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VOL. 125 | NO. 156 | Thursday, August 12, 2010

Mediation Gains Ground In Flailing Economy

JONATHAN DEVIN | Special to The Daily News

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The old joke is that when two parties go to court, the only ones who really win are the lawyers. But thanks in part to a bad economy, lawyers are learning that it may be more profitable to avoid trying lengthy cases.

That’s what Harry Johnson, of counsel for Apperson Crump PLC, is trying to do.

“I retired two years ago and just happened to be talking to a judge one day, and he said, ‘Why don’t you try some mediation?’” said Johnson. “It took me a while to decide I’d at least take the training course and a while after that to say I’ll give it a shot.”

Johnson was general counsel for First Horizon National Corp. and First Tennessee Bank NA for 20 years before retiring. Now he hopes to start a successful practice of mediating issues outside of court for businesses.

“I’m trying to start something that hasn’t been done here as a formal part of the practice, particularly relating to businesses,” said Johnson.

Apperson Crump is one of many law firms now looking into mediation as a fast-growing part of the legal community, both in Memphis and across the country. Formerly the territory of single-person operations, firms now see the potential for profit in mediation.

With unemployment soaring, families and businesses are looking for cheaper ways to settle disputes.

Mediation is a form of alternative dispute resolution now recognized under the Tennessee Supreme Court’s Rule 31. Essentially, a neutral third party mediator works with two disputing parties to form an agreement.

Lawyers are usually present on both sides. Mediators cannot give legal advice, and judges and juries are not involved. There is no lengthy discovery period that causes some cases to last a year or more. And at the end, the agreement is drafted into a legal order and signed by a judge as a binding agreement.

“The reason I got into mediation was that I kept doing custody cases where I felt like everybody lost – especially the children,” said Jean Munroe of Jean Munroe Associates in Knoxville.

Munroe travels the state training new mediators.

“When you’re in litigation, you are as polarized as you can be trying to destroy the other side and there’s no chance to build a future parental relationship,” said Munroe.

Johnson said the same applies to business disputes between, for example, companies and clients or companies and their suppliers, in which both sides benefit from keeping a working relationship after the dispute is settled.

“Plus, you can actually agree to things in mediation that the court doesn’t have the power to give you,” said Munroe. “If it’s not illegal, you can agree to it.”

She offered the example of divorces in which one parent agrees to contribute to the education of a child who’s of legal adult age, something a court has no jurisdiction to award.

Mediators go through a 46-hour training and certification process for family mediation and 40 hours for civil mediation. There are education requirements for each, and all mediators must be approved by the Tennessee Supreme Court’s ADR commission.

The commission approved 102 new civil mediators and 113 new family mediators in Tennessee in 2009, bring the total as of January to 532 civil, 290 family and 244 civil and family mediators.

In 2009, Shelby County reported 553 mediated disputes to the Tennessee Supreme Court, topped only by Knox and Davidson Counties, but even largely rural counties like Hawkins, Blount, and Greene counties reported more than a hundred mediations each. Rutherford and Sullivan Counties reported 234 and 269, respectively.

Hayden Lait, a Memphis attorney and chairperson of the ADR commission, said 95 percent of his business now comes from mediation. He was trained in 1994.

“Case loads are increasing and the increased use of mediation allows courts to more readily handle those case loads,” Lait said. “From a lawyer standpoint, the quicker a lawyer can settle a case, they can move on to another case and the happier your client is also.

“The concern early on when mediation started developing in Tennessee was a loss of income, but I think people soon realize that they are able to get a quicker resolution and handle more clients.”

Under state law, mediation is now required for divorce cases before parties can appear in court.

That’s causing an influx in Munroe’s training classes. Beginning in 1992, she offered seven or eight classes a year. Now she offers 12 to 15, and the average class size has gone from about 10 to almost 20.

Mediators’ hourly rates vary across the state, but Munroe said most charge in the neighborhood of $300 per hour. But considering that mediation can happen in a matter of hours or days as opposed to years, the expense is cut dramatically.

A divorce for a middle-income family in Memphis can cost $20,000 to $50,000 or more, she said.

“Lawyers were very paranoid about it at first,” said Munroe. “I think they thought it was going to take money out of their pockets.

“But what we’ve found is that their time is a lot more efficient. A retainer fee may run out before a divorce is over. If you can get your case finished before your retainer runs out, it’s good for everybody. If it’s a contingency fee basis and you don’t have a lot of expenses from expert witnesses and things like that, then obviously you’re going to retain more of the money.”

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 72 218 10,440
MORTGAGES 91 293 13,620
FORECLOSURE NOTICES 3 46 2,690
BUILDING PERMITS 0 393 24,700
BANKRUPTCIES 62 184 10,076
BUSINESS LICENSES 25 62 3,798
UTILITY CONNECTIONS 90 338 14,895
MARRIAGE LICENSES 10 68 3,235

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