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Trial or mediation – why not let your clients decide?

From Guest Blogger, the Honorable Barry W. Knobel

I recently mediated a case in which an attorney informed her client that “you can add a minimum of 2 hours for my trial preparation for every hour I spend with you at the courthouse in trial.” I remembered the caption in that classic cartoon of an attorney speaking with his client – “You’ve got a good case, Mr. Jones. Now…how much justice can you afford?”

I then became curious and decided to an admittedly blunt number-crunching as to the potential cost savings to your clients in a “trial or mediation” scenario (now please don’t go anal on me…I realize that your paralegals and you spend time with your clients in conferences, on the telephone, preparing pleadings, motions, etc., etc., etc.).

Anyway, here goes.  Assume the following:

1. You’re charging your client $200 an hour for all your time (both “in-court” and “out of court”). You charge $100 an hour for your paralegal’s time. Your case is docketed for 2 days of trial. You’re at the courthouse with your client from 9 AM – 5 PM both days, taking 1 hour for lunch each day with your client to discuss the case (a total of 8 hours each day to keep it simple).

2. Based on the “2 hours of preparation for each hour of trial” computation, your client’s pure trial cost, would, conservatively, be $10,600. Here’s the math: 16 hours of trial @ $200 per hour + 32 hours of attorney pretrial preparation @ $200 per hour + 10 hours of paralegal pretrial preparation at $100 per hour. I have excluded all costs for “order preparation” if you’re successful, along with the cost of any post-trial motions, and, of course, the cost of an appeal.

Now, assume the following is your client’s mediation cost:

1. Your paralegal spends a total of 5 hours preparing and transmitting documents to the mediator and meeting with your client to prepare him or her for the mediation. You spend 3 hours with your client in mediation preparation. You attend a 7-hour mediation and your mediator is charging the parties $175 per hour (remember that each party pays one-half of the mediator’s fees, unless otherwise mutually agreed by them). The mediator invests 3 hours in pre-mediation preparation and 2 hours in the preparation of a mediation memorandum or mediation agreement.

2. The total mediation cost to your client would be $3,550. Here’s the math: 5 hours of paralegal time @ $100 per hour + 10 hours of attorney time @ $200 per hour + 12 hours of the mediator’s time @ $175 per hour (the mediator’s time is divided in half).

In this analysis, your client saved, in a fully settled case, at least $7,050.

It would also appear that for every single issue settled at mediation, you’ve saved your client “X” number of hours in trial preparation on that issue, and in the scenario above, it would appear that your client saves at least $600 an hour for every single hour of “trial time” saved, not counting saving “paralegal time.”

Go figure.

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