Guidelines

The EDR Process under the Guidelines is simple to summarize. Counsel quickly obtain the information they need to evaluate a dispute, enabling them to confidently forecast the risk-adjusted value of a case and corresponding settlement ranges. Clients are then able to make informed decisions regarding the resolution of dispute.

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The EDR Mediation Guidelines

Overview of the EDR Mediation Guidelines

Most cases never make it to trial or a final arbitration hearing; the vast majority settle. But settlement frequently comes only after parties have expended substantial time and money on discovery and motion practice. Many accept this as the natural progression toward ultimate resolution, without further analysis. The EDR Institute challenges this and has developed the Guidelines specifically to counter the assumption that cases cannot be settled in their earliest stages before the parties have incurred significant expense. The Guidelines are designed to facilitate early, economical, and risk-informed resolution within thirty days or less.

The Guidelines set out EDR Mediation in four steps:

(1) Initial Dispute Assessment
(2) Information and Document Exchange
(3) Risk Analysis
(4) Risk-Informed Negotiation and Resolution

1. General Provisions

1.1 The Process

EDR Mediation is a structured process for early dispute resolution set forth in the EDR Mediation Guidelines (“Guidelines”). The Guidelines define the steps, processes, concepts, skills, and ethical standards that will guide counsel and parties in pursuing early resolution. Although EDR Mediation can be used at any stage of a dispute, it is designed specifically to facilitate resolution at the earliest stages of the dispute, avoiding unnecessary litigation expense and disruption.

Unlike traditional mediation, which is typically conducted in a one-day session, EDR Mediation proceeds through four structured steps over the course of days or a few weeks. As soon as practicable after the parties have agreed to engage in the process, retained an EDR Mediator and executed the EDR Agreement, the EDR Mediator will schedule a virtual conference with counsel to determine how the parties will proceed and set deadlines for each step. Although the schedule will depend on the complexity of the dispute, the EDR Mediation is typically completed within thirty days.

Following the initial conference, the EDR Mediator guides the parties through the four steps, communicating virtually in sequential separate or joint caucuses, as appropriate. After the initial conference, clients participate in the caucuses with their counsel, consistent with the principle of client self-determination. The process is designed to ensure that clients have the information needed to make informed settlement decisions. If the parties have not resolved their dispute through Step Four, the EDR Mediator and the parties may proceed to a Backstop Mediation Session.

1.2 Flexible Application

EDR Mediation is flexible and can be adapted to advance the goal of early, economical resolution. The EDR Mediator works with the parties to simplify the process to the extent appropriate to the dispute and to make it as efficient as possible.

1.3 The Four Steps

(a) Initial Dispute Assessment
(b) Information and Document Exchange (including use of EDR Experts, if appropriate,)
(c) Risk Analysis
(d) Risk-Informed Negotiation and Resolution

1.4 The EDR Mediator

EDR Mediation works best when it is facilitated by an EDR Mediator who has been trained in the process, the implementation of the Guidelines, and Risk Analysis.

1.5 The EDR Agreement

The parties should document in an agreement (“EDR Agreement”) the terms that will apply to the EDR Mediation, together with any additional relevant terms and those typically included in a standard mediation agreement. The EDR Agreement can set out the schedule for the process, or the parties can set deadlines with the help of EDR Mediator. The EDR Agreement may be in the form of the EDR Mediator’s retention letter, a dispute resolution clause in a contract, or a stand-alone agreement.

1.6 Confidentiality

EDR Mediation is a form of mediation. As such, it should be subject to the same common-law and statutory confidentiality obligations and evidentiary protections that govern standard mediation. However, to avoid any doubt, parties should consider stating in the EDR Agreement that they intend for those obligations and protections to apply.

2. Ethics

2.1 Professional Rules of Conduct and Ethical Standards

Counsel in EDR Mediations are subject to the rules of professional conduct in their respective jurisdictions. The Guidelines impose the following additional ethical requirements:

(a) counsel shall fully explain EDR Mediation to their clients to allow them to make an informed decision as to whether to engage in the process;
(b) the parties and counsel shall agree to seek in good faith to resolve the dispute early, economically, and on a risk-informed basis;
(c) throughout the process, counsel shall provide their clients with the relevant information needed to make informed settlement decisions; and
(d) throughout the process, counsel shall act with integrity and treat opposing counsel with the highest level of professionalism and civility.

2.2 Permissive and Mandatory Withdrawal by the Parties

A party may withdraw from the process at any time, for any reason. A party must withdraw if it cannot continue the process in compliance with the Guidelines’ ethical standards or the EDR Agreement.

2.3 Permissive and Mandatory Withdrawal by the EDR Mediator

The EDR Mediator may withdraw from the process at any time for any reason. If the EDR Mediator becomes aware that a party is not complying with the Guidelines’ ethical standards or the EDR Agreement, the EDR Mediator must provide notice of the noncompliance to the noncompliant party ex parte. If that party does not timely cure the noncompliance, the EDR Mediator must withdraw, and shall not provide an explanation for the withdrawal.

2.4 Client Self-Determination

The AAA/ABA Model Standards of Conduct for Mediators provide that “[a] mediator shall conduct a mediation based on the principle of party self-determination.” EDR Mediation incorporates this standard by having clients participate throughout the process with their counsel, and by requiring counsel to provide clients with the information needed to make informed settlement decisions.

3. Step One - Initial Dispute Assessment

3.1 Rationale

Step One directs the parties to gain a thorough understanding of their cases by investigating the facts underlying the dispute and applicable law. Then, with the assistance of the EDR Mediator, the parties simplify the case to its core claims, defenses, and factual and legal issues. Step One is the foundation for each party’s Sufficient Information Request, Risk Analysis, and Risk-Informed Negotiation, as detailed in Steps Two, Three, and Four, respectively.

3.2 Provide EDR Mediator with Settlement Communications, Pleadings, Key Documents

After the EDR Mediator is engaged, counsel should send the EDR Mediator settlement letters and relevant e-mails, pleadings (if suit has been filed), and key documents. Traditional mediation statements are typically not used in EDR Mediation. They generally add little value beyond what the EDR Mediator learns through caucuses with counsel, and are likely to reinforce positional, not probabilistic, thinking. The EDR Mediator may ask counsel to address specific issues in writing, to the extent needed.

3.3 Understand the Material Facts and Legal Issues

For EDR Mediation to move forward expeditiously, counsel should have a thorough understanding of the material facts and issues of the case. With that understanding, counsel can simplify the claims and defenses and the factual and legal issues in dispute, and can determine whether they need additional information or documents in Step Two to develop Sufficient Information.

3.4 Simplify Case to Core Claims and Dispositive Legal and Factual Issues

The EDR Mediator should simplify the case by working with counsel to reach a consensus on the core claims and defenses and the dispositive legal and factual issues. The goal is to distill the case down to issues on which the resolution of the dispute truly hinges, which then allows counsel to narrow their Sufficient Information Requests (if any) and engage in properly framed Risk Analysis.

4. Step Two - Information and Document Exchange

4.1 Rationale

In Step Two, the parties may request from each other a narrow set of information and documents, if any, that will allow each party’s counsel to develop Sufficient Information. Given that the information and documents would almost certainly be discoverable in a court case or arbitration, neither party is prejudiced by providing the information in the early stages of the dispute, particularly when the parties need the information to make an informed Risk Analysis of their case.

4.2 Sufficient Information - Counsel, Clients, and Experts

Sufficient Information refers, respectively, to the limited set of information that:

(a) counsel need to make an informed forecast of the Risk-Adjusted Value and reasonable settlement range for the case;
(b) clients need to make informed decisions as to resolution of the case; and
(c) experts (if used) need to render an EDR Expert Report.

4.3 Request Information/Documents Needed to Develop Sufficient Information

Each party should identify the limited information or documents, if any, it needs from the other side to develop Sufficient Information, which it may request in a Sufficient Information Request. This is not discovery as practiced in state or federal courts. The EDR Mediator should help each party frame its requests narrowly, facilitate resolution of any disagreements related to the requests, and minimize the burden on the producing party, while ensuring that each party receives the information and documents it reasonably needs to develop Sufficient Information.

4.4 Construe Sufficient Information Requests Reasonably

In determining whether documents are responsive to a Sufficient Information Request, the responding party should construe the requests reasonably and provide the information or documents that the requesting party would consider reasonably covered by the request. Requests should not be parsed to limit or avoid providing what the other party is seeking, nor should a party make a voluminous production in an effort to bury the requested information. Responsive documents that are unfavorable to a party must be produced.

4.5 Subsequent Requests

If needed to develop Sufficient Information, the parties may make additional Sufficient Information Requests, facilitated by the EDR Mediator.

4.6 Questioning A Party’s Witnesses

4.6.1 Limited Use

If needed to develop Sufficient Information, counsel may ask to interview witnesses under the opposing parties’ control. These interviews may be on or off the record, as agreed by the parties. Since the EDR Process is confidential as a form of alternative dispute resolution, the default should be “off the record.” The number of interviews and the questions to the witnesses should be narrowly tailored to what is needed for counsel to develop Sufficient Information. The process should be used sparingly; these are not depositions.

4.6.2 Procedure

Parties should agree on a procedure that seeks to elicit information fairly, which may include having the EDR Mediator ask questions that counsel provide. Parties should encourage their witness(es) to answer questions responsively and not to parse questions in a way that would hold back relevant information or render a response misleading.

4.7 Verification of Compliant Response

A requesting party may ask the responding party and its counsel to declare in writing that the responding party has made a Compliant Response to the requesting party’s Sufficient Information Request, which means that:

(a) the responding party has made a diligent, good-faith search of reasonable scope for what was requested, and has produced the responsive information and documents that resulted from the search;
(b) the responding party has not narrowly construed requests for information or documents to withhold responsive information or documents; and
(c) witnesses under the responding party’s control were forthcoming and accurately answered questions.

If the parties resolve their dispute through the EDR Process, the settlement agreement could include a material representation from each producing party that it made a Compliant Response to the other party’s Sufficient Information Request.

4.8 EDR Experts

4.8.1 Experts Discouraged

Experts should be used in the EDR Process (“EDR Experts”) only when needed by counsel to develop Sufficient Information. The use of EDR Experts is discouraged; they add significant cost and time and, in many cases, add little value. Their opinions often contradict each other and contain information and conclusions already known to the parties. If one or more of the parties does need to retain an EDR Expert, the expert’s work should be limited to preparing an EDR Expert Report.

4.8.2 EDR Expert Sufficient Information Exchange

If an expert is retained, counsel may request from the other side the limited information or documents, if any, that the expert needs to issue an EDR Expert Report. Counsel should cooperate in providing the necessary information to each other, facilitated by the EDR Mediator.

4.8.3 EDR Expert Report

The EDR Expert’s report should be limited to a concise statement of the expert’s qualifications, opinions and key findings (“EDR Expert Report”). Unless the parties otherwise agree, they may not use the EDR Expert Report in subsequent or already pending litigation or arbitration.

4.8.4 Joint Experts

The parties may jointly retain an EDR Expert to issue an EDR Expert Report. The written agreement to retain the joint EDR Expert should address guidelines for (i) communications between the expert, on the one hand, and one or more of the parties’ counsel, on the other, and (ii) access to the expert’s work product. Unless the parties otherwise agree, parties may not use the joint EDR Expert Report in subsequent or already pending litigation or arbitration.

4.9 Simplified Process Combining Steps One and Two

In the initial conference with counsel, the EDR Mediator may suggest an abbreviated process that combines Steps One and Two. At that point, counsel can narrow the issues, agree on the documents and information to be exchanged, if any, and decide whether experts are needed.

5. Step Three – Risk Analysis

5.1 Rationale

At this point, the parties should have reached agreement on the core claims, defenses, and legal and factual issues, and should have developed Sufficient Information. Working with the EDR Mediator, each counsel in Step Three undertakes a Risk Analysis of its case, which leads to a recommendation to the client of a Reasonable Settlement Range that considers the Risk-Adjusted Value and subjective risk factors. This creates a common framework for the parties to engage in Risk-Informed Negotiation.

The EDR Process is based on the premise that skilled lawyers with Sufficient Information can forecast the Risk-Adjusted Value of a case early, with a level of confidence similar to the confidence level they would have after conducting full discovery and engaging in motion practice.

5.2 Risk-Adjusted Value

Risk-Adjusted Value is determined using probability logic to forecast the dollar value of a case. The formula is the weighted average of the likely recoverable damage amounts discounted by the likelihood of their being awarded, with future attorneys’ fees and costs then subtracted. Decision trees can be helpful in calculating Risk-Adjusted Value, and in explaining the probable risks and rewards to clients.

5.3 Forecasting the Risk-Adjusted Value Variables

To calculate the Risk-Adjusted Value of a client’s case, each counsel forecasts three variables (“Variables”):

(a) the party’s percentage likelihood of prevailing on each of the material claims or defenses;
(b) the party’s likely range of damages as to each material claim (often using three alternatives—low, medium, and high), and the percentage likelihood of recovering each amount within that range; and
(c) the estimated future costs and attorney’s fees to pursue litigation or arbitration through final judgment or award. Where warranted, counsel should also forecast expenses and fees through appeal or award confirmation, discounted by the likelihood that neither party would seek appeal or confirmation.

5.4 Forecasting Precision

The Risk-Adjusted Value calculation requires judgment and cannot be performed with absolute precision. Counsel should avoid false precision and should instead focus on developing reasonable estimates for each of the Variables, based on Sufficient Information and their professional experience.

5.5 Role of the EDR Mediator

The EDR Mediator should be skilled in using counsel’s forecasts of the Variables to calculate Risk-Adjusted Values, and can assist counsel and clients with forecasting, probability logic, and the actual calculation of Risk-Adjusted Value. Each party’s Risk-Adjusted Value calculations are confidential.

5.6 Subjective Risk Factors

Counsel should also modify the Risk-Adjusted Value, if appropriate, to reflect subjective risk factors that influence a client’s settlement decisions. These include each client’s risk tolerance, leverage, potential collectability issues of a judgment or award, and the personal and business impact of continuing the dispute.

5.7 Reasonable Settlement Range

Based on the Risk-Adjusted Value and evaluation of subjective risk factors, each counsel should recommend to their clients a reasonable range within which to settle the dispute. As appropriate, non-monetary settlement options should also be explored. Counsel should explain to their clients the Variables and reasons supporting the settlement range so that the client has Sufficient Information to make informed decisions when negotiating settlement. Counsel should adjust the recommended reasonable settlement range, when appropriate, if additional information learned during the process changes initial assumptions.

6. Step Four – Risk-Informed Negotiation and Resolution

6.1 Rationale

Having obtained Sufficient Information and prepared their Risk Analyses, the parties can engage in Risk-Informed Negotiation with the goal of reaching a mutually acceptable resolution that realistically reflects the risks and rewards each party faces. The EDR Process has established the foundation for Risk-Informed Negotiation, which can be contrasted with negotiations in which the parties engage in positional bargaining, untethered to a realistic assessment of the case’s likely outcome.

6.2 Risk-Informed Negotiation

Based on their respective Risk Analyses, each party should be prepared to engage in Risk-Informed Negotiation by objectively discussing their positions on Risk-Adjusted Value and their assessment of subjective risk factors. The EDR Mediator should facilitate Risk-Informed Negotiation through sequential caucusing to help the parties resolve the dispute.

6.3 Backstop Mediation Session

If the parties have not resolved the dispute through Risk-Informed Negotiation, the EDR Mediator should hold a Backstop Mediation Session. The EDR Mediator should facilitate the session consistent with standard mediation practice, provided that the parties continue to negotiate on a risk-informed basis.

6.4 Procedure Absent Final Resolution

If the parties do not resolve the dispute before or at the Backstop Mediation Session, the parties through the EDR Process should have substantially narrowed the issues and reduced the discovery needed for arbitration or trial. As a result, the parties, with the EDR Mediator’s assistance, should consider agreeing to an expedited, economical, and binding process that they will follow in court or arbitration.

Likewise, if in the preceding steps, the parties decide that they need a binding decision on a factual or legal issue before further pursuing the EDR Process, they may, with the EDR Mediator’s assistance, structure an expedited, cost-effective process to obtain that decision through arbitration or in court, and then return to the EDR Process.

If all parties consent and the rules of any administrative body involved in the dispute allow, the parties may ask the EDR Mediator to serve as the arbitrator. Before agreeing to serve as the arbitrator, however, the EDR Mediator must be confident he or she can serve effectively in such a role and can comply with any applicable ethical requirements.