Welcome to The Consumer Corner. This is a podcast that focuses on protecting the consumer from Corporate America.
- One of the things we are going to talk about is how different companies have harmed consumers. Sometimes these stories will be newsworthy, other times they might fly under the radar so to speak. We will also cover some legal topics.
In today’s episode, we will look at something called alternative dispute resolution. This is more commonly referred to as Arbitration and mediation. For this episode, we will focus on mediation and how this can help or harm you the consumer.
Since this will be a bit heavy in the way of legal terms and the like, I have to put my disclaimer in. I am an attorney. However, at least for the purposes of this, I am not your attorney. Also, for every legal rule, there seems to be 100 exceptions. If you have questions for a specific case, I recommend talking to a licensed attorney. Also, as many of us are learning, lawyers included, many of our rules are created by judges, and thus can be changed by judges….pretty much whenever they feel like it.
What is Alternative Dispute Resolution
Arguably it is anything that involves resolving a dispute without going to trial. When I was in the Marines there was a couple of mechanisms that involved resolving disputes that not only avoided trial, but it also usually avoided much talking either. Though it was usually pretty effective both in time and cost. Technically that would be a form of alternative dispute resolution…albeit not officially recommended.
Today we generally use mechanisms called Mediation and Arbitration.
What is Mediation
Mediation is where parties come together and discuss their cases with a third party known as the mediator. Ideally, the mediator is neutral. The goal is to get the parties to agree on a resolution. If the mediator is clearly biased it will probably be a waste of time. Prior to the mediation, the parties, probably through their attorneys, will usually provide the mediator with some background info related to the case and their position, as well as any previous attempts at negotiating. This is also usually done ‘ex-parte’ which means, the other side doesn’t see what you send to the mediator. That doesn’t always mean we share everything, but we might be a little more open with our knowledge of the facts. There is usually a confidential nature to the process as well. The mediator is not generally supposed to share anything you say or do with the other side or any other third party, or the judge. There are probably some limits to this, especially if you make physical or other illegal threats. I am also very careful about who I trust given that I represent consumers. So I kind of assume they are telling the world.
For a mediation to be successful, it helps if all the parties are there and not just the attorneys. Typically, each party, through their attorney, will make a statement about their opinion of the case and their interpretation of the facts. This might be the first time one of the parties has actually heard the other side’s position and maybe even all the facts.
Corporate clients will often let their attorneys handle almost all aspects of the litigation with little to no oversight. As you can imagine, attorneys, especially those working for corporations, get paid a lot more for continuing to litigate a case versus settling it. In many of my consumer cases, I would estimate that at least 95% of the damages and attorneys’ fees that are paid by the other side are the result of them being what we call stubbornly litigious. One opposing counsel told me that it was okay if his clients litigated and lost, so long as they ‘learned something’. Each time his client ‘learns something’, they have to pay his fees, my fees, and damages to my client. Seems like it would be a lot more cost-effective to just treat people with dignity and respect, but I digress.
Back to mediation….
After the initial ‘case presentation’ phase, we usually caucus. Pre Covid, this meant the parties each went to their own room and met individually with the mediator. The mediator would go back and forth between the rooms and discuss the good and bad of each case, and try to negotiate a little. Since Covid, much of this is done over Zoom or a similar platform, that allows the use of virtual rooms. Generally, I have not found these to be as effective as the in-person mediations, but maybe they are less expensive.
Hopefully, the parties eventually come to an agreement. Sometimes the parties will come back together to memorialize it, but they may not. And the mediator may draft some language up so the parties can sign. This will depend on the mediator and the parties.
When do you Mediate, Who pays for it, and How much does it cost?
Usually, the parties split the cost of mediation. Sometimes a Court will order it and it might be paid for under a local alternative dispute resolution service. In Federal Court, we have had Magistrate judges that will do the mediation. These would obviously be ones not assigned to our case. These are also free, at least for the cost of the mediator.
As mentioned, many times it is free. In my experience, it usually runs a few hundred dollars an hour per party. And don’t forget, if there is review time prior to the mediation, they will likely charge for that too.
How about the Success rate…
Maybe not surprisingly, the mediations that were not free have been the most effective. I can think of only one time I was truly disappointed in a mediation. There was another one that was required to occur prior to filing a suit as per a contract with a car company. The mediation was required, and the other side had lied to a judge to get an arrest warrant for our client who had purchased a car at a buy here pay here type of place. They actually damaged the vehicle, so it wasn’t drivable, and then accused her of stealing it. Surprisingly they, or maybe their attorneys, were not interested in an actual mediation. It was just an artificial roadblock they had put in place thinking her attorneys wouldn’t keep going after them. For what it is worth, I am glad they didn’t. It ended pretty nicely for her.
Every other mediation, that we did voluntarily through third parties, to the best of my knowledge, has either resulted in a resolution or gotten us close enough to get there soon after.
The second best has been court mediation with the Federal District Courts. Usually, the parties want to get it resolved, but in a small non-trivial amount of time, they are just there to not look bad and act like they are participating. Usually, the mediator sees through this BS and cuts it off soon, and they tell us. I have had some Magistrate Judges, who are the mediators there, say some interesting things about opposing parties and their attorneys. Occasionally we will get a mediator that doesn’t have any interest in consumer cases and acts like it is beneath them. We haven’t had these folks twice though, and I do plan to request another mediator if we are assigned one who has previously indicated they are not going to be neutral. I would say if both parties want to mediate this will be successful most of the time as well.
The last common scenario is the court-mandated mediation that often occurs in small claims courts that have a contract with a local mediation provider. These are usually a dumpster fire. The mediators mean well, but the parties generally don’t care to mediate. And sometimes the mediators, despite their intentions, are not at A-game material. I have had one try to give legal advice to my client that was just wrong, right after he said he couldn’t give legal advice. If you are required to attend one of these and the mediator spends 30 minutes telling you how awesome he is, it is not that awesome. And you are about to see first-hand how un-awesome he, or she, can be. I can’t recall a single case that was resolved when I have had to participate in these.
Why would I mediate and when should I do it?
Well….To get the case resolved. Litigation often takes years to fully resolve if there is no settlement. We have had quite a bit of luck once both parties appreciate the position they are in as far as winning versus losing. In our case, once a defendant realizes that they stand a strong chance of losing they are ready to settle. This usually occurs after the Court has denied any motion they have to dismiss the case or claims. I feel like many times their lawyers are making them think there is a chance of winning so they can keep fighting and billing. But once that order from the Court comes out, they seem to have a change of heart. Maybe the lawyers blame the judge and say that settling is cheaper than an appeal….I don’t know. Once, I have had a defendant want to mediate before filing an answer. Oddly, they didn’t want to settle prior to getting sued. I think their attorney just wanted one last chance to bill and then he tried to disparage us in the mediation. It did settle though, and our clients seemed pretty happy with the result, despite his rude comments. While I don’t really care about the other side’s opinion of mediation in that case, or any case, it was a win for them as well. The money they would have had to pay my clients and myself, as well as their own legal team could have been very significant if we were successful. And I think given the facts, we would have been successful.
You also may have to mediate as part of a contract prior to litigating a claim. This was the case in the car dealer matter I mentioned before. We had to mediate, and then we had to arbitrate. But we will talk more about arbitration later.
Consumer Pro Tip
I am stealing an idea from another podcast I listen to that focuses on lawyer things like practice management, etc. They end each episode with a tip, or hack, from each person on the podcast. So I am going to try and have a Consumer Pro Tip for my episodes. And my Consumer tip for this week is to stop paying people for taking advantage of you. Consumer prices seem to be going through the roof. If it is a staple that you need, you may not have a choice, but if you don’t need it, don’t reward their behavior by paying the same or more than you were paying before. I have changed hotel brands I try to use because Hilton is horrible right now. I usually have diamond status, and now I am lucky if I get offered a bottle of water that is 3 tiers below tap water. They won’t clean the room and breakfast is 50-50 if it will be there. They don’t even apologize for it. Rooms are clearly dirty and sometimes just disgusting. And the price has only gone up. So, I don’t use them if I can avoid them. Same for unnecessary consumables. If this country could take a month off from buying stuff we didn’t need, I think some things would fix themselves. That said, I would give some deference to smaller locally-owned businesses so we can keep those around. We just have to stop rewarding these big businesses that are taking advantage of us and usually their employees as well.
And that’s a wrap on today’s episode!
- I hope you had a good time listening and maybe learned something.
- I am always on the lookout for press releases or other reputable news sources about the misdeeds of this company or any financial company that is harming consumers. So, feel free to send those to me.
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Have a wonderful week!