Sunday, March 24, 2019

Alternatives to Lawsuits

Law Matters

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Lawsuits are expensive. Even in smaller cases, the parties can pay tens of thousands of dollars in attorney’s fees. Attorney’s fees exceed the amount in dispute in many cases. Unless the prevailing party is entitled to attorney’s fees by term of contract or statute, attorney fee are not generally recoverable from the losing party. Even when they are awarded, courts rarely award all of the attorney’s fees and costs paid by the winner.

Why is litigation so expensive? One reason is attorneys are expensive. There is a lot of overhead and operating expense associated with a law office. Hourly rate for experienced trial attorneys in Collier County can exceed $500. If a client is willing to pay, the attorney is often happy to work. If both client and counsel believe they will win and the other party will pay, there may be little incentive for efficiency.

The lawsuit process itself is one which is not designed to minimize expense. Lawsuit starts with a complaint filed with the court. Process servers are paid to serve the complaint. The recipient hires a lawyer. The lawyer files pleadings and motions. Everybody has to know everything before the case goes to trial so there are depositions, requests for documents and records, and there can even be offers for settlement and settlement discussions.

The lawsuits are not the only way to settle a dispute. Perhaps the most obvious way to settle a dispute is by discussion and negotiation. A lot of lawsuits start merely because the parties have not communicated. Good attorneys can try to get their clients to resolve their dispute without resorting to court. Those efforts may be doomed by the animosity and the emotionalism between the parties.

To reduce emotionalism and face to face conflict, the attorneys can act as the communicators. The most common form of attorneys trying to settle a case involved phone calls and letters so that process is not particularly expeditious. A more expedited road to settlement can be mediation. Mediation is perhaps the best way to settle a dispute if the parties are truly interested in settling. Even after a lawsuit is filed, judges frequently mandate the parties attempt to settle through mediation before the judge will allow the case to go to trial.

Mediation involves a neutral third party mediator attempting to bring the parties to agreement. Most mediation starts with the parties together with the mediator and the attorneys for each side summarizing each side’s position. The parties then adjourn to separate rooms and the mediator shuttles between each room. Sometimes the parties reconvene or the mediator meets privately with the attorneys, but the separation of parties is intended to reduce emotionalism and allow the parties and their attorney to speak candidly to the mediator as the mediator can searches for a compromise that everyone can live with. Communication during mediation is confidential and cannot be used later in court if the case does not settle.

If mediation fails, the parties may proceed with court action. Approximately 80% of the cases judges order to mediation settle. After settlement, the agreement may be enforced by the courts.

Disputes may also be settled by arbitration. In arbitration, a neutral third party arbitrator actually renders a decision settling the dispute. Florida has a statutory arbitration code at Chapter 682 of Florida statutes. The code includes provision for qualifications of arbitrator, subpoenas, depositions, procedure and even remedies and expenses. Arbitration can also be ordered by a judge, but since arbitration provides a decision, court ordered arbitration is non-binding unless the parties agree the arbitrator decision will be binding.

Arbitration can be simple and expedited or comparable to trial. When it is court ordered and non-binding, it is generally a simplified procedure during which the attorneys present a summary of each side’s case and evidence after which the arbitrator makes a decision. If either party is unhappy with that decision, the party may request trial de novo as if the arbitration did not occur. But, if the requesting party does not do better at trial, that party will likely end up being court ordered to pay the party’s attorney fees and costs.

In binding arbitration, the procedure is generally more complex as it is a trial substitute and the decision will be binding. Witnesses testify as at trial, subpoenas and discovery can proceed as at trial but the procedure is intended to be expedited and condensed so as to minimize delay and expense. Rules of evidence may be relaxed. An arbitration decision can be reduce to judgment and enforced as a judgment.

In some cases, the parties may agree to mediation and, if not successful, to proceed immediately to arbitration. Drawback to that approach is that the parties may share information with the mediator that they would not share in arbitration and then use the same person who has been given confidential information to make a final decision. That problem can be avoided by having separate mediator and arbitrator, but the availability of an arbitrator to immediately follow an unsuccessful mediation is difficult scheduling.

The parties may also agree to mediation to be followed by arbitration of the last offer made during mediation. In that process, each party submits best last offer to the mediator and if they cannot reach agreement, the mediator chooses which offer to be the arbitrated decision. That procedure clearly requires the parties to have great confidence in the mediator/arbitrator.

Since 2003, Florida statutes also confirm that the parties to a dispute have a right to a private trial with decision to be made by a private attorney acting as a judge. If the parties agree on the private judge, they enter a contract with that judge for compensation and the process proceeds much like a trial, without the delays and difficulties accompanying effort to coordinate matters on the calendar of the judge with hundreds if not thousands of active cases. The private judge is appointed by the court in a process that actually starts as court action requesting appointment of a private trial resolution judge. Once the private judge is appointed, the case is no longer shackled with the delays and scheduling issues of a “normal” lawsuit. Decision by the private trial resolution judge becomes judgment of a court by filing a petition for final judgment in the same court appointing the private resolution trial judge. After the court enters judgment, either party can appeal the judgment and proceedings revert to that of a “normal” lawsuit.

The most recent expansion of efforts to avoid courts in resolving dispute is Florida’s formal adoption of an optional collaborative divorce process effective June 17, 2017. Under collaborative divorce, the parties enter a collaborative participation agreement. If the parties are represented by attorneys, the attorneys only represent them in the collaborative law process. If the parties are unable to successfully conclude their divorce through the collaborative law process, the parties may proceed in court but the collaborative attorney representatives may not represent them in the judicial proceeding. Proceedings are confidential and mediation cannot be used as part of the process. The process is still in its infancy, but it is hoped that the collaborative procedure will reduce friction and cost.

Alternatives to litigation referenced in this article are not exclusive, but are examples of the primary alternatives available. Alternative dispute resolution can be used to address entire cases or to simplify issues by resolving some but not all aspects of a dispute. Emotionalism involve in a dispute often compels the parties to court action. In many cases, the parties would be well advised to consider an alternative.    

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