Commercial Questions: CPR Board Chair John Kiernan Assesses ADR Progress and Suggests a Future Path



John S. Kiernan

International Institute for Conflict Prevention and Resolution Chairman John Kiernan recently told the Association for Conflict Resolution of Greater New York 2016 Annual Conference that conflict resolution practices had made great strides, and the processes and practitioners are widely used.

But he warned that in some ways, they are still facing not only growing pains, but even issues of general acceptance.

Kiernan, who also is president of the New York City Bar Association and co-chairs the Litigation Department at Debevoise & Plimpton, where he is a partner in the New York office, addressed the June 16, 2016, luncheon following ACR-GNY’s presentation of an ADR Achievement Award to Kiernan for his work in the field.

The Association for Conflict Resolution of Greater New York is the New York City metropolitan area chapter of the national, 7,000-member professional association of neutrals, educators, and others involved in the conflict resolution field. Its membership includes professional and volunteer mediators, government employees, lawyers, arbitrators, environmental public policy specialists, community and consensus-building facilitators, ombuds, educators, students, and others.

Kiernan then delivered the following address:

“It’s a pleasure to have this opportunity to gather and break bread with this impressive collection of ADR practitioners and fans. In the presence of dispute-resolvers like the folks in this room, advocates like me can practically feel the ‘adversarial-ity’ drain right out of us. If we can just infuse our clients, our clients’ adversaries and their lawyers with the same peace-mongering hormones, maybe we can get something accomplished.

“Gatherings like this provide an opportunity to pause and check the scorecard on how ADR is really doing in practice and in the general marketplace of ideas. The range of answers you can get from asking this question is broad, but the best answer from this litigator’s perspective appears to be that there has definitely been progress, to the point where partisans of ADR rightfully believe there is a widely recognized first level (as it might be called) of increased openness to ADR that did not exist in the same measure a few decades ago. And that ADR methods truly have established themselves as able to foster resolution of disputes faster, more efficiently and less expensively than litigation would do, but ADR remains far short of its full, what might be called “Level Two Maturity.”

“Universal buy-in remains held back by shortcomings in individual participants’ particular experiences with ADR efforts; by disputants’ understandable preference for winning over compromise so long as winning seems potentially achievable without intolerable expense; by institutional or personal priorities that cause litigants to feel a need for a judicial resolution, and by a wide array of cultural sensibilities among disputing parties that can be deeply felt and are hard to shake.

“Where is the progress?

“In the commercial sector, certainly, senior lawyers can all remember times when even highly sophisticated litigators and clients would breezily dismiss suggestions to consider mediation with statements like, “We can’t profitably talk settlement until we have inflicted some of the pain of litigation on the other side and seen how the case develops. Later, if the other side really becomes ready to talk settlement, we won’t need a mediator because I and my adversary can accomplish as much by talking to each other nose-to-nose, as old warhorses, as any mediator can accomplish.”

“That sensibility hasn’t disappeared, and by the way sometimes it’s exactly correct. But too many of us have seen too many disputes resolved through mediation, sometimes after efforts at bilateral negotiation have gone nowhere, for the categorical form of this view to feel like the reflexive majority sensibility today.

“Instead, it now feels as though discussion of mediation or some other form of ADR will be part of the vocabulary attached to a big percentage of disputes, often at multiple different points in the dispute.

“To the extent that ADR partisans want to claim a universally accepted new paradigm about how disputes should be resolved, though, that might be a little more self-congratulatory than the objective evidence suggests. In lots of contexts, at least absent court mandate, mediation remains exceptional rather than normal.

“Some of the best expansions of mediation have occurred because particular messes involved too many parties and too many different subgroups that had to sort out their own separate side agreements for a normal bilateral settlement negotiation to seem even potentially workable.

“Some mediations have worked simply because mediation created a process for compelling the personal attention of key business decision-makers who, unless scheduled and directed to sit in a room until a deal got negotiated, otherwise were too susceptible to getting distracted by other demands to focus as needed on the hard work of negotiating a resolution.

“Sometimes parties are drawn to ADR because they just plain need a decision so they can move on, and because they can’t get what they want from courts in a satisfactory fashion or acceptable timetable. That certainly seemed to be a big factor in the ADR boom in California that ran distinctively ahead of East Coast practice in the late 1980s and early 1990s, for example.

“Or sometimes the parties, unable to agree on anything else, have been able to agree that they simply couldn’t stand that such a large percentage of the pool of money available to resolve a dispute was being paid to litigators rather than to the settlement pot.

“In some contexts–particularly ones where the plaintiffs are individuals who feel personally aggrieved and the defendants have no principled objection to paying something or taking other formal actions if that will enable them to achieve peace–courts and other bodies have also seen that procedures giving claimants an outlet to tell their stories and then negotiate an early settlement can have a high success rate if the narratives get managed effectively and the mediators do their jobs well.

“These increasingly popular sources of resort to ADR are important. Having ADR available in these circumstances significantly advances the cause of achieving workable resolutions of disputes at tolerable costs.

“But before we over-celebrate, it’s worth recognizing the continuing ways that mediation and other forms of ADR remain in their relative infancy, with major distances yet to travel, in both the commercial marketplace and general public sensibility.

“We can take as a given that many people who bring lawsuits, and most people who are sued, correctly view the lawsuit as a problem that needs to be solved, as to which litigation to a final resolution is only one of a wide range of potential outcomes. Litigants uniformly want to win their disputes, but tend to recognize that if the case can’t be resolved or transformatively narrowed by an early dispositive motion, litigation to final judgment will likely be the most expensive possible mechanism for getting the dispute resolved.

“So if you set aside the important set of cases that seem readily susceptible to an early dispositive or narrowing motion, and accept the general starting reality that most litigations will settle instead of getting litigated to final judgment, and that expenditure of litigation dollars before any negotiations will not always significantly alter the risk-discounted value of the dispute or the price of settlement, that should objectively lead the most thoughtful participants in the process to certain kinds of pragmatic thinking and conduct.

“Now, in the face of those realities, ask any random sampling of experienced commercial litigators or in-house litigation counsel the following questions:

1. How often is your first approach in a new litigation, as a matter of agreement between litigator and client, to take an immediate deep dive into the merits as necessary to develop, at the very outset of the dispute, your best truly objective assessment of the strengths and weaknesses of the claims, the probability of success and failure, and the range of possible outcomes? For most disputes, the most common answer would probably be more often now than a decade ago, but still not very often.

2. How often do clients communicate by words or body language, or do outside litigators develop on their own, the strong sense that the client wants its litigators to be “true believers” in its position, such that no matter how the client nominally asks for the lawyers’ assessment, provision of truly objective assessments of the dispute’s merits and risks or fully candid discussion about the expected range of outcomes or the advantages of early consideration of settlement carries a major risk of damaging the client’s confidence in the lawyer’s expected zeal as an advocate–or maybe even of preventing the lawyer from getting hired?

3. When lawyers are asked to advise on disputes challenging the conduct of particular individuals within an institution, how rigorously does the client work to separate the decision-making regarding the dispute from the understandable instinct of the attacked individuals to defend their conduct, so that the risks are evaluated objectively?

4. How often do either outside or in-house lawyers think that the time would be ripe to begin exploring settlement in a litigation–in that further litigation will not likely change the settlement price by an amount exceeding the costs of that litigation–but that they can’t yet do so with any force because the ultimate business client is not ready to think in those terms? On the flip side, how often do plaintiffs’ lawyers approach mediation with the view that their goal is not to settle but to establish a floor of commitment by the defendant that can become a starting point for negotiations further down the line?

“In the arbitration world, meanwhile, how many of us have heard highly skilled outside lawyers or in-house clients say they won’t ever agree to arbitrate as a matter of policy, based on a bad experience with a mismanaged arbitration, a belief that arbitrators merely split the baby, or a hatred of giving up appeals?

“As a result of this view, these executives have preferentially consigned complex disputes to horrendously overworked trial judges who can’t set the case for trial for many years and may hand the case to someone else for trial, and to juries that likely won’t understand the issues in sophisticated ways.

“Why don’t they consider it indisputable that they would have a better prospect of avoiding unwarranted results by instead selecting highly experienced arbitrators who would carefully study the record, responsibly streamline the process, and understand the most complex issues far better than the judge will likely have time or the jury will likely have capacity to do?

“These questions aren’t offered to criticize any participants in the dispute process–a litigation is a profound human experience, and it’s usually extremely important to both parties to aim for an outright win and view that outcome as the only tolerable one. There are often highly creditworthy institutional or personal reasons for parties to a litigation to fight to a final decision rather than press for the earliest possible resolution.

“The more modest point is that further advancement of ADR will require a continuation of the evolution of cultural sensibilities–and, ultimately, the wills of disputing parties and the perspectives of their most trusted advisers–that have already advanced mediation and other forms of ADR from a position of near-institutional invisibility a few decades ago.

“Although, as many of you in today’s audience know, it has always existed in families, communities and some kinds of institutions where disputes needed to be resolved.
“So what is the next wave of ADR sensibilities that folks at CPR, JAMS, the [New York City Bar Association] and this and other organizations are thinking about?

“Maybe we aren’t too far away from the time when the pursuit of negotiated resolutions stops getting postponed for long periods because each side is unwilling to make the first overture out of a belief that introducing the subject is a sign of weakness that will cost big settlement dollars.

“Maybe others will emulate the Fortune 100 in-house head of litigation who recently addressed his company’s nine-digit annual litigation spend, and overwhelmingly directed to disputes with his enterprise’s biggest competitors by setting up a monthly lunch with his counterparts at each of those competitors–a step that led to a wide range of different forms of alternatives to litigation for resolving disputes, and a massive reduction in dispute-related costs.

“We have been seeing mandatory mediation or streamlined arbitration clauses in contracts and in some court rules for the past decade or two. Maybe we will increasingly see settlements actually get reached as a result of those provisions, to a degree that alternatives to litigation like these will become a matter of reflex–not only for parties that need to continue doing business with each other but also for other counter-parties that hate the pain and distraction of protracted litigation almost as much as its cost.
“Maybe, in contexts where neither party sees a major advantage in a jury trial, clients will increasingly come to value and hire lawyers in part based on their nimbleness in figuring out and working with their adversaries on ways to resolve the dispute more quickly and less expensively.

“Some recent experiences of mine–one with some really good in-house lawyers at a client who ultimately redirected their company’s business strategy based on a rigorous and candid pre-litigation assessment of a massive and complicated dispute in which no complaint was ever filed, and another matter with an unusually resourceful and pragmatic adversary where the parties found themselves litigating a billion dollar dispute under a contract provision requiring that arbitration hearings conclude no more than 45 days after they were initiated–have strongly suggested to me that these kinds of thoughts about improving the process for resolving disputes do not necessarily involve looking generations into the future.

“That kind of second-wave thinking about ADR will not eliminate the need to litigate when one or both parties feel a need for the litigation process or a determination to get to a decision, win or lose, and it will not put litigators out of a job, because there will always be disputes.

“Lawyers who think creatively about different ways to help their clients resolve disputes, and who have the capacity to pursue ADR as effectively as they pursue traditional litigation, should remain in great demand.

“It’s great to have a conference to tease out some of this new thinking, and to have a chance to talk to you about the Level 2 sensibilities of ADR that may lie in our futures. But it’s also important to remain attuned to the timing sensibilities of the mediator who, asked whether he considers himself facilitative or evaluative as a mediator, responded,

“I’m highly facilitative, relentlessly so, until about 4:30.”

“Time for me to stop talking and for you to enjoy each other’s company and your lunches. Many thanks.”

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