As The National Law Journal recently reported, looming budget cuts in federal spending could portend disaster for federal courts. "Courts brace for cuts" [NLJ, 12-17-12]. Cuts in state court systems are in the headlines as well. Cuts in both staffing and hours of operation can mean further delays in an already overcrowded judicial system delays that will invariably cost litigants.
The United States is regarded as the most litigious country in the developed world, spending billions of dollars in the process, at a time when it can ill afford to lose any competitive edge in the global market.
Meanwhile, in 1986, Motorola created a system called Six Sigma as a way to eliminate errors in manufacturing, and it quickly became adopted as a way to improve other business processes as well. Companies understood that implementing a systems-based process was the essential element to creating efficiencies and improving quality. But no one thought to implement such a systems-based approach for litigation, even as corporations spent millions of dollars a year on litigation costs by continuing to deal with conflicts on a case-by-case basis. It was considered just another cost of doing business and entered on the expense/liability side of the ledger.
But it doesn't have to be this way.
Just as companies can implement a systems-based approach to manufacturing, sales and other business functions, general counsel can implement a system for managing legal cases, with an eye toward avoiding litigation and its attendant costs at the earliest possible juncture. A group of general counsel at Fortune 500 companies have joined together to change the culture of litigation that has pervaded Corporate America, causing waste, inefficiencies and diversion of resources that could be used to gain a global competitive advantage, by signing on to the International Institute for Conflict Prevention & Resolution (CPR)'s 21st Century Corporate ADR Pledge.
CPR revolutionized litigation and promoted the adoption of alternate dispute resolution (ADR) with its Corporate Policy Statement on Alternatives to Litigation, beginning in the 1980s. More than 4,000 operating companies and 1,500 law firms have signed the "CPR Pledge" and committed to consider ADR before filing suit. However, the initial pledge envisioned that it was to be effective only between parties that had both adopted it, within the context of an individual dispute.
CPR's new 21st Century Corporate ADR Pledge provides companies an opportunity to focus on a systemic approach to dispute resolution. Rather than focus on each individual case, we encourage companies to embrace a broader view, to approach dispute resolution in a new way and look at its internal processes with an eye toward resolving conflicts without litigation.
Developing a sophisticated set of policies and practices as part of an integrated program creates significant and sustainable time and cost savings. Such an approach provides mechanisms whereby the dispute and its resolution remain in the control of the parties rather than in the hands of uncontrollable third parties. With a systems approach, the natural tendency to litigate aggressively on a case-by-case basis is moderated. Companies work together through all phases of the resolution process with the same goal: identifying opportunities for early resolution that translate into better outcomes and less cost.
Some disputes are inevitable, so it is important to build in processes that de-escalate conflict at the contract formation stage. Creating contractual incentives up-front to cooperate are key. A system that requires all cases to be analyzed for early resolution options, and a discussion with opposing parties, eliminates the impression that the discussion arises from a weak position on the merits. It must become part of a company culture to truly drive change.
Early evaluation of the settlement opportunities allows the parties to be more creative in crafting a resolution process that best fits the circumstances. The dispute-resolution world has come a long way from the "one size fits all" litigation model. Today, there are many different methods and combinations available to solve business disputes. Arbitrations also can be customized to address specific business needs or fast-tracked, and discovery can be reduced or eliminated.