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Encouraging Parties to Settle

Saturday, January 18, 2025 4:41 PM | Anonymous

Can a Case be Reopened After Settlement: Exploring Your Legal Options | Wyatt Injury Law Personal Injury Lawyers

Do you believe that an arbitrator should regularly encourage the parties to think about settlement (or mediation) at various times throughout the course of an arbitration proceeding, or should they stay away from any discussion of settlement, after the preliminary hearing, and simply recognize that the parties are looking for a final determination from the arbitrator? If an institution is involved, should they be the one encouraging settlement (or mediation) rather than the arbitrator?

What are your thoughts? 

Comments

  • Sunday, January 19, 2025 11:40 AM | Michael Fox
    I don’t think the arbitrator should initiate the subject beyond asking about mediation plans at the beginning of the process, or in context of the issue being raised by the parties. Otherwise you can give the impression you are trying to avoid your responsibilities as arbitrator.
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    • Sunday, January 19, 2025 11:45 AM | Charles goldbero
      Like a trial judge once the arbitration hearing begins the arbitrator should not suggest or take part in settlement discussions
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      • Sunday, January 19, 2025 3:26 PM | R Wiesenthal
        No harm in it.
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    • Sunday, January 19, 2025 11:47 AM | Steven Schwartz
      At the first management conference, I tell the parties that I don’t get involved in settlement discussions or suggest that they settle. That’s not my role. If they want to talk during the hearing, I give them all the time they need. If they want to change the arbitration schedule to go to mediation or have time to discuss settlement, I amend the arbitration schedule.
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      • Monday, January 20, 2025 12:15 PM | Stephen
        I generally agree with Steven, especially if the parties are both entities and not individuals. I would also not raise the subject if arbitration is provided in a contract calling for arbitration.
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    • Sunday, January 19, 2025 11:54 AM | William J. Tucker
      If my understanding is correct, AAA offers mediation to parties who sign up for arbitration. If I am correct, no need for an arbitrator to make that suggestion. If I am incorrect, perhaps AAA should always offer mediation.
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    • Sunday, January 19, 2025 6:03 PM | Aric J Garza
      I agree with this approach.
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  • Sunday, January 19, 2025 11:46 AM | Anonymous
    I always bring up settlement in the preliminary hearing. However, I do not bring it up again unless the situation is one in which settlement is obviously likely and/or obvously desirable.
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  • Sunday, January 19, 2025 11:46 AM | Denise Presley
    I'm always glad to hear parties have resolved their dispute during the proceeding, but encouraging settlement after a preliminary scheduling hearing is tricky. I generally don't. Less sophisticated parties may interprete such a suggestion as the arbitrator interferring with their right to an evidentiary hearing.
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  • Sunday, January 19, 2025 11:53 AM | Dean Burrell
    In traditional labor cases I routinely ask the parties at the beginning of the hearing whether they've spoken in advance, do they wish to, and to let me know when or if I should be involved. I also make clear its always a wonderful day for a hearing, so they don't think I'm trying to shirk my responsibilities and pick up an easy fee. More often than parties have not spoken and it settles. In a number of Covid-related cases the issue no longer exits and its a question of damages. I may suggest settlement or essentially making this a compliance hearing, i.e. how much?
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    • Sunday, January 19, 2025 12:02 PM | J Ramon
      No. Once the hearing begins, the arbitrator should stay neutral throughout the proceedings.
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    • Monday, January 20, 2025 2:06 PM | Clauss, Brian
      Agreed. But, labor is different than other areas because the labor-management relationship is part of an ongoing relationship. A labor arbitration award is read in conjunction with the collective bargaining agreement.
      Like Dean. the question "have you talked?" is always a question at the labor arbitration. Because of the realities of practice, the parties often have not talked. Many disputes resolve at this stage.
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  • Sunday, January 19, 2025 12:20 PM | Mark Bunim
    At the conclusion of the evidentiary hearing, (but not before) if the parties have requested a reasoned award, I remind them of the significant cost that a reasoned award entails, and I encourage them (before spending more time on post-hearing briefs) to think seriously about settlement and I volunteer to stay the running of all time-clocks for 2-3 weeks to enable them to engage in settlement discussions. At the end of the agreed period, they either tell me that the case settled or did not. If not, then their time to submit post-hearing briefs begins to run followed by closing argument.
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  • Sunday, January 19, 2025 12:48 PM | Richard McDonald
    I try to get some sense at the preliminary conference if there have been, or will be, any discussions about settlement, whether by way of mediation or private negotiation. My only follow up comment after would be that if counsel is interested in discussing mediation, that AAA has a separate process for that, and that my involvement is strictly as arbitrator, so "let's proceed.".
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  • Sunday, January 19, 2025 12:53 PM | Arthur L Pressman
    Much more effective and less potentially misunderstood for institution/case manager to recommend mediation rather than arbitrator. Just as a normal check-in, maybe even w/o arbitrator's knowledge. Just what they do at a certain point before or during the case.
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  • Sunday, January 19, 2025 1:05 PM | Stephen Yusem
    There is nothing more important to the arbitration process than the neutrality of the arbitrator. By attempting to convince the parties to settle, the arbitrator risks losing that critically important component.
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  • Sunday, January 19, 2025 1:18 PM | Mark F. Brfancato
    Under both Commercial Rules of Arbitration R. 10 and Construction Industry Rule R.10, parties in matters where a claim or counterclaim exceeds $100,000 "shall mediate their dispute pursuant to the applicable provisions" of the pertinent Rules. R.10 further provides in each set of rules, "Absent an agreement of the parties to the contrary, the mediation shall take place concurrently with the arbitration and shall not serve to delay the arbitration proceedings." R.10 also states that "any party to an arbitration may unilaterally opt out of this rule upon notification to the AAA and the other parties to the arbitration." Thus, in matters where a claim or counterclaim exceeds $100,000, the arbitrator must ensure compliance with R.10. If neither party opts out in the manner required by R.10 and there is no agreement between the parties that supplants R.10, the arbitrator must ensure that the parties are mediating in accordance with R.10, bearing in mind that R.10 also mandates that the mediation "shall not serve to delay the arbitration proceedings. In my view, this requires the arbitrator to work with the parties to keep their mediation as concurrent with the arbitration proceedings as pragmatic and reasonable. If a party has not opted out and refuses to cooperate with the other party to mediate, the arbitrator should exercise his/her authority under Construction Industry or Commercial Rule R. 31 to postpone the hearing or under R.38 to to "take whatever interim measures he or she deems necessary" to enforce R.10. Outside R.10, an arbitrator can and, I believe, should encourage the parties to consider settlement as part of the Preliminary Hearing and, when appropriate under the circumstances during the hearings. Beyond that, an arbitrator should steer clear of any direct or indirect involvement in any aspect of settlement or mediation.
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  • Sunday, January 19, 2025 2:57 PM | Dustin Hecker
    As someone pointed out, Commercial Rule 9 requires (but, with a unilateral right to say "I'd rather not even try, thanks") that the parties attempt a mediation. The template preliminary hearing order requires a discussion of whether the parties are amenable to mediation. My practice is to use the template question to remind the parties they may use private or AAA mediators if they wish and, if they want to use an AAA mediator to contact the case administrator, not me. Beyond that, I will allow time for mediation in the scheduling order if the parties are interested in specifying that. And I will almost always suspend or extend the proceedings if both sides agree to mediate and jointly request to move the schedule out. But I don't encourage the parties to mediate or to settle. Not my role as an arbitrator.
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  • Sunday, January 19, 2025 3:35 PM | John Darden
    Mediation deadline mentioned as part of the scheduling conference. Depending on the nature of the arbitration, I have one or two scheduled telephone conferences to check status. I ask at status conference if any changes are needed to the future schedule and if mediation deadline is in the scheduling order, it is addressed. Otherwise, no discussion. We know 90% of cases settle and I ask at the first concerence to be courteous with my calendar and with their client's payment of my preparation time and not wait until the eve of the hearing.
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  • Sunday, January 19, 2025 4:58 PM | Hon. O. Peter Sherwood (ret.)
    I believe mediation should be encouraged and Rule 9 of the Commercial Arbitration Rules strongly encourages parties to mediate. At the first preliminary hearing I inquire whether the parties have attempted mediation and, if so, whether that process is ongoing. I also include time for mediation in the scheduling order. In some cases I will inquire again at the final prehearing conference.
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  • Sunday, January 19, 2025 6:37 PM | Ruth V. Glick
    During the preliminary conference and in my scheduling order, I have always advised the parties that according to R-9, now R-10 of the Commercial Rules that mediation may take place while the arbitration is pending. I would only refer to mediation during the hearing if it is brought up by the parties and then advise them that the AAA case manager can provide them with a list of top notch mediators. If parties are engaged in their own settlement discussions, I might provide them with additional time if requested by both sides.
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  • Sunday, January 19, 2025 6:43 PM | William Bierce
    To preserve neutrality, NYS Code of Professional Responsibility, at Sections 1.12 and 2.4, defines prohibitions and restrictions on an arbitrator's possible role as mediator. As i read it, nothing there prohibits an arbitrator from inquiring about the parties' possible use of mediation or describing how mediation permits party autonomy to get negotiated terms that an arbitrator or judge cannot offer. It may help break the ground where each side wants to avoid being perceived as "weak." But after that, in my view, the arbitrator should drop the subject to avoid any implication of partiality or unwillingness to pursue the arbitration to completion.
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  • Sunday, January 19, 2025 9:11 PM | Anonymous
    It is my practice to mention settlement at the preliminary hearing and to ask the lawyers to build that into their schedule. I put the reference in my first scheduling order and then I usually do not mention it again.
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  • Sunday, January 19, 2025 10:19 PM | Patricia Beaujean Lehtola
    There were times when I was in front of a judge that repeatedly brought up settlement or mediation that I got the feeling the judge had already prejudged the case and was telling us because she/he already felt one side was going to lose. For this reason, I don't bring it up after the Preliminary hearing.
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    • Monday, January 20, 2025 9:26 AM | Gordon A. Coffee
      I also had judges push settlements when I was a litigator, but my assumption was that they were doing so because they did not want to preside over a lengthy trial or to write a detailed opinion.
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  • Sunday, January 19, 2025 10:53 PM | David Freedman
    I never encourage or mention settlement because I don't believe that's part of my role as an arbitrator. If I'm told the parties plan to mediate, I say that's great and allow time for it in the scheduling order.
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  • Monday, January 20, 2025 9:35 AM | Gordon A. Coffee
    In one of my earlier cases, I asked about settlement during a preliminary conference, prompting one counsel to regale me with details about the "generous offer" he had made that his opponent had rejected. I since have presided over three or four cases where attorneys gratuitously mention their settlement offers or include them as exhibits, presumably to influence me. I now say at the outset that if the parties settle, that is great, but I do not want to hear or see specifics of the discussions or offers.
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  • Monday, January 20, 2025 12:08 PM | Renee Gerstman
    I agree with Mark Bunim's comment and see no reason why an arbitrator cannot tell the parties that before a final award is issued the parties are free to resolve their dispute. As to whether the arbitrator can also serve as mediator in certain circumstances, I suggest the parties consider med/arb practices. Tom Stipanowich's article from October 2020 is instructive on this blog topic. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3689389
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    • Monday, January 20, 2025 2:23 PM | Clauss, Brian
      Good point. Med-arb is a part of my labor and employment arbitration practice. It is a growing area.
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  • Monday, January 20, 2025 1:28 PM | Anonymous
    A Panel should almost always raise the topic of whether the parties are able to engage in settlement negotiations and inquire when those might be most productive. Not getting into substance- just posing the question about mediation and/or negotiations. Again, not abdicating responsibility or taking a position- just asking/inquiring, at various times in the case process. I also believe the AAA should do the same, away from the Panel.
    Reasoning for this position includes the reality that lawyers don’t communicate with each other and often need the prompt of a higher authority to do so. They may need the “cover” of proposing the idea of a negotiation or mediation to protect them from their own client, or to eliminate the notion that such a proposition coming from one side makes that proponent look weaker to the opposition. Calendars that get locked up and then released at the last minute because suddenly there is an epiphany to think about settling is very annoying to a full time neutral, not to mention potential cancellation fees unnecessarily incurred. The unnecessary efforts by many to schedule locations, logistics, travel, etc. when the case might settle anyway if further reason to inquire.
    In the IPHC I always ask if the parties need an Order to Mediate and/or drop dead date to mediate to protect lawyers from looking disinterested in their client’s case and needing “cover” to engage in a settlement focused process, thus provided/encouraged by the Panel. Lastly, when the testimony is concluded I remind participants that there will be time now to go to work to see if settlement is still out of reach. They have heard the testimony, seen the witnesses, heard the questions from the Panel, seen the Panel’s reactions, etc. Perhaps it might be wise to keep control of the outcome and have further dialogue.
    My two cents. Tracy Allen
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  • Monday, January 20, 2025 7:42 PM | Barry Freeman
    Yes I think there is nothing wrong in suggesting that the parties consider discussing settlement or maybe consider mediation.
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  • Tuesday, January 21, 2025 9:21 AM | Marianne Espinosa, J.A.D. (ret.)
    This issue is largely fact-sensitive. In cases where emotions run high or a ruling has just been made in one party's favor, the suggestion that parties consider mediation could be read as signaling what the arbitrator considers the likely outcome, compromising the perception of impartiality. That danger is also present If an institution is involved, promoting mediation, and the arbitrator appears to endorse the institution's view. I see no harm in revisiting whether the parties are considering mediation as part of a follow-up management conference call. However, I cut off the parties at the pass when they - presumably innocently - attempt to update me on the progress of negotiations.
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    • Tuesday, January 21, 2025 9:41 AM | 'David E Robbins
      The role of arbitrator is different from mediator. If the arbitrator keeps encouraging the parties to mediate, to settle, she/he is giving a strong signal that one side will lose, giving the distinct impression that he/she has prejudged the case. The parties known they can always settle; they don't need the arbitrator to tell them.
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  • Tuesday, January 21, 2025 11:40 AM | D. Andrew Byrne, Esq.
    I do not mention settlement to the parties, but if they bring it up I tell them that I certainly encourage them to explore settlement if they wish to, and I will adjust the case schedule to accommodate any settlement discussions they wish to engage in.
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  • Tuesday, January 21, 2025 11:50 AM | JTB
    I mention settlement at the preliminary conference and indicate that they should consider it, but by AAA rules I cannot assist with the process
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  • Tuesday, January 21, 2025 3:33 PM | Robbie MacPherson
    The thoughtful comments demonstrate the value of this Bolg, so thank you Jeffrey Zaino and ACR-GNY.
    I like the approach suggested by Mark Bunim of suggesting the parties consider settlement after the evidentiary hearing is done and before final briefs are prepared. But I also have no problem with an arbitrator raising the topic whenever the arbitrator thinks it appropriate given the circumstances. A settlement reached by the parties will always be a better resolution that one imposed any an award.
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  • Friday, January 24, 2025 11:51 AM | Thomas Rossi
    I do not believe it is wise for an arbitrator to be encouraging settlement after the preliminary hearing and particularly after any evidence or motion practice is submitted. It is too easy for the arbitrator to tip his/her hand or at least have the parties believe that the arbitrator has tip his/her hand.
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  • Sunday, January 26, 2025 1:42 PM | Wm. Frank Carroll
    I do not believe it is the arbitrator's function to encourage settlement or mediation. However, I always put in my Scheduling Order a provision which says if the parties elect to mediate the matter they must conclude the mediation by a specific date and that the matter will not be continued for a mediation after that date.
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  • Sunday, January 26, 2025 1:58 PM | Peter Silverman
    I offer parties that, if they all consent, I would present them with my preliminary views of the case when requested. This could indirectly encourage settlement and can be a benefit to parties who have counsel that lacks judgment as to the merits of the case. Regardless of settlement, preliminary views help counsel shape their case to better persuade the arbitrator by offering early transparency. See, e.g. Arbitrator Techniques and their (Direct or Potential) Effect on Settlement, E. Sussman and K.P. Berger (chairs of Working Group 4) IMI Global Pounds Conference at 36-37,
    bit.ly/4jvnVEw.
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  • Sunday, January 26, 2025 2:35 PM | Melissa Hubbard
    Per the template for the scheduling order, mediation should be discussed at the prehearing conference with a deadline set forth, but letting the parties know that they can mutually agree to change it since mediation is a voluntary process. I also make it clear that I cannot serve as a mediator which often leads to a brief discussion about the differences between arbitration and mediation, for new practitioners and sometimes for the benefit of their clients who may also be involved in the first conference call. I also make it known that I have a one-week cancellation fee so as to discourage night-before hearing settlements.
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  • Sunday, January 26, 2025 11:52 PM | Anonymous
    Parties come to arbitration, and to me, because they have a dispute, not because they require an arbitrator. Therefore, I see myself as a dispute resolver first and then as an arbitrator.
    Consequently, I point parties to mediation (by someone else) at critical stages of the arbitral proceedings, except when I am in a tribunal with colleagues who have a different approach, even if this is not a requirement in the arbitration agreement. I do this in good faith in a bid to save time and costs. Generally, the parties and counsel appreciate this.
    My approach has been validated by the High Court of Kenya in a judgment dismissing an application for my disqualification. The applicant had felt "pre-judged". The court noted that my order applied equally to both parties and so none was targeted.
    Paul Ngotho, Kenya.
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    • Monday, January 27, 2025 6:11 PM | Lionel M. Schooler
      I think any discussion by the Arbitrator “regularly” encouraging settlement by the parties during an Arbitration proceedingwould be improper. It would inevitably be construed as the Arbitrator’s view of the merits of the pending matter. It would also involve the Arbitrator in a possible side tracking of the Proceeding. I therefore concur with the suggestion in the second sentence, i.e., that the Arbitrator should avoid the subject altogether after the preliminary hearing, and then only informing the parties of their right to consider that alternative with a different professional.

      As for institutional involvement, I think that of the two, the sponsoring institution or the Arbitrator, only the institution should discuss (not “encourage”) the availability of mediation as an alternative
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  • Sunday, February 02, 2025 3:28 PM | George Wood
    At the preliminary conference stage inquiring if the parties have explored settlement is good. Encouraging the parties to settle is not the job of the arbitrator and can intimidate the parties. Asking if parties wish to explore settlement at some stage of the process and setting the date is appropriate.
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  • Sunday, February 02, 2025 4:12 PM | Michael Glasser
    The purpose of arbitration is to provide a cost efficient and expeditious route to dispute resolution for the parties. I see nothing improper about encouraging the parties to attempt to work out their own disputes, if possible. Where I am located, the best trial judges absolutely encourage the parties/counsel to try to settle their matters. This does not involve pre-judging the merits. It is simply an acknowledgment that life is short and need not be spent in protracted and expensive litigation. So, yes, I do encourage the parties to give resolution their best shot; but I also tell them my job is to decide the issues if they cannot resolve the dispute themselves. I also tell them that no third party will ever know their case better than the parties themselves and that it will not hurt my feelings if they do me out of a job prematurely.
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