More changes coming to state courts

The grand unwelcome budget-cutting experiment in which California courts are currently engaged may result in the undoing of reforms courts have developed over the past several decades to better manage their caseloads. Ideas that both the federal and state systems now consider best practices, such as the individual calendar system and closer judicial involvement in pre-trial proceedings, are in danger of being thrown out. Case in point: the LA County Superior Court, the largest local court system in the country, is seeking to jettison case management conferences, one of the main tools the court has at its disposal to check in with the parties early in the case and help steer cases to resolution. The court is also planning a return to master calendars for some categories of civil cases. The only rationale for these changes is that this kind of individualized case management consumes a fair amount of judicial and administrative time. But scrapping case management conferences could leave the court with no contact with counsel unless there is motion practice--and the court is also trying to discourage motion practice! The danger is that these unsupervised cases will simply languish in the system and contribute to increasing backlogs.

The prevailing forecast in our state court system is therefore for greater delays and less judicial attention. If only the courts could figure out a cost-saving way to divert their caseloads to other forms of resolution. But wait! Wasn't mediation supposed to do that? Right now a fairly large proportion of the court's caseload is sent to mediation, which has a high success rate in resolving litigated disputes. These dispositions save court personnel time in reduced motion practice, settlement conferences, and trials.

With the courts in financial crisis, one might expect them to propose even greater use of outside ADR procedures. Ironically, however, the court's mandated budget-cutting will more likely lead to less ADR. That's because the proposed reduction in judicial supervision, as well as the planned elimination of the court's own administration of ADR panels, will create fewer opportunities to prod the parties into seeking mediation or other alternative dispute resolution procedures. Leaving the courts without an effective procedure to refer cases to ADR also raises questions about the court's ability to comply with Code of Civil Procedure sections (C.C.P. 1141.10 et seq. and C.C.P. 1775 et seq.) that mandate the referral of certain categories of cases to arbitration or mediation. The courts will need to design effective alternative procedures to accomplish the same result, and it is not clear that they have the resources to do so.

Prior posts in this series:

I.    Ten courthouses

II.   Court-annexed mediation not dead yet

III.  Free mediation revisited

IV.  New rules

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Anatomy of a negotiation

The "fiscal cliff" negotiations of the last couple of months present an interesting case study showing the stages of negotiation usually necessary to make a deal. Congress set the process in motion more than a year ago with a budget agreement that essentially forced the two parties to make this deal by the January 1 deadline, otherwise a set of consequences would take effect that neither side wanted.

That created a situation not unlike the typical lawsuit, in which the court sets a trial date that will force both sides to incur substantial cost and risk, an event the parties can only avoid by making a deal that neither side views as optimal, but that is usually better for both sides than the alternative. To get to that point, however, parties often need to pass through a series of stages not unlike the Kubler-Ross model of the stages people usually go through to enable them to face the inevitability of death.

I wrote a series of posts on my mediation blog over the past couple of months, outlining as they took place the steps the parties followed to arrive at the negotiated agreement Congress just passed on January 1, 2013.

I.   Openings - the parties make unrealistic opening offers and demands.

II.  Impasse - negotiations break down in the middle stages.

III. Plan B -  the parties explore the alternatives to a negotiated agreement.

IV. End game -  the parties finally abandon previously inviolable positions.

V.  Who won? - the post-mortem.

This negotiation, led by the White House, but mainly between the Democratic and Republican leadership of the House and Senate, took a few surprising twists and turns, but in the end followed a familiar pattern to a predictable result.

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Planned Early Negotiations

Abraham Lincoln, who was a famous trial lawyer before he became a famous president, is supposed to have said:

Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer has superior opportunity of being a good man. There will still be business enough.

It sounds like a recipe for turning away business, but perhaps Lincoln was also describing a range of services that even a trial lawyer could provide to help clients resolve conflict without litigation. 

I'm not talking about what Professor Marc Galanter described years ago as litigotiation, which is a prevalent form of litigation that recognizes that most cases are eventually going to be resolved by a process of negotiated agreement, and uses all the processes of the court system as leverage and as aids to that negotiated outcome.  I'm talking about a method of lawyering that avoids the court system altogether, except perhaps as a fallback if the ADR process fails.

The legal profession is only beginning to formalize such a process. I recently picked up a book the ABA released last year called Lawyering with Planned Early Negotiations: How You Can Get Good Results for Clients and Make Money, by John Lande. Lande shortens his ungainly book title to the acronym of PEN, for planned early negotiations. I'd just as soon tell clients I will try to resolve their dispute if possible without litigation, and I've been telling clients that for years. Still, I'm happy to see that somebody has tried to create some structure and guidelines for doing that. Lande even includes a helpful CD full of form agreements and other documents that might be useful in this type of practice.

So what is lawyering with planned early negotiations? Basically it means the lawyer is going to advise the client from the outset that the lawyer is going to try to solve the client's problem through negotiation, rather than a traditional adversarial approach to litigation. Clients are often reluctant to hear that message, instead usually wanting to know how their lawyer evaluates their chances of prevailing in court. But if we are honest with clients, we have to tell them in most every case, that the chances that their case will be resolved in court are fairly small. Most cases are going to be resolved by negotiated agreement anyway, so it makes sense to set the client's expectations for that from the start. As long as we're doing that, it makes sense to suggest trying to get to that point without litigation, a less familiar pathway for lawyers and clients.

To practice with the expectation of a planned early negotiated resolution might require changes to lawyer's engagement letters and creative fee arrangements. Lawyers then have to get used to the idea of forming constructive relationships with opposing counsel, which will help in exchanging information with the other side in a cooperative and informal way. Attorneys have to reach out to the other side to agree on a process that is likely to resolve the dispute without litigation. Lande also includes tips on negotiating and other techniques that are familiar to people working in the mediation world.

Divorce lawyers have led the way in this field, building up an elaborate body of collaborative practices, including what is known as the participation agreement. Such agreements generally require that if the parties fail to reach a negotiated settlement, the first set of professionals will be disqualified from representing the parties in court. This gives parties and lawyers maximum incentive to succeed in settling the case, and little incentive to litigate.

Can such an approach take hold in the commercial litigation context? It sounds like the opposite of the way I was taught to litigate years ago, when a particularly aggressive style of litigation was in favor, one that considered it almost unethical to do anything that would make your adversary's life easier. But it's really not all that different from the way many litigators have learned to practice. We often send out a demand letter as an invitation to a negotiation as well as a threat of litigation. We are supposed to try to resolve discovery and other disputes without bothering the judge about every disagreement, and it's usually in our clients' interests to do that. All trial lawyers recognize that the vast majority of cases will end in negotiated resolution, so we act as settlement counsel in cases we are simultaneously litigating, and conduct ourselves in a way that is not going to antagonize the other side unduly so as to jeopardize the ongoing settlement negotiation. Some firms use separate settlement counsel and trial counsel working simultaneously on a case, keeping each focused on their conflicting objectives.

The difference between the PEN process and customary litigation practice may come down to a decision at the outset of the case to put the threat of litigation into the background, instead of initiating a case by threatening or actually commencing a lawsuit. Corporate lawyers do that all the time. They can be just as aggressive as litigators, but they know they are employed to make a deal, that they might be blamed if they blow the deal, and that they will not be the ones to handle the case if the deal falls apart and litigation ensues. If business trial lawyers started adopting the PEN approach, they would have to start acting more like those corporate lawyers, which still allows them to advocate strongly for clients, but in the context of a planned negotiated resolution of the dispute.

In my litigation practice, I have had some success with an approach like the one Lande is describing. My fee is generally lower in such cases, but client satisfaction is generally higher, and I avoid the risk that can happen in litigation of a case getting bigger and more expensive than a client can afford, which can be disastrous for both the lawyer and the client. If I can provide the same or better outcome for a client without having to a resort to a process that, let's face it, is more fun for lawyers than it is for clients, what possible reason would I have not to offer it?

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Ten courthouses

Although the budget crisis in California has lasted for years, the state court system has until now managed to avoid the worst possible scenarios. Courts have survived these hard times by depleting their reserves and diverting their capital budgets for operations. Having exhausted those strategies, and with no prospect of restoration of full funding in sight, the courts have finally had to grapple with some huge funding shortfalls. This month, the Los Angeles County Court system announced their plan to deal with budget shortfalls by closing 10 regional courthouses, including the branch courthouses in Beverly Hills, Malibu, Pomona, and Whittier. These facilities may end up staying open only for such purposes as paying traffic tickets. Their courtrooms will be shuttered.

This news is tragic, because it means increased delays throughout the system, particularly for civil cases, dramatically reduced staffing, and increased costs. It also marks the end of a concept of neighborhood justice that all these branch courthouses represented. In a far-flung county as large as Los Angeles, that concept spared a lot of people a lot of long trips downtown. Now litigants will have to adjust to a more centralized, more crowded, and much slower system.

For my practice, the solution of closing 10 regional courthouses was probably the best of all possible bad worlds. I've never been much of a believer in scattered regional courthouses, and I always file downtown, and usually end up defending cases filed downtown, even when the parties are from the West Side or the Valley. One reason is that I have officed downtown for more than 20 years, and like being able to walk to court. I also probably have some big city biases against regional courts, even though the clerks in those places are usually more friendly than they are downtown, and the judges are just as good. So I'm happy I won't ever have to drive to Pomona or Beverly Hills for court appearances anymore. (If only they would also close Van Nuys and Santa Monica!) On the other hand, I'm not going to be happy about the increased delays we can expect downtown.

Courthouses function as gateways as well as destinations. Litigants commonly think of the courthouse as the place that will decide their dispute. But the courthouse might be better thought of as an intake system for disputes. Resolution of the dispute may be farmed out to an arbitrator or a mediator, or parties may reach a resolution by their own devices. Very few civil cases end by trial. If we think of the courts more as an intake system than as a final destination, I wonder how efficient it is going to prove to force litigants to start their journeys in the massive downtown courthouse. Faced with that prospect, will litigants devise other ways to commence the process?

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Back to the future

I grew up in the 1960's when the prevalent architectural vision reflected the dawning space age. Designers imagining the cities of the futures pictured tall building surrounded by flying vehicles, ramps and elevated highways. My childhood ideas of the future came from such sources as the Jetsons, the 1964 New York World's Fair, and 2001: A Space Odyssey. That style of architecture is out of fashion nowadays. We have returned to a more old-fashioned, pedestrian-friendly idea of city life. It's called the New Urbanism, and I'm all for it.

But cities like Los Angeles still retain examples of distinguished architecture from this period. (e.g., the Theme building at Los Angeles Airport; the Cinerama Dome, which I had a hand in saving; the Music Center; the Columbia Records Building) These buildings are both historic and futuristic at the same time. Downtown LA also contains remnants of a plan to build a series of bridges to connect its buildings, and an elaborate people-mover system that would shuttle people around downtown in the kinds of trams you now see mainly at airports, or Disneyland. The people mover plan was killed as part of President Reagan's budget cuts in 1981, and most people think it was a good thing it was killed, otherwise the downtown sky would be cluttered with a lot of ugly elevated tramways. As I mentioned, nowadays we believe in sidewalks again, and are busy installing more outdoor cafes and retail on the street. The idea of whizzing around downtown on elevated tramways is no longer so appealing. Instead, current plans call for reviving streetcars.

The building we're about to move our offices to, the LA World Trade Center (350 S. Figeuroa St.), has a large empty plaza in the back originally designed to be one of the main stations for the never-built downtown people mover. The building also connects to all the surrounding buildings by an elaborate series of bridges and ramps that are still used as pedestrian access to nearby hotels, office building, and apartments. The World Trade Center is so futuristic it has no front door that opens onto the sidewalk, only elevators that take you to a long concourse that looks like it could have been part of the 1964 World's Fair. It was designed to be entered primarily through the parking garage. That makes it less than ideal for New Urbanists such as myself who prefer to take the subway to work, but still convenient for accessing Bunker Hill and other parts of downtown. Looking out my new office window, across some freeway ramps, I will be able to gaze at another remnant of the space age, the Bonaventure Hotel, replete with even more flying ramps, bridges and outdoor elevators. For someone such as myself, interested in the movement to re-invigorate downtowns, it seems ironic to move into this artifact of an abandoned and probably unworkable dream for downtown Los Angeles. On the other hand, I am also interested in historic preservation. And these days, what is now being called mid-century style seems to represent the new historic.

OUR NEW ADDRESS (as of July 23, 2012):

Law Offices of Joseph C. Markowitz
350 S. Figueroa St., Suite 975
Los Angeles, CA 90071

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What the Supreme Court is deciding

Justice Ginsburg said the other day that the people who are speculating about what the Supreme Court will do with the health care law don't know, and those who know aren't talking. That hasn't stopped the speculators from talking, and the talking has only gotten more intense as the decision has become imminent. Most of this loose talk focuses on the political implications of the Court's upcoming decision, as well as the possible effects on the health care law itself. Similarly, the speculation about the imminent Court decision on the constitutionality of Arizona's attempt to regulate immigration law has also generated much talk about the decision's political implications, as well as the effects of similar immigration enforcement by other states. From the Supreme Court's perspective, hardly any of this talk concerns what these cases are actually about at all. Granted, the justices' feelings about the advisability of the Affordable Care Act, or about Arizona's immigration statute, can't help but influence their rulings to some extent. Still, the justices have to think beyond those concerns.

What the Arizona case is really about, as far as the Supreme Court is concerned, is the scope of the pre-emption doctrine. To what extent do federal laws prevent the states from legislating in the same area? Traditionally, immigration has been viewed as exclusively the concern of the federal government. Even if  the conservatives on the Court approve of what Arizona is doing, they might not like it if other states start enacting stricter laws than the federal government has imposed in other areas. (environmental regulation for example) They have to think carefully about the precedent they are setting about the scope of federal pre-emption.

The health care case is mainly about the meaning of the Constitution's commerce clause, meaning that it is about whether we want to go back to the era before the 1930's, when the Court took a narrow view of the permissible areas of federal regulation of commerce. Clearly some of the judges are not afraid to turn the clock back, but others are going to hesitate before doing that. If the Supreme Court overturns all or part of the ACA (and I still think that is a big if), what will be of most importance to the future of our whole federal system will be whether they do it on narrow grounds that can be restricted to this particular statute, or whether they will issue a broader ruling that changes the meaning of federalism that has been accepted over the past 75 years or so.

In other words, what is at stake in these cases is nothing less than the relationship between the federal and state governments. The question is whether the federal government has the power to deal comprehensively with important issues like immigration and health care. The larger question is the one that has preoccupied us since the time the Constitution was written. Do we want a strong central government, or do we want most of the power to be dispersed among the fifty state governments? Two great events in our history--the Civil War and the Great Depression--caused us to create a much stronger central government. Our dominant military power built up during the two world wars, and the Cold War, also contributed to the need for a strong central government. (When military interests come into play, the conservatives tend to favor a strong central government.) The Supreme Court is now considering whether to dismantle that consensus. Three radicals on the Court seem eager to do that. The four justices appointed by Democrats probably favor the constitutional status quo. It will be up to the other two (Kennedy and Roberts) to choose whether to follow the radical vision, to uphold the status quo by upholding the Affordable Care Act while striking down the Arizona statute, or to modify our understanding of our federal system in some large or small way.

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The Supreme Court and Arbitration

The right to jury trial in civil cases is fundamental. It is guaranteed in the Constitution. That right is becoming increasingly illusory, however. It is easily waived, and most litigants find themselves looking for alternatives to pursuing their rights to the end. Or they find they gave away those rights from the beginning. Just what does it mean to remind people that they retain the right to sue those whom they believe have violated their interests? That is what the Supreme Court considered last week in Compucredit Corp. v. Greenwood. In that case, the Court had to interpret the meaning of a statutory mandate enacted by Congress that credit repair companies disclose that consumers maintain the right to sue the companies. The Court held, 8-1, that this requirement did not preclude the credit repair companies from mandating instead that consumers arbitrate any disputes. So consumers are being told by these companies, yes you have the right to sue us, but sorry, you have to give up that right if you want to do business with us in the first place.

As a matter of statutory interpretation, the result is understandable. That it was decided by an 8-1 vote shows that it was not difficult for most of these Justices to wrap their heads around the concept that consumers are entitled to waive even fundamental rights. That is the whole point of the Federal Arbitration Act of 1925. We have the right to sue in many other circumstances, but we waive that right all the time. And if Congress had wanted to bar credit repair companies from requiring consumers to sign arbitration agreements, there were much more direct ways of accomplishing that than simply mandating disclosure of the right to sue. One could also interpret the "right to sue" as including the right to pursue claims in arbitration, although that may be a stretch.

On the other hand, you have to sympathize with the consumer's situation in being handed a contract with a credit repair company that on the one hand clearly guarantees the right to sue the company if the consumer is dissatisfied, and on the other hand, clearly requires that he or she waive that right. I believe the legal term for such a clause is "Catch-22."  Yet another example of how queasy we should feel in enforcing pre-dispute mandatory arbitration clauses that are contained in take it or leave it contracts that people are required to sign to engage in an increasing number of ordinary business transactions.  

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Brinker argument

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