Much is being made about how mediation and arbitration are effective alternatives to the courts now that COVID-19 has made trials logistically problematic. Mediation, and to a lesser extent arbitration, have been at the forefront of the legal profession for a number of years.The current pandemic, however, has made these alternatives to court more mainstream. This is especially true in Los Angeles, where the courts are buried with cases, creating a huge backlog.Mediation is a private process in which parties jointly pay for a private mediator to essentially knock heads for a day at a neutral site, going back and forth to reconcile facts and to hammer out a deal. I would estimate success at least 85 percent of the time so, in many cases, it’s worth the $6,000 to $15,000 a day for a good mediator.Early in my career, we rarely discussed mediation. About a month before trial – having spent tens of thousands of dollars, if not hundreds of thousands of dollars, on legal fees – the court would force the parties to participate in a “mandatory settlement conference” with another judge. Sometimes it worked, but given all the defense costs already spent, it rarely seemed like a great result from the client’s perspective.Mediation is now routine and is essentially required by every court in California. Over 98 percent of all civil cases settle before they reach trial so they either resolve through mediation or private discussions between the parties or their attorneys. Resolving disputes sooner than later in the litigation process can save a ton of money.Arbitration is a contested and binding trial done in a private setting with a paid arbitrator (charging between $8,000 and $20,000 a day).The cost of the arbitrator is significant, but the expense is generally outweighed by the attorney fees saved in lieu of a jury trial. Then there is the reduced risk of being in front of a retired judge or senior attorney as arbitrator instead of arguing a case in front of panel of jurors who may not be able to identify with or be as sympathetic to the client, especially in an employment dispute. If the client company has employment practices liability insurance, the carrier will pick up the cost of the arbitrator as part of its coverage.Often ignored when considering whether to fight or settle is the corporate downtime required to deal with the legal issues brought to the company: strategy meetings, depositions, sitting in a trial or arbitration, the stress, the potential financial impact. We have successfully guided San Fernando Valley companies through that process, resulting in a successful mediation and settlement later approved by the court as required by law.Mediation can occur even before a lawsuit is filed – when a client receives a demand letter and there is enough perceived liability. Clients often feel morally outraged by the demand letter and refuse to put even a relatively nominal amount on the table to get this dispute off their desk and off their books as a contingent liability. Once I talk them off the ledge, however, they tend to see the rationale for early resolution. If I can’t talk my way to settlement over the phone with the other side, we often will go to early mediation.Once a company properly considers the potential risk, the costs, the fact that they may lose their employment practice insurance renewal, and the corporate downtime. Companies come to understand that they will pay a lot more in legal fees if they fight. The better strategy is almost always for them to pay and go home. Once they get over the moral dilemma of the issue, it’s much easier to get to a business decision, leaving emotions at the door. This has never been more true as the COVID-19-related trial delays continue to mount.Jonathan Fraser Light is the managing attorney at the management-side employment law firm LightGabler in Camarillo.
