By Claudia Diaz
Here are notes from the 2021 CPR Annual Meeting second-day panel, “Expanding the Definition Of ADR: The Case for Conflict Prevention & Risk Management,” an hour-long Jan. 28 afternoon event.
Partner, Global & U.S. Co-Chair, Litigation Practice, DLA Piper, New York
Partner, Winston & Strawn, Washington, D.C.
Deputy General Counsel, Litigation, Arbitration & IP, ConocoPhillips Co., Houston
Assistant General Counsel, Eisai U.S., Woodcliff Lake, N.J.
The session opened with the panel members introducing themselves:
- Laura Robertson manages worldwide disputes—litigation and international arbitration, as well as intellectual property matters, as deputy general counsel, and serves on CPR’s board.
- Megan Westerberg works in risk management, among other duties, as assistant general counsel at her employer, a U.S. unit of a Japan-based pharmaceutical company.
- Reed Stephens, a former U.S. Department of Justice prosecutor, focuses on pharmaceutical fraud and abuse, corporate compliance, and risk management.
- Q [by Moderator Brown to Panelist Westerberg]: The role prevention takes in your in-house job?
- The company is in “a constant state of assessing risk benchmarking, trying to anticipate . . . what our regulators’ next move might be.”
- A focus on robust training–constantly evolving our training.
- Proactive monitoring–will spend resources and go out looking for processes.
- Quarterly and monthly updates to risk assessment processes.
- Lawyers and business colleagues working together at all times, making efforts to assess and benchmark “anything . . . that is different, unique, novel, cutting edge.”
- “Our goal is obviously taking smart risks.”
- Private party conflicts–There can be internal “silos.” When the company starts to see tensions with another party, the company will assess who internally is working with the other party, and there is already a dialogue–looking for ways to de-escalate.
- Q [to Robertson]: The role prevention takes in your company? . . . Can you give insight into the culture of prevention in your company?
- A [by Robertson]:
- ConocoPhillips was an early signer of the CPR pledge—the Corporate Policy Statement on Alternatives to Litigation; the company looks to that CPR guidance.
- The legal department wants to foresee issues. Early evaluation and resolution saves money.
- The legal department has a written litigation management mission statement focused on early resolution and early evaluation, and “feel[s] strongly” about multistep dispute resolution provisions.
- We want to be consistent with business goals in the legal department–we want to help the business be successful.
- A focus on trust building so we can resolve disputes early and quickly . . . before they become full-fledged litigation.
- Q [to Stephens]: It’s probably harder to draw attention to prevention in large law firms. Can you talk about risk management and prevention?
- “My perspective on this . . . is built around the idea that conflict avoidance really depends on active risk identification and active management.
- “I am coming out on the back end” after the company has fallen into a situation, so the task is to “see how a problem really emerged.”
- The challenge is how to persuade stakeholders to not get there in the first place.
- Being able to explain to clients that they need an active risk management approach “can take some doing.”
- Part of the job is to explain the value in doing this risk management—”to the extent it is proportionate to the risk” being taken.
- The industry is important . . . different types of risk depending on what the enterprise focuses on.”
- Q [to Robertson]: How do you measure successful prevention “in a world where everyone wants metrics” to prove outcomes and demonstrate performance. How do you measure this?
- Success is around the business clients feeling like the legal department helped prevent business interruptions.
- In an example of a dispute with a foreign government, the company was able to resolve the dispute and make a framework for future disputes that clarified definitions. “It actually improved the relationship. . . . I use that as an example of success.”
- It is “mak[ing] lemonade out of lemons.”
- Q [to Westerberg]: How do you evaluate the value of the risk prevention work?
- We have a Japanese parent company and that has helped us . . . look to other cultures and to how they approach conflict.
- A “proud parent moment”: “We spend a lot of time” counseling and asking why the leadership is not getting this, but “then you get struck by this a-ha moment,” and we see them explaining “the gray areas” and helping their teams navigate “with or without our help. [T]his is . . . a measure of success.”
- If the legal department does not see that type of moment, “then it causes use to go back to the drawing board” and ask why the policy, guidance, or training was not getting through.
- “We don’t want to be thought of as the police. . . . We need to get to know the business . . . and let [the business executives] know you’re approachable.”
- The company is not “running metrics on those ‘proud parent moments’ but it sure makes us feel warm and fuzzy when they happen.”
- Q: Prevention can be seen as different things, for example, de-escalation, or sometimes you work on contract provisions on exposure when a situation arises. You talked a little bit about risk assessment. . . . How do you prioritize what you are going to spend your time on in terms of prevention? . . . Reed, from an outside counsel perspective, how do you think prioritization should work?
- A [from Stephens]:
- It’s “the idea of figuring out what’s the high value [of] catastrophe,” dollars or personal injury or reputation, “and then you back through your operational structure” to address it. It requires identifying where the employees “have the most discretion to make a decision” and focus on those potential bad outcomes with them.
- Where outside counsel comes in is to help the enterprise align where the big risk is, with how the product or service is being delivered.
- The effort is connecting real world problems with the consequences back to the process to identify where the highest risk, and the activities surrounding it that can lead to problems.
- Q: I would be interested to hear about early case assessment and early resolution.
- A [from Robertson]:
- A tool we use for early evaluation is decision tree analysis, the “Treeage” software (see https://www.treeage.com/) that is designed for litigation and disputes. For large matters, the company brings in a consultant, but it also trains “all of” its lawyers and paralegals. The point is to “define the issue.”
- At the end of that process, “we always come out of it with a better understanding of what is really at stake.”
- Q [to Westerberg]: How do you approach early resolution in the pharmacy industry?
- “I’ve really been reflecting on the need . . . for the in-house lawyer to step back and get the team . . . in-house counsel, outside counsel, your insurance company, to pause, and in our case without the software . . . do that assessment. Where is this going . . .?”
- “That is, I want to commit myself to [assessing] . . . the pros and cons of those options.”
- A [from Stephens]:
- A lot depends on your adversaries and if they are interested in early resolutions.
- The government is more accustomed to a matter taking two or three years–“and they’re comfortable with that.”
- “As outside counsel, being able to get the government to even entertain the thought of early resolution, without, essentially, handing over the keys to the kingdom is a challenge.”
- Defining the problem is critical when discussing issues with the government. “You’ve always got to be ahead of the government.”
- “[T]he biggest challenge with dealing with government conflicts is really figuring out a pathway to get the government’s attention, [and] engage them to be willing to look at issues of exposure,” instead of allowing “months and months to go by.”
- Q [by moderator Loren Brown]: Regarding the pandemic, “I had no idea how much [the world] would also need lawyers, but when things are uncertain and dislocated this way, and our clients are responding to change, they need advice and counsel. . . . How [has the] pandemic changed what you are doing . . . on your legal teams, in your practice and how that has affected prevention?”
- A [from Robertson]:
- “We may be too close to see really see [the long-term] impact.” But the biggest impact to how the company has managed disputes and dispute prevention and resolution in a virtual world is how much “we just skyrocketed . . . our use of Microsoft Teams and Zoom, and people have gotten so good at using virtual platform for meetings and hearings.” But how much will stay virtual?
- This environment is challenging for negotiations. It is hard to do a negotiation with an adversary because it’s harder to develop rapport. “When we get out of this [it’s something] we won’t do—I think that’s something that’s been a real challenge for the last year.”
- Not having courts open, “has had an interesting psychology impact on resolution.”
- On the positive side, virtual work won’t disappear. “There’s a lot of value” in virtual events like CPR’s Annual Meeting that can have hundreds of people all over the world “that we never could have done before.” And the cost savings from less business travel is significant.
- Brown: Mediations have been going really well virtually.
- A [from Westerberg]:
- “Value transfers” with customers, healthcare providers, are “always scrutinized by the government.”
- Has the company “been able to educate [its] providers over the past year” without having to provide entertainment and events associated with the sale of pharmaceuticals? And, if so, it may mean that the company and industry “has fundamentally shifted how we interact with customers.”
- “Are we just going to pivot back to the old way? . . . [W]hat will the government think and say about that? We’ve proven we can educate through ways that are more nimble, less expensive.”
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The author, a third-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern.