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How mandatory mediation (HB 5073) hurts car crash victims

January 30, 2018 by Steven M. Gursten

New proposal for mandatory mediation in state facilitates race to the bottom for car accident victims; auto accident lawyers who don’t know how to try cases; middling injury settlements and rewards mediocrity, increases costs

Mandatory mediation will facilitate a race to the bottom in terms of justice for car accident victims.

Mandatory mediation sounds like a good idea – assuming you have no idea what mandatory mediation actually is. In reality, it will be yet another costly roadblock for car accident victims.

Introduced on October 10, 2017, by Rep. Klint Kesto (R-Commerce Township), House Bill 5073 makes the following proposal regarding mandatory mediation in certain civil lawsuits, including those filed by auto accident victims under Michigan’s No Fault serious impairment of body function threshold law:

“A civil nondomestic relations action in which it is claimed that damages exceed $25,000.00 … must be referred to mediation …”

This would represent a huge change in how car crash injury cases are litigated.

And after nearly 25 years as an auto accident attorney, I can assure you, it would not be a change for the better for the people I represent. HB 5073 is great for defense lawyers and insurance companies. It is great for insurance defense lawyers who bill by the hour. It may even be a good way to move low-quality, high volume cases – which means it is good for the big legal mills that churn and burn through auto accident cases for very low settlement amounts and for the law firms who make their money on sheer volume (and increasingly a good dose of PIP fraud as well).

But for people who are seriously hurt through no fault of their own, it’s a terrible idea. For plaintiff and personal injury lawyers who practice the right way, it’s a terrible idea. And if we ever want a profession with lawyers who actually know how to try a case and know what the inside of a courtroom looks like, it is a terrible idea.

We already have mandatory mediation in Michigan – it’s called case evaluation

Lawyers are already forced to go through a costly, time-consuming, and increasingly useless mandatory case evaluation process (MCR 2.403(A)(2)). In some counties (Oakland County, are you listening), auto accident lawyers appear before panels of lawyers who increasingly have no familiarity with auto accident litigation – our No Fault law – or any idea what cases are worth.

So, now, on top of this time-consuming and expensive procedure that also carries significant sanctions and penalties, Michigan car accident injury victims would be subjected to the following if this new mandatory mediation were also added to the mix:

  • There would be more downward pressure on compromised settlement values. Mandatory mediation works by awarding average, or slightly below average, value. The problem with this, as any injury lawyer familiar with computer claims software programs such as Colossus already knows, is this is a downward, vicious spiral in which case settlement values keep falling. The problem is exacerbated every time a plaintiff lawyer settles low and for less than a case is worth, because that gets baked into what these types of cases are valued at for the next round – which, ultimately, empowers insurance adjusters to force victims to accept unreasonable and unfair low-ball settlement offers.
  • There would be more leverage for insurance companies and adjusters to delay, deny, defend claims. With this added layer of costs imposed onto the litigation process, insurance defense lawyers – who often are paid by the hour – have even more incentive to drag out the process, stonewall and refuse to settle cases until they’ve been ordered to facilitation or mediation several times. Meanwhile, these delays and added costs and expenses mount for accident victims, eating into whatever settlement he or she eventually obtains.

The only way to get full and fair value is to go to trial or, at least, present a credible threat of going to trial. But – and here’s my biggest problem with the ADR world we live in today  – where everything seems to get aggressively pushed to facilitation, mediation, case evaluation, and, now, mandatory mediation, this results in fewer and fewer real trial lawyers. Instead, auto accident lawyers settle everything and without credible trial experience to help and protect victims, cases no longer settle for what they are worth, they settle for what the majority of low quality and poorly skilled lawyers are settling them for.

Mandatory mediation adds thousands of dollars in costs and delay.  Mediators need to be paid.  Defense lawyers love this because they get to bill for this.  But for our clients, it’s one more cost and more delay that they have to bear as part of their settlement – which adds further pressure to settle the case for less than it is worth for our clients.

As to the future of the legal profession, I tell my younger lawyers the best way to prepare for an unknown future is to return to our past. There will always be opportunities for great trial lawyers – but mandatory mediation will further diminish the already staggeringly low number of jury trials that now occur. That’s bad for victims because with fewer trials, there’s fewer opportunities for attorneys to acquire the necessary trial skills they need.  And it’s bad for the entire legal profession as we become glorified deposition and motion lawyers instead of true trial lawyers.

People deserve a day in court if they cannot get a fair settlement. Accident victims want justice, not compromise accident settlements for slightly less than the average median amount of what a mediator sees similar cases settling for. People have a right to to be heard when their lives – and their families’ lives – have been turned upside down.

But, even more basic than that, people should have a right to have jurors decide what the right thing is to do without being forced to spend thousands of dollars sitting through multiple attempts at alternative dispute resolution, such as mandatory mediation, if they don’t want to.

This is how the American civil justice system was set up to work: Trial by jury.

The vital need for the right to trial by jury was one of the most important factors for our country’s founding fathers. The right was enshrined in our Bill of Rights in the 7th Amendment. And, it’s been an integral part of Michigan’s Constitution since 1908.

This is how our civil justice system is supposed to work.

Let’s keep it that way.

HB 5073, mandatory mediation and the Death of the American Trial Lawyer

As I think about HB 5073 and how important it is to our system of justice that it not pass, I’m reminded of what nationally renowned trial lawyer Robert Eglet wrote in his article, “Death of the American Trial Lawyer”:

“Over 225 years ago, James Madison observed that, ‘trial by jury in civil cases is as essential to secure the liberty of the people as any one of the pre-existent rights of nature.’ If we still believe this to be true, our liberty is in jeopardy. The civil jury trial is disappearing and appears to be rapidly approaching extinction [thanks to the seemingly unstoppable surge of “alternative dispute resolution” measures such as mandatory mediation], and with it will bring the extinction of the American trial lawyer.”

What does HB 5073’s mandatory mediation proposal consist of?

House Bill 5073 provides the following:

  • “A civil nondomestic relations action [such as a car accident lawsuit] in which it is claimed that damages exceed $25,000.00 … must be referred to mediation, absent an objection to mediation …”
  • “‘[M]ediation’ means a process in which a neutral third party facilitates communication between parties to, assists in identifying issues in, and helps explore solutions to promote a mutually acceptable settlement of a dispute and is governed by the Michigan Court Rules.”
  • An “objection to mediation” must be “written,” filed “within 14 days after entry of an order assigning the action to mediation” and must be based on “good cause,” which may include the “inability to afford the fees and costs of mediation.”

HB 5073 was initially referred to the House Judiciary Committee. However, on October 17, 2017, the bill was referred to the House Committee on Law and Justice, which is chaired by Rep. Kesto, HB 5073’s sponsor.

No vote or recommendation was made regarding HB 5073 during an October 24, 2017, hearing before the Law and Justice Committee.

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