Baltimore Development Corp. seeks to use mediation as alternative to condemnation disputes

The Baltimore Business Journal reported Wednesday that the Baltimore Development Corporation will being using mediation as an alternative to protracted legal battles over the condemnation of private properties using the controversial “quick take” procedure. A “quick-take” condemnation occurs where government takes possession of the target property prior to a trial on the merits of its claim simply by payment into the registry of court an estimate of the property’s value (which, of course, is typically far less than fair market value).

The BDC had received two stinging rebukes for its use of the “quick take” procedure from the Maryland Court of Appeals, both affirming a lower court’s decision in favor of the landowner. The most recent decision held that the BDC “must demonstrate the reason or reasons why it is necessary for it to have immediate possession and immediate title to a particular property via the exercise of a quick- take condemnation.” In an earlier opinion, the same Court held that the City must, therefore, demonstrate “a true exigency, or an emergency such as an immediate need to alleviate dangerous or unhealthy conditions.”

Both disputes were mediated after the property owners victory in the curt of appeals. One owner negotiated a settlement for more than 220% of what the city had offered. The other received an additional 45% above the quick take offer. The head of the BDC said they would continue to use mediation as a way to avoid similar protracted legal disputes.

This case really illustrates one of the benefits of mediation. The takings process was intended to fairly compensate the property owner for land that the government desired for public use. Fair compensation means that the price established should be what a buyer is willing to pay and a seller is willing to accept in an arm’s length transaction, not what some bureaucrat believes the property is worth. What better way to establish a fair value than the have the parties sit down in mediation and work it out among themselves?

A great blog for mediators – mediator blah…blah…

I wanted to take the opportunity to mention a great blog I’ve been reading since I started this process myself, mediator blah…blah…. Geoff Sharp is one of the pioneers of the mediation blogosphere and his blog is full of excellent practice (or “practise” as they say in New Zealand) advice and interesting anecdotes. I wanted to thank him for mentioning my modest little blog and recommending to his readers my Lessons from a Mediation Road Warrior series.

Geoff has a lot of useful and interesting stuff on his blog, including a post about scanR, a great tool that allows you to photograph a white board or a document and turn it into a PDF. Please check him out.

I missed out on the BAR/BRI Settlement

I was somewhat excited when I received my notice of settlement in the BAR/BRI class action lawsuit yesterday. Even though I knew the individual settlement would be small, everybody loves found money, right? So, I dove into the settlement papers. As I leafed through all the legal mumbo-jumbo that still amazes me after a decade of practicing law, I got to good ol’ fine print. The class included everyone who took the bar from 1997-2006. I wasn’t eligible. I took the bar in 1996. C’est la vie.

Lesson II – The Benefit of an Apology

One of the difficult things in mediation is the party that cannot look past a perceived personal slight or insult and look objectively at their case. They sometimes feel that they have been “singled out” or treated impersonally by a seemingly heartless corporation such as an insurer, or the employer of our Mediation Road Warrior, Mr. Smith. As these type of claimants frequently file the type of personal injury claim that Mr. Smith handles, I asked him how he deals with this issue.

Mr. Smith believes strongly that you have to get the parties looking at the matter from an objective, risk analysis perspective, and if the claimant is preoccupied with assessing blame or harboring ill will toward the defendant, they will not think objectively about the issue at hand – mediation and settlement of their claim. Mr. Smith believes that an apology or a statement of sympathy from the corporate representative will often defuse the tension in the room and allow the parties to focus on the issues at hand.

Many lawyers overlook this fact and view an apology or a statement of sympathy as a sign of weakness. Nothing could be further from the truth. Mr. Smith does not suggest an admission of liability or fault, but a statement along the lines of, “We understand that this has been difficult for you, Mr. Plaintiff. I hope you understand that nobody at XYZ Corporation intended for you to get injured, and we are sorry this happened to you. We are here in good faith to try to negotiate a settlement to which we can both agree.” Often, the claimant simply wants an acknowledgment of the pain and suffering he has endured at the hands of the offending party. A statement like the one Mr. Smith suggests could go a long way to making the claimant feel as if his needs and concerns are being heard, if not fully recognized, and that he is being viewed as a person, and not a file.

In fact, in a recent case in which I participated, the plaintiff’s demands included a formal apology from his employer for alleged wrongful treatment. There was some indication that this was his primary concern and that everything else was secondary. He felt isolated and unfairly treated and simply wanted someone to say, “I’m sorry. I understand your concerns.” Never underestimate the power those words may have in the context of a mediation.

Lesson I – The Mediator Should Know the Target Audience and Tailor the Opening.

In Mr. Smith’s his experience, the best mediators know their target audience and tailor their opening accordingly. Most mediators have a canned speech discussing the nature of mediation process, the role of the mediator and the confidentiality of the process. Mr. Smith believes that the best mediators not only explain the basics of mediation, but go beyond that – they explain the litigation process, especially the risks inherent in proceeding to trial. He believes that it is impossible to reach settlement until the parties understand that the matter before them is a risk-analysis exercise.

The questions facing the parties at mediation are really how much risk does each party bear in taking the matter to trial and how much is each party willing to forgo in order to ensure an acceptable result. Far too often, he encounters mediators who do nothing to help set realistic expectations and explain that the parties will not achieve their “best case scenario” at mediation.

Claimants get lots of advice from friends, family and co-workers, most of which is in the form of a story about their cousin who got $500,000 for a hangnail. The parties, specifically, PI claimants, need to know that for every jury that awards millions of dollars for spilt coffee, there is another than finds in favor of the defense.* The mediator must remind the parties that if they squander their opportunity to control their own fate, they leave it in the hands of, in Mr. Smith’s words, “twelve people too stupid to get out of jury duty.”

More tomorrow on the benefit of a well timed apology.

*P.S.. – When I spoke with Mr. Smith today, he was on his way to hear closing arguments and await the verdict in a case which he was overseeing. He just sent me a message from his Blackberry – “defense verdict.” It was a case in which both liability and damages were in dispute, but the plaintiff had unrealistic expectations – he refused to come below $2.5 million during mediation. Now, because Mr. Smith made an offer of judgment for 10% less than his highest offer at mediation, the plaintiff may end up owing Mr. Smith’s company almost $100,000 in fees and costs.

Lessons from a Mediation Road Warrior

I had the opportunity to speak this week with the regional settlement counsel for a large publicly traded retailer. He asked that I not mention his name or his company, so I will refer to him as Mr. Smith. It is Mr. Smith’s job to act as the corporate representative in the early stages of litigation against his company. His company takes an economic approach towards risk and litigation management, preferring to settle claims; therefore, part of his job is to persuade the claimants to participate in mediation. As such, he attends over 100 mediations per year and has a lot to say about the mediation process, the role of the mediator, preparation for a mediation and negotiation tactics. Some of this may be old hat to the more experienced, but I thought it might be useful to share some of his insights.

The Sweet Smell of . . . Litigation?

Striking a blow for those with oversensitive olfactory systems,

An employee in the Detroit planning department who claims she is severely sensitive to perfumes and other cosmetics has sued the city, saying a co-worker’s strong fragrance prohibits her from working.

Suing under the Americans with Disabilities Act, Susan McBride is claiming unspecified damages and asking for a ban on perfumes in the workplace. Having been assaulted by several office staffers who apparently bathed in, rather than spritzed on, their perfume, I can understand her consternation. I guess I wasn’t creative enough to think my discomort could be my retirement plan.

At least she isn’t claiming that her heavy metal lifestyle is a disability…

More on the mediation program in the UK Technology and Construction Court

In an earlier post, I reported that a pilot program in the UK Technology and Construction Court (TCC) using sitting judges as mediators appeared doomed to failure. I located the entire report over the weekend, and while it strongly suggests that UK lawyers do not want sitting judges mediating their cases, it would appear that mediation is gaining favor in the TCC.

The complete report, compiled by the UK firm of Fenwick Elliott, gives an interesting glimpse into the use of mediation in the UK, as reflected in the cases before the TCC. During the first 6 months of the study, the authors gave out approximately 300 questionnaires – 254 in cases that had been settled and 44 in cases that went to judgment. They received responses in 76 cases, or 25.5%.

Of the cases that settled before trial, 32% settled as a result of mediation. This is an encouraging statistic. Even more encouraging is that fact that 81% of the cases went to mediation as a result of agreement between the parties, compared to 14% as a result of court order. This would seem to indicate a widespread acceptance of the process. As reported earlier, the parties utterly rejected the use of sitting TCC court judges as mediators, preferring barristers (48%) and construction industry experts (38%) as mediator. None of the respondents reported using the TCC judges as mediator.

Of the remainder of the cases that settled, 61% settled as a result of ongoing negotiations between the parties, and 7% settled as a result of some other, unspecified method.

The study also discussed at what stage in the litigation the case settled. According to the respondents, 81% of the cases settled before the parties reached the proverbial “courthouse steps.” The study identified 4 choke points, at which the parties seemed more likely to settle:

During exchange of pleadings (33% of cases);

During or as a result of disclosure [discovery] (14%);

As a result of a payment into court (10%)*; and

Shortly before trial (24%).

American lawyers must keep in mind that given the “loser pays” system, UK solicitors do not file lawsuits as glibly as American lawyers, or use the filing of a lawsuit as a leveraging tactic. Therefore, a dispute that reaches the “exchange of pleadings” phase is taken more seriously than here in the States. I would expect that if you asked American lawyers the same question, the majority of cases would settle during or after discovery, rather than during the exchange of pleadings.

*According to a friend who is a UK solicitor and US-barred lawyer, “Payment into Court” is a mechanism similar to the “Offer of Judgment” provided for in Fed.R.Civ.P 68. The defendant makes a settlement offer and deposits with the court an equivalent sum of money without prejudice. If the claimant/plaintiff fails to accept this offer within 21 days of the payment in, and the claimant (plaintiff) fails to received a judgment at trial in excess of the amount paid into the court, then the claimant must pay the defendant’s costs from the date the defendant made the payment in. As noted above, in the UK system, a party who loses at trial is liable for the reasonable costs of the opposing party, including attorney’s fees. The purpose is to encourage claimants to accept reasonable settlement offers.