Special Masters: How To Make the Best of Both Worlds, Part VII

Part Seven: Being the Neutral Eyes

By: Merril Hirsh, James M. Rhodes and Karl Bayer

In the past few posts, we have been discussing how special masters can be part of making resolutions of disputes fair, just and efficient. Part IV focused on using special masters as hands-on managers to incentivize parties to avoid discovery disputes in the first place and to resolve discovery disputes quickly, fairly and with a minimum of expense when they do occur. Part V discussed teaming special masters with experts in electronically stored information to develop technical solutions to an enormous litigation cost. Part VI discussed a success story where special masters have been used in the Appellate Division of the New York Supreme Court to evaluate cases and to facilitate their resolution. So what more have special masters done for you lately?

A recent exchange of posts on the Mediate-and-Arbitrate listserve managed by Paul Lurie of Schiff Hardin, LLP, generated a number of thoughtful comments on the potential problem that both judges and arbitrators have when asked to review materials for possible privilege. Most of us have grown up with the perception that judges and arbitrators possess special minds capable of total compartmentalization. Juries, the thinking goes, are creatures of emotion, whose objective judgment would be overcome if permitted to hear that the defendant accused of driving on an expired license is also, during his spare time, a recidivist axe murderer. But judges and arbitrators are supposed to be of a different sort. Even in bench trials, or arbitrations, there is no risk of judges learning that type of information. They can put it out of their minds and decide the case only on the evidence.

In the exchange of posts, there was a difference of views about whether this works in practice. Some contributors do believe judges can read information – for example, documents submitted in camera as part of a privilege review – without it affecting their judgment. Edna Sussman, a well-known arbitrator and mediator, however, reported on experiments that were conducted with groups of judges in the United States to ascertain whether information that was inadmissible as evidence in court impacted decision making. As Sussman reported, in one experiment half of the judges saw a document claimed to be protected by attorney client privilege which was devastating to plaintiff’s case, while half (a control group) did not. 75% of the judges who saw the document ruled that the communication was privileged and excluded it. Of the judges who did not see the document, 55% found in favor of plaintiff, while of the judges who saw the document and ruled that it was privileged, 29% found for the plaintiff.  Perhaps some judges are better at compartmentalizing than others. Perhaps being human, judges may not always be able to sort out what has influenced them and what has not.

But even if a judge were certain of his or her ability to compartmentalize, that still does not mean that justice is best served by putting this to a test. As judges frequently point out, our legal system depends not merely on being fair, but being perceived as fair. Randall Kay, another well-known arbitrator and special master based in San Francisco, noted in the posts that California has a special master program typically to execute search warrants in privileged environments, such as law offices, hospitals, medical offices and prisons. The program allows a neutral master to see the documents and make rulings on privilege, thereby insulating a judge from seeing the documents.

Of course, this is not necessarily a perfect solution. Unless parties stipulate otherwise, they have a right, at least in Federal court, to have decisions ultimately made by an Article III judge. But parties can agree to refer documents to a neutral (or do so as part of an arbitration). Even if this were to result merely in greater appearance of fairness, and not greater actual fairness, that result would be positive. And the takeaway is simple: use special masters as a pair of neutral eyes.

So if special masters have all these apparent benefits, why aren’t they used more (or even routinely) in complex commercial cases. Stay tuned for Part VIII, as we begin to discuss why and what can be done about it.

Read Part One: The Problem.

Read Part Two: Improving the Process, Not Just the Rules.

Read Part Three: What Incentives Are We Creating?

Read Part Four: How Do We Create Better Incentives?

Read Part Five: Incentives Through Expertise.

Read Part Six: An Appellate Court Success Story.

Read Part Eight: How Are Special Masters Perceived?

Read Part Nine: Beating the Rap.

Read Part Ten: Using Regularity to Start Beating the Rap

Read Part Eleven: The Rule Rather than the Exception

Read Part Twelve:  An Adjunct to Civil Litigation

Read Part Thirteen: Doing Disagreement as Effectively as Doing Agreement

Read Part Fourteen: Is Doesn’t Just Have To Be Construction That’s Constructive

Read Part Fifteen: Where Else Do We Bring Alternative Dispute Resolution Skills to Dispute Resolution?