Is The ADR Market Saturated?
The Continued Influx Of Lawyers-Turned-Neutrals Makes It Tough For ADR ‘Rookies’ To Get Referrals — The Lifeline Of Any Arbitrator Or Mediator

By Jason M. Scally

Attorneys have all heard the tired complaint, "There are too many lawyers."

But with the once cutting-edge dispute-resolution field reaching adolescence, a new question has emerged in Massachusetts: Are there too many mediators and arbitrators?

The ADR industry, historically encompassing retired judges and a few pioneering lawyers, has taken on a life of its own as more lawyers and non-lawyers enter the market.

Some local attorneys took the plunge into the ADR market years ago and created successful businesses.

More recent entrants, citing the increasing demand for mediation and arbitration services, are jumping in to get a piece of the pie at least on a part-time basis.

Noted Boston trial attorney Paul R. Sugarman is one of the most recent attorneys who has formed an ADR company as a side-project to his law practice.

Although not completely new to the ADR business, Sugarman and his partners recently started ADR Experience, LLC in order to formalize and increase the number of mediations they handle.

"This is now part of our culture," he says of ADR. "People are more settlement-oriented than they were in the past."

Although demand for ADR services is up, experts say the market's saturation point may be fast approaching.

Practitioners seem to agree that established players will likely do fine, but those just entering the game may be left on the sideline. And reputation and references may prove the difference in whether a neutral can make it.

Sugarman, who has performed mediations in the past but now plans to increase his involvement with ADR, says that "there may be more people in the field than the field will justify, and the marketplace will have to determine which ones will succeed."

The Boston litigator adds that he would be more concerned if there weren't enough mediators.

Sugarman contends that "the fact that there are more people in it is probably going to lead to a better product."

Some attorneys who have been in the ADR business full time for a number of years agree.

Paul A. Finn of Brockton, who has been providing ADR services for more than 10 years and now runs Commonwealth Mediation and Conciliation, says that "the more mediators, the better off I am."

He likens the effect of competition to the adage that if you put a gas station on one corner, then add three more on the other corners of the intersection, all four will end up doing better business than if just one had been there.

Finn says that he welcomes the friendly competition, and from his accounts, it has been more friendly than not.

"I've referred cases [to others] every year, and cases have been referred to me," he notes.

Finn's partner, Sarah E. Worley of Brockton, agrees.

"Frankly, the more providers that come in the marketplace, the better our business is," she says.

Joseph L. Kociubes of Boston, a longtime litigator who recently became affiliated with ADR Network, says there is "no question that a lot of people are doing it."

But, he argues, the practice of law isn't exactly "wide open" either.

"I don't know that one market is any more saturated than another," says Kociubes.

He thinks one reason for the "explosion" of ADR providers in the market is that demand for their services is on the rise.

"I see more judges suggesting mediation than a decade ago," Kociubes observes.

Superior Court Judge John C. Cratsley, chairman of the Supreme Judicial Court's Standing Committee on Dispute Resolution, remarks that "there are a healthy number of folks that do this business."

Nonetheless, Cratsley says the number of providers has remained fairly steady over the past few years.

The Superior Court's ADR coordinator, Patrice Slater, says she has seen a spike in the number of ADR providers, but it seems to be leveling off.

Her general sense is that "[ADR] is thriving," although she agrees that the market may be reaching its limit for ADR providers.

"A lot of people use the same people that they used before," she recalls. "I don't know how much business these [newer] people have been getting."

Charles P. Doran of Mediation Works, Inc. of Boston says even though the number of service providers in ADR is high, the market does not have to be saturated.

"When I look at the ratio of practitioners to the number of disputes, if we really did our job and got the word out that mediation exists and is available to the public, we'd be spending more time mediating," says Doran.

"The challenge to us as practitioners," Doran remarks, "is to encourage more parties to come to the table."

Much of the tension between mediators competing in today's market is a result of the number of full-time ADR practitioners versus the number of part-time providers.

When asked whether he thinks part-time mediators are taking away business from full-time providers, Barry Shelton of Wellesley replies that "it cuts both ways."

He says that full-time ADR practitioners have "a leg up" on the part-timers, because not unlike the practice of law, "by and large it operates on a referral basis."

Shelton believes this burgeoning field is interesting because "we're dealing with an avocation that is quickly becoming a vocation."

James P. Barron of Boston, an ADR provider who has been in the business for a number of years, agrees that the number of ADR providers has increased over time, but "in terms of saturation, I am not convinced that the increase is affecting everyone equally."

He argues that those who have been in the business for a while and have established a "degree of credibility" will probably have no problem attracting customers.

The reason, according to Barron, is simple.

"If you ask me to give you an analogy to the real-estate business where it's location, location, location, — I would say in ADR it's references, references, references."

Christopher P. Kauders of Boston runs Pre-Trial Solutions, which provides both mediation and arbitration services.

He notices that "the number of us doing it full time is decreasing and the number of people mediating a few cases a quarter is increasing."

Kauders "emphatically" believes that the market has gotten too saturated, and that it is partly a result of the increasing number of lawyers and others who are attempting to break into the market part time.

Although he says his business has not suffered any ill effects, Kauders notes that some of his colleagues' businesses have begun to suffer as a result of the increasingly congested market and that it has forced them to return to devoting a larger portion of their business to the practice of law.

"ADR became a cottage industry," Kauders says. "It's grown, and now it's like a large flock of deer where the sick ones will die off."

Finn knows from experience how tough it can be on part-time ADR practitioners because that is how he got started.

Although he now runs a successful full-time ADR practice, Finn recalls that he tried part time for three years and "went nowhere."

Finn says having a part-time ADR practice while keeping a law practice can create the appearance of partiality.

He says that although a part-time mediator or arbitrator may be neutral, a mainly plaintiffs' or defendants' lawyer may be seen by potential clients as having a bias.

"It's not that they are partial [to one side or another]," says Finn. "It's how they appear" that may hinder their progress.

When asked whether it's a good idea to enter the market today, Kauders notes that "it's financially suicidal to try and do it full time now because you need to get a huge number of cases. It would take an enormous amount of time in light of the competitors now."

Echoing the sentiments of many of the attorney/mediators questioned, Kauders adds that it is a difficult industry to break into because one's success is largely based on reputation.

He says attorneys would be mistaken if they believe they can "settle the one notable case" and be successful.

"The best they can hope for is to do [mediations or arbitrations] 10 percent of their time," Kauders remarks.

Worley, on the other hand, counters that attorneys who hope to keep a law practice along with starting a part-time ADR practice will have the hardest time breaking in.

She says that "in order to do ADR properly, you really have to devote yourself full time to it."

Worley's advice for those who are willing to take the "enormous risk" is to do extensive research to see if there is a market for their services.

Having a specialty, such as a background in environmental or family law, may help, she says.

But, "at a minimum, you have to be fluent in the rules of evidence, the rules of procedure and the relevant caselaw," Worley says.

According to Finn, if attorneys really want to provide ADR services, they should do it full time. "You can't be a slave to two mistresses."

He adds: "I'm a true believer in experienced-based mediators. Someone coming [directly] out of law school I don't believe is going to be successful in the long-run."

Barron says the critical component needed to enter the ADR field is "good references."

If a newcomer has no previous ADR experience, Barron suggests taking on cases pro bono as a way to break into the business.

Shelton, who is the clinical supervisor for the ADR graduate program at the University of Massachusetts at Boston, says that despite the possible difficulties involved, it may be worth it for some attorneys.

"If that's what you are interested in doing, and you want to make a commitment, then by all means do it," he says.

The family law mediator agrees with others who advise those interested in starting an ADR practice to tread lightly, because, as he puts it, "It's difficult to hang out a shingle. ADR operates by referrals by other people and past clients."

One of the reasons the ADR market may seem overcrowded could be the proliferation of ADR classes offered to non-lawyers — not necessarily a good thing for them or the industry, say some lawyers.

The problem is not with the classes that have begun to appear in college curriculum's around the country such as the one at UMass Boston, say attorneys, but the ADR providers who are charging prospective mediators and arbitrators a fee for an "unrealistic" goal.

Worley says that she has a problem with the ADR providers who are targeting college graduates with the promise that "you can have a career in mediation if you only take my class."

She says that the classes are not giving a realistic view of the industry to the would-be mediators.

"The practice of law in Massachusetts, because the state is so small, is a reputation-driven business," says Worley. "What disturbs me most about the people who are trainers is they know that's the case."

Shelton agrees that the training programs offered by some providers "are turning out an awful lot of people who don't have realistic [ideas] as to how marketable these skills are."

He remarks that some of his own students frequently ask him, "Now that I have this training, what do I do with [it]?"

"Expecting someone to come along and offer you a job as a professional mediator — those jobs are few and far between," Shelton adds.

Doran, who runs a training program at his company, agrees that people who train new ADR practitioners have to give them a realistic interpretation of the business.

"If people think they're going to take 30 to 36 hours of training and [be able] to charge $250 an hour, it's hard to imagine that's going to happen," he remarks.

Doran's company, mindful of the fact that experience and reputation drive the business, offer volunteer opportunities with an experienced mediator to those who have demonstrated "an initial capacity to mediate."

Some attorneys recognize training classes as a way to develop skills that would be useful in ADR settings as well as others.

Finn echoes the sentiments of many of the surveyed providers when he says "any course you take is obviously going to be helpful in that it gives you insight as to how the process works."

But, he says, experience and reputation are the keys to a successful ADR career, noting that "the people who I know that are the most successful mediators were litigators."

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