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Michigan Supreme Court Allows Greater Flexibility in Alternative Dispute Resolution

The Michigan Supreme Court recently loosened its requirements for specific Alternative Dispute Resolution procedures in most types of civil lawsuits. Alternative Dispute Resolution, or “ADR,” encompasses a broad range of tools designed to spur opposing parties into settling their disputes without additional costly and stressful litigation. ADR options in Michigan include early intervention conferences, settlement conferences and mediation, and case evaluation panels.

Under previous Michigan case evaluation procedures, parties to a civil action were required to submit their cases to a neutral, three-person panel. That panel of neutrals would then gauge the estimated value of a case and supply a proposed settlement award. As an incentive to promote resolution of cases, a party could face sanctions for rejecting that proposed settlement amount if it did not prove additional damages at trial. According to a study commissioned by the Michigan Supreme Court, case evaluation was effective in promoting settlements that helped litigants avoid trial, but attorneys often preferred the flexibility of selecting other ADR procedures, such as mediation.

The Michigan Supreme Court recently issued new rules that eliminate the requirement to engage in case evaluation. Now, parties in a civil action may elect other ADR procedures, such as a mediated settlement conference, with or without submitting their case to a case evaluation panel. In addition, the threat of sanctions if a party does not accept a proposed settlement number from case evaluation has been eliminated. However, the case evaluation requirement was not removed from all cases and remains mandatory in some civil cases, such as medical malpractice disputes. Moreover, parties and judges may still elect to use case evaluation panels in all civil cases, but their use is no longer mandatory.

Litigation costs are a growing challenge to companies’ bottom lines. According to a 2010 study presented to the Judicial Conference of the United States, average litigation costs as a percentage of revenue grew by nearly 80% between 2000 and 2008. These increased costs were not due to an increase in attorneys’ hourly rates but were reflective of costly and time-consuming litigation activities, such as the production and review of voluminous documents during the discovery phase of lawsuits. As a result, according to a Harvard Negotiation Law Review article, corporations have shifted their practices toward attempting settlement through ADR without resorting to litigation. The Michigan Supreme Court’s newly altered procedures ensure that a range of options are available to parties seeking an early resolution of their legal disputes.

You can read the full version of the new procedural rules, together with comments from Michigan Supreme Court justices, at:

https://www.courts.michigan.gov/siteassets/rules-instructions-administrative-orders/proposed-and-recently-adopted-orders-on-admin-matters/adopted-orders/2020-06_2021-12-02_formattedorder_amendtofmcr2.403.pdf
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