Thomas J. Stipanowich William H. Webster Chair in Dispute Resolution & Professor of Law Pepperdine University School of Law Malibu, California Academic Director, Straus Institute for Dispute Resolution 25 th Annual IACM Conference Stellenbosch, South Africa July 12, 2014

The Fortune 1,000 Corporate Survey (2011)  Co-sponsored by Straus Institute for Dispute Resolution with the Scheinman Institute on Conflict Resolution at Cornell University and the International Institute for Conflict Prevention & Resolution (CPR)  Landmark survey of Fortune 1,000 companies and federal agencies, following on 1997 Cornell PERC Survey of Fortune 1,000 companies  Thanks to Prof. David Lipsky (Cornell) and Beth Trent (CPR) for portions of this presentation.

Backdrop: U.S. Litigation 98.8% of federal civil cases settle before trial (2009) Litigation represents more than half of legal budget ($21.1B annual litigation spend in US) 14.3% of companies control 80% of litigation spending Great cost is associated with discovery

International Institute for Conflict Prevention & Resolution4

Crisis in U.S. Courts State Courts Most states cut funding 10%-15% 26 state courts delayed judgeships 14 states massive layoffs NY and CA hardest hit Federal Courts 9.5% district judge vacancy rate Criminal cases up 70% Google/Oracle dispute delayed due to criminal trial

The Fortune 1,000 Corporate Survey (2011)  Co-sponsored by Straus Institute for Dispute Resolution with Cornell University and the International Institute for Conflict Prevention & Resolution (analysis in progress)  Landmark survey of Fortune 1,000 companies and federal agencies, following on 1997 Cornell PERC Survey of Fortune 1,000 companies

Objectives of the Study To obtain information regarding mediation, arbitration, and other ADR techniques used by major U.S. corporations To identify trends comparing the results with the results Cornell obtained in a 1997 Fortune 1000 survey To discover emerging policies and practices in the use of ADR by major corporations To understand the factors that explain the trends and patterns we have discovered in the use of ADR

Survey Design and Methodology The survey was administered by Cornell’s Survey Research Institute Conducted interviews with top attorneys in 368 corporations % response rate (1997 survey received 606 responses) 46 percent of the respondents were GCs and 54 percent were other attorneys in the GC’s office Respondents had the choice of completing the survey by phone, by mail, or by web

Total Number of Surveys 368 Completed survey*360 By mail85 By phone63 By web212 Partially completed survey  ̊ 8 Out of business (Company defunct, merged or acquired)16 Contacted without resolution332 Refused to participate284 Response Rate 37.4% *Includes 6 completes from pilot study Survey Administration and Response Rate

* These options were only included in the 2011 study Proportion of Companies that Used Technique at Least Once in the Previous 3 Yr.

Principal Reasons Companies Use ADR, 2011

Percent of Responding Companies that Used Mediation at Least Once in Each Type of Dispute in the Previous 3 Years

Percent of Responding Corporations that Used Arbitration at Least Once in Each Type of Dispute in the Previous Three Years

Percent of Responding Companies that Used Mediation at Least Once in Each Type of Dispute in Previous Three Years (2011)

Typical Comments “We use mediation a lot more than we use binding arbitration.” “Lack of qualified neutrals is not ordinarily an issue in mediation.” “Mediation is not complicated…people are familiar with it. “ “I am less concerned about third-party neutrals since I can still control the outcome.” “Mediation is not binding, less risk.”

Resolving Employment Disputes Proportion of EmployeesPercentage of Companies More than 75 percent19.0% Between 51 and 75 percent3.5% Between 26 and 50 percent3.5% Between 1 and 25 percent19.4% Zero43.3% Don’t know11.3% “What Proportion of Your Employees are Covered by ADR?”

The Five Characteristics of Integrated Conflict Management Systems  Broad Scope  Tolerant Culture  Multiple Access Points  Multiple Options  rights-based  interest-based  Systemic Support and Structures Source: Guidelines For The Design of Integrated Conflict Management Systems Within Organizations, SPIDR’s ADR in the Workplace Track I Committee, 2000.

Do You Believe Your Company Has a “Conflict Management System”? This result is inconsistent with our other findings: 67 percent of the companies say they have a “system” but only 46 percent say their employees are covered by ADR!

Does Your Company Have an Office or “Function” Dedicated to Managing Your Dispute Resolution Program? This finding together with other findings in our survey suggest that about one-third of major U.S. Corporations have an “integrated conflict management system”

Conclusions  Over the past 15 years, a growing number of companies have adopted ADR as their principal approach to resolving consumer, commercial, and employment disputes  Many companies have adopted a wider array of ADR techniques, including early neutral evaluation, early case assessment, and conflict coaching  Companies have moved from using ADR techniques primarily to avoid litigation to using ADR techniques to resolve disputes at the earliest possible stage  Although the use of ADR techniques has generally grown, the use of arbitration has significantly declined.

Conclusions  Surprisingly, four out of ten respondents report that they do not use ADR to resolve employment disputes  On the other hand, we estimate that one-third of the Fortune 1000 corporations now have an integrated conflict management system (ICMS)  Relatively speaking, the number of corporations with an ICMS has doubled over the last 15 years  It appears that a growing proportion of major corporations are adopting sophisticated conflict management strategies, but a significant proportion continue to use more traditional methods

Thomas J. Stipanowich William H. Webster Chair in Dispute Resolution & Professor of Law Pepperdine University School of Law Malibu, California Academic Director, Straus Institute for Dispute Resolution 25 th Annual IACM Conference Stellenbosch, South Africa July 12, 2014

Mediation Outcomes in Relationship Cases (Golann, 2002)

How construction mediators are selected Dean Thomson, ABA Forum Survey, Constr. Lwyr. (Fall 2001)

Criteria for selection from outside the region 1=highest in importance; 5=lowest ScoreCriterion 2.36Mediator subject matter experience 2.86Mediator reputation 2.89Mediation experience 3.73Acceptability to all parties 3.94Mediation style 4.88Mediator’s legal expertise 5.71Expense of mediator

If mediator has experience in mediation and the subject matter, I prefer…

I prefer:

Preparatory approaches

Beginning the joint session

Handling complex, multi-party disputes Significant early planning and preparation, including Exchange of statements Submission of confidential settlement positions to mediator Premediation meeting with lawyers to set ground rules Exchange key documents, etc. Mini-mediations

Preferred mediator activities (10 is highest ranking) Activity Want to receive Typically receive Asks parties to confidentially evaluate their cases, but does not evaluate Will not let the parties leave unless the mediator declares an impasse At an appropriate time during the mediation, forcefully and vigorously recommends a resolution proposed by one of the parties or the mediator Reviews with the parties the likely costs and expenses of proceeding and the uncertainties of the legal process

Preferred mediator activities (10 is highest ranking) Activity Want to receive Typically receive At an appropriate time during the mediation, forcefully and vigorously reviews with each party in confidence the mediator’s opinion of the likely outcome of the case At an appropriate time during the mediation, encourages the parties to accept a resolution proposed by one of the parties or the mediator Communicates the parties’ settlement positions and helps the parties avoid personality disputes

Preferred mediator activities (10 is highest ranking) Activity Want to receive Typically receive Confidentially discusses with each party the merits and potential outcomes of the case Presents various settlement options or solutions to the various parties based on the mediator’s understanding of the case

If the mediator is to provide a confidential evaluation of my client’s case, I prefer: