The Honorable David B. Saxe (Ret.), neutral with NAM (National Arbitration and Mediation), discusses the ways that his experience as a judge and a lawyer inform his ability as a neutral; the advantages of alternative dispute resolution versus litigation; and the role of mediation and arbitration during the pandemic and beyond.
CCBJ: After an illustrious legal career as a litigator, trial judge and then one of the justices of the Appellate Division, First Judicial Department for the Supreme Court of the State of New York, you’ve been involved in all manner of disputes and legal proceedings. How has your background and experience prepared you for a career in alternative dispute resolution (ADR)?
Hon. David B. Saxe (Ret.): As a judge, my career on the bench spanned 36 and a half years, and I saw pretty much every kind of case imaginable, probably more than once. So, I look to that experience first. From agriculture cases to zoning cases – A to Z – I’ve ruled on cases, litigated cases and negotiated cases and settlements. So, I understand where most controversies will end up in court. That informs my ability as a neutral because I can guide the parties and advise them based on my experience about how I think a court decision would go. The parties always want to know, “How is a judge going to look at this case?” And I know how a judge is going to look at a case, because I’ve probably sat on a case and decided a case just like that in the past. All of that experience helps me be a better neutral.
Additionally, I bring to bear the experiences I had as a lawyer. Prior to my time on the bench, I was a partner in a boutique real estate litigation firm, I was involved in consumer protection cases and I worked for a Fortune 500 commercial lending institution. So, I know the practice of law, and I know the kinds of disputes that come out of doing business. And I’ve experienced them, both as a lawyer and a judge.
When is the right time to seek out ADR?
Both parties and their counsel really have to be ready, both in a practical and psychological sense, to want to talk to each other on a meaningful level. In other words, if they’re ready to tear each other’s throats apart, that’s not the proper time to put them in a room to try to resolve certain disputes. There has to be a cooling-off period first, where they understand that there are risks inherent in going to trial, and that it’s worth the elimination or at least reduction of risk to resolve or settle their case through ADR. They have to reach that level. Sometimes it happens early; sometimes it only happens on the eve of a trial. It’s really determined on a case by case basis, but you have to have that willingness to talk – and listen.
NAM administers arbitrations and mediations, throughout the United States and internationally, that originate from a pre-dispute contractual clause. With that in mind, what is the benefit of including a pre-dispute arbitration clause in corporate agreements and/or employment agreements and programs?
It’s very important. The short answer is that when parties enter into a contract – let’s say it’s any commercial contract, like a contract for the delivery of goods, or for services, whatever it is – if there’s no clause regarding arbitration or mediation, no ADR clause, well, what happens when there’s a dispute? Maybe the parties try to negotiate the problem themselves. Maybe they’re successful. But oftentimes they’re not successful. When they’re not successful, litigation starts, and that’s very hard. At the beginning of a litigation, there’s a great deal of tension between both sides, annoyance, maybe even anger. It’s very difficult at that stage to get the parties together to say, “Well, you know something? Let’s mediate this case.”
It’s far better to have that clause in your contract of sale or services, whatever the case may be, beforehand, so that if a dispute comes about, both parties know that they’re going to be involved with an ADR administrator like NAM, in mediating that dispute, or maybe even arbitrating that dispute. It’s a tremendous savings of time and money as well.
NAM has been utilizing videoconferencing for more than 25 years, and now, during the pandemic, they’ve been able to convert many of the in-person arbitration hearings and mediation conferences to the virtual platform. As the courts continue to deal with effects of COVID-19, how can virtual arbitration and mediation be of value to practicing attorneys?
Videoconferencing is a game changer. There’s no question about it. And COVID-19 has certainly accelerated that change. NAM has been involved in videoconferencing for over two decades, and they are very technologically proficient in that regard. The reason why it’s important, and will remain important, is pretty simple: it saves time and money. I don’t think lawyers are going to go back to the old way of arbitrating or mediating a case, because clients are going to push them and say, “Why go back, when we have developed a proven way of videoconferencing ADR?”
Before I was affiliated with NAM, I was the mediator for various disputes where the parties were coming from different parts of the country to see me in my law office in New York. They had to be put up in hotels in Manhattan, and a client was paying for a team’s meals, travel, hotel arrangements. Now, they can remain in their law offices, the clients can stay in their headquarters, and we can conduct the mediation through videoconferencing. And it’s fine and it works. So, I think videoconferencing is here to stay and going to become the norm. Attorneys are going to like it, and clients are going to like it.
Is there any one type of case or claim that we may see more of as we recover from the pandemic?
I think you’re going to see an uptick in the number ofcomplicated marital dissolution cases throughout the country, especially in major urban areas. And those cases will involve issues of financial distribution, or equitable distribution. Complex matters that really require a judge – someone who is not only sensitive to the issues that are going on in the marriage, but is also really knowledgeable about partnership issues, tax issues and things of that nature. The reason I say that is, I think COVID-19 has caused people and families to be placed into a closer relationship than they might otherwise be. So, people are kind of hunkered down in their homes, and husbands and wives and families are spending a lot more time together than they might have otherwise, and I think that is exacerbating some of the tensions. I think that tension is going to burst when the pandemic starts to subside.
And when the pandemic finally does abate, once we have a decent vaccine and people start getting back into the world, I think you’re going to see a great influx of cases. I’m not only talking about complex matrimonial cases, but also complex commercial litigation and real estate litigation. Generally, lawyers and their clients have been adopting a bit of a wait and see attitude occasioned by the pandemic, and when people feel more comfortable, I think there will be a rush to resolve disputes. And I don’t think the court system is prepared to handle it. I think these cases are going to swamp the court systems, not only in my bailiwick, New York City, but throughout the country. And that’s why I think the concept of med-arb presents an interesting possibility. It provides a neutral an opportunity to try their hand at mediating a case, while also saying to the parties, “You know what? If there are things you can’t agree on, the way to finish this off is to arbitrate it.”
Is ADR ready to handle the influx of cases that I suspect, there will be? Well, I think NAM is prepared. We have a tremendous roster of neutrals, including neutrals who were former judges in the state court system, like myself.
I know how a judge is going to look at a case, because I’ve probably decided one like that in the past.
You’re considered one of the most prolific and frequently cited judges in the nation. Based on your many years of experience on the appellate level, what place would you say an appeals process has in private ADR?
This is a subject I have a great interest in, and it’s one I have written about for the New York Law Journal – an article proposing an appellate platform in arbitration. As a matter of fact, that article was an award winner in a national publication contest, so it was nice to know that members of the bar thought highly about the topic and the article. But getting to the actual substance, I’ve sometimes been surprised by the value of the arbitration award. And while there has to be a winner and a loser, the award is not always just or fair – especially to the losing party – and unfortunately, the affected party really can’t do anything about it. And that’s because of the finality of arbitration.
There are limited grounds, yes, available under statutes for challenging an arbitration award, but they’re very limited. Very, very limited. If I had to put it in a nutshell, you basically have to show that the arbitrator was virtually unethical. It’s an almost impossible standard. So, it seems to me that if you could build in, and this would be in the precontractual agreement, a limited and focused appellate arbitration procedure, it would satisfy a lot of people. I think that it would encourage more litigants to consider arbitration, because they know that if they’re faced with a questionable award, they’ll at least have the opportunity for a do-over. I think that would be very important. I think it would increase the number of arbitrations because the finality of arbitration can sometimes be a deterrent.
NAM has specific appellate rules that parties can agree to and incorporate into a contract between the parties who sign on to arbitration.
If you had to give one piece of advice to a lawyer getting ready to mediate or arbitrate before you, what would it be?
I’ve encountered many lawyers over the years and quite frankly, some are just not good listeners. When others are talking, they’re thinking about something else – usually they’re thinking about a response. And that segues into another characteristic I’ve noticed about attorneys, which is that many don’t have a lot of patience. So, I would try to encourage the lawyer who is representing a party at mediation to be very diligent and aware of their listening quotient. To participate in active listening, where you’re just not letting the words go in and out, but you’re really attempting to listen and maybe even reformulate what’s been said. It shows the party that’s speaking, that you remember what was presented and are reflecting on what was just said.
This is a very important quality, and it ties into the lack of patience that many lawyers have. They want to jump to a solution, and they get upset when the parties at a mediation begin to meander a bit. You’ve got to give people a chance to consider their options, and then bring them back slowly, while listening to their concerns. In doing so, attorneys should not only listen carefully to what their client has to say but also pay close attention to the mediator’s advice. Keeping the dialogue fluid between parties is often the key to a successful resolution. If the attorney fails to do so, their client could become disenchanted with the process and possibly abandon the mediation altogether. Again, I can’t stress enough that the ability to listen is the one of the most important ingredients to a successful mediation.
If I had to put a name to it, it’s emotional intelligence. The qualities of active listening and having the patience to let people tell their story, that’s a sign of emotional intelligence. It encourages a closer relationship between the parties to the mediation, and with the mediator. It’s likely to help produce a resolution. If it’s not there, it’s going to be much more difficult to bring both parties together.
With 2020 almost behind us, what trends do you foresee nationally for ADR, and in particular, for complex commercial matters in 2021 and beyond?
The first thing that comes to mind, because it takes me back to a prior question, and ties into this one, is videoconferencing. As I mentioned earlier, virtual ADR is a game changer. And with the influx of complex commercial litigation coming into the court system, I don’t think that the courts are ready to handle the overflow of cases. The only solution will be to jump to ADR. Or they may actually go directly to ADR – after the lawyers and the parties begin to see that it’s impossible for the court system to handle the increased caseload.
The way ADR can handle it, and the way NAM can handle it, in particular, is to provide a technologically proficient alternative for the parties. I think videoconferencing is going to be very appealing to more and more lawyers and clients. And as it becomes even more sophisticated and mainstream, I think attorneys are going to come to see it essentially as the default position. In-person will become the secondary way. That’s the change I foresee happening, because it’s economical.
Another concept I foresee and encourage is the med-arb alternative. Mediation is terrific, but arbitration locks the door, so to speak. So, combining mediation with arbitration is a terrific way to reduce the areas of conflict that exist between parties. I personally don’t think that this approach has been sufficiently developed in the ADR field, but I think NAM is prepared and has been prepared to offer med-arb. But it ought to be suggested more often, because it will eliminate cases. The parties have to be encouraged to trust the process and know that the neutral will be thoroughly prepared and try to settle the case on consensual terms. But if it can’t be settled, then the parties will go before the experienced mediator, who’s now wearing the arbitrator’s hat, to finally resolve the case.
What I also would like to see in the future is an appeal process within ADR. I mentioned it earlier, but what I had in mind was that after an arbitration award is given, the loser – that is the unhappy side – has a very limited number of options they can do to challenge the award. So, there is a process called confirmation. The winner jumps into court and seeks to confirm the award so that they can enter a judgment. The loser might go to court to seek an order to disaffirm the award, but as I previously mentioned, the grounds for challenging an award are very limited. So, I’ve been encouraging the creation of an appellate process in arbitration that is a limited and focused arbitration procedure, but is a simple and economical way. I think an appellate process would bring into the world of ADR, and especially into the world of arbitration, a great many more cases than you have now.
Published December 2, 2020.