president of the Michigan Chapter of the Association for Conflict Resolution. He is also the co-author of the nationally recognized “A Taxonomy of ADR: A Guide to ADR Practices & Processes for Counsel” that can be accessed at http://hurfordresolution.com.
