Mediation: A Simple, Effective Approach for Resolving Complex Issues

No doubt, many of you have watched a few evening television dramas depicting the mediation process. Scurrying from one conference room to another numerous times, sometimes carrying sandwiches and beverages, the mediator attempts to settle the differences between disputing parties to stave off an impending courtroom battle.

Believe it or not, except for a few embellishments, the television portrayals of mediation are fairly accurate — or at least more believable than the courtroom antics often aired. There is, of course, more detail to the mediation process than what I just described, but the salient point is that mediation can be a valuable tool in settling legal claims before they escalate to the trial level. In fact, in states where mediation is regularly deployed, there has been a 95 percent success rate of resolving conflicts prior to litigation, making it one of the more popular forms of alternate dispute resolution.

Aside from being a positive, upbeat approach for settling legal claims through discussion, negotiation and compromise, the mediation process is quite expedient and cost-effective as compared to lengthy and expensive courtroom litigation. Consequently, to help streamline the legal process, many jurisdictions across the United States are requiring that all disputed claims defer to mediation first before considering any litigious action in a courtroom. In all of the contracts I draft for business or transactional clients, I build in a provision requiring neutral third-party mediation as a preventative measure to avoid litigation.

Neutral mediators can be retained from several sources. For instance, local attorneys who have quality reputations as problem solvers are always a good choice. I often use the mediation services of Christopher Soelling, a well-respected Seattle lawyer. Retired judges, local or statewide, that are trained and experienced in dispute resolution are other prime sources for neutral mediators. There are also professional mediation services available statewide or regionally, or you can contact the American Arbitration Association regarding their professional mediators who serve nationwide.

In all mediations, preliminary documentation is required of all parties to a dispute, including an exchange of position papers or mediation briefs. Generally, two separate sets of mediation briefs are distributed, one for the parties undergoing mediation and the other specially earmarked for the mediator. And as you would expect, there are basic ground rules for conducting mediation.

Ethicsl rules prevent the sharing of confidential information between disputing parties by the mediator. However, with permission, a mediator may share information to encourage settlement. Also, joint sessions of the disputing parties are permitted, but most attorneys involved in mediation waive that right, preferring the process to be conducted in separate rooms with the mediator acting as the “go-between” in negotiations. It is important to note, too, that a mediator does not decide the outcome of any mediation, but acts more like a facilitator working toward solving problems.

Sometimes, mediation is not successful initially, and there can be occasional roadblocks. When dealing with construction claims cases, for example, you need to have an insurance adjustor available on site to make decisions. The same goes for large corporations or multi-claim disputes. You must have someone with authority present during a mediation to sign off on any conditions for settlement.

Eventually, though, perhaps after several attempts, mediation will usually result in a successful compromise between disputing parties. And in some states, like Washington, once a settlement is reached and general terms are accepted, the provisions of a mediation agreement can be legally binding and enforceable when a prepared document is signed jointly by all parties of the mediation.

The Value of Mediation: Your Opportunity to Control the Outcome of a Dispute

What if you had a crystal ball that could predict the outcome of your pending litigation in court or even a proposed legal action? Would you do things differently? Oh, don’t you wish! The stark reality is that once you go to trial, the resolution of a dispute is out of your hands. You are essentially waiving your control of any legal settlement to an unfamiliar third party, whether it is a judge, a judicial panel or a jury. You do, however, have an alternative to this litigious situation: mediation. The process involves the selection of a neutral third-party that attempts to resolve a legal dispute through discussion, negotiation and, hopefully, a mutually acceptable compromise.

Yes, I did say “compromise,” but that is actually a good thing. All parties in a dispute need to regard compromise as a means for resolution, not confrontation or disappointment. It is the last point in litigation in which you still have control of your decisions before someone else steps in and takes over completely. At that point, all disputing parties must face the truly unknown consequences of a trial procedure. Unfortunately, in a courtroom you don’t know what’s going through a judge’s mind or through the minds of jury members. In fact, the expected outcome of a judge’s determination or a jury’s deliberation can sometimes be quite the opposite. But when you are arguing the merits of your case or defending your position during the mediation process, you have a prime opportunity to influence the outcome with your decisions — and your compromises.

In the state of Washington, whether in a federal or state court, all disputed claims or actions must defer to mediation first before a judge will even allow a case to go to trial. This is a systematic approach I strongly support. I often find that clients, even if they are sophisticated business clients, don’t always understand what mediation is or its benefits. So in all of of the contracts that I draft for my business or transactional clients, I insert a mediation provision requiring all parties in a dispute to engage in mediation before they can even file suit in state or federal court. I rarely receive an objection to this provision, because all clients at least ponder the idea of settling a case before entering litigation. A neutral third-party can provide a fresh perspective on the merits of your case and your defense, as well as the weaknesses of your case and your defense.

Occasionally a client may have a corporate policy barring the use of mediation, but overall, I have found the process to be a valued alternative to lengthy litigation in court, and mediation can be applied to virtually all types of legal disputes — large and small. Of course, mediation is not always successful the first time out of the gate. I have encountered this often in multi-party construction claims cases, in which the initial mediation doesn’t solve the issue, and nobody wants to settle. However, as the trial deadline approaches, everybody realizes that this opportunity to determine and control an equitable outcome is fast-disappearing, so they call back the mediator in an attempt to reach a settlement. That scenario, unfortunately, is becoming more and more common. Perhaps people think they can gain bargaining power as a case proceeds, but more often than not, their bargaining power actually dwindles as the trial date gets closer. Inevitably, most will go back to the mediator.

Mediation agreements are not without recourse either, should a stakeholder default on the terms of the settlement. In Washington, for instance, the provisions of a mediation agreement can be legally binding and enforceable when a prepared document is signed jointly by all parties to the dispute. If someone later decides to back out on the settlement, the other parties can proceed to court and have the mediation agreement enforced as a matter of law. That action in itself shows a judicial preference and favor for mediated dispute resolution over a court trial bureaucracy.

You Don't Need Big Box Firms for Big-Time Representation

The Washington Biotechnology & Biomedical Association (WBBA) is a trade group for life sciences in Washington. As a Life Sciences attorney, I often attend their trade events and meet people who are involved with pharmaceutical studies and various bio-technology projects. They are usually represented by one of the large firms here in Seattle.

The people I meet in the life sciences industry complain to me about the cost of their legal fees; they make a phone call to their attorney, and they're charged $400 an hour. I'm not really sure why or how these big firms have a monopoly on the life sciences, but it seems as if there is a perception out there that big law firms are better-equipped to handle cases. They are bigger, after all, and better-staffed. Their fees are hefty – but surely you get what you pay for.

This is an unfortunate misconception – one that costs a lot of money.

Many attorneys who now work as solo practitioners or for small firms trained at a major law firm. It is indeed possible to attain high-quality legal representation at a big firm. But is a big firm the only place you can find this level of competent representation?  If you choose to go a different route, will you be sacrificing quality? The answer is unequivocally “no” – and it's important to understand this, particularly if you don't have a corporation paying your legal fees.

The fact of the matter is that big firms are expensive – and they simply don't have to be. Their high costs are often a result of inefficiency and a certain approach to billing practices. In litigation, for example, the big firms tend to issue the absolute maximum number of interrogatories and requests for production and admission. The goal is to bring in as much information as possible, but retrieving and assimilating all that information takes time and costs money, which is then billed to clients. Perhaps this isn't a pressing issue when the client is Google or Microsoft, but what about individuals paying their own legal fees?

Whether it's a contract or a litigation dispute, the most cost-effective approach is to try to narrow down what's actually relevant and draft language that reflects what needs to be said in clear language, omitting the superfluous. For those of us in solo practices, part of the reasoning for this approach is practical: we are busy, and we don't have the time or the staff to do unnecessary work.  Many solo practitioners and small firms are staffed with attorneys who trained at large firms and provide excellent services at reasonable prices. 

For me, however, working as a solo practitioner also plays into my belief about the way I want to practice law. I don't believe in billing time just to bill time. It is my objective to do exactly what my clients want me to do – no more and obviously no less. I don't take action unless my client has approved it. When my clients receive my bill, they fully understand exactly what it is they're paying for.

Essentially, I believe in making things as clear as possible for my clients in the area of contracts and other transactions, using clear, understandable language. It is inappropriate, in my mind, to use 30 pages of complicated and archaic legal-speak to say what could be said simply and clearly in three pages. This is my approach in all matters.

Legal representation can be efficient, excellent and economical. It is possible to have all three. A smaller firm or a solo attorney can provide clients with the same level of service they would receive at a larger firm, and making this choice can bring the added bonus of a considerably smaller price tag.

If you are looking for an attorney, I recommend you contact your local bar association. Most Bar Associations, including the King County Bar Association and the Snohomish County Bar Association, have lawyer referral services. 

Fault-Finding to Success

Consumers are always seeking a quality product – no matter what industry the product is intended for. However, the complexities of most products today bring about an inherent problem: one industry does not necessarily control production up and down the chain. Thus, it is generally difficult to ensure quality control beyond one’s own company. This lack of control could be unnerving, if not for an unexpected, guiding principle: fault.

This principle of accountability holds true within the realm of Clinical Research Organizations (CROs). Liability drives companies to create better products, and fault is an ever-present motivator. In the case of CROs, these organizations find themselves in a delicate position of having to be cautious about whom they are dealing with in both upward and downward directions: medical sites, clinical research assistants, sponsors and subcontractors.

Every step of the way, your contracts must stipulate that the quality of work is guaranteed, and allocating fault and responsibility is a key element to that.  No matter who is involved in the process, though, there must be assurance that quality is assured, starting at the top and running straight to the bottom. 

My yard, like many yards, is inhabited by a number of squirrels who assume they belong on my property. My dog will bark, informing them that this is, in fact, not their yard. While an audible yap is not necessarily a powerful deterrent to the squirrels and their trespasses, the constant threat and physical presence of the dog keeps them on their toes. People in contracting relationships can think of the dog’s bark as “fault.” While the persistent threat looms, there is always the possibility of greater danger – such as a loose dog that can chase you.

The liability associated with a bad drug reaction – or even worse, introducing a dangerous or deadly drug to market – is huge. To prevent this from happening, CROs must have clearly defined guidelines and expectations for all the organizations and individuals involved. This runs deeper than being a blueprint for the “blame game.” This means establishing a method to ensure data integrity, which, in the realm of CROs, ultimately translates to public safety and health. CROs are not just trying to indemnify themselves, but they are making sure that every step along the way preserves the highest quality work.

The world of life science is a challenging and competitive ecosystem of tests and trials. Fortunately, there are some governing principles that help ensure the safety of those within it. For CROs, they can feel assured that the threat of fault will ensure that the best product possible can come from the system, and the greatest good can be done so that the consumer can have the maximum benefit.

Deeper Into the Licensing Abyss

In an earlier post I touched upon the importance of proper contracting language, but I barely poked the surface. Today I thought I’d delve a little deeper so you can better understand some of the ways licensing agreements can affect a business.In life sciences, one area where attorneys can be particularly useful is helping Clinical Research Organizations (CROs) with licensing agreements.

A CRO, for those unfamiliar, is sort of a middle man. It contracts up with a sponsor, a company producing a new drug or device or what have you, and then contracts down with subcontractors to use and test the new technology. Subcontractors include clinics and clinical research assistants, who go to medical sites where the new drug or device is being used and make sure data are properly maintained.

Licensing agreements are made between the sponsor and its subcontractors — sometimes passing through the CRO as well — granting them the right to use the new technology for testing purposes, but without conveying any ownership interest in it.

For example, right now I’m dealing with a company that came up with technology that uses genetics to measure the rate at which an individual metabolizes a drug. To test its device, the company will grant a license to a clinic to use it, but the license won’t transfer any patent rights, or any intellectual property rights.

Where I also get involved with a CRO is when a sponsor sometimes tries to include some type of licensing fee, which, in my opinion, is inappropriate in the context of a licensing agreement for testing drugs or equipment. Think about it: CROs aren’t making a profit from the use of a new technology, they’re simply testing it. If they're being paid to test a device, why should they also have to pay a licensing fee while seeing if it works?

Attorneys can also make a big difference by ensuring that the contract language of a licensing agreement is consistent between biotech companies, CROs, vendors, clinics and clinical research assistants. In other words, if there is a licensing agreement between a CRO and sponsor company, the subcontractors need to be similarly bound to the terms of that licensing agreement. Otherwise, there could be situations where subcontractors are using a particular device or software and think they have ownership interest in it, maybe even modifying it and putting their name on it.

For instance, a client of mine was running a licensed biostatistical software program to process data on the efficacy of a particular experimental drug. The client hired a subcontractor, but didn't tell him about its licensing agreement. He started tweaking the software and wanted to use it for other clients.  This was not a good situation:  the client did not have a work for hire provision in its subcontractor agreement, so technically the subcontractor had ownership, but that ownership was adverse to the licensing agreement with the sponsor. 

Fortunately, I was able to negotiate a resolution to the competing claims of ownership, and draft licensing language for my client to avoid this situation in the future.  If you deal with licensing agreements in your particular line of work, make sure to get legal advice.

The Importance of Insurance

When people hear the term “insurance,” they automatically assume that it is some form of coverage broadly defined in general terms. What many do not realize is that insurance is so much more than simple coverage for accidents and other unforeseen events, and being properly insured is an important aspect of doing business.

Insurance should perform a very crucial function: to protect a person or business entering into a transaction. One cannot always shift risk and responsibility to another party in the transaction.

The type and amount of insurance necessary is critical. Those who may have insurance may not be covered for what is actually needed, and those who have the proper type may not have enough to cover the potential damages one is exposed to in a business transaction. The specifics are dangerous traps, and many do not read between the lines where they should.

For instance, I have a Clinical Research client I formed in 2008. Clinical Research Organizations (CROs) assist in the testing of experimental drugs from conception through FDA approval.Once the company was up and running, they spoke with a broker who obtained an insurance policy.Six months later, they asked me to evaluate whether they were property covered for their particular line of work.

They were not.

The broker had simply procured them a medical malpractice policy, even though a CRO does not practice medicine. There was a specific exclusion in the policy precluding testing for administration of drug trials, which is exactly what a CRO does.

For six months they were operating with no insurance protection. I was able to put the client in touch with a qualified broker and obtain a full refund of the premium they had paid for the useless coverage. Legal advice regarding the adequacy of insurance is critical.

I have another client who contracted with a tile contractor who worked on condominiums for six full years before realizing that the insurance company had included a condominium exclusion that the contractor was unaware of. Unfortunately, the exclusion was discovered too late and my client and the tile subcontractor incurred substantial unanticipated costs due to the exclusion. Although the condominium exclusion was never blatantly stated, it was clearly within the policy and no coverage was provided.

The bottom line is, if you want protection during your transactions, you need to have the right insurance. And to get the right insurance, legal advice regarding the adequacy and sufficiency of insurance is critical.

Life Sciences, in Lieu of Chocolate

Science and technology fascinate me. Perhaps this isn’t the first sentiment you imagine hearing from an attorney, but it occurs to me daily. My enthusiasm for the life sciences industry and the intelligent people who make up its moving parts is one reason why I look forward to coming to work every day.

I was tempted to surprise the whole industry with a box of chocolates, but for today I’ll simply share a few pieces of what I value most.

I entered life sciences law with a strong desire to help companies start from scratch. As I mention on the website, my first client in this field was a Clinical Research Organization (CRO). The four individuals behind it have backgrounds in different areas of the field: pediatric oncology, managing FDA compliance issues and pharmacy. These clients fill the room with brain power, but as good as they are at what they do, they’re not attorneys. Companies in this industry have so many moving parts; they need someone on their side who understands contracts and licensing. For example, they need an operating agreement to explain how the business will run and how decisions will be made. This particular company has taken off in leaps and bounds in the four years since we started working together.

Always Changing

Due to fluctuations in venture capital and government funding, life sciences is a continuously changing environment. As soon as someone gets funding, everyone in the industry knows who they are and wants to start a new business with them or buy their existing operation. This is why new companies should involve an attorney from day one. Clients come to me knowing as much about indemnity, choice of entity and portion of liability as I know about biostatistics. This doesn’t prevent me from handling their agreements and licensing. We teach each other, and it’s in those learning experiences that I find my job so much fun!

Always Innovating

The intellectual abilities of my clients keep me on my toes. Every innovation brings a new set of issues to address on the legal side. I’m good at dealing with these issues. When you have smart people from varied backgrounds coming together and creating something new that’s financially viable, it’s an exciting thing to be a part of. These companies have a bright future not only in Seattle and San Francisco, but nationwide.

Always Building

The ultimate reward of working with life sciences companies from the very beginning is watching their rapid growth. Legally secure, my clients have a strong foundation to build on. The potential is huge because nothing can come up and bite them from behind. As their business grows, my business grows. Once the legal corners are squared, my role is to make sure the company is moving in the right direction.

The life sciences draw all kinds of curious people. Working with sponsors and vendors, or negotiating biotechnology agreements and software licenses allows me to hear about advancements directly from the source. In an industry that’s always changing, innovating and building, I get to learn something new about the world every day.