For generations, trial lawyers understood the courthouse as not only a venue for adjudication but also a forum for resolution. Trial judges would order parties to settlement conferences where pragmatic compromise frequently replaced prolonged litigation. (See In Re Caballero, 441 S.W.3d 562 (2014)). This innovation evolved into what we know as mediation, often considered a required stage in litigation and a cornerstone of modem dispute resolution. (See Hernandez v. Telles, 663 S.W.2d 91, 93 (Tex. App. 1983)). From that foundation emerged the movement toward Early Dispute Resolution (EDR) championed by Peter Silverman, Michael Hawash, and Anne Jordan, founders of the EDR Institute. The institute promotes early, economical, and principled resolutions. The central thesis of EDR is to resolve a dispute shortly after, or even before, a lawsuit is filed. Recently, the American Arbitration Association (AAA) adopted up the EDR concept as efficient and effective. To this end, the AAA is utilizing the EDR protocols of the EDR Institute.
EDR is intended for mediating either before the initiation of litigation or immediately after parties have filed initial pleadings. The benefits of EDR invites emphasizing the application of EDR litigation. As a subset of EDR, pre-litigation mediation (PLM) is designed to resolve a dispute before it reaches the courthouse door.
This article introduces the possibility of an effective approach to PLM. A pioneering framework for PLM was established by the EDR Institute. The institute designed and maintains a set of protocols. The protocols provide a structured, directed, and distinctive approach designed to resolve disputes shortly after, or, even better, before a lawsuit is filed. Following the protocols, resolution can be achieved in as little as 30 to 60 days. (Michael A. Hawash and Paul D. Clote, The Fundamental of Early Dispute Resolution, UT Law CLE’s 2022 Labor & Employment Law Conference (May 5-6, 2022), Austin). This avoids the substantial time, cost, and emotional toll of protracted litigation. A mediator trained in the process, understanding and applying the four-step EDR protocols while adhering to Texas’ ethical and statutory requirements, can facilitate an early, economical, and principled resolution.
Concentrating on PLM and using the framework of the EDR protocols, this article focuses on pre-litigation mediation, though the same basic principles apply to engaging in the process shortly after initiating litigation. Both approaches, before litigation begins or shortly after it is initiated, bring benefits for time expended and costs as well as diminishing the anxiety fostered by the much more expensive litigation process. A substantive benefit of PLM, mediating before litigation instead of immediately after a lawsuit is filed, is the increased avoidance of publicity and enhanced capacity to maintain an ongoing business relationship.
I. Legal and Ethical Foundation in Texas Law
Before embarking on PLM, the mediation must be expected to operate within the legal and ethical boundaries established by Texas law. (Ethical Guidelines for Mediators, Misc. Docket No. 11-9062 (Tex. 2011).This responsibility rests on both the mediator and the parties.
The Texas Alternative Dispute Resolution (ADR) Act and PLM Mediation
While Texas law does not mandate pre-litigation mediation in private disputes, parties can contractually agree to do so when a dispute arises. (See Highsmith v. Highsmith, 587 S.W.3d 771 (2019)). The Texas ADR Act, though focused on pending litigation, establishes the state’s public policy of encouraging voluntary settlement. (Texas Civil Practice & Remedies Code §154.002).
Key principles for the EDR mediator under Texas law include:
• Confidentiality: Under Texas Civil Practice and Remedies Code §154.073, communications made during a court-ordered ADR procedure are confidentialand may not be used in any subsequent judicial proceeding. The EDR protocols extend this commitment to their pre-litigation process, which is critical for fostering candid, productive negotiations.
• Mediator Qualifications and Ethics: Mediators are expected to meet minimum training standards (typically 40 hours of training) plus training in early dispute resolution and must comply with the Ethical Guidelines for Mediators adopted by the Supreme Court of Texas and the State Bar of Texas Alternative Dispute Resolution Section. This includes duties of impartiality, maintaining confidentiality, avoiding conflicts of interest, and ensuring client self-determination (i.e., the mediator does not coerce a settlement).
II. The Early Dispute Resolution (EDR) Institute’s Four-Step Protocol
PLM utilizes the EDR Institute’s protocols to formalize a rapid, focused information exchange and risk analysis to enable parties to objectively value their case and make informed settlement decisions. The four steps of the protocols consist of (1) initial dispute assessment, (2) information and document exchange, (3) risk analysis, and (4) resolution. The process works best when all parties commit in good faith to the protocols. The mediator guides the parties through four key steps:
Step One: Initial Dispute Assessment
The first step is for the parties and their counsel to quickly narrow the scope of the conflict.
• Rationale: To efficiently acquire an initial understanding of the facts and legal issues before costly and time-consuming discovery.
• Mediator’s Role: The mediator works with counsel to identify the core claims, dispositive legal issues, and material facts that will drive case value. Counsel may provide the mediator with a set of key documents and a summary of settlement communications to date. The mediator helps simplify the case to its essence, focusing on what is necessary for a preliminary informed valuation.
Step Two: Information and Document Exchange
This step is designed to streamline the discovery process, economically providing only the information necessary for a realistic settlement assessment.
• Sufficient Information Standard: The parties agree to exchange the information and documents that are sufficient to understand the merits of the opposing side’s position and the realistic risk-adjusted value of the case. This is a critical departure from litigation’s “leave no stone unturned” discovery, demanding transparency and good faith production of information—even if it seems detrimental to one’s own case.
• Mediator’s Role: The mediator facilitates and manages this exchange. If a party believes they have not received a compliant response, the mediator is called upon to address the objection. The protocols state that an attorney’s obligation is to withdraw from the mediation process if their client refuses to make a compliant response, emphasizing the high ethical standard of disclosure. The mediator may also facilitate limited witness interviews or joint expert exchanges if deemed necessary for case valuation.
Step Three: Risk Analysis
Once the parties have “sufficient information,” they move to an objective valuation of the dispute.
• Rationale: To ground settlement expectations in the legal and factual realities of the case, rather than in emotional bias or worst-case assumptions.
• Mediator’s Role: This is where the mediator’s specialized training comes into play. The mediator may encourage counsel to use tools like risk analysis or probability software to forecast the risk-adjusted value (RAV) of the case. Some online AI systems can be used or commercial software designed for this task.
o Forecasting Variables:The mediator works with counsel for each party to determine the potential range of outcomes (e.g., low, middle, high damages awards), assign a percentage likelihood of prevailing at trial for each outcome, and then calculate the RAV, which is the sum of all potential outcomes discounted by their predicted likelihood.
o Objective Review:The mediator reviews the confidential risk analyses with each party in caucus and helps them identify realistic settlement ranges. Focusing on probability and data, the mediator helps the parties transition from advocacy (what they hope to win) to pragmatism (what they canexpect to achieve after risk).
Step Four: Resolution
The final step is the negotiation and formalization of the settlement.
• Negotiation: Armed with a common understanding of the case’s objective risk and value, the parties engage in negotiation, often through traditional mediation caucuses facilitated by the mediator. The focus shifts from arguing facts to developing creative, mutually acceptable settlement options.
• Formalization (the Mediated Settlement Agreement): If a resolution is reached, the mediator ensures the terms are memorialized in a mediated settlement agreement (MSA). Because this is pre-litigation, the MSA should be meticulously drafted to be a stand-alone contract, including all essential terms such as:
o The settlement amount and payment schedule.
o The agreement to refrain from filing suit or, if a suit has been filed, to dismiss it with prejudice.
o Confidentiality and non-disparagement clauses, as desired.
III. Conclusion
PLM, utilizing the EDR Institute’s protocols, provides an efficient, structured road map for resolving disputes in the nascent stages of a dispute, aligning with the spirit of early resolution promoted by Texas’ ADR statute. In a PLM case, the mediator acts as a catalyst for a rapid, focused exchange of information and an objective assessment of risk, leading to an informed and durable settlement. By strictly adhering to the EDR protocols’ four-step process—assessment, exchange, risk analysis, and resolution—the mediator empowers the parties to achieve an early settlement, effectively eliminating the need for the filing of a lawsuit and the subsequent costs of litigation.
Jerry Zimmerer is a former justice of the 14th Court of Appeals in Houston. He holds a J.D. from South Texas College of Law Houston and two LL.M. degrees in health law and international law from the University of Houston Law Center. Zimmerer is currently active as an arbitrator and mediator.
Stanley Santire is a former naval officer and a graduate of the University of Texas School of Law. He served as chief legal counsel for Lockheed Aircraft International, followed by extensive trial experience in private practice, and currently serves as a mediator and arbitrator.