It was so easy when I embarked upon a litigation career in 1978. In that bygone era, many clients expected and were willing to pay for costly and aggressive litigation tactics, and it was not unusual for 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 seen as only for the “weak of heart,” and trial courts had not yet adopted effective case management techniques, judicial “evidence-based practices” or imposed staged and proportionate discovery limitations.
Fast forward 40 years, and we see a radically different landscape. 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 is less than 1 percent in all classes of cases
More than 50 percent of all cases were settled
Fewer than 10 percent of cases are dismissed by the trial court
Although Medical malpractice cases have the highest bench and jury trial rate, only 5 percent went to a trial
Employment discrimination, business, products liability, and breach of contract cases lagged far behind in the percentage that made it to a trial at 1 percent, 0.8 percent, 0.3 percent, and 0.3 percent respectively
In this environment, litigators must consider harnessing evolving judicial case management practices and integrating appropriate ADR strategies to achieve timely, cost-effective, and client-centric resolution of disputes. It’s a new way of thinking, and besides paying close attention to proposed amendments to the Michigan Court Rules, litigators are well advised to look to SCAO for guidance – it’s Caseflow Management Guide and Michigan Judges Guide to ADR Practice and Procedure are invaluable resources.
Litigotiation May Be One Approach
Professor Mark Galanter first described the concept of “Litigotiation”:
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.”
Litigation no longer involves simply preparing for a trial that statistically will not happen in 99 percent of cases. Instead, the litigator is encouraged to become familiar with and effectively employ 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 increasingly important skill sets.
Long gone are the days when a party will be allowed to pursue unlimited discovery, engage in 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 and ADR techniques to effectively assist the client’s negotiation strategy.
Depending upon the nature of the case, during the case management conference, the litigator, who seeks to achieve the client’s BATNA, will now have to tactically address such issues as:
The best means 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 address the scope of discovery and other sub-disputes during the life of the case; and
The ADR process or processes (and the timing thereof) that are best suited to the potential resolution of the dispute.
Here’s an example to illustrate the concept of litigotiation and its potential efficacy in cost-effective dispute resolution.
Two business partners (with ownership interests of 51 percent and 49 recent respectively) experienced a significant deterioration in their personal relationship over several years to the extent they could no longer work together. 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 lengthy, 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 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 (see the Michigan Judges Guide of ADR Practice and Procedure for a discussion of the expert hearing process), as it was apparent the optimal valuation methodology would be a “battle of experts.” The court entered an order approving the standstill agreement and 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 identified several areas of agreement including the impact of the differing valuation models on the payment to the departing partner. Mediation sessions that followed initially focused on how the competing valuation models might be modified to achieve a “fair” evaluation process and 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 impeded a global resolution.
The case was ultimately resolved after three mediation sessions that spanned six months. The total litigation cost savings 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 in the court’s case management plan were extremely helpful in incentivizing the parties to timely complete the ADR plan.
Counsel followed a creative “litigotiation” path harnessing judicial procedures and ADR processes to augment a negotiation approach that achieved the BATNAs of their respective clients quickly and economically.
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 several disputes that need and should be tried, and the trial will always play an essential 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 the litigator can best leverage ever-expanding, ever-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 along with the evidence-based practices outlined in the Caseflow Management Guide and embodied in the proposed amendments to the Michigan Court Rules.