#CPRAM21: Committing to More Diversity in ADR

If you missed the 2021 CPR Annual Meeting in January—the first free public meeting held online in the organization’s 40-year history—the videos are being posted on CPR’s YouTube Channel. While additional videos will be posted for CPR members only, the first, linked here on CPR Speaks, is open access and features the keynoters, CNN Anchor and Chief Political Correspondent Dana Bash and General James Mattis, who is former U.S. Defense Secretary. Click the Subscribe button at YouTube for alerts and for more CPR content. For information on full access and joining CPR, please visit CPR’s Membership webpage here.

By Amy Foust

The CPR 2021 Annual Meeting’s final panel presentation encouraged participants to take action for a more equitable alternative dispute resolution community, and focused on CPR’s Diversity Commitment

The Jan. 29 third-day panel was hosted and moderated by CPR’s Anna M. Hershenberg, who is Vice President of Programs and Public Policy, as well as CPR’s Corporate Counsel.

The discussion, “Time To Move The Needle! CPR’s Diversity Commitment and Model Clause–and How to Track for Accountability,” included panelists

  • Hannah Sholl, Senior Counsel, Global Litigation & Competition at Visa Inc.;
  • Brenda Carr, Chief Diversity & Inclusion Officer at Arnold & Porter Kaye Scholer in Washington, D.C.;
  • Tim Hopkins, a senior consultant at McKinley Advisors, also in Washington; and
  • Linda Klein, a partner in the Atlanta office of Baker, Donelson, Bearman, Caldwell & Berkowitz.

The panel offered insights, simple practice changes, neutral selection templates, and diversity tracking tools for promoting diverse ADR panels.

Moderator Hershenberg kicked off the presentation with a poll of attendees, which asked, “What is the number one reason holding you back from selecting a diverse arbitrator or mediator for your matters?” The most popular answer, with 26% of the audience, was “I’m too nervous to select a neutral I don’t know or who my colleagues haven’t recommended.”

Hershenberg also reviewed the requirements under the CPR Diversity Commitment, including recruiting and hiring diverse neutrals.  She noted early Commitment adopters, including  Baker Donelson, ConocoPhillips Co., KPMG LLP, Shell Group, and Visa, among many others.  (Companies and law firms may sign the commitment on CPR’s website at www.cpradr.org/about/diversity-commitment.) Hannah Sholl discussed Visa’s process of managing diversity in light of adopting and signing the commitment.

These efforts, of course, raise the question of why practitioners don’t know more diverse neutrals.  Linda Klein, acknowledging research into affinity bias, said that in ADR, “the parties choose their judges, the arbitrators, and most people are comfortable with people who come from similar backgrounds.” 

Klein recommended applying the Mansfield Rule, which suggests ensuring that any slate of candidates includes at least 30% candidates who self-identify as diverse in some way. See, e.g., Homer C. La Rue, “A Call—and a Blueprint—for Change,” Dispute Resolution Magazine (Feb. 17 (available at http://bit.ly/2ZZ3zvJ).

The panel agreed that an easy way to identify diverse candidates is to request a slate from an institution like CPR, which strives to include diverse candidates.  Klein suggested that it is appropriate to complain if an institution provides a slate that is not diverse, and to request a substitute slate that includes a significant number of diverse candidates. 

The panel agreed that it might be helpful to reach beyond customary contacts to seek input on a neutral, but noted that inclusion on a provider institution panel alone is an indication that the proposed neutral has been vetted.

The audience and the panel repeatedly noted a variety of resources available to identify and research diverse candidates in addition to CPR Dispute Resolution, including the National Bar Association, the Metropolitan Black Bar Association, the African Arbitration Association, the American Bar Association, JAMS, Arbitral Women, the American Arbitration Association, and REAL-Racial Equality for Arbitration Lawyers.  The panel also provided extensive advice for potential neutrals on entering the field and for current neutrals on increasing their exposure and, ultimately, appointments.

Tim Hopkins and others noted that it can be helpful to sign the CPR Diversity Commitment or a comparable business pledge, and then checking to see if other parties to the dispute have signed similar diversity or corporate pledges.  It might be easier to convince other stakeholders to enlist an unfamiliar neutral if they have made a commitment to advance diversity–especially a specific commitment to advance diversity in ADR.

A simple, practical tip the panel provided was adding diverse neutrals clauses to organizations’ standard contract templates, so that there is a default to require specifically a diverse slate. There also was consensus that those clauses rarely generate mark-ups or controversy, and putting them in a template makes it that much more likely they will be added to a draft agreement. CPR provides a model clause that calls for at least one member of a tripartite panel to be diverse. (See link above.)

Other easy, low-cost tips, according to the panel, included praising diverse neutrals, so that their skills are recognized; confronting bias when it arises (e.g., statements like “Are you sure she can handle a $100 million case?”); including diverse neutrals in recommendations to rating services and providers; and, especially with travel restrictions in view of Covid-19 reducing the cost of attendance at virtual hearings, providing exposure by including diverse attorneys in ADR activities so that they are developing the required skills.

Attendee comments presaged the importance of measuring progress, and the panel agreed with the audience comments. Linda Klein proposed setting up a table of neutral qualifications before preparing a candidates’ list to facilitate an impartial selection process.

Brenda Carr presented a spreadsheet for tracking not only the panelists’ individual talents, but also the composition of the slates for those panels, and which candidates were selected.  Carr explained that tracking progress also helps to identify roadblocks—it allows advocates and parties to “have the conversations if you’re presenting a particular arbitrator as a possibility and you notice that the client is constantly turning them down. Maybe you want to follow up and have a conversation about why this person isn’t someone that you are ultimately selecting.” 

Looking at the tracking programs presented by the law firm representatives, Visa in-house counsel Hannah Sholl said that seeing this kind of work, presented in this way, “speaks a lot, and perhaps even more sometimes than … filling in the boxes and the ABA Diversity Commitment  [see https://bit.ly/3sGQ3tc]. You know . . . the firm [that] is tracking this cares about it, . . . is going through a process . . . and they have had a commitment.”

Overall, the panel agreed that the important thing was to start: Whether by signing a diversity commitment or tracking ADR diversity in just one department or working group, that first step is important.

* * *

The author is an LLM candidate studying dispute resolution at the Straus Institute, Caruso School of Law at Malibu, Calif.’s Pepperdine University, and an intern with the CPR Institute through Spring 2021.

[END]

CEDR’s Eileen Carroll: Her Mediation Story

By Antranik Chekemian

F. Peter Phillips, director of New York Law School’s Alternative Dispute Resolution Skills Program, welcomed an online audience earlier this month as part of the program’s long-running lunchtime speaker series for a session with veteran U.K. mediator Eileen Carroll.

Carroll is founder of London-based Centre for Effective Dispute Resolution, better known as CEDR, “by far the most influential and prescient dispute resolution organization not only in the U.K., but really . . .  in Europe,” said Phillips in the introduction to the Feb. 10 session, which had about 40 attendees.

Phillips invited Carroll to share her professional background and how her journey into the ADR world started.  Carroll opened describing, among other things, a long history with the publisher of this CPR Speaks blog, the International Institute for Conflict Prevention and Resolution, and recounted some of those interactions over these years.  [Phillips is a former CPR senior vice president.]

She said she was a senior litigation partner at a London law firm in the 1980s, with “good contacts” in the U.S., and she took a six-month secondment to San Francisco.  “I was one of the senior litigation partners and they asked me whether I would go and work with a firm on the west coast,” she said, “and I took myself off to San Francisco.”

She said that she decided her focus would be alternative dispute resolution. “I learned a bit about mediation from some of the research I had done, and I thought that would be my project,” she said. She noted that she was impressed by how the mediation process “extracted people from the drama of litigation.” Carroll explained:

I then was given a book called The Manager’s Guide to Resolving Legal Disputes by Henry and Lieberman.  . . . Jim Henry, based in New York, who had started . . .  CPR. He became a very dear friend, and I was going to write a book, but someone gave me his book . . . and I decided when I read that I was really fired up to do something.

James F. Henry is founder of CPR, and Jethro Lieberman is a former CPR vice president and a retired New York Law School professor.

Carroll showed the audience an article she wrote stemming from her U.S. work, “Are We Ready for ADR in Europe?” International Financial Law Review 8 Part 12, 11 (1989).

The article’s title, she said, “was a question no one had asked, and I was determined that we were going to be ready for ADR in Europe. But I knew […] that I needed to do something to get a support behind me, so I set about founding a nonprofit organization.” She added, “I did get inspiration from Jim [Henry].”

She added, “By the time we launched CEDR, I had managed to get with the help of others–80 big companies to support the idea–[and] the major law firms in London didn’t want to be left out, so they thought they better support the idea.”

Philips jumped in and mentioned that CEDR’s story was similar to the CPR Institute’s origin in the U.S. “It wasn’t as if the idea was ‘Let’s take mediation and convince people of it’ so much as it was ‘Let’s take a core of leading owners of disputes–leading corporations, people who spend a lot of money litigating–and convene them so that they become the torchbearers,” said Phillips, adding, “They became the people who are convincing their peers.”

Carroll said that the ties to North America in her work continues, citing current work with the International Academy of Mediators. [CPR and CEDR continue to collaborate on seminars and trainings. Information on the next scheduled joint training–a four-day advanced mediation skills training seminar that begins April 19, in which the organizations will be joined by the Silicon Valley Arbitration & Mediation Center, is available on CPR’s website here.]

Philips asked Carroll about the role of emotion in commercial mediation, noting “the challenge to determine the extent to which . . . the expression of emotion in a commercial context is helpful.”

Carroll said, “In every conflict, there is emotion–people are upset in some way or other. Whether it’s because they have been avoiding it, whether it’s anger, whether it’s anxiety, all of those emotions I find present, and they display themselves in different ways, because we all have different kinds of personalities.”

She stressed the importance of “creating an environment where people can tell whatever their story is.” She stated that a mediator’s job is not to patronize but to notice the parties’ emotions and feelings, and explore them at the right moment with the right questions.

Carroll further emphasized that there is not a uniform approach in mediation. “There may be several working sessions with different people,” she said, “so to deal with these emotions, you have to go at it carefully without too many assumptions and create the space to get to know the people that you’re going to work with.”

Phillips then asked Carroll about the challenges women encounter in ADR. “When you were a practicing lawyer, you were very frequently the only woman in the room,” he said, “In the early days of ADR, you were very frequently one of the very few women who was making a go of it,” he said.

She emphasized that because law firms usually advise their clients during the mediator selection process, “they often follow the same kind of pattern of three names.” She expanded:

When l look back to the beginning of the field when we first started, . . . there was just a sense that we need people with status, people with experience, so at that point people were kind of looking to, ‘Who were those senior people?’ And the legal profession, even in the early 90s, a lot of those people were men. It is changing. But . . . those who were early entrants to the field obviously got . . . a reputation. [If they] were good mediators and good arbitrators who were around in the mid-90s, some of those people still have incredibly effective practices today.

Phillips then asked Carroll about a recent CEDR report that discussed “how female mediators view their strengths as opposed to how male mediators view their strengths.” [CEDR’s current research can be found here.]

“[W]omen recognized that they were good at relationships and empathy,” said Carroll, recalling the research, “and a lot of guys obviously have that experience, but . . . a lot of the men saw themselves as more as getting the deal done, much more transactional.”

Carroll then referred attendees to a Simon Baron-Cohen’s 2012 book, “The Essential Difference: Men, Women and the Extreme Male Brain, which discusses these issues.

“Women do have some very natural abilities in relation to communication skills and they have done work with babies, boys, and girls . . . and the way they react.  . . . So, women have a lot of natural skill in the area of mediation which I think sometimes they underplay because if you look at in life, women often have the role of having to make . . . all the relationships work within a family, sometimes in an office,” said Carroll.

Emphasizing the need for diversity, she concluded, “Women absolutely have the capability to do any tough mediation, because they have got the intellectual skill, they understand the background of the problem. There is no reason why there could not be as many successful commercial women mediators as men. I think it’s something about the filter of the selection process, which I think is changing.”

“All the business people I have worked with through the years in mediation, I have never had a problem,” said Carroll.  “Over time,” she continued, “I have never . . . felt any concern in dealing with business people about the role of the woman mediator. Never. I would not say that was always the case in relation to certain members of the bar.  . . . I have always managed to walk around it. It hasn’t been a problem.”

She concluded her presentation discussing instilling “patience and persistence” into mediation to make it successful.

* * *

Eileen Carroll’s presentation is archived at the NYLS ADR Program link above and directly on YouTube here.

* * *

The author, a second-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern.

[END]

#CPRAM21: Managing Workplace Conflicts, On-site and Remote

If you missed the 2021 CPR Annual Meeting in January—the first free public meeting held online in the organization’s 40-year history—the videos are being posted on CPR’s YouTube Channel. While additional videos will be posted for CPR members only, the first, linked here on CPR Speaks, is open access and features the keynoters, CNN Anchor and Chief Political Correspondent Dana Bash and General James Mattis, who is former U.S. Defense Secretary. Click the Subscribe button at YouTube for alerts and for more CPR content. For information on full access and joining CPR, please visit CPR’s Membership webpage here.

By Antranik Chekemian

Kimberley Lunetta, who represents management in employment matters as of counsel at Morgan Lewis & Bockius, moderated a third-day CPR Annual Meeting panel on state-of-the-art best practices for addressing and resolving workplace disputes. The panel mainly concentrated on managing employees and disputes in the current remote environment, and how to set up an ADR program in order to prevent and resolve conflicts.

The Jan. 29 session included four panelists:

  • Alfred G. Feliu, who heads his own New York firm, is a longtime panelist for CPR Dispute Resolution and the American Arbitration Association’s commercial and employment arbitration and mediation panels. He is past chair of the New York State Bar Association’s Labor and Employment Law Section and a fellow of the College of Commercial Arbitrators and the College of Labor and Employment Lawyers.
  • Wayne Outten is chair and founder of New York’s Outten & Golden LLP, which focuses on representing employees. He has represented employees for more than 40 years as a litigator. He has long advocated for using mediation in employment disputes. His practice focuses on problem solving, negotiating, and counseling on behalf of employees.
  • Cheryl M. Manley is a veteran labor employment attorney with more than 25 years of  experience, and since 2005 has been at Charter Communications, where she is senior vice president and associate general counsel of employment law, leading the broadband/cable operator’s Employment Law Group.
  • Andrew J. Weissler is a partner in the labor and employment group of Husch Blackwell. He is a member of the firm’s virtual office, the Link, based in Bloomington, Ill. Weissler advises and represents public and private clients on workplace issues involving difficult personnel decisions.

Feliu and Outten are on a subcommittee of CPR’s Employment Disputes Committee that is working on a model workplace disputes program, along with a new version of CPR’s Employment Dispute Arbitration Procedure to be issued soon.

A poll conducted at the beginning of the panel showed that remote working was new for most of the participants.

Lunetta launched the discussion by asking Feliu about the threshold questions employers should ask themselves when considering an ADR program.

If the principal goal is avoiding litigation, responded Feliu, then employers “are really focusing on processing existing or incipient claims.” As a result, he said, employers “are going to focus more on arbitration–on ending up with a process that brings an ultimate result.”

But if the employer’s goal is more on problem solving and identifying tensions before they become disputes and the employer views conflict resolution as a strategic imperative, then the alternative approach of problem-solving should be embraced, he said. Here, the focus is different than pure litigation avoidance. Said Feliu, “Litigation avoidance or reduction of legal costs will be part–will be an effect, hopefully–of the problem-solving process but wouldn’t necessarily be the goal.”

This approach would also help the organization become more competitive, he said–to work more constructively and efficiently while, as an after-effect, avoiding litigation.

Feliu explained, “How do you do this? You do this is by opening up lines of communication, by necessarily undercutting to a certain extent the chain of command. You’re empowering employees to come forward with their disputes at whatever level and whatever the nature. And by doing that, you are creating a different kind of an organization that is less hierarchical, less structured, and more fluid.”

Wayne Outten added that ADR is ideal for workplace disputes. Because there already is an important relationship between both sides and the relationship is typically continuing, said Outten, it “is a perfect place for identifying problems and solving them early on.” He then presented two approaches that companies can embrace for dispute resolution procedures, the legal mentality and the human resources mentality.

The legal mentality, said Outten, is, “Let’s find a way to avoid lawsuits and to maximize the chances that we will win them with the least possible costs.” He said the HR approach is better, with goals of making employees happy and providing an environment where workers can be productive and focus on their jobs in an effective and efficient manner.

With the HR approach, Outten said, a program should start identifying problems at the earliest possible stage. “If a problem ripens into a dispute,” he said, the goal is “resolving the dispute in the simplest, quickest way possible and escalating only as and when you need to.” The HR approach also serves the lawyers’ perspective as it “tends to avoid disputes ripening into the possibility of litigation.”

Lunetta then asked the panelists whether having employees working from home in a number of states, possibly new states to the company, would affect the design of an ADR program.

Al Feliu responded that working from home would not alter or change the program itself, but it increases and amplifies “the need for it to be enforceable across 50 states and 50 jurisdictions.”

Wayne Outten discussed some of the positive and negative changes regarding the nature of workplace disputes that come with remote working. On one hand, the kind of disputes that arise from being in the same place, and having interpersonal reactions, presumably will be reduced with the increase in virtual offices, such as sexual harassment claims and bullying.

“On the other hand,” he said, “the opportunities for disputes are exacerbated because you don’t have as much free-flowing communication, and the ability to address things face to face.” Outten added, “Disputes may fester.”

From the management-side perspective, Husch Blackwell’s A.J. Weissler noted that the HR model Outten mentioned “has changed quite a bit in this remote work environment.” If the employees are typically working remotely, then having difficult conversations over the Internet should be acceptable, he said.  

But if a human resources or corporate employee is working from home while the business has essential workers who have been going to the employer’s worksite, then, says Weissler, “there’s a real disconnect there” that can make the on-site workers feel and sense that the employer is not in touch with the employee.

Moderator Kimberley Lunetta then asked panelists whether CPR has resources that can help employers think through these issues if they are considering any of the dispute resolution options that were discussed.

Outten said that this was the reason for CPR to be founded decades ago, with the goal of helping companies figure out how to avoid and resolve disputes.

Outten announced that CPR and its Employment Disputes Committee will be publishing a new set of rules for administered employment dispute resolution.  Accompanying the rules will include “draft programs that companies can adopt and adapt for their own use, which have within them the various different stages that employers can consider […] including things . . . [like] informal dispute resolution and problem solving, . . . open-door policies that invite people to take their problems up the chain of command,” ombudspersons, peer review processes and “all the way up to mediation which . . . is perfectly suited for employment disputes of all kinds.”

The conversation then revolved around the pluses and minuses for an employer of establishing a mandatory arbitration program.

“In reaching the decision that our arbitration program was going to be mandatory,” responded Charter Communications’ Cheryl Manley, “one of the factors that went into play was either reducing the litigation costs, or perhaps not having to deal with court litigation.” She mentioned that her company’s program was built to resolve issues in a timely manner and on an individualized basis.

She further added that her organization has many steps before getting to the arbitration phase to resolve the employment issue. And “when it finally does get to arbitration, we believe that there’s some certainty,” said Manley, “We believe that both parties have some skin in the game, in terms of selecting the arbitrator and primarily, it’s cost effective and efficient.”

Outten then answered a question about CPR’s employment ADR program and how it can help employers not only set up, but also ensure long-term success.

Outten reiterated the program’s strength in early-stage problem solving and early dispute resolution, and added that the program offers room for flexibility and adaptability in different workplaces.

Mediation with a third-party facilitator, he said, “can be extremely valuable and beneficial. It gives the parties an opportunity to air their grievances.” When it comes to arbitration, he said, every successful workplace ADR program really needs to comply “at a minimum,” with due process protocols.”

He then presented several key features of the due process protections (which CPR has adopted here), which include:

  • “The employee isn’t required to pay more than they would pay if they were going to file in court.”
  • “The arbitrator has the authority and power to provide any remedy that a court can provide so that there’s no takeaway of remedies for the affected employee.”
  • “The employee has a fair opportunity to pick the decision maker–the arbitrator–especially given the binding power of the decision of this person to resolve the dispute.”
  • “The employee has to have a full and fair opportunity to gather information in order to present the case and . . . [any] defenses.”
  • “The employee needs to have an opportunity to have counsel of his or her choosing.”
  • “The hearing itself should be reasonably convenient . . .  so the employee doesn’t have to go a long distance to have his or her day in court.”
  • Finally, “the arbitration should end with a reasoned decision, so the parties know what the arbitrator took into account, what the findings were on the evidence, and what the legal conclusions were in determining” the decision.

A.J. Weissler added that “there are great legal reasons” not to “cram down” arbitration in a workplace disputes program, citing fairness. He said that arbitrator selection is an important factor in presenting a fair process, with a say for the employees.

Al Feliu noted that there is a dearth of diverse panelists, but major providers have made strides and continue to work on the problem to enhance and ensure fairness.

Cheryl Manley agreed with the comments, and emphasized that panelists need to reflect the workplace population.

Manley discussed Charter Communication’s Solution Channel, which she described as a 2017 program to compel arbitration use—a mandatory program for newly signed-on employees, with about 10% of the company’s 90,000 employees opting out when it was launched.  She reported that the complaints are restricted to legal claims—non-legal disputes are addressed in other ways–that are submitted through a third-party vendor which create a record over the claim. She said the American Arbitration Association is the provider.  The company absorbs the AAA filing fees and the arbitrator costs. If either side is unsatisfied with the panel, they return to the AAA for more choices.

Weissler says arbitration should be part of any dispute resolution system but if it’s made mandatory and employees are forced to use it, he said, it is counterproductive and it creates problems going forward due to the “asymmetrical” views.

Weissler said he encourages mediation as a best option. He said he is skeptical of programs that outline steps that do not allow a course of mediation to be developed.

Feliu says he has been mediating for 30 years and familiarity has grown during his period of practice after skepticism.  He agreed with Weissler’s points, but noted that mandatory mediation in New York federal court, where he said he would have expected resistance—mandatory is counterintuitive, said Feliu—it has been just as successful as voluntary mediation over about the past 10 years.

Feliu said sometimes there is grumbling but mostly, when parties get to the bargaining table, they try to settle. And he said that while joint sessions are fading, flexibility is needed.  “Every mediation is different,” he said.

Wayne Outten said that he shared Al Feliu’s experience.  In the mid-1980s, he said, the plaintiffs’ bar “viewed this newfangled process as a conspiracy to take away their rights, and I soon discovered that was not necessarily the case and became a big advocate.”

Over the past 35 years, said Outten, mediation “has become quite normal.” He echoed Feliu again,  noting that when parties attempt mediation in good faith, it is successful.

Even in situations with a lot of open issues, he said, mediation “has a very high success rate, . . .  and is always worth trying.”

Cheryl Manley said that pre-pandemic, her company didn’t want anything done virtually or remotely—all depositions, mediations and arbitration hearings were done in person, exclusively.  The change was swift, she said. “Fast forward seven, eight, nine months, . . . when we finally emerge from this pandemic, we aren’t going to go back to all depositions in person, all mediations in person or hearings,” said Manley, adding, “In fact, I think that there is no reason . . . to start putting people back on planes traveling all over the country.  It is expensive. It’s time consuming.  And it is not efficient. “ She said that the “only issues” are “the occasional technological” problems.

A.J. Weissler said he has participated in virtual matters frequently during the pandemic, and found “an incredible benefit.” Having the people resources ready on video, whether from home or for those back in their offices, has “been an incredible thing,” he said, adding that he strongly supports virtual mediations.

Wayne Outten said he always has had a concern whether real decision makers would be in the mediation room.  “Now with virtual mediations,” he said, “that problem can be more readily addressed.”

Al Feliu said he has only done virtual mediations since his first in March.  “All of the impediments, and all of the arguments against them, have been rebuffed, “ he said. For example, he explained, he can evaluate credibility better on close-up video than across a bargaining table.

Feliu conceded that there is a different feel in an in-person gathering where people have committed to the process.  That intensity, he said, isn’t present where people are sitting on their couches, are more relaxed, with their dogs nearby.  “It’s just a different process,” he said.  “I don’t have the shrieking episodes. I don’t have a lot of emotions.  Is it good or bad? It’s just different.”

The result, he said, has been that he isn’t settling cases on the first day as much as he did at in-person mediations.

Addressing audience questions, Al Feliu said he discusses confidentiality with the parties with heightened concerns, noting that a potentially serious issue could be where extra people are present, and not visible on screen, as well as individuals texting on the side. “These are all serious concerns we need to get equilibrium on” going into the mediation, he said.

* * *

The author, a second-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern. Alternatives editor Russ Bleemer contributed writing and research to this report.

[END]

#CPRAM21: Too Much or Not Enough? The Arbitrator Disclosure Issue, Analyzed

If you missed the 2021 CPR Annual Meeting in January—the first free public meeting held online in the organization’s 40-year history—the videos are being posted on CPR’s YouTube Channel. While additional videos will be posted for CPR members only, the first, linked here on CPR Speaks, is open access and features the keynoters, CNN Anchor and Chief Political Correspondent Dana Bash and General James Mattis, who is former U.S. Defense Secretary. Click the Subscribe button at YouTube for alerts and for more CPR content. For information on full access and joining CPR, please visit CPR’s Membership webpage here.

By Antranik Chekemian

Here are notes on the Jan. 28 closing panel of the second day of CPR’s 2021 Annual Meeting. Moderator Deborah Greenspan, a Washington, D.C. Blank Rome partner focusing on mass torts and complex disputes, served as moderator for the Ethics session.

She introduced the panel, starting with Dana Welch, an arbitrator for nearly 20 years who is based in Berkeley, Calif. Welch focuses on complex commercial and employment matters. She is a fellow of the Chartered Institute of Arbitrators  and the College of Commercial Arbitrators, where she is an executive committee member. Before she became an arbitrator, she was the general counsel of a San Francisco-based investment bank, and a Ropes and Gray partner.

The second panelist was David Pryce, the managing partner of Fenchurch Law Ltd. in London, which is the first U.K. law firm to focus exclusively on representing policyholders in insurance disputes. His practice focuses primarily on construction industry risks. Wherever possible, said Greenspan, Pryce tries to approach disputes in a way that maintains or ideally strengthens the commercial relationships between those involved

The third panelist was Adolfo Jimenez, a partner in the Miami office of Holland and Knight.  He is a litigation attorney focusing on international disputes. He heads the firm’s International Disputes team, and he is chair of the Miami International Arbitration Society.

Greenspan opened by discussing the ethical challenges faced in arbitration, focusing on disclosure, in a session that provided Ethics continuing legal education to qualifying attendees. The panel’s first topic was the issue of repeat players, where an arbitrator is repeatedly selected or appointed by a particular entity or a law firm.

Pryce started off the conversation by presenting a recent U.K. Supreme Court case, Halliburton v. Chubb. He described the case’s background for the online audience.

Halliburton Co. had provided services for Transocean Ltd., the owner of Deepwater Horizon, the Gulf of Mexico oil rig that exploded in 2010.  Halliburton faced various claims along with oil company BP and Transocean. They were all part of the same proceedings. Halliburton settled those claims against it for about $1.1 billion.

Halliburton made a claim under the general liability policy it had with insurer Chubb. Chubb refused to pay the claim on the basis that Halliburton had entered into settlements that were unreasonable. A dispute ensued and the general liability policy provided for an ad hoc London arbitration with three arbitrators, one arbitrator to be chosen by each of the parties and a third arbitrator chosen by the party-appointed arbitrators.

If the arbitrators couldn’t agree, the third arbitrator was to be appointed by the High Court in London. In front of the High Court, each of the parties put forward several candidates. After a contested hearing, the High Court chose Chubb nominee Kenneth Rokison QC, an arbitrator in Reigate, U.K. Rokison was “a regular arbitrator in uniform arbitrations,” explained Pryce, “and Halliburton’s perception . . . was that he was someone that is generally appointed by insurers rather than policyholders.”

Prior to him being appointed, Rokison disclosed relevant points to the proceedings. Rokison said that he previously acted as an arbitrator in several other arbitrations including Chubb. He acted as a party-appointed arbitrator by Chubb and he was currently acting as an arbitrator in relation to references that included Chubb.

The High Court didn’t regard any of those appointments as being an impediment to his appointment in the Halliburton-Chubb dispute and they didn’t call into question Rokison’s impartiality.

Three months after his first appointment in 2015, Rokison accepted a further appointment by Chubb to act as an arbitrator in relation to a claim against it by Transocean, which as the overall owner of Deepwater Horizon was also facing similar claims to the ones that Halliburton had been facing. The dispute between Chubb and Transocean also related to the reasonableness of settlements which Chubb refused to pay on a similar basis for the reasons it refused to pay Halliburton.

Rokison disclosed his involvement in the Halliburton arbitration to Transocean, but he did not disclose to Halliburton that he accepted the Transocean appointment.

The following year, Rokison accepted another appointment in relation to an arbitration between Transocean and different insurers, and that was not disclosed either.


After finding out about the second and third appointments, Halliburton wrote to Rokison and raised concerns about these appointments.

Rokison responded that it had not even occurred to him that he was under any obligation to disclose the second and third appointments to Halliburton. Halliburton called for him to resign, raising concerns about his impartiality with regard to Chubb.

It’s apparent that Halliburton was just as concerned, explained David Pryce, and perhaps even more concerned, about a second issue–that Chubb would potentially gain a tactical advantage as a result of being able to find out what Rokison’s views were on certain issues, because they would be making submissions in the second arbitration which will be relevant to the decision that Rokison was facing in deciding the Halliburton arbitration.

A High Court claim was issued by Halliburton seeking Rokison’s removal under U.K. Arbitration Act Section 24, dealing with situations where circumstances exist for a justifiable doubt about the arbitrator’s impartiality.

The High Court and the Court of Appeal both dismissed Halliburton’s application, so it went to the Supreme Court.

The Supreme Court made the following key observations in reaching the decision:

  • First, the obligation of an arbitrator to act fairly and impartially is a core principle of arbitration, and under English law, the duty of impartiality applies just as much to party-appointed arbitrators, sole arbitrators, and presiding arbitrators. Presiding arbitrators like Rokison in Halliburton v. Chubb aren’t required to be any more impartial than party-appointed arbitrators–“Everyone is required to be impartial,” explained Pryce.
  • Second, the Supreme Court confirmed that the test under English law to establish whether an arbitrator had a real possibility of biases is an objective test. “When the fair-minded informed observer is looking at that, they should take into account various considerations including the factual matrix of the case , . . the role of the arbitrator in the case, and expectations regarding what an objective observer may take into account,” said Pryce. In that regard, market practices are relevant, but in some areas, overlapping appointments may be more likely to give rise to an appearance of bias than others.
  • Finally, in relation to the arbitrator’s duty of disclosure, the Supreme Court held the disclosures are not a question of best practices and that disclosures can only be made if the parties that confidentiality obligations are owed give their consent.

The key takeaway from this case is that “disclosure is not an option,” said Pryce, because disclosure doesn’t trump confidentiality.

“The unfair advantage is not the same thing as a lack of impartiality,” Pryce said, adding, “There is just no remedy for unfair advantage.” Even though repeat business might suggest bias in some cases, it is going to depend on market practice.

He further added that in some areas like treaty reinsurance, overlapping appointments are commonplace and parties are not concerned as there are repeat users “all the time.”

Pryce added that it is much more challenging when where there is a one-off user in a dispute with a repeated user. “From the perspective of someone who was a policyholder such as Halliburton,” said Pryce, “a one-time user in this situation, against an insurer who’s going to be a repeat user, the Supreme Court decision for me feels a little bit tougher.”

Panelist Dana Welch said, “I’m not sure a U.S court would have reached the same decision.  . . . We take it for granted in the United States that you have to disclose every business relationship that comes to mind.”

She then shared that California’s Judicial Council has enacted a rule that requires that the arbitrators not only have to disclose looking backward, but they have a duty to disclose looking forward. Arbitrators are required to disclose at the time of appointment whether they are willing to take future business from either a party who is appearing in that case or a law firm that is appearing in that case.

If the arbitrator discloses that they can take future business, they can be disqualified at that point if someone objects. Once the arbitrator accepts the possibility of future business, and then proceeds in the future to take that business, they must provide notice to the previous parties and the law firm that they have done so. At that point, the parties have no right to disqualify the arbitrator.

Panelist Adolfo Jimenez also shared that from an ethical perspective, repeat business in arbitration presents two problems that also were identified in the Halliburton case.

“You can have a situation where you’re going to have one party that’s better informed and an arbitrator that’s hearing evidence that is related to two separate cases,” said Jimenez, “but they are related cases that may influence their view while a set of attorneys who aren’t parties to that other proceeding is ignorant of all . . . that evidence, all that information.”

Second, Jimenez noted, is the risk of inappropriate communications. “Simply because you can does not mean that you should,” said Jimenez, noting that there can be as a result of such contacts an erosion of trust in the process, with one of the parties believing that they’re being affected.

Dana Welch also emphasized that the arbitrators should be careful in order to preserve the integrity of the process in the face of repeat business. She said:

There is a financial incentive if you get repeat business.  And for each one of us who serves as a neutral, every time we get repeat business, we really need to think long and hard about whether we can truly serve as a neutral in a proceeding with a law firm that appoints us a lot or a party that appoints us a lot.  . . . What Adolfo said is right: There’s a difference between ‘can’ and ‘should,’ and it’s an extremely important difference in order to preserve the integrity of the process.

After a participant asked about the future of London-based insurance arbitration in light of the Halliburton decision, David Pryce responded that a single decision shouldn’t call into question the city’s role in insurance arbitration.  He said that when there is a situation with a “one-off” buyer of arbitration services and a repeat user of arbitration services, the court should be extra careful not to go for the appointment of someone who is used frequently by repeat buyers.

“It was an unfortunate choice by the High Court,” said Pryce, adding that if that sort of choice is repeated again and again, “it looks like the deck is being stacked against policyholders,” and that would be a problem for insurance arbitration in London. But he added that as a policyholders’ representative, he did not think the deck is usually stacked against his clients.

[For even more on Halliburton, see the latest issue of Alternatives to the High Cost of Litigation: Adam Samuel, “Multiple Appointments, Multiple Biases: The U.K. Supreme Court Does Arbitrator Disclosure,” 39 Alternatives 19 (February 2021) (available directly at https://doi.org/10.1002/alt.21880).

* * *

Moderator Deborah Greenspan then invited panelists to discuss the expectations parties have about the status of a party-appointed arbitrator.

Panelist Adolfo Jimenez started off the conversation by saying that the duty of impartiality permeates throughout the entire U.K. and U.S. legal systems, and that most arbitral institutions require that arbitrators be neutral.

Jimenez also noted, however, that there sometimes are justifications for repeat businesses–for example, specialized arbitration proceedings such as those at the London Maritime Society of Arbitrators, where parties prefer arbitrators that are particularly qualified. When there is a limited number of qualified individuals, repeat business is an option, said Jimenez.

A second justification is to allow for party autonomy.

He further noted that the Code of Ethics for Arbitrators in Commercial Disputes adopted by CPR Dispute Resolution has the assumption that the arbitrators will be neutral. Even in jurisdictions which allow for repeat business, he noted, neutrality is still expected and required.

Panelist Dana Welch also noted an important reality in arbitration. She said, “When a party chooses an arbitrator, even if it’s a sole arbitrator and not a party-appointed arbitrator, all parties hope that the arbitrator is going to rule on their behalf. Therefore, they are looking for somebody who is going to see things from their point of view.”

She further noted that CPR Dispute Resolution rules provide a process for challenging a party-appointed arbitrator if either side believes that a party appointed arbitrator is not neutral. Reading from CPR Administered Arbitration Rule 7.5, she said: “Any arbitrator may be challenged if circumstances exist or arise that give rise to justifiable doubt regarding that arbitrator’s independence or impartiality.  . . .” She praised the rule and its challenge process for when neutrality isn’t observed.

Greenspan then asked the panelists about the ideal steps parties should take when selecting arbitrators.

Welch said she is a strong advocate of both parties interviewing the arbitrators to understand their management style or their approach to the issues.

Jimenez added that one should be allowed to communicate with an arbitrator to make sure that the arbitrator is comfortable with the cases’ technical issues but should not get into discussing the substance or facts of the case, noting that a red line exists in between.

* * *

Moderator Greenspan then asked the panelists on how to deal with the reality that people from different backgrounds and different jurisdictions have different expectations when it comes to ethical challenges.

Jimenez agreed that different jurisdictions have different norms. He suggested that practitioners can look to journal articles and general expectations of limits that are employed for international disputes. He pointed out that “what may be improper or incorrect in one place is going to be perfectly acceptable [elsewhere]–that’s a real challenge when you’re dealing with a cross-border dispute.”

Greenspan then discussed how parties can enhance trust when implicit or explicit biases exist. When arbitrators are appointed by a party, Welch responded, “it would be the height of denial, to say that there isn’t some impetus that you feel or allegiance that you feel to that party. You really have to struggle against that and understand that you’re a neutral in all senses.”

Welch added that arbitrators need to be conscious of the kind of bias that arises when a party picks them just like they need to be conscious of the kind of bias that can arise when they have repeat businesses.

* * *

The next topic of the panel was about disclosures.

Welch first expressed that the level of disclosure is an interesting question in this age “where everything is known about everybody,” and so much information is out already on social networks. The question, she asked, is “How much is there an obligation for us to disclose versus a party to investigate?”

She then presented two cases.

In the first case, an arbitrator ruled against a claimant, and the respondent was a law firm. Afterward, the claimant did an Internet search and revealed a 10-year-old resume of the arbitrator with a recommendation from a partner from the respondent’s firm.  An appellate court decided this was enough to vacate the award.

Welch concluded, “What it shows is that the courts will look at the arbitrator for disclosure rather than . . . say to the parties to investigate that.”

The second case she presented was decided just a month ago, she said. An arbitrator rendered an award against the claimant. The claimant then found on the Internet that the arbitrator was a founding member of GLAAD, an organization supporting gay rights. The claimant then argued that because he was active in the Catholic Church, and because the arbitrator is active in social justice causes like gay and lesbian rights, the arbitrator had an inherent bias against the claimant.

The Court of Appeals rejected this claim, Welch reported, as it could not find any relationship between the claimant’s allegation and facts of the case.  She noted that “even California” has limits on challenging impartiality. Welch concluded:

What you need to draw from these cases is that the main obligation of disclosure is on the arbitrator, not on the parties. You need to disclose everything that comes to mind. If it comes to mind, you should be disclosing it, but you don’t need to disclose who you voted for president, or what you are active in unless there is a specific issue in that case before you.

Fenchurch’s David Pryce said that “there is a dividing line between . . . bias, something that gives the appearance of bias and what is simply just having better knowledge.” Having better knowledge on its own, he said, doesn’t give rise to either risk of or appearance of bias.

He further reflected on Halliburton v. Chubb. The disclosures, which relate to the same party in another “really high-stakes arbitration . . . about sums over a billion dollars” and issues that are almost exactly the same in both arbitrations, “aren’t insignificant things.”

But, said Pryce, “if we get to a situation where arbitrators feel they need to disclose lots of insignificant things, then I think everyone’s time is just going to be wasted unnecessarily.”

* * *

Greenspan presented the ethics panel’s final topic: “If you’re a mediator in a case and then you are later asked [in a case that doesn’t settle] to be an arbitrator, or if you are an arbitrator and then you’re asked to mediate the case,” how should such a situation be approached?

David Pryce said the moves are uncommon in the United Kingdom.  He added that huge challenges for the med-arb, mixed-mode ADR setup exist, because in mediation, parties are hoping to take advantage of the ability to share things with a mediator that they wouldn’t share with their opponent–and certainly not with the person that needs to make a decision about their case where the neutral is acting as an arbitrator.

The next question was about a situation where somebody had assisted an entity with developing its internal resolution guidelines or contractual terms to use to resolve disputes, and then also became the arbitrator or the mediator in a dispute which is affected by those guidelines.  The question was whether this would constitute a problem.

Dana Welch noted that such a situation raises fewer ethical issues as the person only designed the process, as opposed to being involved in a dispute, and that the person does not know confidential information about the dispute—he or she just comes in understanding the process. Welch says that courts have backed such arbitrators but the focus must be on extensive consents after disclosure.

* * *

The author, a second-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern.

[END]

#CPRAM21 Video Now On YouTube

If you missed the 2021 CPR Annual Meeting in January—the first free public meeting held online in the organization’s 40-year history—the videos are being posted on YouTube.

Click here for CPR’s YouTube channel.

The first video released features keynoters from #CPRAM21’s first two days:

  • CPR President and CEO Allen Waxman
  • CNN Anchor and Chief Political Correspondent Dana Bash
  • General James Mattis, Senior Counselor, The Cohen Group, former Secretary of Defense (2017-2018) and Commander, U.S. Central Command (2010-2013)

Highlights from Dana Bash’s presentation are on CPR Speaks here. Highlights from James Mattis’s talk are on CPR Speaks here.

Here is a direct link to the new YouTube video. Click the subscribe button for more CPR YouTube content.

Additional videos will be posted from #CPRAM21 for CPR members only. For information on access and joining CPR, please visit CPR’s Membership webpage here.

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The Zoom in Arbitration: #CPRAM21 Practitioners Focus on Virtual ADR

By Claudia Diaz

Below are notes from the 2021 CPR Annual Meeting third-day panel, “Hot Topics In ADR And Year-End Wrap Up,” an hour-long Jan. 29 afternoon event.

  • Moderator Ana Reyes, a partner in Washington, D.C.’s Williams & Connolly, provided questions to three panels members, opening by noting that the effect of the pandemic on litigation and dispute resolution–including the adjustments the legal profession has taken, and which practices will be continuing–was the key hot topic that came up for the panel in preparing for the CPR Annual Meeting session.
  • Reyes’ first question for the panel was to comment on trends.  She said, “I have read that in this world of COVID that there are two recent trends in dispute resolution: more not less dispute resolution, and sooner not later.”  
  • Panelist Thomas J. Roberts, Chief Counsel, Litigation, Boeing Defense, Space & Security, in Arlington, Va., noted that he has seen a marginal increase toward more alternative dispute resolution. Initially there was hesitation to do mediation in a virtual setting, but he reported that his department has learned that virtual mediation works well. An in-house counsel, he said, should always think about resolution through mediation whenever a dispute arises. It is the best way to have a settlement conversation, he said, and the dispute will benefit from the guidance of a third-party neutral.
    • There are right and wrong reasons to mediate. Covid-19 has delayed dispute resolution, more so for courts than for arbitration. And he said you don’t want to mediate for the wrong reasons, focusing on entering and using the process solely because of the delays.
    • Still, with the delays, the windows for engaging in mediation are a little bit wider, which is lessening the hesitancy to mediate, giving people more time to consider it.
  • Question for Panelist Yvette Ostolaza, a Sidley Austin partner in the Dallas and Houston offices: Has the pandemic changed your clients’ desire to avoid a virtual hearing that they might not be able to delay? Are they trying to mediate where they would not before?
    • Ostolaza:
      • Virtual hearings are effective. Some clients said to wait, but the parties tried it “because there were bankruptcy issues.” After a securities class-action case mediation with 10 people, she said, “I found it way more effective to be by virtual and by a video than if I had been at an office.” So, efficiency was much better virtually than in person.
      • In virtual arbitration, there were differences in terms of the strengths of the party presentations, and more training is encouraged for participants.
      • There is something about video that makes it so obvious about who is not engaged. Participants need to behave as if they were in the courtroom. “We had one arbitrator that was clearly not paying attention and the client was pretty disappointed.”
      • “We need to remember this is a professional environment, . . . and not be too casual.”
      •  “I think there is a lot of cost-saving in the virtual world.”
  • Question on arbitrators pushing hearing forward virtually, even if that might not be best for the client.
    • Panelist J. Michael McNutt, senior litigation advisor and of counsel at the Paris law firm of Lazareff Le Bars:
      • ADR for his clients, who invest in multi-jurisdiction projects, virtual hearings adds a lot more complexity, said McNutt.
      • He said he has been working under new International Chamber of Commerce Court of Arbitration pandemic policies, which in certain circumstances pushes virtual hearings when the matter is not ready or too complex. For example, in one matter, among other logistical cross-border concerns, the parties needed translations for four languages. With due process considerations, the parties he is representing will proceed, but they will reserve their rights, noting also that there is a counterclaim.  “With international arbitration, it is a lot more complex.”
      • Moderator Reyes asked about cross-examination over video as opposed to in-person. McNutt replied, “It is very very difficult to have an effective cross examination because you can’t assume the other side is going to be honest or act properly.  You have to put another body in the room.” He says he is concerned about protecting the integrity of the proceeding.
  • Question: Are hearings different than mediations virtually?
    • Ostolaza:
      • “I wholeheartedly agree . . . that when it comes to depositions and . . . a hearing with live witnesses that you are cross examining it is very difficult.”
      • At a minimum, the attorney has a right to be with the client in person, and the other side should be socially distanced.    
      • Mediators can juggle multiple rooms better virtually than in person, knocking on doors and waiting.
  • Question to Tom Roberts of Boeing: What is one thing missing from the virtual mediation as opposed to the in-person mediation? Moderator Ana Reyes proposes that the key missing element is the mediator’s power to communicate with the individuals.  
    • Roberts:
      • “The best value that the mediator can bring” is to “credibly deliver the substance of . . . his or her view of the merits of the legal claims.”  He added, “that communicates pretty well virtually.”
      • On the downside, “there is a bit of easy-come, easy-go with virtual mediations.” No travel needed, just click in and click out, he said, concluding that it is easier now for parties to stop mediating.
      • A mediator that is committed to the process will have the people skills to stop today, but will catch up with the parties after—a mediator who wants to see it through.
    • Ostolaza:
      • She said her matters are starting earlier, with three or four calls before the actual mediation day, to go through the parameters and make the client feel comfortable so that the mediation will work.
      • For arbitration hearings, she advises practicing on exhibits and the process with the tribunal administrator
  • Question: Mediations don’t generally occur in international arbitrations—for example, the ICC does not require pre-mediations–perhaps because of a lack of availability of mediators that can work on the cross-cultural issues at play. Discuss these cultural factors.
    • J. Michael McNutt:
      • The reason the firm has offices in Dubai is for Chinese investors investing in Africa, who use arbitration in Abu Dhabi, in the United Arab Emirates, for those disputes.
      • The mentality and the civil law upon entering the contract is a fundamental issue when you have to interpret the contract in these international cases. In mediation it is difficult to find someone that “both parties would agree could accurately boil down” the essence of the dispute. He says that he cannot find qualified mediators– “Mediation is tough.”
      • For international mediation to become more relevant, it needs the ability to address these broad issues.
  • Question to Tom Roberts: Boeing is an international entity–Is that something Boeing has had to face, cross-cultural issues?
    • Roberts:
      • He agrees with McNutt, saying, “If you can find the right person then there is real value [to mediation].”
      • “The cultural differences, expectations, [and] legal understandings are very different in different parts of the world, so [finding the right person is] a big challenge.”
  • Question: Is there some loss in connecting in mediations virtually?
    • Ostolaza:
      • “There are differences in America” in negotiate style depending on the part of the country. “The art of being a great lawyer is understanding and embracing those differences and being good at it and being able to be a chameleon.”
      • She said she and her clients had discussions after virtual mediations by staying on the video for purposes of recapping client communications.
      • There can be a lack of buy-in without the travel and the commitment of an in-person mediation. But the counter is that it was “a little bit” friendlier not being in the same room with participants “hating” each other.  It counterbalanced.
  • Question: Often at the end of a mediation, noted Mediator Reyes, the mediator will ask parties to sign on to the terms of the mediation so the settlement will not unravel.  How have you addressed the technical request to sign on to the terms?
    • Ostolaza:
      • She had a term sheet at the outset for one pandemic mediation—she says she brings one to every mediation—and the parties were able to sign it two days after the conclusion of the session.
      • In another recent case, the mediation term sheet was signed with DocuSign—virtually–and no one left until it was done. That, she said, was the agreement about the deal going into the session, and it worked.
  • Question: Do you have a feeling that a couple years from now we will see a developing body of law about awards being enforced that were made in a virtual hearing?
    • McNutt:
      • If necessary, he says his firm will resist enforcement if it serves their clients.
      • He says he is a proponent of civil law issues, but in cross-border disputes, it is about the will of the parties and not the type of analysis of a common-law setting.
      • In a virtual hearing, he said, you do not know if the other lawyer is sitting across the table handing the answer to the witnesses. We have that problem even in in person hearings, said McNutt.
      • He said he looks forward to challenging the validity of awards where due process rights were abused, for example, in France, where process is fundamental to enforcement. Such challenges are “not good for arbitration,” he conceded, because finality of the award is the core reason clients turn to arbitration.
      • Tribunals need to render awards that can be enforced.
      • “The tribunal works for the parties, . . . and people need to hold tribunals accountable,” he said, for producing awards that can be enforced.
  • Question: A new issue developing, med-arb, in which you have a session with a single mediator and if a claim does not settle, then the mediator becomes the sole arbitrator, converting the matter to an arbitration from mediation. Comments?
    • Yvette Ostolaza:
      • She said she was not in a med-arb matter, but a client as part of the mediation agreed that if there is a dispute the neutral would arbitrate the mediation issues covered. She said she thought it would not work, because the mediator would think the entire time to protect himself. “I am not a fan,” she said, “Heck, I am not a fan of doing the federal magistrates’ [mediation] when they are mandatory and then going to the federal judge,” noting that she is skeptical that they will refrain from talking as the magistrate sheds the settlement role and the judge moves in to adjudicate.
    • Tom Roberts:
      • “I am generally down on the idea, but it also sort of depends on what the alternative is.” He agreed with Ostolaza’s concerns. It is impossible to not have the arbitrator contaminated by what they learned in the mediation process, said, adding he might be open to med-arb in a smaller case “where you really just want to get an answer.”
  • Moderator Reyes noted a 2021 CPR Annual Meeting chat comment advising that mediation is an old process with deep tribal roots that is common in most indigenous populations.
    • J. Michael McNutt:
      • “Mediation works when the community has already established who the mediator should be. That’s fundamentally different than a judge, of course.”
      • The skillset for arbitration: “We are hired to protect our clients and defend and win in the client’s interest. Prior to commencing arbitration there is a conversation of what is the client’s interests so that we know what they are and what to fight for.”
      • To mediate in arbitration is different, concluded McNutt, adding that the skillset is different.

* * *

The author, a third-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern. Videos from #CPRAM21 will be posted soon at www.cpradr.org.

[END]

House Reintroduces a Proposal to Restrict Arbitration at a ‘Justice Restored’ Hearing

By Mark Kantor

On Thursday, Feb. 11, the U.S. House of Representatives Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law held a hearing, “Justice Restored: Ending Forced Arbitration and Protecting Fundamental Rights.” 

This hearing was held in connection with the same-day reintroduction of the “Forced Arbitration Injustice Repeal Act” or the “FAIR Act” (See press release here).  That proposed act, co-sponsored by 155 House Members, would ban mandatory pre-dispute arbitration agreements in cases of employment, consumer, antitrust and civil rights disputes. 

In the previous Congress, the FAIR Act passed the House by a 225-to-186 vote, with virtually all Democrats and a number of Republicans in support.  The U.S. Senate, however, then controlled by the Republicans, did not take up the legislation.  The FAIR Act thus died at the end of term in that Congress, to be revived as a proposal in the current Congress that convened last month.

The hearing was chaired by Rep. Hank Johnson, D., Ga., a leading FAIR Act sponsor.  Johnson strongly supported prohibiting such pre-dispute arbitration agreements.  In addition to employment, consumer, antitrust and civil rights disputes, Johnson also criticized the impact of mandatory arbitration on small business disputes with large businesses.

After Johnson’s opening statement, Ranking Minority Member Rep. Ken Buck, R., Colo., made his own opening remarks.  Buck opposed the FAIR Act’s general ban on pre-dispute arbitration clauses, arguing that arbitration is a fair system. 

It is very interesting to note that he did, however, offer support for reviewing coverage of sexual predation claims in arbitration and “doing away with the secrecy provisions in contracts” when workplace predatory conduct exists–“those are two issues I want to make sure we distinguish in the employment context.  . . .” 

Buck stated his particular interest in hearing the testimony from Gretchen Carlson, the former Fox News anchor who made public her story of sexual harassment and filed suit against her boss at Fox News.  Other Republican members raised the prospect of excluding “sex and race discrimination” from mandatory arbitration and for overriding class action waivers for a “pattern of behavior” by a “bad actor” rather than individual claims. 

That focus on employment discrimination/harassment claims and overriding related confidentiality provisions may signal a possible path for narrower bipartisan legislation.  A narrower approach may arise if, as many anticipate, the broader approach of the FAIR Act fails again in the Senate for lack of the 60 cloture votes necessary to overcome a filibuster or a Senate decision to eliminate the filibuster.  

Four witnesses testified at the hearing:

  • Gretchen Carlson, Journalist, Author, and Advocate
  • Myriam Gilles, Paul R. Verkuil Chair in Public Law, Benjamin N. Cardozo School of Law
  • G. Roger King, Senior Labor and Employment Counsel, The HR Policy Association
  • Jacob Weiss, Founder and President, OJ Commerce

Carlson spoke about the adverse impact of “forced arbitration” on her sexual harassment claims, as well as the barrier federal arbitration law poses to implementation of local State laws seeking to move similar claims out of arbitration.

Gilles spoke more broadly in opposition to mandatory arbitration in employment, consumer, antitrust, civil rights and small business/big business disputes, areas of her scholarship for many years. 

Weiss spoke in criticism of Amazon’s arbitration policy in contracts with its small business counterparties.  Notably, Weiss was discussing a category of B-to-B commercial claims where there is an imbalance of bargaining power, not claims involving individuals.

King testified in support of positive aspects of arbitration, the inclusion of due process rights for claimants based on procedures adopted by U.S. arbitral institutions, and reform of class action procedures.  Like Rep. Buck, he contended that concerns about confidentiality and nondisclosure agreements can be addressed separately from arbitration.

Readers should note that other legislation has also been introduced in the new Congress focusing among other matters on banning pre-dispute mandatory arbitration clauses in employment arrangements.  The most notable legislation in that respect is the proposed Protecting the Right to Organize Act.  Among as many as 50 pro-employee proposals in the PRO Act, it would prohibit employers from using mandatory arbitration agreements with employees.

Senate control has shifted to the Democrats in this Congress, even though by the narrowest of margins.  We can therefore anticipate hearings and committee activity in both the House and the Senate for these legislative proposals.  In each case, though, the fundamental political calculus in the U.S. Congress will be driven by the role of the Senate’s filibuster.

A video of the hearing, statements from House Members, witness written testimony and statements from interested parties can be found here.

* * *

Mark Kantor is a member of CPR-DR’s Panels of Distinguished Neutrals. Until he retired from Milbank, Tweed, Hadley & McCloy, he was a partner in the firm’s Corporate and Project Finance Groups. He currently serves as an arbitrator and mediator. He teaches as an Adjunct Professor at the Georgetown University Law Center (Recipient, Fahy Award for Outstanding Adjunct Professor). He also is Editor-in-Chief of the online journal Transnational Dispute Management. He has contributed frequently to CPR Speaks, and this post originally was circulated to a private list serv and adapted with the author’s permission.

* * *

For more from author Mark Kantor, join CPR’s Employment Disputes Committee and Government & ADR Task Force for a free public online panel discussion on Feb. 24 on labor and employment ADR under the Biden Administration. Kantor and other experts will discuss how the current composition of the Supreme Court, the new Democratic majority in Congress, and the new leadership of the NRLB and EEOC will affect arbitration and mediation of U.S. labor and employment disputes.  For a list of Kantor’s co-panelists and registration information, please visit the CPR website at https://bit.ly/3nV4fgf.

[END]

#CPRAM21: Inside Counsel Focus on Prioritizing Dispute Prevention Efforts–How? And How Much?

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.

Moderator:

Loren H. Brown

Partner, Global & U.S. Co-Chair, Litigation Practice, DLA Piper, New York

Panelists:

T. Reed Stephens

Partner, Winston & Strawn, Washington, D.C.

Laura Robertson

Deputy General Counsel, Litigation, Arbitration & IP, ConocoPhillips Co., Houston

Megan Westerberg

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?
  • A:
    • 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]:
    • 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?
  • A:
    • “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?
  • A:
    • 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?
  • A:
    • 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?
  • A:
    • “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.”

* * *

The author, a third-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern.

[END]

#CPRAM21 Day 2 Opener: Carlos Hernandez Presents Five Principles of Prevention

Former CPR Board Chairman
Carlos Hernandez

By Antranik Chekemian

Carlos M. Hernandez, recently retired Chief Executive Officer of Fluor, opened the second day of the CPR 2021 Annual Meeting to an online audience of about 180 conflict resolution professionals focusing on dispute prevention techniques.

Hernandez, a former CPR chairman and a current board member, reflected on how his perspective on dispute resolution has evolved throughout his professional career. He said, “As I matured as a lawyer, especially after going in-house, I began to understand that disputes often had implications well beyond, and more material,  than the immediate conflict.”

Coming out of law school, said Hernandez, “my career goal was to get the opportunity to try to win cases. I wanted to deliver favorable outcomes and of course I wasn’t too concerned about the business relationship between my client and their adversaries. . . . If I delivered a win, regardless of how I got there, within ethical bounds of course, the post-dispute relationship was not my concern.”

He said his experiences as a lawyer and then as CEO have led him to think of litigation as a last resort, ADR as a better alternative, and conflict prevention as best practice.

He reflected on the decade in the construction industry and how the industry players suffered staggering financial losses with bankruptcies and lost projects. This upheaval, said Hernandez, involved tremendous amounts of litigation, much of which might have been prevented. “And the cost and destruction of litigation itself has contributed to the demise of contractors and projects, and of course, the careers of many good people,” he said.

Hernandez outlined principles he found helpful in conflict prevention, noting that these principles are still frequently disregarded.

He first emphasized that “contracts need to be fair and capable of being executed by both parties. The ‘I win, you lose’ approach often results in both parties losing.” Hernandez noted, “Entering into a bad deal with the expectation that one will work things out, or solve disputes through negotiations, frequently results in solving the dispute through costly formal proceedings.” He also acknowledged the significant imbalance in market power, often resulting in bad contracts.

Second, Hernandez mentioned the importance of entering into contractual relationships with parties that will live by the terms of the contract–meaning that parties should not take contract terms as mere suggestions. “Have some degree of trust in the counterparty and respect the bargain. Seek partnership rather than an adversarial relationship with your counterparty in the performance of the contract,” said Hernandez.

Reflecting on the keynote address of Dana Bash, CNN’s chief political correspondent (see CPR Speaks post yesterday here), about the lack of personal relationships among Beltway politicians, and the resulting lack of conflict resolution in the federal legislature, he pointed out that this theme transcends institutional boundaries.

He recommended alignment sessions at the inception stage of business ventures as ways to discuss potential uncertainties. For example, one can establish communication channels even beyond the terms of the contract. These sessions, by building working relationships, have led to greater trust, better communications, and fewer disputes, said Hernandez.

Third, Hernandez encouraged lawyers to plan for good-faith disagreements and to negotiate contracts that contemplate that disagreements will arise, and that have prescribed means of addressing them in a prompt and business-like manner.

Conflict prevention provisions, he said, should be as standard in contracts as conflict resolution provisions. This may include having a third party providing nonbinding opinions such as a standing project neutral who has an ongoing relationship with the parties and knowledge about the project during its lifetime.

His fourth principle was about confronting potential disputes early. There is often a tendency to avoid addressing potential disputes early, he said , but typically, conflicts do not get better with time.


Arguments for resisting addressing an issue with a customer early on include that it would damage the relationship and that it would make continued execution of the contract more difficult, or that it would adversely affect the prospects for future contracts.

Hernandez, however, noted that one does not have to communicate in an adversarial or threatening way. “Disagree in a respectful way, don’t overstate your position, and leave the door open.  . . . I see it as an approach with the best interests of the client in mind,” he emphasized.

His final principle was that it is seldom too early or too late to engage a neutral third party for assistance, when the contracting parties are at odds. Hernandez concluded: “If all methods of conflict prevention have been exhausted without success, then mediation is a way to engage and settle discussions with third party neutrals that is worthy of pursuing.”

* * *

Carlos Hernandez is adapting and expanding his presentation for the March issue of Alternatives to the High Cost of Litigation, which will be available at the end of next month at www.altnewsletter.com. Follow CPR on Twitter @CPR_Institute and Alternatives @altnewsletter.

* * *

The author, a second-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern.

[END]

James Mattis’s #CPRAM21 Second-Day Keynote Focuses on Listening to Resolve Conflict

General Jim Mattis during his Zoom #CPRAM21 keynote on Jan. 28.

By Amy Foust

Thursday’s CPR 2021 Annual Meeting lunchtime keynote by James N. Mattis, a former U.S. Secretary of Defense for the first halt of President Trump’s term and a four-star general, reflected on conflict resolution and prevention for the business audience. 

Mattis began his comments by musing on the irony in inviting a war general to #CPRAM21, to speak to a group devoted to preventing conflicts, but went on to articulate a clear and concise plan for national reconciliation and healing.  He emphasized committing to local civics action, and relying on listening skills.

Mattis is currently a senior counselor at the Cohen Group, a Washington, D.C. consulting firm founded and headed by former U.S. Senator William Cohen, who preceded Mattis as defense secretary by 20 years.  Mattis was defense secretary from January 2017 to January 2019.

In his presentation, Mattis returned frequently to the theme of handing the world off to the next generation in the same or better condition than current leaders inherited it.  He noted that often means working closely with people with whom you disagree, people who may be inexperienced, ill-spirited, or just wrong. 

It also means admitting when predicted outcomes turn out differently. He said that people of opposing viewpoints need to work together to address issues, which usually starts with relatively small tasks where there is broad consensus on how to improve—he mentioned education and infrastructure–and then working up to bigger and more divisive issues. 

Mattis encouraged the audience to hold close people whose behavior offends, because, he said, “I’ve never seen it help when we cut people off in terms of them becoming more ethical in their performance.”

Invited by the moderator, CPR President & CEO Allen Waxman, to offer advice to a Zoom room of conflict resolution professionals predominated by lawyers, Mattis urged restraint from over-specific rules, which can lead to “brittle” situations and illogical outcomes.  He mentioned the importance of building trust before a crisis. 

Mattis recounted stories of watching great leaders build trust by listening to their counterparts, learning from them, and helping them.  He recounted General George Washington’s work with an untrained volunteer army that went on to defeat the world’s best army, and would go on to defeat Napoleon’s army just a few years later. 

General Mattis said Washington’s secret was “very boring”—

He would listen, and he would listen with a willingness to be persuaded.  He would actually change his views.  He listened to these guys from Delaware who went out on the water everyday and they kept in their own boat and now they’re in the army.  And the guy from South Carolina who couldn’t even understand those funny-talking people from Boston . . .

He’s learning from them, as he’s listening he’s willing to be persuaded.  He listens. He learns.  This is showing respect and when he does this, he helps them.  He helps them with the most . . . simple things at times like getting socks and warm coats and blankets. He does anything he can to help, and only then does he lead.

Citing was he said was the business community’s “more practiced effort” for defining and solving problems, Mattis called on the meeting attendees to apply their problem-solving skills to matters of public importance. Serve on school boards, he said, or the city council.  

“Run for office, if that’s your bent,” suggested Mattis, “but spend time giving back in the governance area—local, state, federal—because we need what business is bringing right now.” 

Answering his own question as to why local action is important, General Mattis concluded, “The country’s worth it.”

* * *

The author is an LLM candidate studying dispute resolution at the Straus Institute, Caruso School of Law at Malibu, Calif.’s Pepperdine University, and an intern with the CPR Institute through Spring 2021. #CPRAM21 continues on Friday, Jan. 29; registration is free at www.cpradr.org.

[END]