The purpose of Alternative Dispute Resolution (ADR) is to reduce litigation expense and delay… yet the traditional ADR model bakes in those very inefficiencies, as parties tend to prepare for mediation in much the same deliberate, expensive way that they prepare for trial.
Why is this such a waste? Because in many cases, parties get to mediation and find out their bottom line positions are not actually that far apart. They don’t proactively engage in serious negotiations early in the case, and instead waste precious time and money working up the case for a mediation deep into discovery simply because they lack a safe way to “cut to the chase” early.
Forward thinking litigation professionals can save their clients serious time and money by taking a “lean” approach to negotiations.
The core tenets of lean methodology are small batch sizes, rapid iteration, and avoiding unnecessary delays and prolonged mistakes. Today’s entrepreneurs utilize lean methods because they cannot afford to make big mistakes or move slowly, but lean thinking dates back centuries and was first applied at scale by efficiency-driven Henry Ford, and further refined at Toyota motors. More recently, lean thinking is fueling transformative growth in the software sector, allowing innovators to rapidly iterate from concept to marketability with minimal delay and waste.
To best serve their clients, litigators and claims professionals should extend those same principals to ADR, and refocus on the purpose that led to the rise of mediation to begin with - saving everyone time and money.
We have accomplished this goal at First Court by recognizing the fact that there is not a genuine disagreement on value in many cases... but that the penalty for being too honest, too soon is a barrier to efficient negotiations.
We removed that barrier by creating Settlement Testing, and have proven how transformative it can be in our One Hour Mediation service. We encourage our clients to not wait to compile perfect information, rather get the critical information they need to put a value on the case, then engage in serious negotiations as early as possible.
We find that in about half of the cases we mediate, parties learn that they have essentially the same valuation, and didn’t need to spend big on discovery - they just needed a risk-free way to compare their positions. Eliminating discovery spending on cases that don’t really need it creates massive savings for everyone involved.
If we don’t settle early, there is very little lost because 1) parties do not need to reveal actual dollar positions, so there is no risk, and 2) we only take an hour. Even if they don't immediately settle, parties often learn exactly where their impasse is and focus discovery efforts on addressing just that key issue, rather than spending across the board. The results speak for themselves, as our average client has saved over 20 hours and thousands of dollars per case compared to traditional mediation.
We need to start thinking lean. By removing risk and comparing honest values early in the life cycle, we can dramatically reduce the length of many lawsuits (or even settle disputes pre-suit) and in doing so, build a better legal system. Over-busy attorneys should demand this. Claims leaders should demand this. And most of all, the people footing the bill or waiting to be made whole should demand this.