Unintended Consequences of ADR


Justice James Marchiano (Ret.)

The renaissance of alternative dispute resolution (ADR) in California civil law in the last 30 years has produced a sea change in how lawyers practice, has altered our legal culture and generated an extraordinary rippling effect of five unintended consequences. I will discuss these unintended consequences from my perspective as a trial judge for 10 years and appellate justice for 15 years after first looking back at what led up to the change.

Let’s briefly stroll down memory lane. Remember that 98 percent of all filed civil cases settle at some time before trial. But how long “before” became the crucial question. Before “Fast Track” legislation made judges accountable for case management and early disposition of cases in 1988, the backlog of civil jury trial cases caused many cases to languish anywhere from two to over four years before going to trial. A revolutionary change occurred in 1988 with the enactment of the Trial Court Delay Reduction Act: Trial judges were mandated to resolve 75 percent of assigned cases within one year, 90 percent within 18 months and most of their remaining cases within 24 months.[1]

Semiannual Bench/Bar settlement conferences using panels of plaintiff’s attorneys, defense attorneys and judges helped resolve many cases pre-1988, but it was not enough. Fast Track judges, each managing over 600 cases, used issue conferences before trial to try to settle cases, but it was not enough. Having to prepare for trial multiple times with the debilitating cost to the client and the stress of lost weekends for the attorney and staff was more than enough. Under pressure to resolve cases in a mandated timely way, in the early 1990s, courts began to facilitate reference to mediation as an adjunct to direct case management. Initially, time consuming, complex, multi-party business and construction defect cases found their way to local lawyer/mediators who specialized in such cases. At the same time, the cost of preparing and trying cases continued to spiral, especially from escalating expert witness fees and lawyers’ thirst to search under every rock with a discovery tool. A new cottage industry burgeoned and cast a shadow on the traditional civil trial model.

Lawyer/mediators who specialized in specific areas of the law realized their personal relations skills could be applied to a wider range of cases. Retired judges saw a fertile field of cases desperate for early intervention to save litigation costs. Special Masters and providers such as JAMS, Judicate West and ADR Services sprang up with an energized cadre of capable lawyers and retired judges whose sole business was to mediate and settle cases ASAP. Recognizing that mediation was far more cost effective in many cases than waiting for a court room, lawyers and clients turned to experienced professional mediators for resolution of litigation.

In addition to mediation reducing trials, contractual binding arbitration agreements mushroomed in all types of commercial transactions and precluded trials. Corporations and insurance companies started to scrutinize the high cost of litigation and looked for alternatives to filing or defending an action in Superior Court. The convergence of mediated settlements, compelled contractual arbitration and fewer court filings suddenly resulted in civil trial courtrooms becoming available on a regular basis for trials on Monday mornings. And knowing one’s case would certainly be tried at a specific time resulted in more cases settling. Moreover, some cases that were tried ended up with unexpected, jarring verdicts. Jury verdicts became less predictable because of the fewer number of tried cases from which to draw predictability ranges. De rigueur mediation spread like a tinder dry forest fire, becoming a way of life in our legal system, but with some unintended consequences.

The first unintended consequence is the phenomenon of the disappearing jury trial. Because of fewer filings, more successful mediations and the open court room, the number of jury trials has declined dramatically in the last 15 years. According to Administrative Office of Court statistics, for the fiscal year 1997 to 1998, Contra Costa County judges tried 29 jury trials, San Francisco tried 139 and Alameda County tried 97. For the fiscal year 2012 ending June 30, 2012, Contra Costa County’s civil jury trials had fallen by nearly 60 percent to only 11, San Francisco plummeted to 43, and Alameda County fell by 59 percent to 56 cases. What has the unintended consequence of fewer jury trials due in large part to ADR produced? Let’s see as we examine the second unintended consequence.

The second unintended consequence flows naturally from the first. Far fewer civil cases are now reviewed on appeal. Appellants face an expensive gamble, difficult odds, and obtain reversals in less than 12 percent of their cases. Because the appellate process is a funneling up system, with the number of appeals in the courts of appeal dependent on the number of appealed judgments, few civil jury trials are now available to review. The number of appeals pending in the court of appeals is 25 percent less today than 15 years ago. The silver lining is that the lightened workload in civil appellate filings gives appellate justices more time to devote to cases with significant issues, but it has led to a third unintended consequence affecting the development of our law.

Since the California Supreme Court only decides about 110 cases a year, the California Courts of Appeal for all practical purposes are courts of last resort for important legal issues that become binding law on trial courts through the Auto Equity rule.[2] Because many cases with important unresolved legal issues are successfully mediated or resolved in other ADR forums such as binding arbitration, the issues in those cases are lost to appellate review.[3] The moth does not return to an extinguished candle. Issues that may have quickly percolated through the system for resolution in the court of appeal 20 years ago, now take much longer because they have not been appealed.

A good example is the Howell doctrine affecting the proper application of the collateral source rule when the negotiated amount paid to a health care provider by an insurance company is less than the billed amount.[4] The issue appeared in many personal injury cases for a number of years and was the subject of opposing views in legal journals. Because most personal injury cases were resolved by mediated settlement, the trial bench and bar continued to wrestle with how and when a jury should resolve the issue. There were so many ways to skin the cat, that the cat howled for relief from a definitive court of appeal decision. However, it took considerable time for the controversial issue to percolate up to the appellate courts and then finally to reach the Supreme Court because cases in which it appeared were resolved by ADR and never appealed. Another example: Fewer civil jury trials means that the panoply of new CACI civil jury instructions, which guide jurors’ deliberations, are not receiving appellate clarification. Critical legal issues are taking longer to be resolved.

The fourth unintended consequence of the success of ADR is the lost opportunity for litigators to develop trial advocacy skills. Twenty years ago, trial lawyers would try at least three to four cases a year. Now most litigators try one or two cases every two or three years. The best that an associate in a firm can expect is working a case up for trial for a partner or perhaps sitting second chair on a rare occasion. The art of effectively trying a case is becoming a lost art. One can only learn what works and doesn’t work in a jury trial by trying the case before a jury. Just as the novice tennis player improves by playing frequently, trial skills improve with repetition and through trial and error. A lawyer’s comfort level, ability, and confidence in the courtroom expands exponentially from advocacy in front of the finders of fact. A trial advocate’s persuasive skills are not developed or erode as fewer cases are tried.

The fifth unintended consequence of ADR is that it has spawned a new field of work for lawyers and an expanding, new field of law taught in all law schools. Retired judges do not retire. They rewire for work as ADR mediators. Seasoned lawyers have rebranded themselves into full time mediators, using wisdom gained from experience to resolve disputes. And this is good. Goliath does not have to die from the hand of David. The combatants who despise one another can withdraw to the mediator’s tent and each walk away alive, partially satisfied. Civil litigation largely involves disputes between private parties who should have the opportunity to remove the baggage of self-consuming litigation from their shoulders so that they can go about their lives. ADR provides that opportunity for conflict resolution as it complements the civil trial system. Even the Sermon on the Mount extolled mediation: “Blessed are the peacemakers …” They are noble words that resound today. ADR, especially mediation, fosters a conciliatory milieu in our legal process rather than a hostile, adversarial atmosphere.

Despite some barnacles arising from unintended consequences, ADR with it benefits has become so ingrained in our civil system that it is here to stay to help advance principles of justice in different forums. The symbiotic relationship between ADR and the court system provides a creative range of strategic opportunities for resolution of legal disputes.[5]

[1] See Government Code sections 68600, et seq. and California Rules of Court, Standard of Judicial Administration 2.2.

[2] Auto Equity Sales, Inc. v. Superior Court 57 Cal.2d 450 (1962).

[3] The ability to appeal from an adverse arbitration award is severely limited by Code of Civil Procedure section 1286.2 and Moncharsh v. Heily and Blase 3 Cal.4th 1 (1992) and its progeny.

[4] Howell v. Hamilton Meats and Provisions 52 Cal.4th 541 (2011).

[5] See the variety of Superior Court sponsored ADR programs at www.cc-courts.org/adr and the Contra Costa County Bar Association programs at www.cccba.org/attorney/build-your-practice/adr-programs.php.

Filed Under: Spotlight


RSSComments (2)

Leave a Reply | Trackback URL

  1. I agree with Justice Marchiano’s observations. The only silver lining to the cloud is with court funding and resources so depleted, less cases in the system keeps a bad situation from becoming intolerable. Then again, if it were intolerable, maybe there would be more public outcry to move the politicians to fund our courts properly.

  2. randy andrada says:

    Thank you Justice Marchiano for your thoughtful article. I propose that there is another unintended consequence, namely the obsession with discovery that actually does not produce much significant information. Do we really need document demands with fifty categories? Do we really need set after set of interrogatories? When was the last time a ten page meet-and-confer letter produced a benefit that was worth the effort? Justice Marchiano, thank you again for your article. Randy Andrada bar number 70000