SC Lawyer, Jan. 2004, #1. South Carolina court-annexed ADR: past, present and future.

• Author: By Andrew M. Walsh

South Carolina Lawyer

2004.

SC Lawyer, Jan. 2004, #1.

South Carolina court-annexed ADR: past, present and future

South Carolina LawyerJanuary 2004 South Carolina court-annexed ADR: past, present and futureBy Andrew M. WalshSouth Carolina adopted mandatory circuit and family court mediation and arbitration (collectively known as "alternative dispute resolution" or "ADR") as a pilot program almost seven years ago. In late 2002, the Supreme Court, recognizing the virtues of ADR, reconstituted the Commission on Alternative Dispute Resolution, resetting South Carolina on a course toward a uniform, statewide mandatory court-annexed ADR system, most likely within the next two years. If you litigate in the circuit or family courts of South Carolina, you have or will soon be encountering ADR. This article is a primer on court-annexed ADR in South Carolina: its history, current rules and likely future.

Past: prior ADR commissions and rules

Formal court-annexed ADR in South Carolina dates back to at least 1993, when the Supreme Court created a Joint Commission on Alternative Dispute Resolution built on the prior arbitration efforts of the Supreme Court Judicial Council and mediation efforts of the South Carolina Bar's ADR Section. Within two years, the Joint Commission proposed rules reflecting the collaborative efforts of more than 50 ADR pioneers. Following public comment, the Supreme Court adopted those ADR rules for certain "pilot counties," originally effective July 1, 1995, but ultimately March 15, 1996, with nominal seed money. In 1999, the ADR rules were expanded to Charleston, Horry and Lexington counties as written and to Greenville County on a modified basis. In 2000, Anderson County was added on the same modified basis. In 2001, Charleston County withdrew from the program, but the rules remain in effect in the circuit and family courts of Anderson, Greenville, Florence, Horry, Lexington and Richland counties.

The Judicial Department's Office of Court Administration initially administered the Joint Commission's work, including certification of mediators and arbitrators (collectively, "neutrals"). Effective September 1, 2002, the Supreme Court adopted Rule 422, SCACR, creating a new Commission on Alternative Dispute Resolution and Board of Arbitrator and Mediator Certification, both administered by and housed at the South Carolina Bar. Chief Justice Jean Toal envisions one statewide system of mandatory ADR for circuit and family court, and has given the Commission the task of designing such a system. The primary purpose of the court-annexed program is to increase public satisfaction with the judicial system. Cost savings and docket control are secondary considerations.

Present: A primer on the current ADR rules

While sometimes denoted "the ADR Rules," regulation of ADR in South Carolina courts derives from four primary sources:

1. Rule 422, SCACR:

   This is the enabling rule creating the Commission on ADR and detailing its powers, composition and obligations. Under Rule 422, the Commission consists of 19 members appointed by the Court: six judges, six attorneys, two public members, a pilot county court clerk, the Director of Court Administration, two legislators and the Chair of the Bar's ADR Section. The Commission's charges are broad and include coordinating all civil and family court ADR efforts, collecting and analyzing ADR data, promoting ADR education, monitoring court ADR elsewhere and nominating commissioners to the Board of Arbitrator and Mediator Certification which in turn certifies neutrals and approves training programs.

2. ADR Commission regulations:

   Attached as an appendix to Rule 422 are the Commission's regulations covering mostly internal procedures: membership, committees, staff, meetings, quorums and voting. However, it also includes procedures for certification, recertification and decertification of mediators and arbitrators and the approval process for training programs. Highlights include: * applications must be typed, signed and submitted with payment ($250), with a right of appeal to the Commission; * neutrals must be recertified annually ($50), now by December 31 of each year;

   The renewal date was moved only within the last few months to correspond with the Bar's calendar. Reminders are mailed to neutrals in November of each year, currently separate from the Bar's dues notices; * the Board must maintain and distribute to clerks a roster of certified neutrals; A copy is available to the public at www.scbar.org/adr; * the Board must process complaints of misconduct which can lead to discipline and decertification, subject to appeal and reinstatement procedures; and * training program approvals, costing $25 per annual application, are subject to a "clear and convincing" standard, with a right of appeal to the Supreme Court.

3. Circuit Court ADR Rules:

   Originally, there were two sets of Circuit Court ADR Rules: one for mediations and another for arbitrations. Effective July 1, 2000, they were merged. For a summary of those changes and differences, see Robert W. Hassold Jr., Circuit Court ADR Rules: Changes and Differences, South Carolina Lawyer, November/December 2000, at 23.

   The current Circuit Court ADR Rules mandate that disputants in almost all civil matters in a pilot county circuit court must timely attempt resolution in an "ADR Conference" (mediation or arbitration) before any trial will be permitted. Greenville and Anderson county circuit courts follow the same rules, but as modified by local standing orders approved by the Supreme Court. A brutal summary follows of both the modified and unmodified Circuit Court ADR Rules.

   * Terms (Rule 1): "Neutral" is defined as either a mediator or an arbitrator and does not include, for these rules, other ADR forms and practitioners like early neutral evaluations and summary trials. "Certified" is limited to neutrals certified by the Board, excluding certification by other entities. Mediation is defined as "settlement discussions" facilitated by an impartial third person, as distinct from arbitration, where the third-party actually decides the case. Self-determination is strongly affirmed: absent consent of the parties, arbitration is non-binding, a settlement is voluntary and any right to trial is preserved.

   * Coverage (Rule 2): In the unmodified rules, absent another agreement, civil claims exceeding $25,000 are subject to mediation; all others are subject to non-binding arbitration; and there are only seven exceptions to mandatory ADR. Under Greenville and Anderson counties' modified rules, mediation is the sole default process (albeit parties may still voluntarily elect arbitration), and there are only two exceptions to mandatory ADR: post-conviction relief and previously mediated cases.

   * Appointment vs. selection of a neutral (Rule 3): Parties have 210 days after filing to select anyone they wish to serve as their neutral and 224 days to file either a stipulation naming the selected neutral or a notice requesting appointment of a neutral. Appointments must be from the official roster of certified neutrals, but selections need not. Under the modified rules in Greenville and Anderson counties, no notice or stipulation is required; rather, parties must file a Proof of ADR (POA) within 300 days reflecting that a mediation or arbitration was held and whether settlement was reached. If no POA is received by the 210th day, the court clerk automatically appoints a primary and alternate mediator from the official roster - no request is needed. If still no POA (or Exemption) is received by the 300th day, the court may issue a Rule to Show Cause for sanctions.

   * The mediation or arbitration ("ADR Conference"): Rule 4 details the mediation or arbitration conference: its locale; that it is not to delay discovery or motion practice; that it can be recessed and reconvened by the neutral as needed; that it is private; and that it must be held within 300 days of the filing of the action unless deferred for good cause by the chief judge.

   * Duties of parties (Rules 5 and 6): Unless otherwise agreed or ordered, the parties and their counsel - including corporations, governmental agencies and insurance carriers - must physically attend the mediation, bringing with them "full authority to settle." Prior memoranda to a neutral are permitted, and in mediations, can be ex parte. Cooperation is mandatory. So is confidentiality, which must be memorialized in an Agreement to Mediate signed by everyone present. Rule 5 lists specific examples of confidential communications and how to finalize a settlement agreement. Rule 6 has no comparable confidentiality provision for arbitrations, albeit Rule 7 forbids recordings and transcripts and bars evidence of the arbitration in a subsequent proceeding.

   * Arbitrations (Rule 7): In arbitrations, witnesses can be compelled; subpoenas are authorized; arbitrators may conduct hearings like trial judges (excluding contempt powers); the law of evidence is but a guide (except privilege); and ex parte communications, recordings and transcripts are forbidden. Arbitrations are limited to two hours, unless the arbitrator extends it - or shortens it by refusing repetitive or cumulative evidence. Awards must be written, served within five days and resolve all issues plead, but need not include findings or conclusions unless exceeding $25,000. Appeal is by right to the circuit court if a non-defaulting appellant makes a timely written demand, in which case the trial is de novo and the arbitration is inadmissible. Absent timely appeal or dismissal, the prevailing party must submit the award to the chief judge to enter essentially as a consent judgment.

   * Duties of neutrals (Rules 8 and 9): Mediators and arbitrators control their conferences and have duties to set up the conference, to explain certain procedures, to be impartial, to disclose potential conflicts and to timely report results. Neutrals have broad immunity and cannot be compelled to testify in a later proceeding. Mediators must preserve confidential information, may have private consultations or "caucuses" with any party or counsel during the mediation and must timely declare any impasse. Attorney-client privilege is expressly preserved in mediations, but not in arbitrations.

   * Payment (Rule 10): Neutrals selected by the parties may charge market rates, but appointed neutrals can be paid no more than $125 per hour for mediations (including no more than one hour of preparation and barring travel time) and $200 per arbitration. Absent an agreement, order or intent to file for indigency, the neutral's fees and expenses are shared equally by the parties and are due at the conclusion of the mediation. Indigency applications are not considered and must be made within 10 days after the conference since mediations and arbitrations often change the petitioner's financial status.

   * Sanctions (Rule 11): Unless the results of a mediation or arbitration, or an exemption or deferral form, are filed with the court by the 300th day, a Rule to Show Cause may be issued as to why sanctions should not be imposed. Failure to attend a mediation or arbitration without good cause can result in sanctions as well, including payment of attorney's fees, neutral's fees and expenses; contempt; and other Rule 37(b), SCRCP, sanctions. See, e.g., Hopkins v. Harrell, 352 S.C. 517, 574 S.E.2d 747 (Ct. App. 2002) (action dismissed for failure to mediate three years after filing and one year or more after mediation twice ordered), cert. denied (S.C. 2003).

   * Certification: Rules 12 through 16 create the Board of Arbitrator and Mediator Certification and provide for the certification, training, decertification and discipline of circuit court mediators and arbitrators. Under Rule 13, circuit court mediator and arbitrator certification is limited to attorneys licensed for at least three years and free from recent ethical and disciplinary problems; out-of-state attorneys can also be certified if they meet similar requirements, join the South Carolina Bar as associate members and agree to submit to the ethical and disciplinary rules of this state. In addition, Rule 13 provides that, with narrow exceptions for applicants trained prior to the promulgation of these rules or outside of South Carolina, or for arbitrator applicants who served as a master-in-equity, circuit or appellate court judge, arbitrator applicants must have at least six hours of training that meets the content and other requirements itemized in Rule 15, and mediator applicants must have at least 40 hours of training that meets the content and other requirements itemized in Rule 14. Training programs may, but need not, be pre-approved. Effective October 15, 2003, some foreign trained applicants may need a few supplemental hours of South Carolina ADR training to be certified. All applicants must be of good moral character, pay all fees and freely serve indigents if so ordered. Under Rule 16, all neutrals, certified or not, must comply with the appended ethics code promulgated by the American Bar Association and others, which affirms fundamental ADR concepts: self-determination by the parties; impartiality, competence and propriety of the neutrals; and confidentiality, quality, fairness and integrity of the process, including truthful advertising and solicitation and upfront disclosure of fees and terms. Neutrals who breach these standards or fail to remain certification eligible can face discipline and decertification by the Board and the Supreme Court. See Rule 16 for the criteria and the ADR Comm- ission Regulations for the procedures.

   * Uniformity: Rules 17 and 18 require the ADR rules be uniform in all the pilot counties and forbid local rules without Supreme Court approval.

4. Family Court Mediation Rules

   The fourth and last source of "the ADR Rules" are the Family Court Mediation Rules, which are so similar to the Circuit Court ADR Rules that the ADR Commission is likely to merge them into a single, streamlined set of rules, preserving necessary differences as sub-rules. Some differences currently include:

   * No arbitration: Currently, mediation is the sole default ADR process in family court; there are no arbitration provisions in the current Family Court Mediation Rules, and there are no certified family court arbitrators, only mediators. However, family court litigants can voluntarily agree to arbitrate equitable apportionment claims, see Swentor v. Swentor, 336 S.C. 472, 520 S.E.2d 330 (Ct. App. 1999), and the Commission is considering adding arbitration as an optional process for resolving property and alimony issues should the parties so choose.

   * Coverage: All contested issues of custody or visitation not previously mediated are subject to mediation in family court except for contempt actions or under "exceptional circumstances" as determined by the chief judge. Other contested issues, like division of property, are not yet covered, but might be in the future. However, by motion, all issues in family court may be ordered to mediation, and special conditions may be imposed (e.g., co-mediation or mediation with an attorney or mental health care professional).

   * Appointment vs. selection: Under Family Court Mediation Rule 3, parties must select a mediator, certified or not, by the temporary hearing or within 60 days of filing the summons and complaint, whichever comes first. Within the next five days, the plaintiff's attorney must file the stipulation. Like in circuit court, if the parties cannot timely select a mediator, the family court will appoint one from the official roster of certified neutrals.

   * Mediation conference: Both circuit court and family court mediations are held in the county where the case is filed; may not delay discovery and motion practice; are scheduled by the mediator; and are private. Unlike circuit court, family court requires more and sooner mediations, specifically, at least three, with the first mediation held within 30 days of the stipulation or appointment and all others to be completed within the next 90 days. A provision not in the Circuit Court ADR Rules states: "other persons, including attorneys, may attend only with the permission of the parties and mediator." Rule 4(f) (emphasis added).

   * Duties of parties: While attendance and sanctions are mandated in both Circuit and Family Court ADR Rules, the "full authority to settle" language is omitted from Family Court Mediation Rule 6, likely as unnecessary. Also unique to the Family Court Mediation Rules is Rule 5(a)'s mandate that "[a]ll attorneys should fairly and objectively inform their clients about mediation." Both sets of rules require a signed agreement to mediate and full cooperation, but Family Court Mediation Rule 5 also requires the parties complete an intake form and that the plaintiff's attorney confirm the selected mediator's availability before filing the stipulation of selection. No memoranda are mentioned. Confidentiality is almost identical in the two courts' ADR rules, except that Family Court Mediation Rule 5 expressly excludes threats of harm and attempts to inflict physical harm, especially if seeking Parental Kidnapping Act or domestic abuse statutory relief. Finally, Family Court Mediation Rule 5 does not discuss "finalizing" of agreements and consent judgments, as done in the Circuit Court ADR Rules, likely because that unique function is reserved in family court to the judges themselves.

   * Duties of neutral: Neutrals in both courts control the mediation at all times; must disclose up front certain information about the process; may caucus as needed; must be impartial and disclose potential conflicts; must timely declare impasse; must report mediation results to the court; are substantially immune from liability; and cannot be compelled to testify later. However, family court mediators are expressly required to explain the difference between mediation and other conflict resolution forms; have express exceptions to confidentiality regarding abuse, threats and attempted harm; and must "immediately" file a mediation results report with the court (versus a 10-day rule in circuit courts). Also, there is no express protection of privilege in family court mediation as in circuit court mediation. These omissions and deviations may be unintentional, due to different drafters, and may be eliminated as the rules are merged into a single set by the Commission.

   * Payment: Family court mediators are paid a market rate when selected by the parties, but no more than $100 per hour when appointed, absent order or agreement otherwise. Appointed mediators in both courts cannot charge for travel time nor more than one hour of preparation, unless otherwise ordered. Fees and costs are still shared equally, absent agreement or order. In family court, payment is due at the beginning of each conference and there is no express time limit on when an indigency application is due, which is made to the chief judge in family court, not to the court as in circuit court.

   * Certification: Family Court Mediation Rules 9-12 are virtually identical to Circuit Court ADR Rules 12-16, except that Family Court Mediation Rule 10 in addition to attorneys, permits certification of seven categories of non-attorneys, if licensed for at least three years under South Carolina law: psychologists, master social workers, independent social workers, professional counselors, associate counselors, marital and family therapists and physicians specializing in psychiatry. While family court mediators must also complete 40 hours of instruction covering substantially the same topics as circuit court mediators, family court mediators have a substantive family-law training component, plus their role-plays necessarily cover unique family law issues. All mediators, certified or not, must comply with the Standards of Conduct for Mediators. All certified mediators are subject to the same application, decertification and discipline processes and fees described supra.

   The future of court-annexed

   ADR in South Carolina

   Chief Justice Jean Toal has tasked the ADR Commission with proposing a uniform, mandatory circuit and family court-ADR program to be implemented statewide as soon as feasible, with citizen satisfaction her first priority and cost-savings and hardened dockets secondary. The 19-member Commission, working through four industrious subcommittees, is dedicated to this vision. The new rules are likely to follow the existing rules, but adopting many of the modified provisions that eliminate significant paperwork and burdens, and "tweaking" other provisions for improvements suggested by the various pilot counties' experiences. Likely characteristics of the new rules include: * a single set of streamlined, user-friendly, self-affecting ADR rules, broken into three parts: mediation, arbitration and certification/decertification, each containing sub-rules where differences between circuit and family court ADR were unavoidable; * mediation will be the default process, regardless of the size of the claim, albeit parties will be free to select arbitration instead; * Neutrals will be appointed automatically if a Proof of ADR is not timely filed. No stipulation of selection or request for appointment of a neutral will be required; * All family court contested issues will be subject to mandatory mediation, with custody and visitation issues targeted for earlier intervention than property issues; and * Self-determination will remain the cornerstone of the process, with the belief that, in short order, attorneys and parties will embrace ADR, promptly selecting a neutral and scheduling mediations such that appointments, show cause hearings and other court involvement will be rare.

   The first draft of the new ADR rules should be available for public comment in the next few weeks, hopefully at the Bar Convention in Charleston. They will also be posted online (www.scbar.org/adr) and circulated widely, including at regional "town hall meetings" and "road shows" sponsored by the Commission. Following this comment period, ending in April or May, the Commission will revise and finalize the rules as needed and submit them to the Supreme Court in August for its review and action. If approved, the rules would roll out statewide in a manner consistent with the Court's current plans for a statewide automated case management system and budgetary constraints. The Commission will promote and provide educational opportunities for judges, neutrals, clerks, attorneys and others before, during and after promulgation of the new rules to ensure the programs are well-received, supported and implemented.

   ADR is predicated on self-determination, collaboration and inclusion. To that end, the ADR Commission seeks a collaborative rulemaking process, which includes your opinions and input. Please review the draft when it is posted at www.scbar.org/adr and submit your comments there, to the author or to any ADR commissioner. The commissioners are listed in the 2003-2004 South Carolina Bar Lawyers Desk Book at p. 393. Join the Bar's ADR Section which is also active in this process. Invite the Commission to attend your functions, hear your concerns and share its progress with your organizations. Court-annexed ADR is here and expanding; your voice in its future is sought.

   Andrew Walsh is Public Services Counsel for the South Carolina Bar, and thanks Judge Wm. L. Howard Sr. for his assistance.

   Copyright (c) 2004 by the South Carolina Bar. All rights reserved. No part of this publication may be reproduced without written permission.