Can Six Sigma Improve Diversity in ADR?

Legal teams' initiatives and policies to increase diversity, race, and gender representation in the legal field are a work in progress. Despite this focus on diversity, there has been little attention paid to one facet of the legal ecosystem: alternative dispute resolution (ADR).

In-house counsel can use traditional business strategies and concepts, such as Six Sigma, to evaluate their company’s approach to ADR and increase diversity in their selection of professional neutrals.

What the data shows

Many ADR professionals come up through the legal profession. For the past few decades, the American Bar Association (ABA) has implemented several initiatives[1] to improve diversity in the legal profession. However, they have not had the impact or wide adoption anticipated.

In their most recent resolution promoting diversity in corporate law departments and law firms, a survey tool was incorporated for assessing law firms-the 2020 Model Survey. The ABA’s principal findings illustrated that law firm leadership consisted overwhelmingly of white men. Although the minority associate pipeline was growing, it declined at the higher levels of partnership; and minority attrition was greater than that for white attorneys[2].

Some initiatives, such as the Mansfield Rule[3], have had more success. Under the rule, 30 percent of interviews for an open position should be with diverse candidates.

After the inaugural year of the program, Diversity Lab, an independent research firm, determined in 2018 that 41 of an initial cohort of 50 firms would be Mansfield Certified. This doesn’t mean that the firms have reached the finish line. Rather, they now have a process by which they can effectively reach their diversity goals.

Can Mansfield help ADR?

This development is significant for neutrals in ADR practices because corporate law departments and law firms are the key gatekeepers in arbitral and mediation case assignments. As principal selectors of ADR neutrals, they have been generally viewed as lagging in the selection of diverse neutrals. This prompted the adoption of Resolution 105 by the ABA in 2018, which called for an increased representation of minorities in rosters and increased selection by users of neutral services, that is, corporations and law firms.

According to the ABA, the impetus of this resolution was the “lack of transparency” and the “network- based culture” that drives the selection process of neutrals. The sponsor of Resolution 105, the ABA Section of Dispute Resolution, concluded, “[It is] essential to shine a spotlight on the low level of diverse representation on neutral rosters and the special challenges created by the combination of the network-based culture within the profession, implicit bias, and the confidentiality that tends to obscure the degree to which Dispute Resolution lags behind the legal profession as a whole.”

With the incremental change driven by the Mansfield Rule, corporations have a chance to address the dilemma presented by the low-level of diverse neutrals in ADR. The question is: Do we have to wait for that incremental change? Or are there other available tools to address the issue contemporaneously with the accruing benefits of that diversity program?

More and more corporations keep diversity metrics for their legal work. Extending that tracking to ADR, an often overlooked area of legal practice, is an easy pivot. Corporations often use a closed referral network (the old boy network) for high value or bet the firm cases. But do all their cases fall into this category?

Six Sigma can increase workforce diversity

As Vice President & Associate General Counsel at GE Capital Life Assurance Company of New York, I learned how the business philosophy of Six Sigma could improve processes. According to Six Sigma proponents,[4] actions and behaviors are a function of our values and beliefs. Therefore, a corporate culture guided by a system of values reinforced by metrics and goals becomes ingrained. Employees have a clear understanding of what the company stands for and how they can support their company’s goals.

While most corporations are familiar with Six Sigma in achieving quality processes in products, it can also accelerate change — including ADR diversity. Six Sigma principles state:

We don’t know what we don’t know;
We can’t act on what we don’t know;
We won’t know until we search;
We won’t search for what we don’t question; and We don’t question what we don’t measure[5].

When firms seek to address these unknowns, they adopt the DMAIC (Define, Measure, Analyze, Improve, Control) process to uncover the truth of the processes that are not offering the quality they want to achieve. Corporations can apply these principles to their ADR policies.

We know corporations are leaders in adopting arbitration and mediation clauses in their contracts to resolve all manner of disputes. But do their diversity values carryover in this space? For this purpose, let’s define the issue as whether the corporations’ diversity values are reflected in their assignment of neutrals.

Establishing a baseline (the firm's past two, three, or five years of cases) will be instructive in applying the principles cited. Concurrently, analyzing this cohort of cases, the firm can stratify the cases along identifiers such as type of case (arbitration, mediation), case issue (employment, consumer, commercial, IP, technology, etc.), amount at risk (this will help identify the actual number of “high value” cases), diversity of the arbitrator or mediator[6], and outcomes. The metrics from the last three criteria will illuminate information critical to whether high value cases are really driving assignments, who your assignees are, and whether you need to make informed changes in your case assignments.

After conducting the appropriate assessment, and determining whether the company’s diversity policy is reflected in its assignment of neutrals, you can see if your ADR selections are adequately diverse. That is, you can proactively improve your criteria to ensure your diversity policy is actively extended to every sector of your firm's operation.

Institutional options

Most companies use one or more of the major institutional providers (such as the American Arbitration Association, JAMS, and the International Institute for Conflict Prevention & Resolution (“CPR”)) as their case administrator in ADR. Most, if not all, of these institutional providers have implemented program changes to ensure that they have vetted highly qualified and experienced diverse neutrals. They offer selectors 20 to 30 percent of diverse neutrals with every selection list offered in a pending case, or have committed their members to diversity pledges.

A continuing task for these institutional providers, of course, is to assess whether actual selections reflect the goal of their diverse lists. But aside from these institutional providers, there are a myriad of neutral organizations (such as the College of Commercial Arbitrators, the National Academy of Distinguished Neutrals, and the National Academy of Arbitrators) that can identify diverse neutrals with published resumes identifying the depth and variety of their expertise as either arbitrators, mediators, or both.

In other words, there are many other tools and resources available. Relying solely on the recommendation of individuals in your network is not your only resource. And, based on your Six Sigma analysis, it may be limiting effective deployment of your diversity policy. After all, your diversity policy should be based on objectively analyzed criteria that supports your corporate values, strengthens outcomes for your internal and external stakeholders, and is in general good for our society. Therefore, ensuring its application is reflected in all areas of company business is just good business.

Reprinted with permission from “The Docket Magazine”

https://thedocketlaw.com/

[1] ABA House of Delegates, Resolution 113 adopted 2016; Resolution 105 adopted 2018.

[2] See, 2020 ABA Model Survey Report

[3] The American Lawyer, August 20, 2018, by Meghan Tribe, pp.1-5.

[4] Mikel Harry, Ph.D., and Richard Schroeder, Six Sigma, The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, p.69, (Doubleday, 2000).

[5] Ibid.268-269.

[6] This may be the most difficult to quantify but not impossible given MWBE data maintained by corporations or the cooperation of Service Providers who provide diverse strike lists or have adopted diversity pledges. See, for e.g. policy of American Arbitration Association, JAMS and CPR.

Submitted by Glenn P. Milgraum, Esq

Glenn Milgraum PC

Cedar Grove, NJ

HAVE YOU ADJUSTED YOUR APPROACH TO MEDIATION AS A RESULT OF PREJUDICES, BIASES, FIRST-IMPRESSIONS AND GUT-FEELINGS HAVING BEEN PLACED UNDER A SOCIETAL MICROSCOPE?

WARNING:  This article is intentionally written to encourage introspective thought and as a topic for dialogue with your colleagues.

Prejudices, biases, first-impressions and gut-feelings have been placed under the societal microscope as of late.  Does this mean that we should stop ourselves from jumping to early conclusions when dealing with individuals who find themselves in situations that we have been trained to evaluate?  Is it okay for us, as evaluators and facilitators, to jump to conclusions based upon patterned behavior and expected outcomes?  Do we have to evaluate all interactions starting with a clean-slate and methodically flesh-out all alternatives and possibilities before reaching any foundational conclusions?  Should we trust our instincts when ‘personality’ traits can be utilized to help predict future behavior?  Are our ‘instincts’ reliable indicators or are those instincts just a reflection of our own personal biases?

Are you interacting with a puppy, an ostrich, a bear, a turtle, or a fish?

As a seasoned litigator, small-claims arbitrator and mediator, I have noticed that most participants to a dispute show personality traits that fall within several distinct categories.  Handling negotiations is best done after being able to observe the participants and learning more about their individual tendencies.  As such, introductory conversation is an absolute must.  At the same time, there exists a need to identify one’s own biases/prejudices so as to avoid misconstruing behavior or missing clues as to how a participant may act or react.   When acting as a small-claims arbitrator, quick decisive conclusions are expected.  As such, this author has been trained to stop reading nuances into a situation that are not consciously being presented by the parties.  The expected results are then determined with a passive understanding that gut-feelings are more likely the result of subconscious educated evaluation rather than expressions of mere bias.  When performing duties as a litigator, attorneys are programmed to utilize ‘character’ behavior for their client’s advantage and jumping to conclusions to formulate ideas tends to serve them well when making unplanned points in oral argument.  However, when mediating, it is necessary and extremely helpful to slow-down the process and take the time to understand the personalities of the participants and how they may react to each other.  The mediator should try her best to get the participants to look at situations from a ‘new’ perspective that doesn’t necessary comport with their usual behavior or way of doing things.  By taking the participants out of their individual ‘comfort zones’, the mediator seeks a change in the behavior that created the dispute and the resulting impasse.

As a short-hand (which in and of itself is based upon first-impression biases) ¹,  this author tends to place the participants’ actions into several distinct categories that are equated with animals to simplify what approach may need to be taken going forward.

Below, are representative examples of some of these pigeonhole categories in which to place the mediation participants, and what steps may be needed to be taken to help the individual and the mediation process to move forward (the list is not exhaustive by any means, and placement requires constant reevaluation):

1. The Ostrich: Puts one’s head in the sand ignoring the importance of matters believing that passage of time will force a resolution.  Runs after issues in quick and short spurts. May, or may not, want to be present.

2. The Puppy: Naïve.  Willing to please at his/her own expense.  Happy chasing its tail even if no gains are made by doing so.  Makes a lot of noise, just so he or she can believe they are being heard.  Tends to be young and still clouded by strong emotions.

3. The Fish: Cold to the situation.  Like the “puppy”, willing to follow others’ ideas and/or actions without much thought. Tends to have a “short” memory.   Doesn’t want to be “caught” by his/her actions and can be hard to pin down when a resolution may be close at hand.

4. The Bear: Big presence.  Growls and grunts.  Can be aggressive.  Fears no one and believes nothing will cause harm to them.  Tends to be “short-sighted”.  Very defensive about the children and their perceived needs.

5. The Turtle: Like the ostrich, can hide their heads as a means of avoidance.  Has a hard protective shell as a “defensive” mechanism. Takes slow and cautious actions (sometimes positive, sometimes negative).  Quietly observes.

6. The Bee: Loves to hear their own voices.  Drones on and on about the same things; usually revisiting topics previously discussed.  Wants to be productive but doesn’t yet realize that they cannot do it alone.

7. The Squirrel: Hordes all of the paperwork and slowly doles out information when requested.  Has a tendency to either try to control the dialogue and/or tends to bring up pertinent facts after the issue has been discussed ad nauseam.

8. The Goat: Devours all suggestions (even the bad ones).  Wants to “be on top”.  Willing to butt heads, just for the pleasure of it.  Resistant to seeing anyone else’s perspective or needs.

9. The Giraffe: Willing to stick their necks out to discuss fresh or new topics.  Looks for sympathy and expects to get a response in return.  Ready to run when confronted with situations that make them feel uncomfortable.

10. The Rhino: Very short-sighted.  Blind to, or unwilling, to see the surrounding situations.  Do not see themselves as vulnerable but is susceptible to being exploited if no guidance is given.

When dealing with “rhino” personalities, it behooves the mediator (if authorized to practice law) to educate the parties on the state of the laws and what is expected of the parties.  All mediators should repeatedly encourage the parties to seek independent legal advice to protect their own interests.

When both participants fit into the same category, it tends to make the mediator’s job much more difficult.  As mediators, we are there to assist the parties in reaching mutually agreed upon conclusions that fit within the parameters of the law.  The methodology we use to get the clients to a successful conclusion will by necessity vary by the client’s willingness and ability to actively participate in a constructive manner and our ability as mediators to be creative and flexible.

With gentle guidance and a knowing look, we can be the wise “owl” our clients expect us to be.

Becoming sensitive to our own prejudices and biases gives us important insight on how we have behaved in the past.  It should not mean that we disregard our experiences, education and our ability to use first-impressions and gut-feelings to give us guidance in formulating a foundation to establish a framework to build upon in our evaluative process.

¹ Emphasis is placed on the fact that this method is being used as a short-hand to track an individual’s behavior characteristics and is not based upon any scientific study or analysis.

* Nothing herein should be construed as legal advice. You should always consult and/or retain a lawyer regarding any legal matter.

**  Glenn P. Milgraum, Esq. is the principal attorney at Glenn Milgraum P.C, and is a litigation attorney with over 30 years of matrimonial experience in New Jersey and New York.  He is a qualified mediator and appears on the court rosters in New Jersey and New York for “Civil”, “Matrimonial” and “Economic Aspects of Family Law” cases.  He has also been trained to handle cases that have aspects of “Domestic Violence”. As such, he is a mediation-friendly “Review Attorney”. In New York his mediation services are conducted under the name of “Morningstar Mediation”

Submitted by:  J. Jay Safier, CPA, CBMA, CFF

I was involved in mediating a case with the following situation:

Customer had hired a retail home improvements company (“Company”) to make extensive modernizations of the kitchen and main bathroom in the Customer’s residence. The terms of payment required a modest deposit with most of the cost being paid after the work was done to the Customer’s satisfaction and the final inspection document had been signed by Customer. Over the course of time the work had been found to be unsatisfactory and problems arose during and immediately after the construction was considered completed. The Company repeatedly sent personnel to make the necessary repairs and corrections. However, the Customer was still dissatisfied and ended up hiring a second, independent contractor to finish the job. This meant tearing up some of the original new construction and replacing it. The Customer paid the second contractor almost as much as the outstanding balance still due to the Company. The Company persisted in billing Customer for the unpaid balance and now interest was accruing on it. Customer brought suit against the Company to stop the billing, indicating that the work had been unsatisfactory and that a second contractor was brought in to fix all of the problems. Documentation was also presented in the form of invoices from the second contractor to substantiate the extra costs Customer had incurred. The case was sent for mediation.

Prior to the mediation conference I had requested the attorneys from both sides to submit mediation statements. They did so and included exhibits believed to strengthen their respective positions. Included with the documents from the Company’s attorney was a signed inspection document indicating approval of the work performed. After reviewing them I had determined how I wanted to proceed during the mediation and it was going along to a point where I thought a break was in order. Just as we were going to break I casually posed the following question to the Customer: “If you had so many objections to the work that was done, why did you sign the final inspection document acknowledging that you had walked through the work sites and found everything acceptable?” The Customer asked to see the document and upon looking at it said, “This is not my signature.” We did not take the break and instead I asked the Company’s attorney to respond to the statement. The attorney indicated that he could not because a review of the Company’s employees’ records for the date shown on the document revealed that no one from the Company had been at the Customer’s house that day.

I requested the attorneys to meet with me privately at which point I reviewed the potential alternatives with the Company’s attorney. I indicated that I could stop the mediation and send the case back to the court to pursue the forgery matter. If such a piece of news got into the press it would provide bad public relations for his client. Alternatively, he might want to discuss the matter with the owner of his client and see if the limitation on the amount offered to close the case might be increased and then his client could handle the investigation of the forgery internally. As a result of the phone call the Company agreed to cease all claims for the balance of the original contract and also agreed to pay the Customer’s legal fees in connection with this matter

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Click HERE to contact I. Jay Safier of Safier Mediation Center, LLC

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Author: I. Jay Safier, CPA, CGMA, CFF Safier Mediation Center, LLC Fair Lawn, NJ