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CPR institute for dispute resolution january 2000.

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~~
SPECIAL SUPPLEMENT
CPR Institute for Dispute Resolution
J A N U A R Y 2000
On Jan. 27-28, 2000, about 200 legal practitioners and academics met a t t h e University Club i n
New York City for t h e CPR I n s t i t u t e for Dispute
Resolution Winter Meeting t o exchange ADR strategies and examine policy. The meeting i s part o f a
two-year commemoration o f C P R s founding i n
1979 by i t s president and Alternatives publisher
James F. Henry. See ”’Focus, Education and Legitimacy‘: CPR Celebrates 20 Years o f ADR,” 1 7 Alternatives 1
(January 1999).
The principal seminars are summarized below. I n February, Alternatives reviewed t h e winners o f t h e 1 7 t h Annual
CPR I n s t i t u t e for Dispute Resolution Awards, sponsored by
Cigna Corp., which were presented a t t h e meeting. See 18
Alternatives 22 (February 2000). Throughout t h e course o f
t h e year, Alternatives w i l l publish adaptations and updates
o f t h e award winners i n t h e writings’ categories.
For information on t h e CPR 2000 Spring Meeting i n
Santa Fe, N.M., i n June, for members and CPR panelists, see
page 66.
proach: “I ... make sure that my staff understands my
commitment to ADR, and put ADR .. . in the overall
decision making in terms of compensation.”
Diggs said he also tries to take the lead in
many of PPG’s and his department’s key ADR processes. ADR, he said, is “just not a checked box, and
then we move onto something else.”
Diggs brought up a recurring theme in the
session, the importance of ADR education. “You can
make an edict,” he said, “but you’ve got to change that predisposition [to litigate] all the time.”
Panelist Barbara E. Daniele, vice president and senior litigation counsel of G.E. Capital Corp. in Stamford, Conn., agreed,
noting that her company is institutionalizing ADR through three
initiatives. She said it screens “every major case at least quarterly
to ask the question again and again and again through the life of
the case” whether ADR should be used. The second part is a
broad training initiative. Third, the company has an ADR page
on its Intranet, which she said includes “a whole series of tools,”
among them case-screening devices, model clauses, and panels
1ist i ngs .
“Most of our lawyers are not litigators,” said Daniele, “so
what we’re trying to do is to institutionalize first to the
nonlitigator legal community within the company.” The goal,
she said, is to include ADR in business documents and enable the
lawyers to pass the ADR measures along easier to the business
people.
Panelist Robert G. Cohen, deputy general counsel at Ernst
& Young in New York, said that the accounting and consulting
firm includes a step ADR provision in engagement letters to
clients that “has met with enormous success.” He says most
clients have signed on to ADR.
He said the firm has enlisted outside trainers for law
department ADR workshops. “It’s a fact of life now in most of
our cases that we are going to go to mediation at some point,”
said Cohen, “and we recognize that and we make that part of
our strategy.”
An audience member asked whether the panelists viewed a
settlement conference “as real ADR or just part of the litigation
process.”
Richard S. Paul, senior vice president and general counsel of
Xerox Corp. in Stamford, Conn., said “I know I don’t look at it as
(continued on following page)
WINTER
MEETING
I. GENERAL COUNSEL FORUM
ON ADR PRACTICE I N THE
2 1 S T CENTURY
An overview of alternative dispute resolution from the in-house
counsel’s perspective kicked off CPRs Winter Meeting.
From the outset, moderator Dwight Golann, a law professor at
Suffolk University in Boston, went directly to audience questions
about corporate ADR. The panelists did not preface their remarks
with opening statements; prior to the meeting, CPR solicited questions, so Golann already had a stack of E-mail inquiries.
The result was a session focused on practice in which
operations questions were addressed directly by five top senior
counsel, as well as peers in the audience.
The first discussion topic was on ADR implementation. An
audience member asked how the senior corporate counsel on the
panel ensured that the people in their organizations involved in
disputes resorted first to ADR, rather than litigation.
James C. Diggs, senior vice president and general counsel of
Pittsburgh’s PPG Industries Inc., said he takes a personal ap-
SPECIAL SUPPLEMENT: CPW WIN’hER MEETING
(continued from previous page)
real ADR. I think in many cases when I see that I might suggest to
the other side we should go to mediation. At least that way we can
select who we’d like to try to negotiate a settlement with.”
Daniele said it varies from case to case, with long-running
cases nearer jury selection being better candidates for settlement
at court-ordered mediations.
Panelist Hans Peter Frick, senior vice president and general
counsel at Nestle S.A. in Vevey, Switzerland, said in Europe there
often are local rules that send cases to a mediation or a conciliation before trial. “They call it conciliation mostly,” said Frick,
“and that’s kind of the first step.”
Frick said that the driving force is preserving business relationships. “In France, we have five major customers,” he explained. “Two of them merged now, so you imagine you cannot
afford to have court litigation against one of those because we
would lose 20% of our business instantly. So mediation for our
company is a very, very good tool to settle problems, to solve
disputes and to continue a business relationship.”
James Diggs of PPG said that court-ordered mediations
take too long. “If I’ve already spent years and years of litigating,
I’ve spent 80% of the money that I’m going to spend on the case.
I want to settle the case efficiently, effectively, obviously, but as
early as possible. And waiting for the court to have decided
summary judgement, waiting for the court to order the mediation to me is just too far down the process.”
Moderator Golan said that a study of about 450 commercial cases at ADR providers had an 81% settlement rate. He said
that where the parties solely used facilitation they had a 79%
settlement rate-but he quickly added that court- or contractmandated settlement rates were close, at 76% of the cases. “It
wasn’t much lower,” said Golann, “even though people were
being forced to do it.”
The panel discussed the status of mediation in the public’s
view and the legal community. Barbara Daniele of GE Capital
said that users should guard against court mediation as a process
that “is just something you need to get through.” She said that she
believed that big-firm litigators have “bought in completely.”
Both Richard Paul and Dwight Golann said that ADR
acceptance will continue to evolve. Golann said that business in
the Boston area is booming for commercial mediators. He said
that a CPR law firm member trumpets its ADR cases in a promotional brochure called “Recent Litigation Successes.”
An audience member questioned the reach of ADR education programs, and Daniele said “Do not despair if this broad
process-based plan of educating everybody is not within your
vision or not possible at your company or your law firm.” She said
ad hoc ADR converts business people into believers. Echoing the
comments about ADRs evolution, she added that the same thing
happens to the business lawyers who go through an ADR process.
Richard Paul, who also is chairman of CPRs Executive
Committee, agreed, noting that a company couldn’t mandate
how it resolves every dispute.
An audience member raised settlement authority issues.
Daniele said her company focuses on the personal dynamics of
ADR session decision makers in advance. “While we are not able
to control who our adversary is going to bring as [its] representative, sometimes we’ll get down to [that] level of detail of bargaining,” she said, adding that GE Capital might say “We will bring
the general counsel, if you bring the general counsel. We will
bring the chief financial officer, but you have to bring the person
with this characteristic.”
ABOUT THE CPR I N S T I T U T E FOR DISPUTE RESOLUTION
ORGANIZED BY PROMINENT CORPORATE COUNSEL,
THE CPR INSTITUTE FOR DISPUTE RESOLUTION has
become a leader in developing uses of private alternatives to
the costly litigation confronting major corporations and public entities. The membership of CPR, a nonprofit organization, consists of more than 500 large companies, leading U.S.
law firms, academics and judges. See “Who’s Involved” at our
Web site, www.cpradr.org.
TO I T S MEMBERS, CPR OFFERS EXTENSIVE BENEFITS
AND SERVICES, including research access to CPRs unique
ADR database; training and counseling; a complete library of
ADR practice
and mode] procedures;and semi-annual
conferences for CPR Sustaining Members.
WOULD YOU LIKE FURTHER INFORMATION ABOUT CPR?
See our Web site at www.cpradr.org or complete the following
form:
Name:
Organization:
Title:
Address:
Telephone:
RETURN TO: Membership and Administration,CPR Insrirute for Dispure Resolution, 366 Madison Avenue, New York, NY 10017. Telephone: (21 2) 949-6490. Fax: (212) 949-8859. Internet: info@cpradr.org
SPECIAL SUPPLEMENT: CPW WIN’hER MEETING
Hans Peter Frick emphasized the need for communications
between parties. “As soon as you only dialog with the outside
counsels-through outside counsels -I think then the situation
is [so] stressed that you have a good chance that things will break
down.”
The panelists discuss the frequency that they use ADR
clauses. James Diggs said that a mediation clause is incorporated
“in excess of 90%” of the companies’ contracts. He said specific
mediation forms or step proceedings aren’t spelled out, but that
company is “pretty close” to providing for mediation in nearly
every contract.
Daniele said that her company doesn’t have a uniform
requirement for mediation clauses. She said that she considers
the situation that would occur if the contract or the relationship
broke down. “What posture am I most likely to be in?”she asked,
noting that if, for example, a supplier failed to deliver, the
company wouldn’t want to mediate. “I’m not going to do business with a supplier who doesn’t deliver. I want my money or I
want my damages probably.”
Cohen said that Ernst & Young mandated mediation in
contracts. “We put it in,” he said. “We may negotiate the terms
of it down the road, but it’s in the original agreement that we
send out.”
The panel touched briefly on automated ADR software and
Internet programs that produce solutions. Using the debate over
tellers and automated teller machines as an analogy, Daniele said
that, like ATMs, ultimately, “there’s going to be a wide audience
of people who prefer to deal with their disputes” through such
mechanisms.
Xerox’s Richard Paul had a different view than the panelists
and many audience members in summarizing several points. He
said that mediation wasn’t more widespread because “there’s too
much focus on lawyers and not enough focus on business
people.. .. If you start getting senior officers of major corporations telling me their business people-not only their lawyers...want to see more mediation, then you’re going to start seeing
mediation really move. The practical problem that we face.. .is
that a number of key offices in my company don’t understand
mediation in spite of my enthusiasm for it and what we need to
do is make sure key offices support mediation.”
Paul said that mandating mediation in a contract “is of little
value.” He agreed with Daniele that mediation might not be a
first choice, and he said that the company didn’t want to be “in a
situation where we always are going to be placed with a mediation obligation.”
An audience member countered, “There’s a way to make
this mandatory without locking yourself in. You commit that
you’re going to consider it-ADR
first, without taking away
options to litigate if that’s the smart thing to do.”
But Nestle’s Hans Peter Frick said that his company has
forms available on its Intranet and personnel “are mandated to
use it, because I think we want as a first step not to go to the
court, but solve the problem differently.” He said his staff includes two lawyers who are trained mediators.
An audience member asked whether mediation was taking
the path of arbitration, and whether mediation reforms were
needed.
“[Tlhere’s restraint I’d like to see,” said Daniele. “Just as
arbitration used to be a nifty idea to do things fast and cheaply . ..
I think it got completely ruined when we decided to introduce
massive discovery, and it now takes years and it costs millions of
dollars. And you get bogged down in lots of depositions and fights
and subpoenas. I’m personally starting to see in major mediations
the same ill creeping in-because we can’t control ourselves, because
we’ve been trained as advocates and the people who are typically
our lawyer-advocates or lawyer-facilitators are trained with a certain background and believe, .. . that we have a fiduciary duty to
do the very best we can for our client’s position. ...”
Daniele continued: “[Als we continue to burden mediation
with all the things that are either good or ill in litigation, I think
we’re going to start to undermine its value. ... [ w e ought to use
some restraints so we don’t wreck this tool also.”
Moderator Golann said that mediation seemed to be more
commonplace. “[I]t’s sort of a routine thing,” he said.
Ernst & Young’s Robert Cohen agreed, but added, “That’s
not what we’re really looking for. We want to try to resolve the
matter as soon as we can, efficiently, effectively.”
Golann asked the panel to summarize its view of key issues
for mediation over the next three to five years. Daniele first
urged the audience members to closely evaluate ADR results,
and ask whether the outcome was better or worse than if
another tool was used.
Paul said that the role of ADR, particularly mediation,
would be determined within the next five years by court systems’
actions. Citing the possibility of continued “aberrant jurisdictions [and] runaway juries,” Paul said that ADR use would
increase because litigants “won’t want to leave their fate in the
hands of the judicial system.”
James Diggs said that ADR could make inroads into the
intellectual property area.
Hans Peter Frick from Switzerland said that “what we’d
like to do is typical in Europe-to
build on this mediation1
conciliation tradition” and “to help to structure the process a
little bit better.”
Cohen said he expects increased numbers of mediations
and arbitrations. “I see, looking back 10 years ago, we’re mediating matters [now] that I never thought we’d mediate,” he said,
citing class action mediations. He seconded Paul’s comments
about court systems being a driving force in ADR use.
(continued on following page)
SPECIAL SUPPLEMENT: CPW WIN’hER MEETING
(continued from previous page)
11. THE CUTTING EDGE I N
FEDERAL PROCUREMENT DISPUTES
The second CPR Winter Meeting program featured government
representatives discussing how companies in commercial disputes with federal agencies can use ADR.
The panel focused on the U.S. Air Force’s troubleshooting
efforts. It was moderated by the Air Force’s assistant general
counsel, Joseph T. McDade Jr., who head its ADR office. He was
joined by an Air Force officer, one of its contractors and the U.S.
Justice Department’s ADR point man.
First, Peter R. Steenland Jr., a Justice Department senior
counsel and head of the department’s dispute resolution office,
provided perspective on government ADR efforts.
Steenland has overseen, at Attorney General Janet Reno’s
direction, a variety of ADR efforts throughout the executive
branch, as well as internal initiatives.
He said that since 1995, the department has trained more
than 1,400 attorneys to be better advocates in “enhanced negotiations,” which he said was “a fancy way of talking about interest-based bargaining and mediation advocacy.”
Steenland said that the department has spent more than
$15 million on hiring private ADR providers, noting that about
two-thirds of the cases are settled. He said that the department
uses court ADR too-almost always mediation, and rarely arbitration.
He said that ADR growth in the department has been
steady, but “a little uneven” across offices. He said the Civil
Division has “made some splendid progress” on using ADR in
environmental and general civil disputes. Every Civil Rights
Division attorney has been trained. Steenland said that tax practice and government contracts lag, but “there’s a lot of potential
there and the movement is all in the right direction.”
Steenland discussed the executive branch’s interagency
ADR working groups, which he explained grew out of a 1998
order by President Clinton. The goal of the groups, which were
convened by Attorney General Reno and run out of Steenland’s
office, is to immerse an ADR culture into the agencies.
There are four working groups: a workplace section, dealing with federal workplace disputes; a second on contracts and
procurement; a section on mediation options for disputes that
arise out of circumstances where the government takes civil
enforcement action, and a group dealing with monetary claims
against the government. [For more information, see the groups’
Web site at http://www.financenet.gov/financenet/fed/iadrwg/
iadnvg.htm.1
In the course of the preceding year, said Steenland, there
have been more than 70 meetings, which have provided advice
and guidance to agencies on ADR program design, where to find
neutrals, how to organize programs, and how to get management
“buy-in.”
Steenland offered some advice on dealing with the government:
“When you’re litigating a government contracts case,
the government lawyer’s always playing catch up, because the matter has just been transferred to us from the
Pentagon. And so we’re still learning about it. We’re still
looking at documents figuring out what this is all about.
[The] contractor’s counsel has lived with this thing for
years as it has worked through the contract dispute
process. ... We can’t settle a case until we know its
settlement value. We can’t settle a case until we can
appreciate the risks involved, until we’ve done some
basic discovery. So sometimes the idea might arise that
dispute resolution could occur too soon before we’re
ready. And if that happens or if that’s the perception, I
have a suggestion. .. . [Ilfthe Justice Department lawyer
says, ‘I don’t know. I haven’t quite figured this out yet. I
need to do some more discovery’. ..say, ‘Well, how about
we go find some neutral to facilitate the management of
the case. Let’s not talk settlement yet. We promise we
won’t say anything about settlement. Let’s just go hire
some expert who can assist us with discovery.”’
The point, said Steenland, is to get the government attorney
the information he or she needs, quickly, to move to full ADR.
Next was panel member Gen. Frank J. Anderson Jr. of the
U.S. Air Force, who is commandant of the Ft. Belvoir, Va.-based
Defense Systems Management College, a Pentagon institution
that trains senior acquisition officials and program managers.
Anderson, who is chairman of the interagency ADR working
groups’ contracts and procurement section, discussed the extensive Air Force ADR program
Anderson started by applauding -literally- audience comments from the previous session about mandatory ADR. “I agree
with what you were saying,” said Anderson. “To make it mandatory does not mean that you have to give away your right to make
a decision or commit to a bad business decision. To make it
mandatory only says we have a commitment to consider ADR
first.”
Anderson explained how the preference for ADR is being
accomplished. “[We’re moving to get the legal and the business
community together so that we view this as a team approach. And
we’d like for people to think about ADR as just being another part
of the business process.”
Anderson continued: “It is our view that ADR starts from a
fundamental principle and that is, no perfect contract. .. . So we’re
saying that in any case where you have a complex contract, you
need to build in enough flexibility so you can deal with those
things that you don’t know the day you write the contract.
ADR, the general said, acknowledges “there may be issues
SPECIAL SUPPLEMENT: CPW WIN’hER MEETING
that we have to deal with. It improves long-term partnering. If
you’re only going to deal with an individual once, maybe you
don’t want to do ADR. Maybe you want to build leverage on
your legal rights. But if it’s a long-term relationship, you want to
find a way that you and your partner can solve issues in a win-win
relationship. And ADR provides those tools.”
The key, he explained, is to start out at the point of contract
formation: “How are we going to solve issues?What are the risk
areas? What are the challenges that we’re going to have in completing this contract?”Addressing those issues makes the contract
better, Anderson suggested.
He said that exchanging information is one of the biggest
issues in ADR. “Neither side wants to take actions early that are
perceived to hurt the case. But you can’t settle if you don’t share
relevant information. By definition, ADR is going to fail if you
don’t share relevant and pertinent information.”
Anderson said that Air Force ADR divides into two “tracks,”
interventions for existing contracts, and as a business process to
be incorporated into projects.
Anderson addressed authority issues, saying that settlement
authority should be addressed when constructing an agreement.
“[S]tructure the relationship so you’ve built the right environment for settlement up front,” he said, adding later, “There is a
partnering sense to ADR.”
The corporate perspective on government contracting was
provided by panelist Robert J. Ingersoll, vice president of contracts and pricing at Boeing Co. in Seattle. He said that the
aircraft maker has more than 10,000 active contracts, and that
avoiding litigation was one of Boeing customers’ top prioritiies.
Echoing Anderson, Ingersoll said that long-term partnering is the
key to preserving customers. “I can’t afford to have long-term
issues on the table with my customers, whether it’s in a litigation,
a dispute or a negotiation,” he said, “I got to move quickly and
get things settled and get on with the execution of our business.”
Ingersoll discussed a large mediation with the government
over a case involving a company Boeing acquired. Ingersoll said
that mapping out a mediation strategy worked well in resolving
the case because of high-level participation on both sides. He said
that Boeing and the government met for months defining an
approach to proceed with the mediation; the parties had created a
database with “dozens of depositions,” and “literally millions of
documen ts.
The ADR in the matter, Ingersoll said “was strictly a business solution. It was a net present value solution on the claim
amount.”
Ingersoll said that Boeing had executed an “overarching
agreement,” which included a chief operating officer’s signature,
with the Air Force. “We have every program manager [and] every
contract manager cosign with their Air Force counterparts a
supplement to that agreement, recognizing that when and if we
get into a situation that requires dispute resolution, the ADR
process will be the tool of choice. We have applied that to all
programs and we are connected with the Intranet we have today.”
Moderator Joseph McDade noted that Air Force ADR use
still is dependent on communicating that ADR is acceptable.
The Air Force’s Internet ADR guide [at www.adr.af.mil] and
other public outreach “get the word out to top-level contractors,
mid-level contractors, and everybody else that the government’s
really serious about this.”
Gen. Anderson said that the Air Force has put a communications infrastructure in place to help disseminate the ADR
emphasis. McDade said that the branch has made a written ADR
offer “to every single litigant” before the Armed Services Board of
Contract Appeals, which he said is the Air Forces’ “biggest
litigating forum.” He added that the Air Force still was assessing
the effect of the offer, but he added that “many of the companies
have said, “What’sADR?”’
i
111. B R I N G I N G T H E PRACTICE I N T O
THE DIALOGUE ON PROBLEM-SOLVING
The CPR Winter Meeting’s first-day sessions closed with a discussion about focusing law school curriculums on problem solving.
Kathleen A. Scanlon, a CPR vice president who is in charge
of publications, training, research and counseling, explained that
the CPR Academic Project had convened meetings with legal
academics to try to identify strategies and propose recommendations for integrating problem-solving into the law school curriculum.
This committee, she said, is trying “to broaden the focus of
legal education to train lawyers, not just as advocates using an
adversarial model based on the case-method study, but also to try
to train law students to be counselors, problem-solvers, decision
makers, planners, [and] negotiators-in short, the tasks that lawyers are called upon to do in their day-to-day practice.”
The goal of the Winter Meeting program was to gather
practitioners’ thoughts on the subject and enhance the
committee’s efforts.
Robert H . Mundheim, ofcounsel to New Yorks Shearman
& Sterling and a former dean and a law professor at the University of Pennsylvania, began the panel discussion noting that
effective problem solving is defined by an individual’s mind set.
He said it’s a natural characteristic of corporate lawyers, and good
litigators.
Problem-solving attorneys, explained Mundheim, draw on
a variety of disciplines to solve tasks, because often legal issues
aren’t the predominant difficulties in a particular matter. “On
the other hand,” he added, “you’ve got to know enough law so
(continued on following page)
SPECIAL SUPPLEMENT: CPW WIN’hER MEETING
(continued from previous page)
you don’t unnecessarily rule out a potential solution and legally
prohibit it. That aspect requires a certain self-confidence about
substantive law, which usually means that you’ve had to learn it
somewhere.”
He listed several other key traits for effective problem solving. They include:
Recognizing that relationships are long term and require
building trust and confidence.
Having good listening skills.
Having confidence to know what you don’t know and to
ask questions.
Being a good judge of people for, among other things,
putting together the right team to hammer out a solution.
Projecting an image of a “consistently fair-minded approach, not a ‘win-at-all-costs”’ attitude and mentality.
“And I warn you that the representatives of the client don’t
always instinctively share that approach,” Munheim said.
Making judgments clearly and quickly.
Concisely explaining, orally or in writing, reasons for making judgments.
Being resilient when things aren’t done your way.
Panelist Robert H. Mnookin, a professor at Harvard Law
School and director of the Harvard Program on Negotiation,
applied his list of three myths about teaching negotiation to
teaching problem solving. The myths are that negotiation can’t
be taught, that people must learn it from experience, and that
there’s no relevant theory.
From the problem-solving perspective, Mnookin attacked
the theory point first, noting that the social sciences have a lot to
offer on human behavior that can help practitioners understand
ADR dynamics. He added that there was a great deal of theory on
effective listening and building relationships.
As to learning-by-doing, Mnookin said: “My own experience is it’s extremely difficult to learn from experience. And what
most of us do most of the time is not learn from our experience,
but just develop a set of habits-which
sometimes work for us
and sometimes doesn’t work for us.”
When the habits and practices fail, he said, “we’re pretty
clueless ... as to why and we don’t devote very much energy in
really learning from those times when it’s not working.” For
effective problem-solving, practitioners need an intellectual
framework to analyze the experience, he said.
And Mnookin insisted that problem-solving skills could be
taught and have been taught in many law schools. “Lawyers have
been problem-solvers for a long time,” he said, “and in fact,
working on problems [and] doing simulations under supervision
where you’re given a conceptual framework ... is a very good way
to learn. It’s like all other human activities. People come to the
enterprise with very different natural endowments. .. . [TIhose
who come to the enterprise most gifted can usually [get] the most
from effective coaching in a course. But no matter what our skill
level, people can learn how to get better.”
Panelist Carrie Menkel-Meadow, a law professor at
Georgetown Law School, said that teaching problem-solving was
equivalent to teaching creativity. She said that traditional legal
education has “fallen short” on teaching creativity, but it is improving.
She said that when reviewing the substance of cases with
classes, she asks students if there are other ways they could have
been decided. She said she teaches about different processes such
as consensus building, facilitation, negotiation, and mediation.
Menkel-Meadow said she caps off such discussions with a
focus on the substance of the creative process:
“What was this case about? What were the people in the
case trying to do? What went wrong? ...What other
people beyond [the stakeholders] that we see in the
named case were affected by this problem? How might
we solve their problem? What interest might they have
in what resolution there might be? What ripple effects
might there be, from whatever these courts and decision
makers have made along the way, to other people?”
Moderator Scanlon asked whether a problem-solving emphasis could undermine strong analytical training. Panelist Donald
C. Langevoort, also a Georgetown University Law School professor, said that “there are a number of ways to do it,” and that the
potential problem was being addressed by some law schools. He
said that “one of the best things we can do for our students .. . is
talk about creativity and problem-solving in the context of structuring relationships [and] deal design.”
He said that attorneys need to think about the possibilities
in creating a relationship that is less likely to break down.
Langevoort asked the audience to consider a first-year contracts course. “Realize that studying the parol evidence rule [or]
the Statute of Frauds is nice, but what’s most interesting [and]
challenging about contracts is designing them. And there is a
wonderful body of thinking about the possibilities of contract
design. ... We should be asking students to become adept [at
design], using disciplines for economics, psychology at thinking
about putting a relationship together, getting the parties satisfied
[and] reducing it to writing. .. . Contracts is the place to start the upper class curriculum then builds on that.”
Robert Mundheim said that such teaching doesn’t end at
law school. “I would say that some of the best legal education
today is being carried out at the large law firms,” he said, “and
they are very much doing problem-solving techniques.”
SPECIAL SUPPLEMENT: CPW WIN’hER MEETING
Prof. Mnookin said that there is one question problem
solvers need to guide their work, regardless of whether it arises in
constructing or during the course of a deal, or in trying to resolve
a suit: “Am I carrying in my head what might be called a ‘zero
sum mind set’-what you win, I lose?”
He said that lawyers’ business relationships can’t involve
“client control” for effective problem solving to occur. “[Ilnstead,
I think what a lawyer’s mind set should be [is] one of curiosity
and wanting to serve the informed interests of his or her client.”
Mnookin added that problem-solving often is tough for
attorneys because it requires structuring an appropriate relationship with a client and an adversary lawyer, and neither
“may come to the transaction with a problem-solving” orientation.
Carrie Menkel-Meadow said that law schools have rediscovered-or simply discovered- the business school case study
method. The method, along with clinical programs, is used
because “lawyers have to make decisions and solve problems in
conditions of uncertainty. And they have to deal with dynamically changing situations.” Appellate case books, she said, contain
“facts [that] have been found, perhaps by multiple layers of fact
finders.” Business case studies are different than legal
hypotheticals, she said, because the facts often are deeper and
more contextual.
Menkel-Meadow summarized by noting that a second-year
law curriculum should include some of the process skills that
Mnookin described, and then in the third year, “deepening that
with the substantive knowledge that’s needed, but with more of
these . .. either simulated or real world opportunities.”
Langevoort agreed. The case method, he said, also “starts
reinforcing a look at how decisions are made [and] how interests
are created in a business environment. It creates an introduction
to the language of business [and] to the thought processes. And I
think that in that setting, we can see lawyers becoming much
better problem-solvers.’’
The remainder of the session focused on the efficacy of law
schools’ using the problem-solving approach from a practitioner’s
perspective. The panel and the audience discussed joint MBAlaw student situations.
Audience member Peter Steenland Jr., who heads the Justice Department’s Office of Dispute Resolution, said that the
department is actively recruiting problem solvers.
Langevoort said that change was needed in the legal profession, well beyond the law schools. He said the “cultural reformulation” involves changing the profession. Langevoort said that
among lawyers in many legal transactions, as well as in law
schools, “is kind of an implicit notion that the courtroom is the
model, that a third-party judge is going to be deciding, that the
person who makes the more clever arguments is going to persuade the other person, and the way cases get settled is basically
because you scare the other side into thinking that the legal risks
are too substantial, so they’re willing to put some money on the
table.”
Better problem-solving approaches are part of legal culture,
concluded Langevoort, but the challenge is to give them the
emphasis they deserve both in schools and the workplace.
B
I V . N E U T R A L S ROUNDTABLE:
T H E PERSPECTIVE O F T H E
S O P H I S T I C ATE D CPR P R A C T I T I O N E R
The CPR Winter Meeting’s second day began with an examination of the hottest issues in neutrals’ practice, again directed by
meeting participants’ biggest concerns.
Peter Phillips, CPRs vice president for committees, industry initiatives and model ADR procedures, moderated the discussion, which involved seven longtime members of the CPR Panels
of Distinguished Neutrals.
The discussion opened on the worst mistakes that are consistently made in mediation sessions.
Bennett G. Picker, a partner in Philadelphia’s Stradley,
Ronon, Stevens & Young, said that problems pop up with negotiations. “[Mlost counsel are prepared for what they want in a
mediation, but not what they may have to accept.”
Quoting the book “A Civil Action,” Picker said that parties
regularly arrive in mediation with the attitude of “Why should
my bottom line be anything less than my honest evaluation of the
case?” He added that it “doesn’t take into account risk and 29
other things. It’s like a child’s picture [of the case]. ... And it
goes on. They don’t ask questions. Information’s power. They
don’t listen carefully enough.”
Panelist Margaret L. Shaw, a New York mediator and
trainer, said there are two categories of mistakes. Going into
mediations, Shaw explained, parties often don’t understand how
the other side is approaching the session. The meeting gets
started with misconceptions about positions; she said sometimes
“it takes you at least a half a day to get the parties squared away.”
Shaw added that near the end of mediations, new, special
demands often appear, extending the sessions for hours. She said
it’s often not a tactic, but a mistake, because people haven’t
“thought through exactly what is part of the entire [settlement]
package.” She said that though the point may be minor, the
timing of such introductions jeopardizes all of the previous agreements the session produced.
Former U.S. Federal District Court Chief Judge Joseph W.
Morris said the big mistake at the outset of a mediation often is
an aggressive, argumentative position. “It’s perfectly appropriate,” said Morris, “to take a firm, evenhanded position [and] set
forth what your position is, but if you start out in a highly
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aggressive and argumentative tone, it sometimes doesn’t serve the
purpose of the mediation.”
Panelist Michael K. Lewis, a neutral and trainer at Washington, D.C.’s ADR Associates, said mediation parties often fail
to size up the session correctly by not recognizing “that the most
important person in the room is the business client on the other
side,” not the mediator or adversary attorney.
Phillips then asked the panelists to identify constructive
tactics that make mediation sessions work.
Frederic K. Conover, a partner at Faegre & Benson in
Denver, said that “when parties come into a mediation and they
treat each other courteously, they listen well, they recognize
positions [and] that turns out to be very effective because you
soon build a degree of trust with the opposing party.” He added,
“You’re not there to convince the other party that somehow you
are right.”
Phillips asked what the panel would do if, acting as a
neutral, they had a mediation party that was acting in a manner
that had been criticized.
Morris, who headed Oklahoma’s Eastern U.S. District
Court and is now a partner at Gable & Gotwals, a Tulsa,
Okla., law firm, said he would try to slow the process by
asking the offender questions that highlight the counterproductive behavior.
Ben Picker said he would try “to secure a commitment to a
good-faith engagement in the process.” He said if someone is
“being terribly abusive,” he will confront them. “One has to be
delicate as to how that confrontation takes place-not in a joint
session obviously so as to embarrass them before the other side,”
he said.
Morris said “that’s quite appropriate,” but added “the concern that I have is you must not rob yourself of neutrality. You
must be able to always demonstrate that you’re evenhanded and
fair to both sides.”
Picker agreed, adding, “there’s a question of what’s abusive.
If someone is excessive at the beginning, well that’s expected.. . .
I’m talking about truly abusing the process.”
Shaw added that mediators can point out the impact the
conduct is having on the other side, and how that affects resolution prospects.
Conover said that a mediator can assert control at the start
by setting the tone for a constructive meeting. “Sothat when he
has to take some action,” Conover said, the mediator “can refer
back to own earlier statements instead of pointing his finger to
one side or the other. ...”
Phillips asked about the frequency of parties’ abuse of the
mediation process. Panelist William H. Webster, a partner in the
Washington, D.C., office of Milbank, Tweed, Hadley &
McCloy, said it depends upon perception. “Sometimes too elaborate an opening, I think, is apt to produce a perception by those
who perhaps have been in litigation [that they have] heard all the
arguments before -and they’re sitting there seething.”
Webster-a former U.S. District and federal appeals court
judge who headed the Federal Bureau of Investigation from 1978
until 1987, and then moved to the U.S. Central Intelligence
Agency as director until 1991-said that these sessions can be
particularly difficult for lawyers, because they involve changing
the lawyer’s role.
Panelist Charles G. Bakaly Jr., of Los Angeles’s Bakaly &
Davies Mediated Dispute Resolution, said that when mediation
parties have been in litigation, he sometimes will not start with a
joint session, but rather a private caucus. He added that if there is
a business representative at the mediation who is new to the
conflict, mediators might want to have that person listen to the
other side’s story as soon as possible.
Bakaly said he “had an instance where the defendant’s lawyer in an employment case started right out attacking the plaintiff,
calling her a no-good employee in front of everybody, and you
could just see her start to seethe.” He said he immediately called
for a caucus to halt the process. “He happened to have been an
employment lawyer .. . that I’d known,” Bakaly continued. “And
I said, ‘You’rejust blowing it here.”’
Moderator Phillips asked whether the lawyer had made
more of a mistake than an intentional abuse of the process. Bakaly
said, “Well, it was intentional. He knew what he was doing.” The
result was that it was impossible to settle the case that day. But he
said that the parties kept up their attempts, and the case settled
two weeks later.
Frederic Conover said that he tries to avoid bad sessions by
scheduling preliminary meetings. He said his goal is to ensure that
he knows what the parties expect with regard to good faith, use of
facilitative or evaluative techniques, and what they generally want
to get out of the ADR session.
The first stage of the preliminary meetings is with counsel
alone, usually on the telephone. Then, the day before the mediation, Conover said he meets often via telephone with the parties and
the attorneys to set ground rules and uncover underlying interests.
Michael Lewis said he did the same thing, getting the mediation parties to send him private, confidential submissions that
“commit not only to their rights and interest-based analysis,” but
in which the parties also address barriers to settlement and psychological issues. “I asked specifically for their suggestions for
creative paths for resolution,” Lewis said, noting that mediation is
“often jump-started by these initial steps.”
Joseph Morris said that he thought it was “a wise thing” for
arbitration parties to set time parameters beforehand, specifying
direct examination, cross-examination, and rebuttal times.
Charles Bakaly Jr. said that time limits apply to other ADR.
“It’s hard to imagine that all of us haven’t at one point or another
had a mediation that’s been bounded by time for one reason or
another. I think in general deadlines are useful. Deadlines that
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one can extend are also useful. But you needn’t say that you’re
going to extend when you set the deadline.”
Michael Lewis discussed the need for mediator intervention
when a potentially poor settlement was going to occur: “I don’t
think it’s my responsibility to take care of the people who haven’t
thought things through,” said Lewis, adding, “I do think it’s my
responsibility not to help anyone perpetrate a fraud. And if
someone said to me, ‘Well we’re going belly-up tomorrow, but
I’m going to do this stock deal with the other side, and guess
what, they’ll end up holding nothing,’ I think my obligation is to
say to them, ‘You’ve now presented me with two choices. Either
we’ve got to structure this in some way so that the other side
understands what the real situation is or I’m going to have
to ... stop mediating this.’ ...Now frankly, I’ve never had anything that dramatic presented to me in mediation before. I have
had lots of parties who have come to the table not well prepared.”
Bennett Picker said he had seen something close. “We were
valuing partnership interests. . .. We reached a settlement in a
marathon session on the 20th hour of the third day. ... We
thought it would take three days. ... And after the settlement
occurred.. . one of the parties said, ‘Would you get a confirmation on this fact? We relied on this fact.”’
The party, Picker explained, relied on the fact to value the
properties. He continued:
“I went back to the other party and they said, ‘Oh my gosh,
it was a mistake. It wasn’t deliberate.’ And I went back to the
other side and I said, ‘That figure was wrong.’ They said, ‘Then
we want another XX millions of dollars.’
“And so I then sat with them for a while and tried to
determine whether it was material or not. It sounded like it could
be material. And I said, ‘Why’d you ask that question? They said,
‘Because we knew all along that it was wrong. We had a sheet
from the prior year. ...’
“... I said to them, ‘Don’t you think the time to have raised
that was when we closed the last gap, if you thought it was wrong
or knew it was wrong?’ And by the time we were done, the
settlement held. ...”
Picker concluded: “I’m not sure what I would have done if
they didn’t essentially say, ‘Well, I guess you’re probably right.”’
Former Judge Webster had a warning for neutrals: “[Tlhere
are going to be people in the room who will not understand your
role, no matter how often you’ve told them.” The misguided
parties will think, “Why doesn’t he go back in there and sell my
offer?” according to Webster, “and you say, ‘That’s not the role
of a mediator. I can give all your reasons and I can add a few of
my own-but I’m not your lawyer. I am a neutral in this and you
have to understand that.”’
He also cautioned neutrals to only work on material that
they have the parties’ express authority to pursue.
Peter Phillips asked the panel whether the sophistication
level of law firms participating as advocates in mediations was
adequate.
Conover said it wasn’t. “There is a shocking lack of progress
in ADR knowledge and skills,” he said, adding, “I just see it all
the time. And I see people still don’t know the difference between
arbitrations and mediations. .. . You go into mediations not only
with reluctant counsel, but frequently hostile counsel and that
makes an even greater challenge to the mediator to try to educate
parties. ...”
He said that inside counsels’ experience varies too. Said
Conover: “[Tlhe one characteristic I see is ambivalence- that
even though for those who are sophisticated and have sophisticated departments.. .you will find a quick switch to win-at-anycost”-with the current case being “an exception to [the
company’s] rule that all cases will be mediated.”
William Webster talked about problem solving in mediation. “My shorthand for it is the good mediator looks for ways to
achieve more gain for the claimant and less pain for the respondent. And often that’s a matter of finding a way around it.”
Joseph Morris said that for mediation success, a parties’
business representative should not be a lawyer. “I believe that the
party, of course, has the right to designate whomever that party
wishes to have as the business representative,” Morris said, “but I
strongly discourage them having a top business representative
who is functioning as a lawyer, because my experience is that
nb
doesn’t work very well at all.”
V. N E G O T I A T I O N SHOWCASE:
C O G N I T I O N OF THE NEGOTIATOR
Max Bazerman, a Northwestern University Graduate School of
Management professor, focused the audience on negotiation conduct and strategy in a 90-minute solo presentation on the CPR
Winter Meeting’s second day.
He opened the session with a trick auction, offering a $20
bill to audience members. The trick was that the bid immediately
prior to the winning bid would have to pay Bazerman the amount
of the bid-and get nothing in return.
As the audience members bid the bill up to and then
beyond $20, Bazerman smiled, the audience laughed, and the
note was sold for $23.
While the audience congratulated the supposed winnerwho bid more than $20 because he had been a $19 “loser”Bazerman said that the entire CPR Winter Meeting showed a
new, heightened focus “on the analysis and decision-making
processes of disputants and neutrals.”
Bazerman explained that early negotiation theory focused
on “game theory,” which “was always a study of how rational
actors interacted where you assumed rational behavior on the
other side.”
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(continued from previous page)
But rational behavior, he said, didn’t explain how to “avoid
making a variety of mistakes that most of us are prone to make”and which allowed him to auction off a $20 bill for $23.
Understanding negotiation not only includes avoiding making such mistakes, but also anticipating “the mistakes that we can
expect the other side to make as well.”
Such understanding is necessary for effective neutrals’ practice too. “[Iln fact [if] we’re the neutral,” Bazerman said, “we
want to be able to help the parties make more rational decisions,
avoiding the errors that we can expect disputants to make on a
fairly regular basis.”
He talked about the mistakes people make in the $20 bill
auction. He said they typify all types of negotiations. “[C]ommon
errors are not the mistakes that ‘less talented’ make, but rather
pervasive mistakes that end up being rules of thumb used by even
the brightest of the folks that we run into.”
He said that any bidding at all, in the case of the $20 bill, is
the first, basic mistake. He said that the problem is that “we don’t
think enough about the decisions of other parties.” He said that
the only thing that got bidders off the hook was the intervention
of others, which eventually petered out. Sitting it out, he said, is
a “perfectly rational strategy.”
But for people who got into the auction, the second mistake
kicks in. Bazerman explained:
[Pleople tend to escalate their commitment to a previous course of action. Once we have somebody who got
stuck at $19, why would they bid $21? Well at some
level there’s a rational analysis that suggests that it
might be the right thing to do. After all, there’s some
probability that the $20 bidder will quit ... . Without
knowing that probability, it’s hard to say that $21 is a
mistake in and of itself. O n the other hand, I would
argue that there is a psychological tendency to escalate
your commitment to your previous course of action.
There’s a propensity to bid $2 more basically to justify
the mess that you got into.
Another mistake, he said, is that people allow auctions to
run up high. “[Blidders often get mad at each other,” he said,
“and they develop a , . . mentality of ‘I may lose money, but I’m
not going to lose more than you.”’
He said that “the real world equivalent of that are executives who make decisions and end up following the wrong goal.
They want to beat the other side. They want to make the acquisition, rather than making a profitable decision for the firm.”
He said that as simple as the auction is, it highlights specific
mistakes that “lead even the wisest of decision makers astray on a
fairly regular basis.”
Better negotiation results come from better attitudes going
in. “Positively framed negotiators have a greater propensity to
settle than negatively framed negotiators,” said Bazerman, because a positive outlook also works to eliminate negotiation risk.
“To the extent that you have some control over the other side,” he
said, “you want them thinking in terms of a positive frame ... for
them to be risk averse and want the settlement now.”
Likewise, he said, neutrals “generally want to present information in a positive frame to invoke risk aversion by both of the
parties to induce a propensity to settle.” Top neutrals, he said,
“probably do this pretty intuitively,” which he later clarified as
both intuition and a “sort of experience-based intuition.”
Bazerman led the meeting attendees through two exercises
on framing. He said that people generally come up with a hypothesis about a problem, “then we go and look for evidence that tells
us that we’re right. And it turns out that the world is a very
friendly place, it’s very easy to get evidence that tells you you’re
right, even when you’re wrong.”
But he said that in problem solving, there is more data that is
available by trying to disconfirm the hypothesis. “ [ m e seem to be
intuitively wired to search for confirming information, which is
shockingly easy to obtain, but far less important than
disconfirming information,” said Bazerman. He continued: “[Als
a result, we often don’t have contingency plans to adapt when the
mediator [or] the other side does something that seems relatively
surprising to us.”
He offered the audience a problem on valuing a company.
The bids, he said, often fail to think about the contingent acceptance of the other side. Negotiators need to think more about the
other side’s perspective, Bazerman repeated.
Bazerman emphasized that merely getting negotiation experience, even a positive experience, isn’t enough. “When you simply do it well, but can’t explain it to other people, my guess is that
not only does that limit you as a teacher, but it probably limits
your ability to generalize your knowledge from one domain to
another,” he said, adding, “Experience is great, but what we want
to do is to couple it with a better conceptual understanding so that
we can better grow that experience over time.”
Bazerman discussed fairness, noting how reasonable parties
can have vastly different views on what constitutes fair offers. He
said that these perceptions are detectable by people’s views of the
other side’s offer. “Most of us have malevolent interpretations,”
he said. “I offer them what’s fair. They must be very bad people to
want something different than that.”
He concluded by summarizing some of the biases mediators
may have. First was the bias that an agreement is a good thing. It’s
true, he said, if it’s avoiding a court showdown, but it might not
be true in a deal-making context.
Also, the drive to complete the deal may be a mistake,
Bazerman said, “because often a mediator can drive a deal ... where
the parties reach an agreement -but there’s another agreement
out there that’s much better.” He called the effect “a bias toward
closure.”
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He also warned against a bias against splitting the difference.
Doing so may make people comfortable, he said, “rather than
necessarily identifying their fair resolution of the dispute.”
i
V I . R E M A R K S BY SECRETARY O F
T H E I N T E R I O R BRUCE B A B B I T T
CPR Winter Meeting keynote speaker Bruce Babbitt, Secretary
of the U.S. Department of the Interior, said that alternative
dispute resolution techniques have taken a major role in public
policy debates. ADR, he said, not only has replaced some court
activities, but also has substituted for legislation.
The Clinton cabinet member spoke and took questions for 30
minutes. He set out his agenda immediately: “My thesis is simply
going to be that ADR concepts have invaded natural resource
policymaking in a remarkable and profound and largely unappreciated and unnoticed way. . .. ADR concepts have actually displaced,
not only the traditional role of the courts, but the traditional role of
the Congress, and created a new quasi-governmental process.”
He said that the audience could judge whether the result
“marks a significant step forward in the evolution of our democracy or whether it is a sign of the degeneration and terminal
illness of our society.”
Babbitt described an environmental problem on Cape Cod
in Massachusetts requiring ADR. Sea gulls were overrunning a
preserve set up for smaller birds. The U.S. Fish & Wildlife
Service poisoned the gulls, but activists protested the killings. He
suggested that he was satisfied with a mediation that produced a
solution that scared off the gulls with color flags at sea and flares.
He said that, coincidentally, coyotes returned to the island soon
after, and resumed their role as predator of the gulls.
Babbitt said that the Cape Cod solution made him think
about and apply ADR practices to deal with other resource problems, including logging issues in the Pacific Northwest and water
rights issues also in the Pacific Northwest as well as in California.
In disputes over the San Francisco area water system, Babbitt said, “none of the traditional solutions worked.” He said the
situation illustrated that “[alny attempt to move a resource solution by traditional majoritarian means is doomed to failure,
because the stakeholders have been able to demonstrate again and
again and again that a motivated minority can stop the process.”
He continued: “ [ m e have spent 20 years in California.. .
watching the stakeholder veto at work-meaning that the California Legislature can’t solve it, that the United States Congress
can’t solve it.”
His conclusion was that Congress “is no longer a player” in
such disputes.
Then he moved on to an Arizona water dispute, noting that
“water law is a growth industry.” Babbitt said courts don’t satisfactorily address “really large, multi-stakeholder issues that in-
volve the allocation of a limited resource and public policy.” In
such situations, he said that the courts, like Congress, “can be a
tactical weapon, but they can’t possibly be a solution.”
The result, the secretary said, “is an entirely new system of
public policy. I wouldn’t call it alternative dispute resolution. I
guess I would call it quasi-legislating dispute resolution. It involves an entirely extra legal process.. . .”
He said that policy evolves in the big natural resource
controversies through government’s use of “regulatory sticks”that is, powerful laws, like the Endangered Species Act-and
incentives, predominantly Congress’s appropriation powers.
Babbitt concluded emphasizing that he wasn’t being negative about politics or public policy work. “I don’t mean to sound
cynical about the Congress or the courts or anything else.” ADR,
he said, is “a concept which is invading the very core of government, because in some ways, relationships among communities
[and] among the use of resources ... have now become such a
pervasive part of our society that the traditional ways of finding
solutions are yielding to something that is enormously dynamic
and that we-at least, I-don’t fully understand.”
But Babbitt said he is “quite certain” these problem-solving
methods “will continue to develop and proliferate and perhaps
ultimately shake back into some kind of more clearly understood
i
institutional innovation.”
V I I . A D R B E Y O N D U S . BORDERS:
A N I N T E R N AT1 0 N A L PERSPECTIVE
The CPR Winter Meeting closed on Jan. 28 with a look at
international ADR. Five experts from around the world set the
global ADR scene for companies conducting business across their
borders.
Richard K. Jeydel, senior vice president and general counsel
of Kanematsu USA Inc., a New York-based division of a Japanese
holding company, moderated the 105 minute seminar.
He introduced James H. Carter, a partner at New Yorks
Sullivan & Cromwell, who set the stage by contrasting U.S. and
European ADR use. “To Americans, [ADR] means mediation
and arbitration. And to most Europeans, it means voluntary as
opposed to binding results.”
Overall, he said, “traditional” international arbitration organizations are putting more emphasis on mediation and conciliation.
Carter reviewed the recent ADR records of several large
groups. First, he said that the International Chamber of Commerce, with 529 new international arbitration cases filed in
1999, has a “continually growing caseload,” but little mediation.
He said that the ICC would have a new mediation initiative in
the spring.
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[Editor: note: O n March 3 1, the ICC’s Working Party on
ADR presented an interim report to the chamber’s Commission
on International Arbitration “proposing directions for further
involvement” in ADR growth areas. An ICC release said that the
Working Party “settled for the adoption of a broad set of rules”
which “puts forward mediation as the default option for parties
while allowing resort to other ADR options,” including neutral
evaluation and minitrials. The new rules would replace current
conciliation rules. The release said the Working Party’s proposed
rules would be circulated among ICC national committees, then
submitted with revisions to the commission for consideration on
Nov. 30.1
Carter said that the LCIA, formerly known as the London
Court of International Arbitration, is averaging about 70 international arbitration cases annually. He said the LCIA’s mediation rules, with a step clause, took effect last Oct. 1.
Carter discussed the World Intellectual Property
Organization’s arbitration and mediation efforts, and described
its work on the first Internet domain name dispute. [See “New
ADR Process Clears Its First Internet Dispute,” 18 Alternatives
23 (February 2000).]
He also discussed the U.K.’s Centre for Dispute Resolution, which he said conducted 257 mediations over a one-year
period ending last March, up from 192 in the same period a year
earlier. Preliminary figures for the past year, Carter said, indicate
an even greater jump in mediation cases.
The result of this activity, said Carter, is that “it’s fair to say
that mediation is becoming more popular at least within European countries.” But he said that there is “still relatively little use
of it” across borders.
In U.S.-originated international work, Carter said that the
New York-based American Arbitration Association has made
some findings that seem intuitive. He said that the association
has found that it’s more likely to settle cases begun as arbitrations, rather than cases filed as requests for mediation. He said
that the earlier mediations start -preferably during the arbitrators appointment process-the more likely they are to be successful. The range of cases that are most likely to succeed in
mediation are those valued from $100,000 to $1 million-not
higher or lower. Cases without a value attached are not likely to
be successful in mediation. Licensing and distribution agreements are the best mediation settlement candidates, and manufacturers are more successful than service industries in settling
their disputes. And, finally among the AAA findings, Carter
noted that there is no correlation between settlement and the
price of the mediator.
Carter offered several theories as to why ADR isn’t as
popular elsewhere as it is in the U.S.: “Other people’s court
systems aren’t as broken as ours and so therefore, the need isn’t
there. Then some say that mediation really works in the U.S.
because we are all within the same culture.” He said the recent
U.K. increase has shown that it is working within other cultures
too.”
He said that some observers believe that “Europeans already
have their own flexible and informal conciliation procedures and
that that is something of a barrier to the growth of traditional
ADR.” He said Europeans also criticize “U.S.-style ADR [as] too
highly structured,” and suffering from “perhaps excessively zealous U.S. sales efforts.”
Panelist Gladys Alvarez, a judge at the National Civil Court
of Appeals of Buenos Aires, Argentina, reviewed South and Central American ADR developments, country by country. She said
that Argentina views ADR not just as a private mechanism, but
also as a governmental responsibility. She said “that is why we are
against that ideology that thinks that ADR is a kind of
privatization of the justice. It’s not a privatization of justice. It’s a
duty of the state to support and institutionalize this mechanism.”
Alvarez, who also is president of the Advisory Committee of
Libra Foundation, a Buenos Aires group that supports ADR and
the modernization of Argentina’s judicial system, said that nine
years ago, Latin America except for Colombia knew little about
ADR. But she said since then Argentina has passed an act on
mediation and conciliation; has instituted pretrial mandatory
labor conciliation; developed a national system for arbitration in
consumer disputes, and recently instituted a victim offender mediation program in the criminal area.
[Editor? note: Alternatives will feature an article by Alvarez
describing Latin American ADR elements later this year.]
Alvarez discussed some characteristics of Argentina mediation. She said that there is 60 days to carry out the mediation.
Confidentiality, she said, is assured. Mediators can call parties
separately. She said neutrals facilitate, but are “not allowed to give
advice.. . or to give his or her opinion about how to settle the
case.”
Next, E. David D. Tavender, of Fraser Milner, a Calgary,
Alberta, law firm, reported on the Canadian ADR scene. He said
that there has been “a revolution” in the past five to seven years.
He said that mediation’s Canadian history is one of ad hoc use.
Domestic arbitration, by statutes in each province, has become
too costly and difficult. He said the two key recent developments
have been mandatory medation and “judicial dispute resolution.”
Mandatory mediation, said Tavender, is used in three provinces for all civil litigation, with some exceptions. Under the
programs, within 90 days of the first defense filing, the matter is
referred to mediation. Ontario was the first to make the system
mandatory, a move Tavender said took many by surprise, and
which was followed by Saskatchewan and British Columbia.
“I’m told the Ontario government thought that it was the
most effective way of kick-starting mediation in the court system,” he said, adding that “there are now something like 300
mediators on a panel in the Toronto area” offering this service.
SPECIAL SUPPLEMENT: CPR W I N T E R MEETING
Litigants get a one-hour preparation and three hours of mediation for $300, payable to the mediator. “After that,” said
Tavender, “you work your own deal.” He quickly added that
“success rates and user satisfaction is said to be very high in
Ontario,” though he said some of the rates conflict.
The province of Quebec, however, selects cases at random
for mediation. Alberta, he said, has a mandatory mediation pilot
program in a small claims court.
Judicial dispute resolution, Tavender explained, is an expanded case management system with pretrial conferences which
informally emphasize judge-led settlement conferences. He said
that in Alberta and many other jurisdictions-but
not Ontario
and Quebec- the process has become institutionalized. For example, he said, Alberta judges had been trained in mediation and
settlement techniques by 1994. The conferences, held late in the
case management process, post-discovery, “did not avoid the upfront and substantial costs of developing a case to get ready for
trial.” But he said that the success rate was high, even though the
program had detractors who said, among other things, that there
was improper pressure to settle and the program affected judicial
independence.
Panelist Antony M. D. Willis, a mediation consultant at London’s
Clifford Chance, said that U.K. ADR still trails “areas of great
activism” such as Northern California and Texas. Willis said that
the Centre for Dispute Resolution’s international mediations constitute about 30% of the center’s cases. He discussed other U.K.
ADR efforts, including some that involve community groups.
Willis mentioned several public and private initiatives. He said
that the U.K. has a new financial services regulatory system that
C.PR NEWS
CPR NEWS
(continued from page 66)
rules, including a “screened selection
process for arbitrators, creation ofa CPR
Challenge Review Board, and provisions
related to arbitration awards.
“ADR Streams” examining how
companies, lawyers and mediators can
deal with the streams of disputes generated in class action settlements and product liability dispute resolution systems.
The session will address issues such as
consistency in quality control, individualized procedures vs. mass processing,and
concerns over repeat transactionsbetween
neutrals and lawyers.
“Arbitration Laboratory I: Assays in
Arbitration Process Choices,” which will
has built a “mediation loop” into its regulatory code. He said “it‘s
impossible to overestimate the importance” to the increase in ADR
of the Wolfe Reforms, which were changes made to the civil justice
system in the mid- 1990s that included encouraging ADR.
Though he predicted continued mediation increases,Willis said
that there are pockets of U.K. resistance. For example, he said mediation is frowned upon in personal injury cases.
Moderator Jeydel asked Willis if the debate over evaluative and
facilitative mediation existed in the U.K. He replied that the facilitative methods are taught, but neutrals tend to move toward evaluation. He suggested that there is skepticism toward evaluating cases,
concluding, “There are some mediators who have gained the reputation of being very evaluative and my impression is that the market is avoiding them.”
Blake Redding, a partner at Archibald Andersen, a Paris law
firm that is part of a network of firms tied to Arthur Andersen, the
New York-based accounting and consulting firm, discussed Europe ADR from the perspective of a longtime in-house attorney.
He said it was difficult to promote ADR at European corporations,
but he said the situation is changing, slowly, in French courts, where
he said he has done most of his work. The best spot for European
ADR, said Redding, was the construction industry.
Redding talked about being a lawyer in a multidisciplinary practice setting, admitting that he is frustrated with detractors’ arguments, mostly because they aren’t reflecting the views of clients.
“So many of these debates don’t take into account the market as
the ultimate arbiter,” he said.
He added that multidisciplinary practice doesn’t affect providing ADR to clients. “[Wle are still independent law firms and we
act as such,” Redding said.
i
CPR NEWS
cover cutting-edge strategic issues in process design, including whether, when and
how to use med-arb, tripartite panels and
high-low arbitration.
“Practitioner Caucuses,” where
members and panelistswill generate questions and issues to be addressed in facilitated small discussion groups.
“Arbitration Laboratory 11: Assays
in Arbitration Process Choices,” which
will cover debriefing, analysis and lessons
from Laboratory I.
“Mediation Developments in the
News.”
“E-Commerce, E-Disputes & EA D R Seeking Commercial Certainty in
Cyber-Transactions,” which will exam-
CPR NEWS
ine whether private parties to
transnational E-commerce deals can agree
in advance upon dispute resolution processes and thus obviate the need for international legislative conventions. The
program will focus on what neutrals and
practitioners need to know about the
challenges of business-to-business Ecommerce.
Accompanying the meeting will be an
intensive, 20-hour mediator training
course. Its limited class space requires
separate registration.
For more information, see the Members Only section of the CPR Web site,
or call CPR at (212) 949-6490 for an
information packet.
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