One mediator in a one-and-done mediation session: that’s how mediation of legal disputes typically works these days.
So . . . of course . . . the Detroit bankruptcy mediation effort is nothing like that . . . whatsoever. Instead, the Detroit bankruptcy has a team of six mediators who conduct hundreds of mediation sessions.
Detroit’s use of multiple mediators and hundreds of mediation sessions is not surprising. How else could a Court deal with billions of dollars of debt and a multitude of creditors of a City that must keep operating and must meet the daily needs of its hundreds of thousands of inhabitants.
A Chapter 7 liquidation or a going-concern sale of all assets are not even remotely possible alternatives. The Detroit case must succeed in creating an economically viable and effectively-operating municipality – and it must do so quickly.
Multiple Mediation Sessions
Eugene Driker, a Mediator in the Detroit bankruptcy, is responsible for mediating pension plan disputes.
“It is self-evident” at the beginning of the case, Mr. Driker says, that “billions of dollars” of pension plan issues involving thousands of retirees and current employees cannot be resolved in a one-and-done session. Instead, the initial mediation session he conducts becomes little more than “getting-to-know” the people in the room and “where they stand.”
Thereafter, Mr. Driker meets many, many times with mediating parties to address and resolve pension plan issues.
Mr. Driker uses every type of mediation session arrangement: sometimes the sessions are collective events that include everyone involved; sometimes the sessions are in caucus with one or a few parties; sometimes he conducts shuttle diplomacy between disputing parties; sometimes he brings disputing parties together to improve communications and understanding; and sometimes he brings parties together via “dozens and dozens of emails” and by other means of communication.
Early mediation sessions for pension plan issues focus, Mr. Driker says, on “resolving fact disputes.” Once everyone agrees on “a universe of facts,” the sessions turn to “other points of reference”: i..e., negotiations to resolve financial shortfalls in pension plan funding.
So, far from a one-and-done session, the Detroit mediation effort takes hundreds of mediation sessions.
Team of Mediators
Detroit’s team of mediators consists of a lead judicial mediator and five deputies. The judicial mediator orchestrates the mediation process, and each mediator is assigned a category of disputes to mediate. The category assignments are:
—Eugene Driker – Pension Plans
—Judge Roberts – Unions
—Judge Perris — Financial Creditors
—Judge Daniel — Health Care
—Judge Coar – Downtown Development Authority.
Mr. Driker says a crucial part of Detroit’s mediation success is this: the mediators genuinely act as a team—not as independent professionals. For example, “Judge Roberts and I” work “in tandem” and “decide together” on how to proceed, Mr. Driker says, because the interests of the unions and pension plans “go hand-in-hand.”
A team approach is important to the mediators, Mr. Driker says, because they are well-aware of these realities:
–The City has a pool of limited assets that will be utilized in a plan of reorganization under standards of “fairness” and “equitable distribution.”
–The category of disputes assigned to each mediator is directly related to and entwined with categories of disputes assigned to other mediators.
–It’s “a step-by-step process”: any settlement in one category must be “put on the side” until it can coordinate with settlements in other categories
–Settlements must ultimately be “embedded and approved in an over-all plan.”
The team approach comes “very naturally” to the Detroit mediators and runs “very smoothly,” Mr. Driker says.
The Detroit bankruptcy mediation breaks the mold on common and long-established mediation practices.
Footnote: This is the fourth in a series of five articles about the Detroit mediation process, based on interviews with Eugene Driker, a Deputy Mediator in the Detroit Bankruptcy.
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