A Report on the 2019 CPR European Congress on Business Dispute Management (Part I)

EU flagBy Vanessa Alarcón Duvanel and Kathleen Fadden

On 15 May 2019, CPR held its third annual European Congress on Business Dispute Management, in London. Organized by CPR’s European Advisory Board (the “EAB”) and kindly hosted once more by SwissRe in the magnificent Gherkin building, the Congress inspired thought provoking considerations on topics of dispute prevention and resolution. As with last year’s summary, we have split this reporting in two parts: a Part I sharing the morning panel sessions, and a Part II covering the afternoon panels.

“The Future of ADR”

The first panel examined how the ADR community was responding to recent attacks on traditional arbitration and mediation and how ADR can remain relevant.  It was moderated by Mark McNeill (EAB member, Quinn Emmanuel Urquhart & Sullivan (then Sherman & Sterling).  The panelists sharing their perspectives were: Stefano Catelani (DuPont), Ferdinando Emanuele (Cleary Gottlieb Steen & Hamilton), Jennifer Glasser (White & Case) and Noah Hanft (CPR).

Considering the recent developments in dispute resolution, the panel’s remit was to consider whether ADR was approaching crisis point or, whether in fact, there were new opportunities to be seized.  The panel tackled a variety of topics:

Driving mediation into the arbitration process and whether arbitrators should encourage mediation.

Some jurisdictions still have limited acceptance of mediation for multifarious reasons: it can be difficult to find qualified mediators, arbitrators are reluctant to promote mediation and model escalation clauses often force a “check the box” type approach where mediation is not given adequate consideration and viewed solely as a mandatory step.  CPR has been actively encouraging mediation over the world and made a particular push in Brazil.  It has been considering a more flexible model escalation clause that whilst mandating mediation, is not prescriptive about when it shall occur – provided it is before the case is heard.  The use of mediation is referenced in the new 2019 CPR Rules for Administered Arbitration of International Disputes and mediation is now a topic for discussion within the preliminary conference (Rule 9.3e).

How will this change the ADR landscape in the coming years?

Noah Hanft offered his perspective on the evolution of ADR: In his view there is no dispute that mediation is effective so it really is in companies’ interests to adopt mediation.  He anticipates a growth in mediation even though he noted that user complaints have succeeded in driving down the average time it takes to conclude an arbitration.  But there will also be more use of hybrid approaches and the desire for efficiency and cost containment will drive innovation in the area.  These thoughtful comments led the panel to add that mediation was in fact being used nowadays in various stages of a commercial relationship.  For example, mediation is resorted to in transactions to facilitate deals and in the joint venture space consideration was being given to the early identification of those issues that may lead to a dispute with the engagement of a standing neutral and/or the introduction of turnkey provisions requiring stakeholders to focus on the health of the joint venture.

Is ADR at all relevant in investor state disputes?

When it comes to mediation or settlement negotiation, it is often politically very difficult for states to settle disputes with investors.  Andy Rogers of CEDR reported on an interesting development whereby CEDR, in collaboration with other organisations, is currently organizing training for mediators, ISDS practitioners and government officials to equip them with the knowledge and skills necessary to mediate investment disputes.

Will Brexit change the ADR landscape?

Since the Congress was hosted in the United Kingdom (UK) it would have been remiss not to consider the impact of Brexit on ADR!  English governing law and jurisdiction clauses have historically been popular choices for commercial parties and panelists were asked for their views on whether businesses should rethink this choice in light of Brexit.  The overall reaction was that there is no clear answer to the question and the area of greatest uncertainty likely concerns the enforcement of judgments.  Currently, under the Recast Brussels Regulation (Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) also known as the “Brussels regime”), a judgment rendered in an EU member state and enforceable in that member state is enforceable in all other member states.  If the UK exits the EU without an agreement on the continued operation of the Brussels regime, the latter will cease to apply and the reciprocity will be lost.  This could be remedied – to some extent – as the UK is seeking to become a member, in its own right, of the Hague Choice of Court Convention. As the panel noted, if the UK accedes to this international instrument, then as contracting state its courts must give effect to exclusive jurisdiction clauses and enforce any judgments resulting from such clauses. This blog cautions that the Hague Convention is narrower in scope than the Recast Brussels Regulation and questions still remain about the application of the Convention in circumstances where an exclusive jurisdiction clause has been entered into prior to the U.K.’s exit from the EU.   Post Congress, a new “Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters” was adopted on 2 July 2019.  The UK adherence to this new treaty would resolve many of the enforcement issues triggered by Brexit.  Although the 2018 Queen Mary & White & Case International Arbitration Survey reported that London remained the most preferred seat of arbitration and over half of the respondents thought that Brexit will have no impact on the use of London as a seat, it is clear, Brexit has created doubts and given rise to many questions that only time will answer.

This led panelists to move naturally to another new development in ADR, namely the introduction in various jurisdictions of “international” courts.  The Netherlands, Germany and Singapore to name just a few have created or contemplated the opportunity of creating “international” commercial courts.  Typically, these courts – which are established under national law rather than by international treaty – operate in English and adopt arbitration type rules.  Do these represent a threat or a challenge to arbitration?  In general, the panel did not see a significant threat.  There are, of course, pros and cons with national courts and arbitration tribunals.  A key benefit of arbitral proceedings is confidentiality, which is not necessarily guaranteed in court proceedings.  With respect to enforcement, currently, there is no global convention for the enforcement of court judgments in the same way that the New York Convention facilitates enforcement of arbitral awards.  On the other hand, summary disposition of issues is available in some court systems but historically arbitrators have been cautious about their use – even though recent revisions to most leading arbitral rules (including the CPR Rules) permit such procedures.  In summary, there is space for both fora and the panel noted that certainly from a user perspective, competition and choice could only be positive.

The last aspect concerning the future of ADR which the panel considered was: the Prague Rules and whether they will lead to increased efficiencies in arbitration.

The Rules are intended to be an alternative to the well-known IBA Rules on the Taking of Evidence in International Arbitration (IBA Rules) and to bridge the gap between common and civil law approaches.  The panel’s position was not too optimistic.  Neither document production nor the taking of witness evidence are likely to be more efficient under the Prague Rules and the costs of arbitration proceedings are unlikely to reduce.  This is so because the Prague Rules provide a framework and do not exist in a vacuum; in many respects the level of efficiency and the nature of document production is driven more by the arbitrator.  In the panel’s view, rather than a new set of rules, it would be more useful to increase the pool of arbitrators  and even better, arbitrators that are more active!  The panel shared four examples as to why in its view the Prague Rules would not deliver efficiencies.  I) there is a conflict between article 2.1 which requires that the arbitral tribunal “shall” convene a case management conference “without any unjustified delay,” and the requirement in article 2.2 that the arbitral tribunal “shall” clarify at that same case management conference, undisputed / disputed facts and the legal grounds of the parties’ respective cases (among others). Indeed, experience shows that it would be inefficient (perhaps impossible) to clarify disputed and undisputed facts or legal positions on the basis of a Request for Arbitration and Answer to the Request since these typically do not contain sufficient detail.  II) article 4.2 on documentary evidence discourages document production but the rest of the provisions in the same section retreat from this position.  III) with respect to fact witnesses, articles 5.2 and 5.3 empower arbitrators to make determinations about calling witnesses but article 5.7 then rather diminishes that power by providing that if a party insists on calling a witness whose statement has been submitted by the other party, the arbitral tribunal should call the witness to testify at the hearing.  Finally, iv) in respect of experts, article 6.1 appears to make tribunal-appointed experts the default rule.  However article 6.5 states that a party may nonetheless submit a report from an expert appointed by that party.  Given that in practice many tribunals hear only party-appointed experts, the Prague Rules’ regime is likely to lead to arbitrations with both tribunal-appointed and party-appointed experts which will increase the volume of the parties’ submission, hearing time, and inevitably costs.

The future of ADR is in some respects uncertain (Brexit being an example) but at the same time full of interesting challenges and novelties.

“Preparing for the Robo-Revolution”

The second panel of the morning was similarly looking to the future but this time with a legal-tech focus.  The panel was moderated by Javier Fernández-Samaniego (Samaniego Law) and the panelists were: Ulyana Bardyn (Dentons US LLP), Diana Bowman (VINCI Energies), Sarah Ellington (DLA Piper) and Ralph Lindbäck (Wärtsila Corporation).

Should ADR practitioners be concerned about robots? Or do we consider that robots and computer arbitrators are still in the realm of science fiction?

To answer this question, the panel started by looking at the state and use of legal-tech today.  Certain types of dispute and several aspects of dispute management can be automated and in fact there are already automated tools deployed to handle routine and administrative tasks.  EBay was cited as an example, as it uses algorithms to generate decisions in e-commerce disputes.  Currently, automation is however mostly applied in low value disputes rather than complex cases. Whilst appropriate deployment of automated tools can bring benefits in terms of speed and accuracy, the panel noted that it also carries disadvantages and has its limitations.  For instance, it is not necessarily clear how due process will be respected if a computer arbitrator presides in an arbitration, or how algorithms could be created and comply with the confidentiality of arbitral proceedings, or how the parties would know how to pick the right algorithms for their dispute.  One significant limitation highlighted by the panel was the inescapable fact that disputes involve human beings and one cannot automate the relationship management aspect of dispute resolution!  Even if artificial intelligence were able to accurately predict the verdict in a dispute, some litigants simply want their day in court or their day in arbitration, an experience that no robot can satisfy.

Notwithstanding the challenges, law firms are preparing for the robot revolution and some have already achieved significant milestones in this respect. Law firm practitioners on the panel provided real insights into the approaches taken by their respective organizations.  Ulyana Bardyn shared with the audience some of Dentons’ leading efforts in this space including its collaborative innovation platform “Nextlaw Labs”; various programmes focused on case management enabling clients to see spending in real time, or assisting clients with finding the best pro bono help available; and the “Libryo platform” which aims to simplify legal complexity by providing a curated collection of all laws relevant to specific business sectors enabling lawyers to understand their organisation’s legal obligations in any given situation.

Sarah Ellington reported on DLA Piper’s own investments in technology and elaborated on three of the DLA tools, all of which are aimed at dispute avoidance.  A first tool is a guided pathway app geared to IT outsourcing projects and intended for commercial managers, it contains questions about project progress and status and produces a report with red flags if problems are detected.  The second is a virtual secondment tool which enables businesses to submit questions and have a response within 24 hours.  Finally, the firm has an immersive business simulation, essentially a training tool, geared toward infrastructure projects where users can engage in a facilitated session where they take on a particular role within a simulated project.

These tools are impressive from the lawyers’ perspective.  How is the business community reacting to this technology assisting their counsel?  Corporate counsels on the panel all agreed that dispute resolution should be looked upon as a value stream with a significant focus on dispute avoidance.  To reach this goal and develop successful tools, collaboration between law firms and their clients is key.  That is all the more relevant as the business community is making its own progresses in the digital arena.  Many businesses are entering into collaborations, partnerships and campus initiatives – e.g., sandbox environments where universities, startups and investors can come together to innovate– are growing.  Dispute resolution though is not always part of the picture. Would it ever be possible to predict that a dispute was coming?  In certain sectors, that Holy Grail may not be too far off.  As Diana Bowman described, VINCI Energies already attempts to obtain information about events that occur on site and shares it with the back office in real time.  With good record keeping and quality information there may be opportunities to both predict and resolve issues early before a dispute escalates.

Shifting gears slightly, the panel touched on another technology hot topic: cyber security. Cyber attacks are a significant and rapidly evolving peril for today’s businesses but the levels of security deployed, particularly in the arbitration field, varies significantly between, for example, sole practitioners and top tier international law firms.  Regardless of size, all can fall victim to an attack.  Speaking from experience, Sarah Ellington shared some of the lessons learned after DLA Piper suffered from the NotPetya malware attack in June 2017 resulting in all the firm’s IT systems globally being taken offline. The risks are real and the consequences of an attack can be devastating.  To cope with a potential problem, it is fundamental to have: an up-to-date business continuity plan including practical solutions for work continuation, a clear communication protocol, emergency contact groups, back up email, calendar and document management systems.

The digital revolution has arrived although not necessarily in all legal departments! In some of the most sophisticated companies the legal department does not even have a suite of templates.  Readers of this blog, as the audience at the Congress, are encouraged to think about the digital revolution as a wave: do you want to be bowled over by it or do you choose to ride it on a surf board?

Stay tuned for part II…

 

Vanessa Alarcon Duvanel is an attorney admitted to practice in New York and Switzerland and specializing in international arbitration. She is based in Geneva and serves as the Secretary to the European Advisory Board.

Kathleen Fadden is a legal consultant and member of the CPR’s European Advisory Board.

 

A Report on the CPR European Congress on Business Dispute Management (Part I)

EU flagBy Vanessa Alarcón Duvanel

This is the second post of a new CPR Speaks feature, “The European View,” offering valuable insights and perspectives from CPR’s European Advisory Board (EAB).

On 31 May 2018, CPR held its annual European Congress on Business Dispute Management in London. Organized by CPR’s European Advisory Board (the “EAB”) and kindly hosted by SwissRe in the incredible Gherkin building, the event convened European and American practitioners for a successful day of discussion led by four interesting panels. 

This blog piece reports on the exchanges and discussions heard at the European Congress.  Summarizing this full day and four panels into one blog article would have deprived the readers of too many insightful views and ideas shared at the Congress. Therefore, we have split this reporting in two parts: a Part I sharing the morning panel sessions, and a Part II covering the afternoon panels.

The event kicked off with welcoming remarks by Maurice Kuitems, (EAB Chair, Fluor Corporation) and Olivier André (CPR), following by Elena Jelmini Cellerini, (EAB Member, SwissRe), and Nicola Parton (Swiss Re). Ms. Parton offered an inspiring message on the role of ADR and the importance of sustainable dispute resolution mechanisms, a goal that requires full respect of transparency principles and responsiveness to issues raised by our counterparts.

Make ADR great again! The in-house counsel’s perspective

Kenneth B. Reisenfeld (BakerHostetler) moderated the first panel of the day, which was exclusively composed of in-house counsels: James Cowan (CPR EAB Member, Shell International Ltd); Noah J. Hanft (CPR); Isabelle Robinet-Muguet (EAB Vice-Chair, Orange); and Gill Mansfield (Media Law Services).

The first question put to the panelists was whether there was a past renaissance about ADR, or has the ADR process gotten off track. The industry has come a long way since its early years. Many concepts have developed and there are now growing concerns that arbitration is not fulfilling its promises of being fast, confidential and efficient. These criticisms are legitimate and impossible to ignore in light of the high costs and duration of certain arbitral proceedings or the inclusion of U.S.-style disclosures in arbitral proceedings.

There is consequently a real need to make ADR great again, and to find business solutions to business disputes. The panel shared the in-house perspective on some of the means to improve the ADR process:

  1. Involving the business people

All speakers agreed that involving their colleagues from the “business side” is certainly not an easy step, yet it is important and a critical task of the legal department. When a dispute arises, the company’s business does not freeze and the project team has little time to devote to a dispute. The business team’s approach to the dispute will be different from that of the litigators and their early involvement can help define the ADR process in a more business sensitive manner, as opposed to a pure litigation proceeding.

Achieving adequate collaboration from the business people in a dispute requires a cultural environment sensitive to ADR and its benefits. This is only possible with sufficient trainings and an overall commitment of the management to ADR.  As the panelists phrased it several times, the business people must be able to understand the “importance of taking ownership of the matter.”

  1. Early case assessment (ECA)

For the panel, an early case assessment (ECA) is a critical element to any dispute resolution mechanism. It should be the first step in any dispute and is fundamental to understanding the business needs. A good ECA will serve in many ways: it will help shape the ADR process; guide the relationship with outside counsel; and highlight the skills and expertise to look for in the designation of a mediator or arbitrator, or in the selection of experts.

  1. Mediation

According to the panel, using mediation and appointing a commercially minded neutral can improve the efficiency of the dispute resolution mechanism. The financial savings can be significant, particularly in cases where the appointment of a neutral with relevant skills allows the parties to negotiate entirely (or partially) without having to involve outside counsel.

  1. Multi-tier / Step dispute resolution clauses

The speakers briefly touched upon multi-tier dispute resolution clauses, whereby in case of a dispute the parties undertake to take certain steps prior to commencing arbitration in an attempt to amicably settle the dispute. Some of the panelists view such clauses as a thoughtful way of bringing mediation into the process early, and a means to facilitate the involvement of the business people. Other panelists do not consider mandatory mediation as an efficient tool. Every dispute is different and settlement negotiations and/or mediation may sometimes be more appropriate at a later stage. An ADR-friendly corporate culture should also render multi-tier clauses unnecessary.

  1. Diversity

All panelists concurred that a lot of work has been done but so much remains to be accomplished in order to bring more diversity to the ADR process—particularly with respect to age and geographical location. From the panel’s perspective, the in-house counsels have a central role to play in this issue. They can, for example, ask the lawyers to “dig deeper” and present new names on the list of arbitrators, to encourage new appointments, which in turn will contribute to broadening the existing pool of experienced arbitrators for large and complex commercial disputes and will consequently increase the efficiency of arbitral proceedings.

The Progress and impact of the European Directive on mediation: Where do we stand and what’s next?

The panel was composed of mediation experts from various European horizons: Alexander Oddy (EAB Member, Herbert Smith Freehills) who served as moderator; Vanja Bilić, PhD (Ministry of Justice of the Republic of Croatia); Professor Pablo Cortés (Leicester Law School, University of Leicester; Martin Brink, PhD (Van Benthem & Keulen); Ivana Gabrić (Končar – Electrical Industry, Inc.); and Tsisana Shamlikashvili (President, Russian National organization of Mediators, Founder of the Center for Mediation and Law, Head of Federal Institute of Mediation).

The European Union has enacted two “mediation” directives, namely: (1) the “European Directive 2005/52/EC on the facilitation and access to ADR and the promotion of amicable settlement” (the “EU Directive on mediation”), following which some member States have amended their domestic rules to impose mediation prior to litigation; and (2) the “Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes” (the “Consumer Directive on ADR”) which imposes mandatory mediation to all businesses with consumers.

The panelists extended the scope of their discussion beyond its title and the impact of the EU Directive on mediation to include private initiatives taken by corporations to impose mandatory mediation, independently from legislation.

Both the European Mediation Directive and the Consumer Directive on ADR have had a positive impact on ADR.  There is, however, still room for improvement. As with any major change, it will take time. All speakers agreed that improving the use of mediation requires increasing awareness of the benefits of mediation. The potential to save money and time and to salvage the business relationship is significant with mediation, and users need more knowledge of these advantages. One avenue mentioned by different speakers to raise awareness about mediation consists of allowing the management to witness a mediation proceeding in order to understand concretely how it works and how it deploys its benefits for the company.

Ivana Gabrić shared Končar’s success story of imposing mandatory mediation. In 2005, unrelated to any legislative action, the company decided to introduce a mandatory mediation policy for all of its contracts. Within a few years, the policy led to the elimination of all court litigation. Today, Končar has no pending litigations. In light of the success, the management extended the policy to labor disputes.

The EU Mediation Directive also triggered changes beyond the borders of the EU, such as in Russia where—Tsisana Shamlikashvili reported—mediation represents a big cultural change. In a country where courts are very busy and obtaining a judgment has become part of the ordinary business (regardless of the time it takes and any ability to enforce upon such judgement), introducing mediation is equivalent to changing mentalities and requires significant effort. But, the progress is on-going and the efforts deployed to convince the users of the benefits of mediation are starting to pay off.

Stay tuned for part II reporting on the panels discussing “Climate change and ADR” and “Complex financing of ADR.”

 

Vanessa Alarcon Duvanel is a member of White & Case’s international arbitration group and is based in the firm’s Geneva office. She is also the Secretary of CPR’s European Advisory Board. She can be reached at vanessa.alarcon@whitecase.com.

 

CPR Philadelphia Regional Meeting at Stradley Ronon on Effective Mediation Strategies for Client and Counsel

phillymtg

By Anna M. Hershenberg, Esq., Vice President, Programs and Public Policy, CPR

On April 10, 2018, the International Institute for Conflict Prevention and Resolution (“CPR”) held its first Philadelphia regional meeting at the offices of Stradley Ronon Stevens & Young, LLP, a long-standing CPR member and first recipient, more than a decade ago, of CPR’s “Law Firm Award for Excellence in Alternative Dispute Resolution” for the firm’s commitment to principled and creative conflict management and resolution.

The meeting drew more than 130 people, with the attendees split evenly between in-house counsel from Fortune 500 companies, trial attorneys from the nation’s top law firms, and highly sought-after neutrals. The prominent attendees included 15 former judges and general counsels and chief legal officers from Aetna Inc., Comcast Corp., Deloitte, General Motors Corp., GlaxoSmithKline, Hewlett-Packard Co., Independence Blue Cross, Johnson & Johnson, KPMG LLP, Merck & Co., Monsanto Co., Pfizer Inc., TE Connectivity Ltd., Triumph Group. Inc., and Verizon Communications Inc., among others.

The program, “Effective Mediation Strategies for Client and Counsel,” was divided into three parts.  Bennett G. Picker, Senior Counsel at Stradley Ronon, CPR neutral and member of CPR’s Council, and Noah Hanft, President and CEO of CPR, kicked off the meeting with welcoming remarks.

Wharton School lecturer and mediation trainer Eric Max then led the first part of the program, “Negotiating Strategies for Clients and Counsel,” by facilitating an interactive discussion among the in-house counsel, outside counsel and mediator audience members.  Professor Max outlined the multiple layers of negotiation occurring at any given time during a mediation.  He challenged the audience with provocative questions, such as pressing each stakeholder to reveal if they lie to each other during the course of a mediation and exploring the reasons for their conduct.

After a networking coffee break, the program resumed with Sophia Lee, Partner at Blank Rome and former Chief Litigation Counsel at Sunoco Inc., skillfully moderating a panel discussion on the keys to effective preparation and advocacy with panelists Francine Friedman Griesing, Managing Member of Griesing Law; Scott S. Partridge, Vice President of Global Strategy at Monsanto and a member of CPR’s Board of Directors; and John Wright, Senior Vice President and General Counsel of Triumph Group.  Of particular interest to the attendees was Mr. Partridge’s explanation of how he created a relationship-based conflict identification and resolution process to shrink Monsanto’s – and then the entire industry’s – litigation portfolio.

The highlight of evening came when the Honorable Timothy K. Lewis (Ret.), Counsel at Schnader Harrison Segal & Lewis LLP, former federal circuit and district court judge and Chair of CPR’s Diversity Task Force, and Mr. Picker led the third part of the program, “Promoting Diversity in Mediation.”  Mr. Picker – who has been championing diversity and leading by example for decades – provided concrete steps that in-house counsel, outside counsel and mediators can take to drive diversity and inclusion in the dispute resolution field.  Judge Lewis then delivered deeply moving and personal remarks on his experiences as a black attorney and federal court judge in a predominately white legal world.  He challenged the audience to mentor colleagues from historically disadvantaged backgrounds, reminding them that everyone got to where they are by standing on someone else’s shoulders, and “that talent is distributed equally across all races and ethnicities and genders and identities. Opportunity is not.”

He set out his vision for what true workplace inclusion should look like and how to achieve it: “The goal here is not to be included simply because of race or gender; the goal is not to be excluded simply because of these qualities. But in order for us to get there, we have to make a concerted effort, and we must challenge ourselves, our assumptions, and sometimes each other.”  Judge Lewis’s remarks, which received a standing ovation, will appear in Alternatives to the High Cost of Litigation, CPR’s monthly international newsletter (see altnewsletter.com).

benandtimlewis

Pictured: Bennett G. Picker and Honorable Timothy K. Lewis (Ret.) 

The evening concluded with closing remarks by Thomas J. Sabatino, Jr., CPR Board Vice Chair and Senior Vice President, General Counsel, Law & Regulatory Affairs at Aetna and a networking cocktail reception.

In short, the CPR Philadelphia Regional Meeting introduced attendees to what CPR does best: create opportunities for high-level conversations between inside and outside counsel and provide businesses with the tools to cultivate a corporate culture that embraces diversity of perspective, and early and creative ways to prevent and resolve business disputes.

 

About CPR

CPR is an independent nonprofit organization that, for more than 40 years, has helped global businesses prevent and resolve commercial disputes effectively and efficiently. CPR’s membership consists of top corporations and law firms, academic and government institutions, and leading mediators and arbitrators around the world. CPR is unique as: (1) a thought leader, driving a global dispute resolution culture; (2) a developer of cutting-edge tools and resources, powered by the collective innovation of its membership; and (3) an ADR provider offering innovative, practical arbitration rules, mediation and other dispute resolution procedures, and neutrals worldwide. For more information, please visit www.cpradr.org.

 

About Stradley Ronon

Stradley Ronon attorneys have served with distinction as neutrals, both independently and under the auspices of ADR provider organizations such as the American Arbitration Association, the International Centre for Dispute Resolution, and the International Institute for Conflict Prevention & Resolution (CPR). Stradley Ronon attorneys have built a reputation for fairness and creative problem solving and are highly regarded for their ability to understand complex commercial transactions and cutting-edge technologies. In recognition of its commitment to principled and creative conflict-management and resolution, Stradley Ronon’s ADR practice group received CPR’s inaugural Law Firm Award for Excellence in Alternative Dispute Resolution. For more information, please visit https://www.stradley.com/

Dispute System Design: Advancing Predictability, Cost Savings and Efficiency In-house

erin
By Erin Gleason Alvarez

The problem with disputes is that they never go away.  Yes, they are resolved one by one – maybe even a group of them are settled at once.  But there are always more lurking: another claim, waiting to be filed; another complaint, making its way to your desk.  It’s a cycle and everyone knows that.

Many things in this dispute world are out of your control – or at least it feels that way.  Litigation costs money – sometimes lots of it.  It takes time – sometimes lots of that too.  Both of these things are hot commodities and less than ideal expenditures from a business perspective.  Thus, the pressure on the in-house attorney to manage risk, manage cost, settle, settle at the right cost at the right time… it’s always there.

If we know that there will most likely always be a disputes cycle, forever costing money and taking precious time, what is the best way to manage this and prevent logjams? There is an answer.

Dispute System Design

Perhaps it makes sense to take a cue from the business side of the house and view this dispute cycle as another business process to be mapped and managed.  At CPR, we’ve heard many stories affirming this strategy as a successful one, including my own experience in-house.

Nonetheless, year after year, in survey after survey – when in-house counsel voice their concerns over cost and efficiency – there is rarely a mention of dispute resolution systems.  For example, in the 2017 Litigation Trends Annual Survey produced by Norton Rose Fulbright, only 9% of corporate counsel reported that internal processes or controls for reducing the volume of litigation was an effective strategy; only 2% favor a regular risk mapping process.  Instead, a majority of corporate counsel responding to the survey rely on regular training programs for lawyers and early case assessment as effective ways to manage litigation.

What if you combine training + early case assessment + risk mapping + protocols?  Picture it: A coordinated system to resolve disputes, designed specifically to address the in-house concerns about spending too much money on litigation and wasting time that might be better spent elsewhere.

This is where “dispute system design” comes in.  Dispute system design is the process for identifying the trends and pain points in your dispute resolution/litigation practice, and then implementing process improvements along with measurements of your success.

How It Works

Here is a brief overview of what a dispute system design strategy entails:

  1. Conduct an assessment:  What’s vexing, trending, anticipated in your disputes portfolio?  This may be identified through surveys, interviews and data analysis.
  2. Process improvement:  What solutions can you identify to address these issues?  How is mediation being used – can it be done earlier?  What negotiation techniques are most relied upon?  How is arbitration handled?  Some cases must inevitably be routed to litigation – what is the best way for identifying them early?
  3. Implementation: How will you implement the strategies you have identified as most sensible for your work?  Training?  Metrics?  Employee evaluation? Changes to law firm relationships? Processes for identifying better mediators and arbitrators?
  4. Measure success: What criteria will you require to determine the level of success achieved?  Are you mainly concerned about saving litigation cost?  Cost associated with employee time? Case volume?  Settlement rate?  Or are there qualitative goals that should be considered as well, including employee job satisfaction and opening more opportunities for career growth?

Areas of Application

Just as systemic approaches to governance, compliance and contract management are well settled  corporate strategies, dispute system design and management is a practical way to manage exposure.  Bespoke litigation strategy will always have some role in the cycle.  But let’s face it:  Are most of your cases unique and deserving of their own individualized strategies and budgets?   Are the facts so  different that the analysis must be carefully tailored, time and again?  Sometimes.  Most of the time – probably not.

A dispute system design approach may be implemented to address your litigation portfolio, formalizing early case assessment measures, monitoring and reporting on their efficacy and helping to trigger other dispute resolution mechanisms where needed (e.g., direct negotiation processes, mediation, streamlined arbitration, etc.).

Dispute system design work may be applied in other contexts as well.  For example, many reports cite in-house concerns over the rise in cybersecurity disputes over the next year.  Analyzing your current cyber disputes portfolio, in order to develop methods for triage and settlement approach is one way to insert some predictability into an area that is causing a fair amount of anxiety in-house.  The same can be said for other areas of growing concern to in-house counsel: rising environmental concerns, the ever-present threat of mass disasters, and continued changes in health care – all of which are stressors on litigation budgets.  It is proactive to address these risks in a systematic way to enhance predictability, efficiency and cost controls.

Do You Need It?

In determining whether dispute system design is right for your organization, consider these factors:

  1. Are you currently satisfied with the length and cost involved in managing disputes?
  2. Have you identified any issues relating to dispute outcomes (in terms of quality, time to resolution, or expense required)?
  3. Are there any obvious issues that you can address to make your processes more efficient?
  4. Do you have the bandwidth or expertise to conduct this type of review for your company?
  5. What is the ROI in retaining someone to conduct the review for you?
  6. Would reporting on dispute resolution savings, or other efficiencies, be of value to the organization?

Conclusion

Dispute system design is an important function for in-house counsel to utilize in managing disputes in a systematic way.  A coordinated approach lends to predictability in dispositions, cost savings and many other efficiencies.

 

Erin Gleason Alvarez launched Gleason Alvarez ADR in 2017.  She formerly served as the Global Head of ADR Programs at AIG, where she designed dispute resolution systems and served as an advisor to state agencies in the development of mass disaster protocols following Hurricanes Irene, Ike, Sandy and mass claims resulting from wildfires fires in California. 

Erin now serves as a mediator and arbitrator in commercial and insurance disputes.  She also serves as a consultant to corporations and law firms in designing dispute resolution systems.