This column is the first of a series of columns which will detail the parallel growth and development of ADR at least in Maryland with the advent and evolution of “Problem-Solving Courts.” Upon reflection, this seems not to have been a coincidence.
Both the utilization of ADR and “Problem –Solving Courts” proceed from the premise that a satisfactory resolution of people’s disputes more often than not should deal not just with the dispute itself, but also the underlying causes of the dispute. The underlying cause of most disputes usually is more economic and psychological than it is legal or even factual. The enhanced expectation that not only will your dispute be resolved but the underlying cause of it will be addressed is one that is evolving among all classes of disputants and litigants in our courts and in the halls of our administrative agencies and even in our legislatures. It is a by-product to a certain extent of our focus on providing greater “access to justice” to individuals and institutions who do not completely understand and accept the constitutional statutory and most importantly practical limitations of our judicial branch of government. It also results from the hue and cry from all segments of society to reduce the costs of dispute resolution generally and litigation particularly both in the short and long term.
The result of those enhanced expectations that disputes should not just be resolved, but that they should be resolved in a manner that economically and efficiently addresses their cause so that they will not be repeated is that the public and private institutions including law firms and courts that have developed in our society to assist people in resolving their disputes are being forced to dramatically change their business models and work processes to accommodate these enhanced expectations. The recessionary economy which has accompanied these enhanced expectations has propelled them to the forefront more quickly and clearly. As Norman Solovay, in an article in The ABA Business Law Section Journal, “Business Law Today,” has said, “Law firms across the country are laying off associates and even partners have reason to worry about job security. In recent years clients including Corporate Clients have become increasingly unwilling and now in many cases have become unable, to pay the skyrocketing costs of full-blown litigation.”
The Judiciary too, albeit belatedly, has recognized this primarily economic, but also legal and political reality. Corporate in-house counsel, law firms and individuals are looking for cost-effective alternatives to full blown litigation. Law firms will have to provide them in order to survive. Courts will have to incorporate them into the dispute resolution services they offer in order to remain relevant lest they be replaced by private alternatives or worse become the lower tier of an economically tiered civil justice system.
The Chancery Court of Delaware has been out in front of the curve. That court which essentially is a Business Court and at least in part a model for other Business Courts around the country including the Maryland Business & Technology Case Management Program has in the last year begun to allow parties to choose Arbitration as an alternative to litigation in front of its Chancellors. Although it had a temporary set-back when its Arbitration option was ruled “unconstitutional” essentially because its proceedings were not public, that issue has now been addressed. The Chancery Court offers an evaluative form of mediation of its cases by a Chancellor who will not preside over the case. More “Business Courts around the country including our own will and surely should follow suit.
There are many different models of Business Courts, Commercial Parts, Business Technology Case Management Programs, Complex Litigation Management Tracks, etc. in this country. Each has its own history and culture based on that history. All were created because the “business litigation” and the “business disputes” that give rise to the cases which are filed in these courts as well as the parties and lawyers participating in them were perceived to have “special needs”. Those “special needs” were articulated in the halls of state legislatures and the Rules Committee Rooms in many of our state’s highest courts where these specialized dockets were conceived, born and developed to various stages of maturity across the country.
The “special needs” of the parties and counsel in business cases in all of these states are identified as more timely, rational, legally correct and predictable resolution of these disputes. It is also important that these disputes be resolved or decided in a manner that recognizes that unlike many other types of cases, an untimely, i.e. arbitrarily and unduly delayed resolution of a case or dispute may literally devastate economically one or both of the parties’ ability to continue to operate particularly in an economy such as the one we’re in now. Similarly, a legally incorrect, impractical or illogical ruling particularly on a Request for Temporary Restraining Order (TRO) or a Preliminary Injunction can unfairly and irreparably leverage a business party’s position so that it cannot recover legally and more importantly financially and operationally. At best legally incorrect, illogical and/or untimely, i.e. unduly delayed resolutions of business disputes unnecessarily cause great difficulty for business organizations and their lawyers as well as other professionals in accurately quantifying risk not just in specific cases but generally going forward in their operations.
ADR has been integrated into all of these “Business Courts” as a means of meeting these needs in various forms. Those forms are:
1) Formal “Settlement Conferences” are not “Mediations” for among other reasons insufficient time is allotted by the courts to conduct a Mediation. In fact, in many instances not enough time is allotted to have a meaningful settlement conference. Unfortunately, the number of cases processed is deemed to be more important than the quality of the results. At worst, when this kind of program is established, it is usually by administrators and/or presiding judges who have no background, or training in business litigation and do not understand that the techniques of ADR which can be effective in resolving business disputes are not the same as those used to resolve simple motor tort cases. At best this technique, if presided over by a judge or attorney with a background or training in business litigation, can provide a valuable “Neutral Case Evaluation”.
2) Mediation An experienced and thoughtful Business Conflict Mediator, who is trained as a mediator and understands the unique nature of business disputes recognizes that
Mediation is a process not an event.
That means that the process of mediation in certain complex business disputes can take days, weeks, or even months and sometimes has to be staged. Information which may not be known or even available when the mediation begins may need to be exchanged or even developed. Disclosure of certain information particularly that which may be arguably proprietary, may be both an internal and external issue. The trade-off between maintaining confidentiality for the tactical reasons, i.e. reserving of information for litigation purposes and thereby reducing the possibility of settlement may need to be explored by both counsel and client with a mediator facilitating the process. This is almost a sub-mediation within a mediation.
This is particularly true in intellectual property disputes where science may affect the value of the case. It is also a factor in cases involving financial losses where the nature of the market affects evaluation of damages. Specifically, where further scientific and/or economic analysis based on newly acquired information may be essential to developing an accurate assessment of risk in order to determine the leverage that a party may have in the litigation and how that can change as time goes on may well be ongoing as the mediation and the case progress.
3) Arbitration The challenge to this form of ADR which is not often met these days is to insure that this process doesn’t become a process that is just as lengthy and expensive as litigation. This can be difficult because accomplishing that goal while at the same time insuring that the process does take into account the special characteristics of business disputes and the necessary balance between economy and efficiency and fairness. Fairness in these unique disputes requires the exchange of certain information which should be considered to intelligently decide the merits of the case.
Future columns will describe the methods and techniques which can and should be utilized in resolving these disputes whether they be mediated, arbitrated, or neutrally evaluated.