Combining the “Hip Pocket” Service Rule and Early Mediation

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An Intriguing Idea

By: Donald L. Swanson

The California Law Revision Commission is studying mediation confidentiality in the legal malpractice context.  Its Memorandum dated May 27, 2016, discusses ways to address confidentiality concerns.

Minnesota’s “Hip Pocket” Example

An unusual “type of approach” it identifies is Minnesota’s “hip pocket” service rule.  Under this rule, the statute of limitations is satisfied by service of process, instead of “by filing the complaint.”  The plaintiff’s attorney begins the lawsuit by serving the Complaint on the defendant but does not file anything with the court: the Complaint is kept in his/her hip pocket.

The deadline to actually file the Complaint in court is one-year later [Minn. R. Civ. P. 3.01].  In the meantime, the parties can work toward resolving the dispute.

[Note: this “hip pocket” rule is the flip-side of today’s usual rule of filing a lawsuit in court and waiting up to 90 days to serve process on the defendant.]

“Hip Pocket” Benefits

The Commission provides this explanation of the benefits of such an approach:

–By not filing the complaint in a public forum until there is a need for judicial intervention, the parties can preserve the confidentiality of their dispute.

–If a resolution can be reached, the settlement agreement can be just another confidential business contract unexposed to public scrutiny.

HISTORY

A law review article describes the “hip pocket” rule as a nearly-extinct procedure that has “a long history.”

–The rule is “a largely foregone legal tradition” dating back “to the early days of U.S. civil procedure.”

–In Minnesota, for example, the rule is “traceable back” to Minnesota’s days as a territory.  Minnesota Territorial Statutes of 1851, Ch. 70, Sec. 44, provides: “Civil actions . . . must be commenced by the service of a summons.”

The law review article cites a 1937 Report to the United States Supreme Court from the Federal Advisory Committee on Rules for Civil Procedure, which says this about the “hip pocket” rule:

–“Several members of the Committee prefer the system in force in New York, Minnesota, South Dakota, Washington, and a number of other code states. Under that system an action is commenced by the service of summons …. No papers need be filed with the court.”

–“The advantages of that system are that it avoids early publicity, avoids the accumulations . . . of a vast number of actions which are eventually settled or abandoned, lessens the fees paid by litigants in actions which do not reach the stage where court action becomes necessary.”

–“Probably the novelty of such a practice among many members of the bar is, at the present time, the only serious obstacle to its adoption.”

The Present

The article also says rejection of the “hip pocket” rule has “engulfed the vast majority of states.”  On the question of whether Minnesota will ever succumb to peer pressure to eliminate its “hip pocket” rule, a Minnesota attorney says this:

Every time we look at [eliminating the “hip pocket” rule], there is a tremendous resistance within the Minnesota bar. Lawyers like the ability to have cases served, and not filed. And there are a whole host of reasons. One is just general confidentiality. If it’s filed, the papers become public record-accessible to the media, accessible to snoopy neighbors, etc.

ADDING-IN MEDIATION

Minnesotans may be onto something here.  The “hip pocket” rule is an intriguing idea.

And imagine the possibility of layering in a mediation element to the “hip pocket” rule: using mediation in the pre-filing stage to help resolve disputes.  That could provide great value!

Perhaps other jurisdictions should take note of Minnesota’s “hip pocket” rule and incorporate it into their own rules, along with a pre-filing mediation element.

What are your thoughts on this?

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