The down economy is boosting mediation firms as more Chicago-area companies look to cut litigation costs.

A practice long associated with personal injury, product liability and property damage suits is becoming more popular as a way to resolve commercial disputes.

Since mediator Stuart Nudelman left the Cook County Circuit Court bench three years ago, the share of commercial cases he’s handling has doubled to 40%, he says, adding, “I would guess by the end of the year it would be 50-50.”

A commercial practice started four years ago by ADR Systems of America LLC, now accounting for a third of the Chicago-based firm’s total revenue, is expected to grow 30% this year.

Clients like North American Jet Charter Group LLC, a Wheeling-based air charter service, and Pace American Inc., a trailer maker in Bannockburn, reached confidential settlements in one-day hearings after pending cases dragged on for months, if not years.

The trend also is getting a boost from an increasing number of construction, employment and other contracts that contain clauses specifying that disputes be mediated. Courts also are nudging more cases to mediation.

A 2001 Illinois Supreme Court ruling allowed circuit courts to establish “court-annexed” mediation programs. Since 2004, more than 1,500 cases have been transferred to mediation in Cook County.

In the chancery division, half of cases sent to mediation have settled, with the success rate topping 70% for accounting- and contract-related cases, Presiding Judge Dorothy Kirie Kinnaird says.

The dominant player in the industry, Los Angeles-based JAMS, says Chicago office revenue was up a surprising 20% for the 12 months ended in May amid uncertainty over how the credit-starved economy was going to affect demand.

ADR itself got its start, in 1994, because of its founder’s frustration with costs and delays associated with the legal system. President Marc Becker had spent $500,000 in a long-running dispute involving his family’s steel company. The case settled just before trial.

“I figured there had to be a better way to handle this thing,” he says.

North American Jet last summer sued customer Joseph Freed & Associates LLC, alleging that the Chicago-based developer hadn’t paid $363,474 for 11 flights and related costs associated with a plane owned by a Freed subsidiary, Cook County Circuit Court records show.

The defendant countersued, alleging North American Jet had failed to maximize charter income and “effectively hijacked the aircraft by refusing to return it to its owner.”

The suit was referred to mediation in April and settled after a one-day hearing. The parties agreed not to disclose terms.

“It worked,” North American Jet President Kenneth Ross says. “As is typical, you’re not 100% satisfied with the result.”

Freed General Counsel Jeffrey Arnold says, “As a rule, we don’t comment on specific litigation matters.”

Some plaintiffs say mediation helps open their eyes to the merits of their claims.

“It turns out our case wasn’t as strong as we thought it was,” says Mitchell Bender, Pace American’s CEO, referring to a lawsuit it lost here in January in federal court against Mission Viejo, Calif.-based aluminum supplier Elixir Industries. Pace American appealed, and the case was mediated by a Seventh Circuit staff mediator.

“Everyone got an education, and a deal was struck,” Mr. Bender says. “I wish (mediation) was mandatory in more situations.”

Bron: Steven R. Strahler - Chicagobusiness

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