Friday, October 26, 2007

Why Mediation Shows The Future Of Litigation

Mediation is increasingly the preferred vehicle for resolving business-to-business disputes.

Sophisticated parties include mediation clauses in contracts. Even when parties haven't agreed in advance to mediate, they often opt for mediation as a prelude, or alternative, to litigation.

Why? Because mediation avoids the expense and distraction inflicted by the discovery process. Corporate clients insist: Avoid discovery, and resolve the case.

Here's what has us scratching our heads: Parties who mediate, avoiding discovery, are agreeing to resolve their disputes based on imperfect information. Parties who mediate probably won't have scrubbed every last fact on their side of a dispute, and they won't have access to every last fact from the other side. Despite that imperfect knowledge, they're ready to settle. That approach may cost a few bucks in settlement value, but it saves many more bucks in discovery costs.

To our eye, mediation is often a perfectly sensible choice.

But, if parties are willing to mediate without first obtaining complete information, why aren't they willing to litigate without obtaining complete information? If sophisticated litigants often prefer a quick resolution at lower cost, why doesn't society make that option available to everyone? Why doesn't litigation have only a limited discovery process (which would be more affordable and less distracting than our current system) before presenting disputes to a decision-maker?

Frankly, this makes sense for any number of reasons.

First, the current discovery process involves, in all too many cases, producing documents that literally outstrip human comprehension -- tens of millions of pages of electronic records that no human being could read in a lifetime dedicated only to that pursuit. Since no one can read the documents, and computer searches for information are necessarily imperfect, the vast scope of discovery guarantees that facts will be lost and disputes will be resolved imperfectly.

Second, after those documents are produced, they are then distilled at trial into an abbreviated presentation that necessarily omits much of what was learned during discovery. The distillation process incorporates yet more error into our dispute resolution process.

Finally, in jury trials, the decision-maker is a half dozen (or a dozen) people with no advanced education about the nature of the dispute. Whether a case involves epidemiology, reinsurance contracts, or the design of complex machinery, placing these disputes into the hands of a jury guarantees yet more error.

Since the system is guaranteed to yield imperfect results, why should we pretend, during the discovery process, that gathering more information always serves a purpose? Why not simply agree to submit pared-down disputes, based on pared-down discovery records, to a fact-finder, and then agree to be bound by a slightly imperfect result?

That is, after all, what sophisticated parties do voluntarily -- by electing mediation, or arbitration, or some other alternative to full-bore litigation. That's a sensible choice, and it's one that the market increasingly demands. Isn't it likely that society in general may soon revolt against our current discovery process and insist that we instead resolve cases quickly and inexpensively based on less perfect information?

1 comment:

Eric Turkewitz said...

Why doesn't litigation have only a limited discovery process (which would be more affordable and less distracting than our current system) before presenting disputes to a decision-maker?

The cost-benefit analysis of limiting discovery is done routinely by those that work on contingency. It's the bill-by-the-hour set that insists on turning over every last stone, even when the liklihood of relevant discovery is minimal.

So it exists. Just not generally in the world of BigLaw.