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The Big Nuisance: A Not So Radical Proposal for Mediating Nuisance Value Conflicts – Part II

This article was co-authored by Shel Stark, a mediator and arbitrator in Ann Arbor, Michigan, and Sonal Priya, a law student at M.S. Ramaiah College of Law in the State of Bangalore, India. Mr. Stark is Chair of the State Bar of Michigan’s Alternative Dispute Resolution Section, and Ms. Priya hopes to someday be a provider of ADR Services to her clients.

In Part One of this paper, we looked at 1) whether nuisance cases should be a concern in mediation; 2) ways nuisance might be defined; and 3) how suggestions that a case has only nuisance value may emerge in a mediation. In Part Two, we look at whether nuisance allegations are realistic and sincere. If sincere, mediators should explore whether the parties have engaged in realistic risk assessment.

Where’s the Incentive?

As noted, nuisance cases are relatively rare in mediation. Accordingly, when mediators hear “nuisance,” the authors suggest keeping an open mind. Perhaps it is; perhaps it is not. To paraphrase Mark Twain, in our experience, the alleged flood of nuisance value suits is greatly exaggerated. Indeed, nuisance characterizations should be carefully examined as there is little incentive for a plaintiff’s lawyer to pursue nuisance litigation. (On the other hand, the authors did find a website blog titled, “The Insurance Adjustor’s ‘Nuisance’ Value of Your Claim,” which advises “Even if the insurance company is right in claiming no liability for your injury, you may be able to get a ‘nuisance settlement.’”).

In the first place, most plaintiff lawyers are paid on a contingency fee basis: no payment unless there is a settlement. One third of a nuisance value is one third of very little. Where’s the incentive to bring a nuisance suit?  Absent unusual circumstances, few plaintiff lawyers will knowingly accept nuisance value cases to litigate. Contingency fee lawyers cannot earn a living that way. Moreover, to reach a point where the other side is willing to talk settlement or offer to engage in a mediation process, plaintiff’s counsel may be forced to make a significant investment in court costs for filing fees, deposition transcripts, expert witness evaluations and reports, etc. etc. A garden-variety case may cost $5-10,000 of the lawyer’s capital–well in excess of most nuisance value settlements. (At a seminar sponsored by ICLE, the Institute of Continuing Legal Education, several years ago, a lawyer representing the insurance carriers in medical malpractice cases described his instructions to make certain plaintiff’s counsel has invested over $75,000.00 before engaging in settlement negotiations). Because many in the insurance world have made a policy decision to limit nuisance settlements, relying on their stronger bargaining position and the lawsuit’s lack of merit, any claim pursued for nuisance value is a risky venture indeed. This is no mystery to the average plaintiff lawyer. Who would want to invest effort and resources in such a high risk/low value dispute? Who has TIME to process a nuisance suit?  It’s simply bad for business. Therefore, the mediator’s first reaction to charges of “nuisance value” should be “tell me why you think so.”

Second, a lawyer who brings nuisance value cases quickly earns a poor reputation. Lawyers talk about each other all the time. It’s part of the litigator’s life. We rely on our reputations. We rise and fall with them. The reputation we earn has a huge impact on how satisfied we are with our practices. Lawyers with a good reputation are treated with respect and given credibility by the courts and opposing counsel. Lawyers with good reputations are taken seriously by the other side. “If you brought this case, I better take a close look at it.” Word that someone brings nuisance cases will quickly spread throughout the Bar. A reputation for bringing bad cases – either out of ignorance, poor judgment or simple callous indifference to the Rules of Professional Responsibility (which discourages bringing non-meritorious lawsuits) – undermines the credibility and reputation of that lawyer. What’s more, a lawyer’s poor reputation undermines the value of the good cases he/she might bring. “Why should I believe this is a good case when the last three you brought were not worth my time or yours?” That kind of reputation hurts a lawyer’s personal credibility in general, and his/her ability to persuade a court or fact finder that the claim has true merit. Their claims are viewed with considerable skepticism and rarely are given the benefit of any doubt.

Third, a lawyer who brings nuisance cases is more likely to run into discipline trouble and complaints against his/her license with the State Bar. Why? Clients conclude their case must have merit because the lawyer agreed to take it. Most clients – even those with strong cases – have expectations, often unreasonable, about the value of their case. They read about similar (or not) cases in the paper and say, “My case is even stronger than that!”  When the lawyer communicates the nuisance value offer and recommends the client accept, those expectations are shattered. How can this be? “The lawyer has sold me out. The lawyer is in the pocket of the insurance company. The lawyer is incompetent.” There’s an old saying: “Expectations are resentments under construction.”  A resentful client is likely to bring charges of some kind against the offending lawyer. Just what that lawyer needs: a low-value case that results in threats to his license.

More likely than not, therefore, when the mediator hears that the plaintiff’s claim is a “nuisance,” the odds are that something else may be going on. Our best advice to mediators: “trust but verify.”

Has the Defense Engaged in Realistic Risk Assessment?

Sometimes defense counsel doesn’t truly believe the case lacks value. There’s another old saying, “The best defense is a good offense.” Sometimes charging that a claim has “nuisance value” is a technique to rock plaintiff and her lawyer back on their heels and lower their hopes for a good financial settlement. A good mediator needs to explore this possibility by asking good risk questions. Sometimes it may turn out the defense is sincere, but for whatever reason, they have failed to engage in realistic risk assessment. The claim may not be a “nuisance” at all.

Whether the defense is sincere, mistaken or on the mark can only be answered as the mediation process unfolds. Was defense counsel too close to the situation to be objective and give good advice? Did the party representative make the decision that resulted in litigation? Perhaps it was defense counsel who advised the actions leading to litigation. Perhaps the client did not adequately investigate the claim. Perhaps a key participant on the defense side has been less than honest. Is the litigator outside his or her area of expertise? Mediators need to understand the basis for defendant’s position at the table. Have they realistically assessed the problems and shortcomings? Is there a legal basis for the claim? Is the claim solidly based upon case law? What do the cases hold? Is the law unsettled? What are the elements of the claim and will there be evidence to support every element? Has the plaintiff presented evidence the defense has not considered, undervalued or given insufficient attention? Is the defense in denial? Risk assessment and reality testing often reveal whether the nuisance characterization is sincere, mistaken, the result of inexperience or a negotiation ploy. (Perhaps it is plaintiff and plaintiff’s counsel who are unrealistic or mistaken. The same questions and techniques can be used to explore risk and realistic analysis with them. Are they over-valuing the claim?  Have they missed something important? Are they sweeping their weaknesses and risks under the rug?)



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