parties alone to make it work will only be marginally successful. It is the dynamics of the involvement of a third party

that is the key to a successful Alternative Dispute Resolution

process.

MICHIGAN MEDIATION SYSTEM

In Michigan, we now operate under a Court Rule adopted by our Supreme Court which mandates that all civil cases pending in our courts of general jurisdiction be mediated under a prescribed procedure. I have appended a copy of that Rule to my testimony. That procedure is modeled after a settlement mechanism first adopted in our most popular County - Wayne in an effort to alleviate its crowded docket and the then five-year delay in the presentation of most cases.

Simply stated, based on oral presentations and written statements by counsel, a panel of experienced litigators evaluates each case and places a settlement figure on it. Cases which reject the mediation evaluation then proceed to a judge conducted settle

ment conference on the scheduled trial date, with trial set to follow for cases which remain unresolved. Rejection of the valuation figure, coupled with a failure to improve one's position at trial, can result in the assessment of penalties.

The process is designed and has worked to minimize the costs, yet maximize the benefits to the litigants, the bar and the Court. The Michigan Court Rule allows each Court unit to devise

The most

its own method of administering a mediation procedure. successful has been the Wayne County experience. In Wayne County, a non-profit Mediation Tribunal Association was created to handle daily administration of the program. The Board of Directors of this Corporation is composed of the Chief Judge of Circuit and two experienced litigators, one representing the plaintiffs' bar, and one the defense bar. The program is financed completely by modest fees charged to the parties who are required to participate in the process. Mediators are selected by the Board of

Directors. Minimal requirements, such as five years' experience,

ensure that panel members will be knowledgeable litigators.

Each case is scheduled for hearing and the parties prepare
They then appear to present their argu-

mediation statements.

ments before a panel of experienced litigators

a neutral chair

The whole

person, a plaintiff's lawyer and a defense lawyer. procedure takes approximately 30 minutes.

The entire format is settlement oriented. In practice, it operates as a settlement session as opposed to an adversarial proceeding.

No testimony is presented, but physical evidence, such as photographs and diagrams, are shared with the panel. The panel then speaks with each attorney privately to ascertain whether there is any common ground. It then places a value on the case for settlement purposes.

The value placed by the panel can then be accepted or rejected by the parties. If accepted by all parties, the case is closed. If rejected, the case proceeds to trial. Nothing that took place in the mediation process is admissible at the trial, thus encouraging a full and frank discussion at the mediation proceeding.

A penalty provision is included to encourage acceptance. Rejection of a panel's unanimous evaluation by one or both sides can result in court-ordered awards of costs and attorneys' fees at the local prevailing rate for each trial day if the subsequent court verdict does not improve upon the mediation award by at least ten (10%) per cent. The mechanism is not designed to coerce the parties to accept inequitable evaluations, or to waive their right to trial. Rather, it is designed to defray a party's legal expenses incurred at trial when the opposing party fails to assess the value of the case accurately.

The process is not without disadvantages. It clearly is settlement oriented and, thus, has no mechanism for dealing with frivolous or questionable liability cases other than by a low award. It does not permit a ruling of no liability, thus penaliz

ing the manufacturer or seller in a products liability case who wants to defend a product in court. It does have an opt-out

However, as a practical

provision by request to the Chief Judge. matter, it is rare for a case to be exempted from the process. Additionally, as contrasted with S. 2760, the process is deliberately designed to come into play after discovery is completed. Cases are typically scheduled for mediation in the 27th month after their filing. This is because our experience has demonstrated that only at this stage will the parties and their counsel be in a position to realistically and effectively evaluate their position, thus making the process workable. time for cases to reach mediation varies in different parts of the State where the dockets are less crowded, but it is expected that discovery will be complete. The rule does have a provision which permits early mediation, upon application to the Court, in special circumstances such as an elderly claimant.

The

The system is not well suited to complex cases, however, because it does not permit the kind of careful deliberation necessary to evaluate these cases. As a result, many parties involved in the more complex cases request the appointment of mediators who generally receive more compensation from the parties than the conventional panel. These special mediation panels are usually composed of experts in the subject matter of the case and spend considerably more time in the evaluation process.

In the vast majority of routine cases, however, the system works quite well. In 1985, 9,518 cases were submitted to mediation. Forty-seven (47%) per cent of these cases, or 4,509 cases, were settled either before or at the mediation by acceptance by all parties. Because they received evaluations in amounts less than $10,000, 17.5% of these cases, or 1,667 cases, were remanded to a lower court. Although no figures are available, experienced lawyers believe that a very high percentage of these cases do settle as a result of the amount of the mediation award. The remaining 35.5% of these cases, or 3,342 cases, in which awards

were rejected by one or both parties, were returned to the Circuit Court for disposition. Of these cases, 90% settled within

ten to twenty per cent of mediation, according to the mediation

officials.

The system has worked well enough in our State Court to cause the United States District Court for the Eastern District of Michigan to adopt it and refer most of the tort cases pending in that Court for mediation before trial.

What is the benefit to the parties? Before the system, we had in Wayne County at least a 60-month delay between the filing of a Complaint and the time of trial date. Now, that interim period is 41 months and narrowing. The disposition time for the vast majority of the cases has been improved by a factor of 18 months.

In Wayne County, a major Alternative Dispute Resolution operates with the existing system to settle cases. It is an "expedited settlement" procedure that works for all cases, including products liability cases.

Thank you for the opportunity of appearing before you and testifying.

APPENDIX "A"

RULE 2.403 MEDIATION

(A) Scope and Applicability of Rule. A court may submit to mediation any civil action in which the relief sought consists of money damages or division of property.

(B) Selection of Cases.

(1) The judge to whom an action is assigned or the chief judge may select it for mediation by written order no earlier than 91 days after the filing of the answer

(a) on written stipulation by the parties,

(b) on written motion by a party, or

(c) on the judge's own initiative.

(2) Selection of an action for mediation has no effect on the normal progress of the action toward trial.

(C) Objections to Mediation.

(1) To object to mediation, a party must file a written motion to remove from mediation and a notice of hearing of the motion and serve a copy on the attorneys of record and the mediation clerk within 14 days after notice of the order assigning the action to mediation. The motion must be set for hearing within 14 days after it is filed, unless the court orders otherwise.