New York County Lawyers Association Committee on Arbitration and ADR Comments on Success of ADR Program in United States District Court for the Eastern District of New York Offer Encouragement to Users of ADR and Suggest Action by Corporate Counsel

The recommendation to increase both judicial commitment to sending cases into the ADR program and a monetary commitment to beef up staffing to support the ADR Administrator comes in the shadow of the sunset of the Congressional Act which provided the impetus for these programs: The Civil Justice Reform Act of 1990 (the “CJRA”). The CJRA , which mandated court experimentation with differential case management and ADR programs, creating pilot districts and demonstration districts towards this end, sunsets at the end of this year. When the CJRA directives evaporate, the separate funding that has been earmarked for these courts’ programs will disappear, and courts will have to rely on the general funds of the judiciary, as dispensed by each district court.

These favorable findings and recommendations of the NYCLA ADR Committee and the imminent elimination of the CJRA should be significant to Manhattan-based corporate counsel for several reasons.

First, rare is the corporation, these days, that has not found itself entering the portals of federal court in the Eastern or Southern Districts. Based upon the success to date in these courts’ ADR programs, in-house counsel should consider encouraging their litigators to obtain orders of reference to mediation.

The EDNY program began as either mandatory early neutral evaluation (“ENE”), without cost to the parties, or voluntary mediation, at a charge to the parties. Under these conditions, most parties ended up in ENE. While ENE is designed to utilize a neutral who may predict case outcomes and evaluate cases for the purpose of encouraging parties to assess strengths and weaknesses and consider settling the cases, the EDNY ENE program became a hybrid of ENE and the less evaluative ADR process of mediation. While a mediator also encourages parties to assess their best and worst alternatives to a negotiated settlement, including likely costs, risks and outcomes if they proceed through motions, trials, appeals and collection efforts, the mediator generally avoids expressing his or her own evaluation of the case, leaving it to the parties to draw their own conclusions. The mediator’s chief role is to facilitate communications between the parties, to help them understand one another’s perspectives, explore their underlying interests, and generate options and creative solutions for resolving the parties’ dispute.

After observing a leaning toward the mediation model in the EDNY, the EDNY Advisory Group recommended and the EDNY implemented a change from ENE to mediation in its ADR program. Currently EDNY cases may be ordered to mediation without cost to the parties, although resort to a private provider of mediation services is still permitted. The SDNY program has been from the start, and remains, mandatory mediation, without cost to the parties. Corporate counsel seeking information on the federal courts ADR programs may call the ADR Administrators, Gerald P. Lepp, Esq. of the EDNY (718) 260-2577 or George O’Malley, Esq. of the SDNY (212) 805-0643.

Secondly, in light of the benefits available through these mediation programs, corporate counsel might encourage the continuation of these programs locally and, to the extent one’s business is national, encourage continuation of all ADR programs commenced under the CJRA. A number of bar association groups are in the process of preparing statements to the Federal Judicial Conference calling for continuation of the court-annexed ADR programs initiated by the CJRA. Among these groups are the ABA Litigation Section’s ADR Committee and NYCLA’s ADR Committee. Both groups are soliciting comments from local counsel, which could be directed to the undersigned.

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