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ABA Dispute Resolution Section’s 2015 Spring Meeting

Wed, 2015-03-18 13:38

The annual Spring Conference of the ABA Dispute Resolution Section draws hundreds of ADR practitioners, trainers and teachers from around the world.  This year it will take place in Seattle, Washington, on April 15-18.  The Section has asked that we promote it and encourage folks to attend, which I am pleased to do.  The announcement is below.

ABA Section of Dispute Resolution Spring Conference | April 16-18, 2015 | Seattle, WA
Join dispute resolution colleagues in Seattle for an action-paced event that will educate, challenge and inspire you. Whether you are a seasoned dispute resolution professional seeking to advance your knowledge in conducting a more efficient process for disputants, new to the field of ADR seeking to bring conflict resolution processes in a community setting, or a part-time mediator curious how the latest neuroscience research can advance your understanding of decision making, this spring conference has opportunities for you.

The 90 plus sessions will cover a dizzying array of topics that impact and interest our ADR community – mediation, arbitration, technology, ombuds, government and public policy, and practice development. There are programs for a variety of practice areas including labor and employment, family, and commercial disputes. We have two very different plenary speakers this year – Richard W. Pound, the founding chairman of the World Anti-Doping Agency, who will offer an unique insight into sports doping disputes and the role of ADR in these sometimes high-profile cases, and Professor John Medina, the New York Times bestselling author of “Brain Rules,” who will give an entertaining and thought provoking summary of his research on stress, its impact on decision-making and its relevance to those of us interested in helping parties in distress resolve their disputes.

Register today to earn up to one years’ worth of CLE credit.  Take advantage of the First-Time Attendee special registration rate of $500 or One-Day only registrations rate of $275. Visit the web site for details about programs scheduling, presenters, session descriptions, and hotel and travel: www.shopaba.org/Spring2015.

 

Ninth Circuit Reminds Us When Courts Intervene — and When They Don’t — in Arbitrations

Sun, 2015-03-15 15:10

The Ninth Circuit Court of Appeals recently issued a writ of mandamus directing a district court to vacate an order disqualifying an arbitrator, while the arbitration was pending.  Its succinct opinion in In re Sussex (No. 14-70158, January 27, 2015) serves as a clear lesson in the limitations of judicial intervention in arbitration.

A group of hundreds of condominium purchasers brought actions (later consolidated) in Nevada state and federal courts claiming fraud and seeking rescission of their purchases.  Certain of these actions were submitted to arbitration under AAA Rules, pursuant to a provision in the purchase and sale agreements.  In February 2010, he AAA appointed Brendan Hare as arbitrator in one arbitration and, eventually, he served in all three consolidated proceedings, the first of which commenced in February 2012.

Hare failed to disclose that he had addressed conferences as a speaker on the topic of financing litigation for investment purposes, and that he had founded a company with a web site to attract investors for this purpose.  Claimants sought disqualification upon hearing these facts , but AAA denied the request after investigation.  Claimants made similar requests for disqualification on other cases, and sought relief from the district court in September 2013.

On December 31, 2013, the district court issued an order granting the relief sought, disqualifying Hare as an arbitrator.  It reasoned that disqualification was warranted because the arbitrations over which he presided were large, involving 385 claimants; that proceedings were at an early stage, prior to discovery; and that claimants would likely prevail in a motion to vacate any award that Hare ultimately issued, on the ground of “evident partiality.”  If the award were vacated, the entire process would need to be repeated, resulting in a waste of time and resources.

The Court of Appeals granted the respondents’ motion for a writ of mandamus ordering the district court to vacate its order, relying mainly on its determination that the court below had acted “in clear error.”  Its analysis of the role for judicial intervention in arbitrations under the Federal; Arbitration Act is memorable:

[A] district court’s authority is generally limited to decisions that bookend the arbitration itself.  Before arbitration begins, the district court has the authority to determine whether there is a valid arbitration agreement between the parties and, if so, whether the current dispute is within its scope.  If the court determines that the arbitration agreement is valid and ‘encompasses the dispute at issue,’ the Act requires the district court to enforce the agreement by ordering the parties to arbitrate their dispute.  The district court’s involvement ordinarily stops at that point.  After a final arbitration award, the parties may petition the district court to affirm the award, or to vacate, modify, or correct it.

The Court of Appeals also concluded that the “district court erred in predicting that an award issued by Hare would likely be vacated because of his ‘evident partiality.'”  Undisclosed business relationships are insufficient for vacatur if they involve “long past, attenuated, or insubstantial connections between a party and an arbitrator,” and here claimants conceded that Hare had no relationship with any party.  Moreover, the mere risk of financial harm is insufficient to justify collateral review, any more in arbitration than in the denial of summary judgment later found erroneous.

In addition to re-affirming the role of courts in the “bookends” or arbitration, In re Sussex is yet another reminder that counsel’s grasping at legal theories, spending time and money to derail private dispute resolution processes, may not be in their clients’ best interests — especially when the clients are the claimants.

New Journal of Online Dispute Resolution

Fri, 2015-03-13 10:01

Ironically, the first issue of the International Journal of Online Dispute Resolution arrived a few weeks ago in hard copy by the US Postal Service.  It is a very welcome addition to the very few serious legal publications that I pay close attention to.

The introduction to volume 1, issue 1, refers to ODR “as a parallel universe blending information technology and dispute resolution schemes and applications,” and later as “a branch of dispute resolution that utilizes technology and artificial intelligence to settle disputes.”  These seem right, and the Journal seems spot-on for those predisposed to following the growth of this important (and no longer new) field.

The masthead features three editors-in-Chief: Daniel Rainey, Ethan Katsh and Mohamed Abdel Wahab.  Its Editorial Board glistens with the Great and the Good of ODR: Nadja Alexander, Jeff Aresty, Colin Rule, Noam Ebner, Ian Macduff, Michael Wolf, and others.  Add to that an Advisory Board including such figures as Mark Appel, Rusty Park, and Nancy Welsh, and you can’t say the project wants for credentials.

Being an interested observer of many years, but by no means a qualified participant in the field, I don’t venture a view on the quality of the articles in this first issue.  I do note that the Journal seems to continue a form of discourse that plagues ADR generally — people interested in a certain aspect of dispute resolution, writing about that aspect, and being read by others interested in that aspect, who then write back about it.

Similar to other ADR proponents, workers and theorists in the ODR arena seldom seem to include in their dialogue those who would like to incorporate ODR in their businesses.  There are many articles and essays by ODR proponents saying that folks should want the product, but not many by folks who say they do want the product.

As I say, this phenomenon is by no means unique to ODR; indeed, many an event sponsored by the estimable ABA Section on Dispute Resolution is organized by, marketed by, attended by, and feature teachers, experts, innovators and service providers in the field rather than users.  But the launch of this fine new Journal piques my hope that, someday soon, I will see an article that doesn’t read “Here is a dandy new capability that should help a lot of users” and instead reads “Here is the kind of capability my company is looking for — can anyone provide it?”

After all, participants in a market are looking for what they need, not what we wish they needed:

Arbitration, Financial Services Disputes, and Derivatives

Fri, 2015-02-27 13:52

James Freeman of Allen & Overy has written a concise, informative and forward-looking article in the IBA’s publication Business Law International that offers a clear-eyed look at the state of arbitrated conflict resolution in the financial services industry and points to the Arbitration Guide recently published by the International Swaps and Derivatives Association (ISDA) as a path to change.

Freeman notes that, distinct from other commercial sectors, the financial services industry has “proven relatively immune to the lure of arbitration,” preferring litigation before national courts, for a variety of reasons.  Despite the absence of a global mechanism for enforcement of judgments, of the type that is offered for the enforcement of arbitral awards via the New York Convention, and despite promises of relative cost savings, efficiency and confidentiality, Freeman cites two predominant concerns favoring litigation of financial disputes.

The first is structural: that arbitrators may be commercially incompetent, that they have fewer procedural assurances, and that their powers may be limited (particularly in granting ex parte relief).  The infrequency of major banks’ refusal to comply with a judgment rendered by a court in a major commercial jurisdiction reinforces the absence of concern about that issue.

The second is conceptual: that arbitration is ill-suited to financial instruments that are intended to be traded.  Can an undertaking to arbitrate disputes, as part of an indenture or bond that is intended to be exchanged, transfer rights or obligations to subsequent purchasers of that instrument?  Can the holder of a security be bound by an agreement to arbitrate that is neither written nor signed by that holder?  In the case of transactions involving consumers, are agreements to arbitrate enforceable in all jurisdictions?

The ISDA Arbitration Guide departs from this set of concerns.  Traditionally ISDA Master Agreements have called for the jurisdiction of the English or New York courts.  Moreover, players in the derivatives and swaps market were largely uninformed of arbitration options, resulting in drafting errors in conforming the various clauses in the Master Agreements (such as service of process).

After a period of consultation, ISDA promulgated the 2013 ISDA Arbitration Guide, which provides a basic overview of the law and practice of international arbitration and provides 11 model clauses designed to be incorporated into a Master Agreement.  These clauses provide for arbitration pursuant to the rules of seven different providers, with seats in seven different venues.  In providing these clauses, the Guide “ensures avoidance of the common drafting errors” and also “incorporates what is essentially a standard arbitration clause for the arbitral institution specified.”   Moreover, a list of options is helpfully provided, to encourage drafters to consider questions of party joinder, consolidation, state players, criteria for arbitrator competence, and other issues.

Freedman concludes that “the Guide is a valuable tool to educate the derivatives markets about the characteristics of international arbitration and the circumstances in which it might best be employed.”  He also concludes that the provision of expert arbitrators (as is the aim of P.R.I.M.E. Finance, for example) might be the single dispositive factor in providing dispute resolution processes that meet the challenges posed by the users.

Many legal and business practitioners have begun to question the prevailing use of attorneys, rather than industry participants, as arbitrators in disputes involving commercial custom or industry practices.  Freeman’s description of the ISDA initiative is particularly tantalizing in that context, as it places commercial disputes before industry peers rather than those learned in law.

ICC International Commercial Mediation Competition

Thu, 2015-02-19 10:38

Professionally, I am not given to bedazzlement.  I am not among those who claim transformative or quasi-spiritual attributes to what (to me) really boils down to the learn-able professional skill of mediating business disputes.  So when friends have reported their experiences attending the ICC International Mediation Competition with tears streaming down their blushing faces, stammering and gushing about how it had changed their lives, I thought I was learning more about them than about the event.

Well, this year I attended for the first time as coach of the New York Law School team.  And… blush blush, gush gush, stammer stammer, stream stream….

This is a remarkable event, measured by any standard.  Here are gathered about 250 well-trained and focused students from 67 business schools and law schools located in six continents, all highly motivated and practiced in certain distinct skills, prominent among them (a) how to listen constructively; (b) how to identify what the other party to a dispute needs; (c) how to use the intervention of a third party to create options that address the identified commercial needs of your client and of the counterparty; and (d) how to recognize when you have obtained your client’s objectives on satisfactory terms.

These are valuable skills in any of us, and I dare say lawyers who regularly practice them distinguish themselves.  But 250 of them gathered in a room?  And they are all 24-30 years old?  And they are happy?  And they are ambitious?  What a zing!

And then you look around and realize that here, acting as judges or coaches or volunteer mediators, is… well, everybody!  Here’s Lela Love from Cardozo, and Thierry Garby from Paris, and Colin Wall from Hong Kong, and Jim Lawrence from Houston.  And over here is Ewa Gmurzynska from Warsaw.  There’s Giovanni De Berti from Milan.  Hal Abramson from Tuoro.  Bill Marsh from London.  Patrick Van Leynseele from Brussels.  This is better than Old Timer’s Day — it’s like you died and went to mediation heaven!

The starry-eyed part, though, came when I watched my own team grow in confidence, competence, perception and skill, almost by the hour — and to see first-hand the accretion of professional opportunity through personal relationships.  They met peers from Lagos:

Moscow:

Goa:

Australia:

…and even far-away Houston:

No one was more astonished than we to learn that we had advanced through the preliminary rounds to join the 16 Eighth-Finalists — and then the 8 Quarter-Finalists!  To succeed to that level on the first outing was heady stuff.

But who can measure the impact that these connections and friendships will have on these students’ careers?  Who can quantify the value of being able to call someone in Sao Paulo and re-introduce yourself from that time in Paris in 2015 and ask advice on resolving a dispute in Brazil?

And who can put a number, or a measure, on giving two young lawyers the experience of knowing — not being told, but actually experiencing — that their generation of attorneys includes not just litigators and deal-negotiators, but also a core of trained problem-solvers on every continent — and they know a lot of them already?

Darley Maw, NYLS 2L, and Colin McGeough, NYLS 2L

ADR Center to Conduct New Survey of ADR in Europe

Mon, 2015-01-19 20:25

Our friend Giuseppe De Palo reports that the European Parliament’s Legal Affairs Committee (“JURI”) will discuss mediation again at the February 26, 2015, ‘Civil Law & Justice Forum’ in Brussels, and the ADR Center has been asked to present a follow-up to its 2014 study, “Rebooting the Mediation Directive.”

 

The Center has prepared a survey that will be the basis for its presentation, and seeks to have as many and as varied people as possible complete it.  The short mediation survey can be found at this link: https://it.surveymonkey.com/s/77T6PKK.  All those in the EU who are interested in ADR are encouraged to fill out the survey and encourage others to do so.

 

CLE Program on “ADR and Young Lawyers”

Wed, 2015-01-14 12:52

The ABA Business Law Section is partnering with New York Law School to present a half-day CLE Symposium on “ADR and the Young Lawyer” on Friday morning, January 30.

               

The event, held from 9:00 to 1:45, features speakers from leading corporations, law firms and ADR institutions, and advises lawyers on how competency in ADR skills can assist them in creating distinctive careers and practices.  3.0 CLE credits are offered and both breakfast and lunch are offered.

The Keynote speaker will be Paulette Brown, President-Elect of the ABA.

Information and registration can be found here.

 

New Book on “Business Divorce”

Wed, 2015-01-14 10:46

A while ago I was engaged to assist two partners who had worked since their college years to build up a very successful business.  Now, more than 25 years later, they could barely be in the same room with each other, and wanted help in finding a way out.

Just the other day, I opened the first page of Stephen H. Knee’s book, Business Divorce, and found this problem described:

Two individuals form a business.  One has expertise in the normal back-office functions, the other is a great salesperson.  Over the years, one of the individuals begins to feel that she is contributing much more to the business than the other individual and that is unfair, because both are drawing the same salary and are 50-50 owners.  The resentment results in the individuals barely communicating with each other and adversely affects the performance of the business.  The decision-making process becomes deadlocked — the resentment builds until there is an event that pushes the first individual over the cliff.  The battle has begun.

Stephen Knee, where were ya when I needed ya??

This is one of those thin books — barely 100 pages — that you wonder how you did without all these years.  The author has simple and straightforward advice for drafters of partnership, LLC and other similar agreements, that emphasize the importance of buy-sell provisions, triggering events, dispute resolution provisions, disputed valuations, and tax considerations.  Psychologist Jane M. Sullivan writes about the inescapable dynamics of closely-held businesses, which often dominate the process of business divorce far more than economic or legal considerations.  Knee reminds us, too, that an ADR specialist is not the only essential consultant in a business divorce — legal, accounting, business and even psychological insight is often appropriate in order to fashion a break-up agreement that is mutually satisfactory and sustainable.

In characteristically straightforward writing, Knee addresses the legal ethics of lawyers’ consulting in business breakups, citing the caution in the ABA’s Model Rule of Professional Conduct 1.7(a), that the consulting lawyer “determine at the outset who the professional is representing and advise the other parties to retain their own professionals.”  And he gives an illustrative laundry list of legal and other issues that are implicated in the break-up process: handling existing obligations of the entity, settling the owners’ non-monetary benefits like health and life insurance; addressing contingent liabilities such as pending or threatened litigation, managing dissenters’ rights in corporations, and a host of other issues such as union contracts, regulatory and environmental concerns, government filings, and (by contributor Kenneth G. Hydock) tax treatment of the dissolution transactions.

In such a complex context, the use of ADR processes to resolve issues that are not agreed upon, while specifically and intelligently addressed, seems almost an afterthought, however necessary.

This is a great guidebook, one that can be (and clearly must be) reviewed before any of us venture into the mine-laden fields of assisting individuals in managing business break-ups.

 

Invitation for Students to Examine Civil Conflict

Wed, 2015-01-14 09:20

Professor Stacie Strong of the University of Missouri has announced a student writing competition to prompt critical thinking on the dispute resolution ramifications of the events surrounding the killing in Ferguson, Missouri and elsewhere.  The details of the competition are below.  It will be interesting to see what examples of rigorous critical thinking this initiative prompts.

Please consider forwarding this information to students and law schools with which you may be connected.  The window is brief — submissions must be received by February 13, 2015.

CALL: The University of Missouri Center for the Study of Dispute Resolution is pleased to announce a student writing competition that is being organized in conjunction with the Missouri Law Review annual symposium, entitled “Policing, Protesting, and Perceptions: A Critical Examination of the Events in Ferguson.”  The symposium, which will feature speakers and works-in-progress participants from around the country, addresses recent events in Ferguson, Missouri, as well as similar developments from around the nation.    The writing competition features a $700 prize for the competition winner, a $100 prize for the second place winner and an honorable mention for the third place winner.  Prizes are sponsored by the University of Missouri Chancellor’s Diversity Initiative and private funding through the Missouri Law Foundation.   Topic   Submissions must bear some relationship to the upcoming Missouri Law School symposium entitled “Policing, Protesting, and Perceptions: A Critical Examination of the Events in Ferguson.”  Papers can consider the events in Ferguson and elsewhere in the nation from the perspective of civil rights, police-community relationships, police perceptions of individuals, protests and/or civil disobedience. Essays can be historical (for example, submissions could consider the history of the legal response to social unrest in this country, dating back to the 1968 Kerner Commission report to the U.S. Commission on Civil Rights in the wake of the Watts Riots), process-oriented (for example, authors could analyze the evolution and legitimacy of hearings in front of the U.S. Commission on Civil Rights) or psycho-social in nature (for example, papers could discuss the value of having a forum in which to speak and be heard).   All submissions must incorporate either a conflict resolution (sometimes called “peace studies”) or dispute resolution perspective so as to provide some guidance on how to address the outstanding problems and tensions in a useful manner. For example, authors might consider whether and to what extent communities might wish to adopt certain procedures that are often seen in dispute resolution (such as mediation or conciliation) in order to facilitate discussions with local police forces. Alternatively, authors can take look at the genesis of the problem using a conflict studies/peace studies approach.   Eligibility   The writing competition is open to all persons enrolled on February 1, 2015, in an ABA-accredited law school to pursue a degree in law (including the J.D., LL.B., LL.M. or S.J.D.).  Applicants may be of any nationality.  Papers that have been accepted for publication elsewhere are not eligible for the writing competition. Submission Requirements   Submissions must be in English and should be between 2,500 and 3,500 words in length.  The style of the paper will be that of a long “op-ed” (opinion editorial) piece. However, the strongest submissions will include references to legal authorities as necessary. Any citations should appear in the body of the submission and will be included in the total word count.   The text of the paper must be typed with double spaced pages in 12 point Times New Roman font (or similarly legible typeface) and 1-inch margins.  The title of the paper must appear on every page of the submission.  The author’s name must not appear anywhere on the submission itself.   A separate document should be provided including (1) the author’s full name, address, telephone number and email address; (2) the degree-granting institution where the author is enrolled, as well as the degree sought and the anticipated year of graduation; (3) the title of the submission; and (4) the date of the submission.   Papers must be electronically submitted to:
Laura Coleman
Center for the Study of Dispute Resolution University of Missouri School of Law
colemanl@missouri.edu    Papers must be received no later than 11:59 p.m., Central time, on February 13, 2015.   Late papers and papers that do not comply with the submission requirements will not be considered by the selection committee.   Criteria   Submissions will be judged anonymously by the selection committee.  The following factors will be considered:   Legal analysis
  • Thoroughness and depth in addressing the topic, particularly with respect to dispute resolution and/or conflict resolution issues
  • Awareness of significant literature and authorities in this field
  • Contribution to the current debate on this topic
 More information can be found on the competition website: http://law.missouri.edu/faculty/symposium/lawreview2015/writing.html  Questions should be directed to:   Professor S.I. Strong
University of Missouri School of Law
Email:  strongsi@missouri.edu 

 

Hard Data on ADR Practice

Mon, 2014-12-22 13:19

There may be some serious ADR practitioners who have not heard of Tom Stipanowich’s recent articles analyzing the results of the CCA survey on trends in commercial arbitration.  And for those few folks, I copy Tom’s note to me, along with the links:

We are pleased to announce the publication of two articles that present extensive new data on practices and trends in commercial arbitration, including results from and analysis of a groundbreaking empirical survey of perceptions and practices among experienced arbitrators.

Reflections on the State and Future of Commercial Arbitration: Challenges, Opportunities, Proposals and its companion piece, Arbitration in Evolution: Current Practices and Perspectives of Experienced Arbitrators, will soon be published in Columbia’s American Review of International Arbitration.  However, they may now be accessed at the following SSRN links:

http://ssrn.com/abstract=2519084

http://ssrn.com/abstract=2519196

These articles contain new information and insights on many different aspects of commercial arbitration practice in the U.S. and in international disputes.  Topics include the habits and attitudes of business users and their attorneys; barriers to making effective choices regarding arbitration; standards for arbitrator decision making and methods of managing perceived risks in arbitration (including appellate arbitration, final offer arbitration and other alternatives); the variety of proactive approaches now employed to promote economy and efficiency in arbitration; the handling of pre-hearing motion practice and discovery; management of hearings; issues of diversity in arbitration tribunals (including the  gender and the professional background of arbitrators); perceptions of party-appointed arbitrators on tripartite panels; the dramatic growth in the ranks of self-described “dispute resolution professionals”; the education, training and credentialing of arbitrators; legal advocacy in arbitration; arbitrators and settlement; the impact of mediation on arbitration and arbitrators; the growing emphasis on early evaluation or case assessment; the impact of technology; and the insights drawn from behavioral science and “big data.”

Tom is richly informative but — it must be said — seldom concise, which is fine for us Wagnerians  As I tell my wife when I embark to Seattle or Bayreuth for a Ring Cycle, some stories take a while to tell.  And Tom and his colleagues tell this story better than anyone.  So over the holiday break, light the fire, get some cocoa, and enjoy the peerless company of Tom Stipanowich.

Moral Imagination Revisited via Jon Hyman

Mon, 2014-12-22 13:01

The recent confluence of my Conflict Transformation work with the New York Yearly Meeting of the Society of Friends (Quakers) and the richly rewarding session offered by David Hoffman at the April 2014 Meeting of the ABA Dispute Resolution Section have made me increasingly aware of the moral component of non-adjudicative conflict resolution.  I was mentioning this to a colleague, Jon Hyman of Rutgers, who no sooner blinked than popped me over a real tasty paper that is about to be published by Nevada Law Journal.

Titled Beyond Fairness: The Place of Moral Foundations Theory in Mediation and Negotiation, the paper’s argument is set forth by its author as follows:

Intuitive moral judgments pervade mediation and negotiation but are not well understood or managed. People usually experience them in terms of “fairness.” A sense of unfairness can fuel a conflict or prevent an agreement; a sense of being treated fairly, or presented with fair terms, can close a deal. Despite the ubiquity of moral judgments, negotiators and mediators have generally not articulated a coherent and explicit way to deal with them. Moral Foundations Theory, developed by psychologist Jonathan Haidt and colleagues, provides an intriguing means to do so. Rather than relying on some general sense of fairness, Moral Foundations Theory disaggregates moral judgments into six distinct mental modules: Fairness/Cheating; Care/Harm; Loyalty/Betrayal; Authority/Subversion; Sanctity/Degradation; and Liberty/Oppression. Particular moral judgments might be located along one or more of these scales.

In this paper, I explore ways in which Moral Foundations Theory sheds light on mediation and negotiation. I identify the modules at work in a variety of mediations and negotiations that have been described in the literature. In some, we notice that moral modules – in addition to Fairness/Cheating – explain surprising shifts from opposition to agreement. The modules even help explain the enduring attractiveness of value-creating, interest-based negotiation, since that approach requires some care for the other, to try to meet their needs, rather than just imposing a harmful loss on them, as strictly distributive, competitive negotiation often does. 

Moral Foundations Theory remains contested. Is the concept of mental modules, on which it depends, viable? Are there exactly six modules, and are these six the right ones? Can we adequately understand the modules in vivo? Nevertheless, accepting it as a plausible tool, and contingent on its further development, it can provide mediators and negotiators with greater insight into the dynamics of the conflicts they face. Moreover, it can reveal opportunities to ameliorate strong negative moral intuitions and thus provide a clearer path to agreement.

When we facilitate others’ resolution processes, we all wish that we were neutral in every sense, and that as professionals we create neutral environments in which disputants are invited to perceive self-interested outcomes.  Yet the process of conflict facilitation necessarily forbids moral neutrality, the same way that not every article in the New York Times front page can appear above the fold.  I commend this work to all whose curiosity leads them into these uncomfortable forests.

Najar on Dispute Management 2.0

Fri, 2014-12-19 12:33

Jean-Claude Najar has labored in the fields for General Electric in such onerous assignments as Florence and Paris.  He nevertheless maintained his good cheer, and from his new position as international counsel at Curtis, Mallet-Provost, Colt & Mosle he has contributed a terse and sane statement of best practices, appearing in the September 2014 edition of IBA’s publication Business Law International.  The title is Corporate Counsel in the Era of Dispute Management 2.0.

Najar, his colleague Michael McIlwrath, his former colleague PD Villarreal, and others at General Electric were responsible for pounding into my head two distinctions.  The first was the concept of “dispute management” rather than “dispute resolution,” and the other was “Early Dispute Resolution” rather than “Alternative Dispute Resolution.”  Pondering the implications of the distinctions they were making — and trying to master the practice of requiring Early Case Assessments from outside counsel — led to an appreciation of commercial conflict practices that has framed my thinking ever since.

In his recent article, Najar credits Villarreal with the perception that “reducing litigation costs would require transforming GE’s legal policy fundamentally,” implicating not only an institutionalized ADR program but “changing how lawyers viewed their role, how the company viewed its legal docket and how managers worked with lawyers to handle disputes.”  Najar — quite correctly in my view — cites the resulting realignment as a paradigm for multinational companies involved in the global economy.

Central to the redefinition of the role of the lawyer in the company is the critical concept of conflict management.  Disputes conclude either through agreement or adjudication, and the former is far more business-rational (as well as less expensive to accomplish).  So companies have evolved, says Najar, to incorporate management of disputes into their culture, for “true pragmatic/economic reasons.”  In the case of GE Oil & Gas, Najar hired Michael McIlwrath to “manage” (rather than “prosecute”) the company’s litigation docket, yielding a reduction in large litigations from 143 in 1999 to 25 in 2002.  Najar cites such initiatives as the CPR Pledge as prompting efficient, realistic dispute management policies, and the 2013 Fidal/AAA/ICDR survey as documenting their impact.

Increased company involvement in international arbitration proceedings has also been salutary.  As the primary users of the process, says Najar, “companies have made real efforts to regain control over their disputes by increasing their involvement in the decision-making process related to arbitration,” arising from the understanding that “arbitration could not be perceived separately from the conflict itself that led to the arbitral process,” and therefore mediation and other conflict management tools played a vital role in the resolution of many disputes.

The key to modern corporate conflict management is “corporate culture, communication and a more horizontal involvement of the legal department.”  Early Dispute Resolution protocols act as a “toolkit” encouraging business managers to assess the costs of pending disputes and to consider creative — business-oriented — ways to solve them.Among the resources at the disposal of corporate managers is the newly launched Effective Management of Arbitration: a Guide for In-house Counsel and Other Party Representatives, released 6 June 2014.

Few commentators emphasize, as Najar does, the role of leadership at the highest executive level in order for the culture shift to take place on which change depends.  General Electric’s experience continues to act as a rewarding case study.