By Donald R. McNeil |

You find yourself in a business or employment lawsuit pending in Minnesota.  The litigation costs will mount.  There will be filing fees, motion fees, expert witness costs, deposition transcript costs and document management costs.  There will be attorney fees and then more attorney fees.  Time will be spent thinking and dealing with litigation; time that would be better spent being productive.  In Minnesota, the courts have learned that one process has become an excellent means for obtaining an efficient resolution and allow the parties to control their destiny.  That process is mediation, Minnesota-style.  Here are the top three things that you need to know about mediation in Minnesota:

1.     Mediation is highly effective.  

Since the early 1980s, Minnesota courts have looked toward mediation to help resolve civil disputes because it has proven to be a highly effective tool. In the mediation process, a neutral third party facilitates communication between the parties to promote settlement. The use of mediation more often than not results in an efficient, cost-effective resolution of the business or employment dispute with greater satisfaction to the parties. The great majority of the civil cases filed in Minnesota state courts are settled without a trial.

Why does it work so well?  As part of the mediation process, the parties are usually in the same office (although in separate conference rooms), thinking and talking about the same thing and focused on resolving the lawsuit at the same time. The use of a neutral to help the parties communicate and nudge them toward settlement has proven to work wonders. Studies have found that between 80 to 90% of disputes that use the mediation process find a settlement. This is not to say that there are some cases that simply must go to the trial process in order to resolve the dispute. However, mediation has proven so effective that the courts now require attorneys to use some form of alternative dispute resolution before a trial is held, and mediation is the most common process.

2.     The Minnesota Civil Mediation Act.  

In Minnesota, mediation must follow certain basic requirements in order to have an enforceable settlement.  Under the Minnesota Civil Mediation Act, a mediated settlement agreement is not binding unless: (1) it contains a provision stating that it is binding and a provision stating substantially that the parties were advised in writing that, (a) the mediator has not duty to protect their interest or provide them with information about their rights; (b) signing a mediated settlement agreement may adversely affect their legal rights; and (c) they should consult an attorney before signing a mediated settlement agreement if they are uncertain of their rights; or (2) The parties were otherwise advised of these conditions.  Minn. Stat. § 572.35, Subd. 1.  

The courts have weighed in on this unique Minnesota law.  In a landmark case, the Minnesota Supreme Court ruled that a handwritten document prepared by the parties’ attorney at the conclusion of a mediation session was unenforceable as a mediated settlement agreement because it failed to state that the document was a binding agreement.  Haghighi v. Russian-American Broadcasting Co., 577 N.W.2d 927 (Minn. 1998).  In that case, the parties participated in a mediation session represented by legal counsel.  At the conclusion of the mediation, as is often common, the attorneys drafted a handwritten agreement that the parties signed.  However, the document did not contain a provision stating that it was binding as required by the Minnesota Civil Mediation Act.  Later, one party sought to enforce the mediated settlement agreement in court and, ultimately, the case made its way to the Minnesota Supreme Court.

The Minnesota Supreme Court ruled that the document was an unenforceable deal because it did not comply with the Minnesota Civil Mediation Act.  The supreme court found that the Minnesota Civil Mediation Act was unambiguous in its requirements: the Act “clearly provides that a mediated settlement agreement will not be enforceable unless it contains a provision stating that it is binding”.  The court rejected an argument that mediated settlement agreements drafted with the assistance of counsel should not fall within the purview of the Minnesota Civil Mediation Act.  Instead, the supreme court reasoned that “it is just as likely that the legislature intended that a settlement document state that it is binding in order to encourage parties to participate fully in a mediation session without the concern that anything written down could later be used against them.”  As a result, in Minnesota, a mediated settlement agreement must contain a provision stating that the settlement agreement is binding in order to be enforceable.

3.     Some form of ADR is mandatory in almost all civil cases.  

Starting in 1994, Minnesota courts have required that all cases participate in some form of alternative dispute resolution (ADR) processes, except for a few family law situations such as when there is domestic abuse involved. Under Rule 114 of the Minnesota General Rules of Practice, the courts require that attorneys provide clients with ADR information and promptly confer regarding the selection and timing of ADR. Even if the attorneys cannot agree on an appropriate ADR process , the court will schedule a telephone conference with the attorneys for the purpose of setting forth an ADR process. Many Minnesota judges will defer dispositive motions or a trial until the parties certify completion of an ADR proceeding.  By far, the most common ADR process is mediation. The process is mandatory and the court is authorized to impose sanctions for failure to attend a scheduled ADR process.

Mediation, Minnesota-style has proven to work in the vast majority of business and employment lawsuits.  The parties are able to save litigation costs, control their own settlement decision – instead of seven strangers that constitute the jury, and get back to being productive.  Mediation works and is worth the effort.

Donald R. McNeil is known for bringing ingenuity to his work as a mediator and arbitrator. “I always recommend mediation before going to arbitration or trial, with a limited number of exceptions, and you will find that judges in the Twin Cities require it.