Trends in U.S. Mediation: The Fortune 1,000 Corporate Survey

1. Trends in U.S. Mediation: The Fortune 1,000 Corporate Survey Thomas J. Stipanowich William H. Webster Chair in Dispute Resolution & Professor of Law Pepperdine University School of Law Malibu, CaliforniaAcademic Director, Straus Institute for Dispute Resolution 25th Annual IACM Conference Stellenbosch, South Africa July 12, 2014

2. 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.

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

4. International Institute for Conflict Prevention & Resolution

5. 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

6. 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

7. 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 trendsand patterns we have discovered in the use of ADR

8. Survey Design and Methodology • The survey was administered by Cornell’s Survey Research Institute • Conducted interviews with top attorneys in 368 corporations -- 37.4% 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

9. Survey Administration and Response Rate *Includes 6 completes from pilot study

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

11. Principal Reasons Companies Use ADR, 2011

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

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

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

15. 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.”

16. Resolving Employment Disputes “What Proportion of Your Employees are Covered by ADR?”

17. 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.

18. 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!

19. 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”

20. 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.

21. 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

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

23. Mediation Outcomes in Relationship Cases (Golann, 2002)

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

25. Criteria for selection from outside the region1=highest in importance; 5=lowest

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

27. I prefer:

28. Preparatory approaches

29. Beginning the joint session

30. 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

31. Preferred mediator activities(10 is highest ranking)

32. Preferred mediator activities(10 is highest ranking)

33. Preferred mediator activities(10 is highest ranking)

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