ADR is Here to Stay

Norman Solovoy, the Chair of the Alternative Dispute Resolution Practice Group at McLaughlin and Stern, LLP in New York has pointed out that “Alternative Dispute Resolution or ADR is an umbrella term used to describe a panoply of techniques, some well established, others emerging and evolving that can be used to resolve conflict without resort to litigation and without exposure to the increasingly unsupportable costs in time, money, and emotional stress that almost always accompany a protracted court battle.” In an article in the September/October 2009 issue of “Business Law Today”, Polovoy suggests that in the 30 Years (20 years in Maryland) since ADR became an integral part of the lexicon of the practice of law and more recently the separate field of dispute resolution, it has been (and still is in many quarters) mostly seen at least by lawyers and judges as a “cross-practice”.

                This “cross-practice” is viewed by lawyers in mid-size to large law firms as something that can be utilized by the litigators in one or more practice groups and in certain cases where to do so might be in the client’s interest as determined by counsel. When this determination is made, it is then and only then that a more focused discussion of exactly what is involved in these different ADR processes is undertaken to educate the client. That is unless the client has been previously driven by its own or industry economics to educate itself. Then in many instances as a result of that education the company’s lawyers come under pressure to minimize costs by providing ADR services or face the client’s imminent departure to a boutique law firm or even an internally restructured client business model which has In-House Counsel providing the cost-effective dispute resolution services that their previous law firm didn’t.
                The determination by counsel as to whether the use of ADR is in the client’s interest in many instances is driven far more by law office economics, legal culture and the personalities of the lawyers  than any objective analysis on behalf of the client. If the decision is left to litigators, then it is likely that ADR will be utilized only when mandated by the court, by a contract dispute resolution clause, or to minimize potential losses and otherwise manage client expectations.
                Ironically the contract dispute resolution clause which requires mediation, arbitration or both in many instances may have been included by transactional attorneys in the same or similar law firms as the litigators who are grudgingly bound by them. Notwithstanding that fact mid-sized to large law firms’ management committees whose vision is limited to the short-term bottom line have quite naturally pushed back against the spread of ADR which appears to portend and in fact may produce a direct hit against litigation revenues as least in the short term. These management committees are instinctively supported by the litigators in the firm who became lawyer litigators because they liked litigating as did this writer. I have been told by friends and colleagues many of whom are highly accomplished both as litigators and negotiators that they would “10 times rather litigate than mediate.” The former is much more financially and professionally fulfilling. The later is often draining and without glory, recognition, or reward as well as in most instances nowhere near the revenue generator that litigation is. The result is what Robert Margulies, a business litigator and mediator in New Jersey has coined “Litigotiation”. That new term accurately describes the pervasiveness of settlement negotiations in the litigation process.
                What then would be the rationale for law firms to commit to a full integration of ADR into their practice? What promise does ADR hold in the new economic environment?
                The most obvious economic answer is the competition between legal service providers that I described earlier. Everyone reading this column already knows that more than 98 percent of all cases filed are resolved before trial. But many of them settle only after long, grueling and costly machinations which exact a tremendous price on the client in time and money.
                It is just this type of practice that all clients, but particularly business clients and their corporate counsel seek to avoid. Furthermore the evidence is that they will shift to lawyers and law firms willing to look at this larger picture and if necessary trade off substantial short term litigation revenues for an approach that would better serve their clients if that is the only way to remedy their economic distress.   That is not an easy reality to accept for lawyers and law firms. It is however one to be reckoned with.
                Once the decision has been made to fully integrate ADR into a law firm or practice initially as I have said almost always for mostly long-term economic reasons, other and new issues will ultimately arise. Those issues will include ownership and management of cases as between practice groups and lawyers, choosing among alternative methods of dispute resolution and negotiation strategies and techniques, timing, bookkeeping, managing client expectations and relations, development and training in new ADR skill-sets, staffing issues, personnel and technology. These issues will have to be addressed not only for affected lawyers and law firms to be competitive in the legal services marketplace but because the Courts in all states including Maryland will no doubt at some point in the not too distant future follow the trend begun by the Chancery Court in Delaware and expand the inventory of dispute resolution services offered behind their multi-doors. This will have the effect of putting a professional and economic premium on practitioners trained to provide them. Future columns will describe those services, structures and the training necessary to provide them.

Leave a Reply