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ADR and Diversity

Sun, 2018-01-14 15:07

Last year, New York Law School and the ABA Business Law Section convened all three of the CEOs of the national ADR organizations, plus other leaders, to address persistent issues of lack of diversity in the mediation and arbitration profession.  This year, on the afternoon of January 17, 2018, the same event will take place, featuring the past president and the current House of Delegate Chair of the ABA; the Chair of the ABA Dispute Resolution Section; Tom Stipanowich of Pepperdine; Judge Elizabeth Stong of EDNY; Jim Tricarico of Edward Jones; Bill Johnston of the ABA Business Law Section; and experienced facilitators from the leading ADR organizations and court programs around the New York region.

If you are in the New York area on Wednesday afternoon January 17, you should come by.  Three CLE credits, including one hour of the new required category, “Diversity, Inclusion and Elimination of Bias.”  Registration is available here.

Arbitration of Criminal Plea Bargains? A Step Too Far Says Ninth Circuit

Thu, 2017-12-28 09:48

Thanks to Loyola Prof. Imre Szalai for bringing to our attention the interesting Ninth Circuit decision in Breazeale v. Victim Services, Inc., holding that disputes between a putative criminal defendant and a private company contracted by a prosecutor pursuant to a criminal diversion process are not subject to arbitration.

Victim Services Inc. (VSI), a Delaware corporation, is contracted by the offices of various California District Attorneys to resolve suspected violations of California’s Bad Check Statute, which criminalizes the writing of bad checks with an intent to defraud.  The putative violator is contacted by mail on District Attorney stationery and offered the opportunity to avoid criminal prosecution by entering into a program of restitution and fees that is administered by VSI.  The letter also provides that any dispute between the violator and the program administrator VSI would be subject to arbitration pursuant to AAA rules.  That “agreement” (really, an announcement) also provides that “no arbitrator or court can permit or certify a class action, representative action, private attorney-general action or consolidated arbitration in connection with [the] arbitration

Plaintiffs brought this action in federal district court,  alleging “that VSI’s use of official district attorney letterhead conveys the false impression the letters were sent by law enforcement, that the letters contained the false threat that failure to pay would result in arrest or imprisonment, and that the initial form letter failed to contain statutorily required
notices, all in violation of” state law.  VSI moved to compel arbitration.  The district court denied the motion and the Ninth Circuit affirmed the denial, on the ground that the putative arbitration provision of the letter was not a “contract evidencing a transaction involving commerce” within the meaning of the Federal Arbitration Act.

The holding: An agreement between an individual and a state prosecutor addressing criminal liability is not a private commercial contract and therefore not arbitrable pursuant to the FAA.  “A plea bargain is not a commercial exchange.”

It will be interesting to see the convoluted logic that the Supreme Court will employ if and when this question is before them and, consistent with its ever-broadening interpretation of arbitration law, the Ninth Circuit is reversed.

Metrics on Arbitration Efficiency

Thu, 2017-12-07 09:24

The current issue of New York Dispute Resolution Lawyer — really a very good publication of the New York State Bar Association’s Dispute Resolution Section — includes a brief article by Roy Weinstein of the economic research and consulting firm Micronomics.  The article summarizes certain findings of a study comparing the length of time to trial and through appeal in U.S. federal courts, to the length of time to issuance of final awards in commercial arbitrations at the American Arbitration Association.

Weinstein picks New York as his first example, being a state with high judicial and arbitral caseloads, and finds that, in 2015, the median (not the mean) time required from filing to the beginning of trial in district courts was 30.9 months, while the median (not mean) time from arbitration filing to final award was 12.5 months.

Comparisons across the eight most active state jurisdictions yielded similar stark results, with time to final AAA award ranging from 10.2 months to 13.7 months, and time to start of trial in federal courts ranging from 7.2 months to 24.1 months.  Weinstein assumes that delays in state courts are more, not less, pronounced.

Helpful as these metrics are, Weinstein then goes the next step and addresses the economic impact of delay in resolution of commercial disputes.  These include withholding of investment of resources and other behaviors that can be lumped under the term “opportunity costs.”  He concludes that “[d]irect losses associated with additional time to trial required for district court cases compared with AAA arbitration are approximately $10.9 billion to $13.6 billion between 2011 and 2015.”  Add to this the multiplier effect of losses of economic activity that would result from the uses of these “locked” resources, and of course the transaction costs represented by the expenses of maintaining litigation services for the added time, and (as Everett Dirksen never said) we’re starting to talk about real money.

The full study is available here.

Special ADR Event at New York Law School November 15

Wed, 2017-11-08 19:25

The James F. Henry Speaker Series at New York Law School’s ADR Skills Program will offer its third event of the year on Wednesday, November 15, 2017, when CPR President Noah Hanft joins panelists Greg Gallopoulos (GC of General Dynamics) and Prof. Joan Stearns Johnsen to discuss how vital commercial contracts are “Built to Last.”

It’s never been more important that transactional attorneys think though conflict contingencies to ensure that critical projects go through with minimal interruption and maximum ultimate value.  The program, co-presented by New York Law School and CPR Institute, takes place at 5:30 p.m. at the School’s events center, 185 West Broadway, New York City.

A special event at this program:  James F. Henry, founder of the CPR Institute, will be in attendance to receive acknowledgement of his achievements in creating the nonprofit coalition of business and legal leaders that designed the “CPR Corporate Pledge” and brought ADR into the mainstream of American legal practice.

To register for this event click here.

Singapore: The Hub of International Commercial Dispute Resolution

Mon, 2017-10-30 08:41

The Union Internationale des Avocats held its 24th World Forum of Mediation Centres in Singapore on October 13-14.  In addition to the usual high level of discourse and the unparalleled opportunity to meet new friends and keep the old, this particular Forum offered the additional opportunity to reassess the extraordinary richness of Singapore as a world center for international commerce and commercial dispute resolution.

A preliminary panel of regional leaders gave us a broad view of the scale of achievement that Singapore has attained in the field.  We heard from George LIM, Chair of the Singapore International Mediation Centre (SIMC); Nadja ALEXANDER, of the Singapore International Dispute Resolution Academy (SIDRA); Tye Beng (Joel) LEE, Chair of the Singapore International Mediation Institute (SIMI); and Loong SENG ONN, Executive Director of the Singapore Mediation Centre (SMC).  Later in the day I had the opportunity to visit Maxwell Chambers to lunch with Aloysius GOH and Hazel TANG of SIMC, so I got an excellent sense of the matrix that is Singapore-centered commercial dispute resolution.

It was explained at the outset that, on the commercial arbitration end, Singapore is vital.  It is the 3d most frequently named seat for international arbitration (after London and Geneva), owing to the excellence and efficiency of the Singapore International Commercial Court; the high reputation of the rules and administrative support provided by Singapore International Arbitration Centre (SIAC);  and a regimen of local laws that encourage third-party funding.

On the mediation end, the four leading institutions offer distinct but related and mutually supporting missions:

  • SIMC provides mediation services for international commercial cross-border disputes, whether involving Singapore parties or not.  An example was given of a dispute between a Taiwanese and a Peruvian company, in which SIMC was trusted as the provider of a mediator and home for the sessions.  It has a panel of technical experts as well as a panel of 70 mediators situated in 14 countries.  The web site features brief videos of the mediators.  It has online filing and neutral search capabilities.  Most interestingly to many of us, it has a Arb-Med-Arb procedure whereby an arbitration can commence, the matter deferred to mediation, and the settlement referred to the arbitration tribunal for issuance of a consent award enforceable through the New York Convention.
  • SIMI is similar to the International Mediation Institute.  It promulgates qualification and credentialing standards to contribute to the professionalization of the mediation practice in the region.
  • SIDRA provides “thought leadership,” supporting forums on best practices in various fields and conducting research as well as training and education.
  • SMC is the provider of mediation services for domestic disputes.  Established in 1997, it is linked with the Singapore courts and, indeed, located in the Supreme Court building.  Among its fields of expertise are ICANN domain name disputes, construction conflicts, and family and community disputes.

The growth of mediation in Singapore has been intense.  With a population of five million, and the establishment of community mediation centers in the 1990s, the courts introduced a presumptive mediation program through SMC in 2000, accompanied by laws and rules that (for example) included an “ADR Form” to accompany all complaints and requiring counsel to certify that clients had been advised of alternatives to litigation and further requiring an “opt-out” of presumptive mediation tracks.  In 2013 a working group was established to investigate the feasibility of f an initiative in international commercial mediation.  SIMC was established the next year.  In 2016 SIDRA was founded and court rules were further amended.  In 2017 the Mediation Act was enacted to permit stays of court action pending mediation, confidentiality protections, and the recording of mediated settlements of litigated disputes as court judgments.

Taking aside the challenges of leadership that were so evidently met, and looking retrospectively, these developments were entirely in keeping with Singapore’s role as a commercial and judicial hub in the region.  Asian economies are rapidly rising and Singapore is well-positioned to take advantage:

  • It is stable, neutral, open trusted, with no public corruption, and a rule of law that is well-known and efficient.
  • It has a suite of institutional support of international trade as well as international commercial law, including the International Commercial Court and Maxwell Chambers — a centrally-located building in which is officed JAMS, ICDR, LCIA, WIPO, and any number of other international organizations.
  • It houses the offices of many of the leading 200 global law firms
  • It has favorable regulatory frameworks, including tax benefits for non-resident arbitrators who conduct hearings in Singapore

The key to all this, of course, is the “magic triad” of private commercial interests, public dispute resolution institutions, and public policy.  Private commercial dispute resolution in Singapore is a reflection of, and at the same time a contributor to, a collaborative vision to dominate the regional economy.  While the United States retreats from engagement with this dynamic region through disavowal of the TPP, Singapore has found its role — and central to that role is highest-quality mediation and private arbitration of international commercial disputes that accompany the stupendous growth in regional and global trade.

Prevalence of Employment Arbitration is Measured

Fri, 2017-09-29 11:22

Two recently released survey reports measure the pervasive use of arbitration to resolve workplace disputes.

Alexander J.S. Colvin of the Economic Policy Institute in Washington, D.C., has concluded that, “since the early 2000, the share of workers subject to mandatory arbitration has more than doubled and now exceeds 55 percent.”  Key findings of Colvin’s study include:

  • 53.9% of nonunion private-sector employers have mandatory arbitration procedures, and 65.1% of employers with 1,000 or more employees have them.
  • 56.2% of nonunion private-sector employees are subject to mandatory employment arbitration procedures.
  • 30.1% of employers who require arbitration also include class action waivers in their procedures
  • Large employers are more likely than small employers to include class action waivers.

A second study was released by Prof. Imre S. Szalai of Loyola University New Orleans School of Law and published by the Employee Rights Advocacy Institute for Law & Policy.  Prof. Szalai examines the use of arbitration agreements in the workplace by the top 100 largest domestic United States companies.  Key findings include:

  • 80% of the companies in the Fortune 100 have used arbitration agreements in connection with workplace disputes since 2010, and
  • Of the 80 companies with arbitration agreements in the workplace, 39 have used arbitration clauses with class action waivers.

Both studies conclude that these trends are adverse to employees.  The Colvin study states that “mandatory arbitration is a growing threat to workers’ rights,” and the Szalai report states, among other things, that “[t]he widespread use of forced arbitration threatens to undermine public confidence and trust in the American justice system.”

These studies’ empirical data are compelling and a necessary and valuable contribution to any fact-based policy discussion.  Their conclusions seem less reliable.  Both researchers seem to assume that arbitration lacks due-process guarantees of procedural fairness; that arbitration is not as accessible as public courts; and that our institutions of public justice are capable of absorbing all off the employment claims now being handled in arbitration.  They also assume without support that employees’ interests are better served in court than in confidential arbitration (assuming that procedural fairness is observed and that employment arbitration is faster and less expensive than employment litigation).  These issues are among those that need to be empirically studied before policy conclusions can be reached with the confidence and clarity that these reports reflect.

Market Disruption, Anyone?

Wed, 2017-09-27 18:36

You can read all kinds of Richard Susskind books about disruption in the legal markets, but sometimes, like St. Thomas, you gotta see it to believe it.

Recently I attended a Mediation Summit in Hangzhou, China, and with some other American colleagues I was given a tour of the West Lake District Court in Hangzhou, China.  The lobby had arrows pointing ahead for “lawyer service,” to the left for “court,” and to the right for “mediation and rapid arbitration.”

A battery of computer terminals was available, at which a member of the community could select among “directory information,” “file a case,” or “consultation,” among others.

If you picked “consultation” you were prompted to input what your problem was (e.g., “neighbor’s dog barking too much”), what you wanted the court to do, where you lived, and so on.  The computer would then tell you what provision of the civil code was implicated by your problem, what the code provided in simple terms (full code language can be printed out), how much it costs to file a complaint (usually between 10 and 50 RMB, or $1.50 – $8.00), and how many people who lodge such complaints prevail (e.g., “3,476 complaints under this code provisions were filed with our court in the past 5 years, and only 26% resulted in a judgment for the claimant, while 74% did not”).

The user is then prompted again to the home page, where she could decide whether to file the case, to ask for in-person consultation, or to ask the court to set up a mediation.  Or to go home.

Speaking of home, you can of course do this whole thing from your bed using the internet.

Access to justice?  You bet.  Robust, useful and accurate information on your claim?  Absolutely and at no charge.  Options for methods of problem-solving?  Multi-door courthouse?  Empowering the citizen to manage her own issues?  Check check and check.

Where are the lawyers in this process?  Market disruption, anybody?