Alternative Dispute Resolution: Well-Suited To Online Proceedings

One of the more colorful examples of a breakthrough in a mediation is when parties reach an impasse around the table but then run into each other in the hall on the way to get coffee and reach an impromptu deal.

The COVID-19 pandemic may have put a stop to that kind of serendipity, but there’s always the possibility that unexpected hallway meetings can go sideways.

“If the parties are emotional, you don’t want them running into each other,” said Manly Ray, southeast regional director for the Financial Industry Regulatory Authority’s Office of Dispute Resolution and faculty for the Practising Law Institute’s program,  “Securities Arbitration 2020.”  “It might inflame emotion, which can stop or slow down the process. On Zoom you can mute microphones and put everyone in a breakout room. That can be a good thing.”

Overall, alternative dispute resolution has proven well-suited to virtual platforms. Ray reported that for securities disputes, both mediations and arbitrations moved online during the pandemic with no detrimental effects.

“We’ve done over 250 mediations remotely, and the settlement rate is over 90 percent,” Ray said. As for arbitration, “the effectiveness is right there in front of us, in the customer awards rendered. … It’s apparent that arbitrators are able to hear and analyze the evidence over Zoom. Going in, a certain element may have been skeptical, but at this point some of the skepticism has diminished.”

Kimberly J. Donovan, a partner with Squire Patton Boggs LLP, in Miami, said virtual ADR was also effective in the healthcare sector. “It really didn’t skip a beat. I had many pending arbitrations, both as an arbitrator and as an advocate, and it was pretty much business as normal.” Donovan spoke during a virtual conference of the American Bar Association, for a session titled, “The Future of Healthcare ADR: How did COVID-19 Enhance ADR?”

Speaking during the same ABA session, Michelle Skipper, vice president of the American Arbitration Association in Charlotte, NC, said, “The settlement rate did not change for healthcare cases over the last year. [It] stayed close to 80 percent.”

Choosing to Go Remote

Given that ADR works independently of the courts, parties could agree to proceed with an arbitration or mediation in-person, but it has been rare.

“At this point we’ve had one arbitration that went forward in-person in Houston, probably within the last four to six weeks, with social distancing, people in masks, people there to make sure everyone followed the guidelines,” Ray said. He added that there haven’t been any in-person mediations, although one has been scheduled for April.

The fact that some FINRA mediations were already telephonic before the pandemic no doubt eased the transition to online. Ray said that, pre-pandemic, parties had the option to mediate by telephone if their cases involved less than $50,000. When COVID-19 hit they created a similar program with reduced fees. That program ran through October of last year. In November, Ray said FINRA merged the two programs, giving clients the choice of a telephonic mediation or one via Zoom.

“We expanded the reach to more of the caseload,” Ray added, to cases up to $100,000. “The program is running along nicely.”

The same situation existed in the healthcare arena. The Hon. Myra C. Selby, a partner with Ice Miller in Indianapolis and a former associate justice for the Supreme Court of Indiana, said during the ABA session that, pre-pandemic, a lot of arbitration was already conducted either virtually or by telephonic meeting. “That enabled arbitration to smoothly transition into completely virtual or . . . a hybrid of virtual and in-person.”

Skipper of AAA reported that the number of healthcare disputes rose by 25 percent in 2020, and about 50 cases with claims totaling almost $450 million moved along thanks to online platforms. “So these were not small cases that proceeded to virtual hearings. These were significant, large cases.”

Kathy S. Adams, the owner of Colorado-based Dispute Resolutions Services and faculty for the Practising Law Institute’s program on securities arbitration, said it took a while for her clients to get behind remote proceedings.

“I tried to get people to do some of their smaller cases by virtual platform for a while. It never took. I would say, ‘Why are we getting on an airplane for a $75,000 or a $100,000 case?’ but I couldn’t get anyone to bite. It was very rare. Then mediations went 100 percent online and a lot of people have really taken to it.”

Benefits of Remote ADR

Parties may have embraced online ADR in part because it has benefits independent of safety during a pandemic. 

One significant advantage is avoiding travel and “the expense and everything that goes along with that travel,” said Ray from FINRA. “In some cases, we have elderly customers who do not want to travel, so that’s a big positive. Then we have other people who may be tangential witnesses who are going to be on the stand for two hours. Say we’re in Boca Raton and they’re in Los Angeles. They don’t have to get on plane to appear for two hours.”

Virtual platforms are certainly more convenient for busy mediators. Ray said some mediators are in demand all over the country.

Adams pointed out the time savings. She mentioned all the different parties that may be drawn into a mediation. “You have the lawyers, however many claimants. … And on the other side, you have in-house lawyers, outside counsel, maybe brokers who should be in the office producing. Travel takes maybe the day before and half the day after.” That’s a lot of lost productive time on top of the expense of traveling, she said.

Differences Between Remote and Live ADR 

Despite the convenience, some may always prefer in-person mediation and arbitration. Not least because, “when you’re not in a room, you have no chance to build a relationship,” Adams said. “The personal relationships are hard online. It’s much more of a business transaction. Not being able to get a feel for the parties. Not being able to look someone in the eyes.”

Adams also said the number of parties has its effect. “If you have 10 people on a Zoom meeting you have 10 little tiny blocks of people. You lose some of that ability to have an organic interaction.”

Preparations can also differ substantially. Ray said parties need to bear in mind that they will be in front of a camera. “You need to look and appear a certain way, get used to looking at the camera, get used to talking to the camera,” he said. For instance, if you were to get up to stretch your legs you might not give a thought to the fact that you’ve walked off camera, but the other parties might conclude that you’re not engaged, Ray explained.

“You don’t want to have a bunch of things going on,” he added. “You want a clean background.” 

As for exhibits, Ray said that when they’re needed for a mediation they’re generally shared with the meditator in a breakout session, or emailed. But there is a lot less emphasis on exhibits in mediation than in arbitration.

“On the arbitration side, Zoom has a way to share exhibits and share screens, to make sure everyone is on the same page,” Ray said. “Sharing on the screen is a very good tool.”

Then there are the inevitable mishaps. While no one pretends mishaps can’t happen with in-person ADR, virtual meetings have a unique set of possibilities. They can be amusing.

“I think the world has come to know we’re all working at home and we all know things can happen,” Ray said.

According to Adams, “People have been humanized. One time in a mediation a woman had a cat all of a sudden jump on her keyboard. There was another guy, his dog would not leave the room. It was lying on the bed snoring loudly. There have been a lot of unexpected kid entries.” She added that almost everyone has adopted a “‘We’re all doing the best we can,’” attitude. “People are a little more kind to each other.”

A Good Option Going Forward

Once the pandemic is over, Ray thinks that remote ADR will continue to be an attractive option. “Even when we return to the in-person world, Zoom is going to be a mainstay in mediation. In arbitration as well, but definitely in mediation because of its effectiveness and because it lessens expense.”

Adams agrees. “One hundred percent, [remote mediations] are here to stay. Not for all cases but for certain categories.” 

All the same, Adams said she’ll be glad to get out into the wider world again. “I have my first in-person mediation in a long time in another month and I’m excited to get back to it.”

Even as live interaction comes back, Skipper thinks parties will want to take advantage of the possibilities offered by virtual platforms. “Even arbitrators have said, ‘Why can’t we have preliminary hearings via Zoom?’” A big part of arbitration or mediation is that the parties get to set the process. Post-pandemic, she expects them to take advantage of the flexibility offered by remote ADR.

PLI offers additional programs and program segments related to remote trials, mediations, and depositions, including: Current Developments in Federal Civil Practice 2021; Remote Depositions: Practical Considerations and Best Practices for Taking and Defending Virtual Depositions; Securities Arbitration – Arbitration and Mediation Settlement Practicum; and Specialized Deposition Techniques 2020.