This year on Law Day, our nation celebrates “Law in the 21st Century: Enduring Traditions, Emerging Challenges.” This theme is particularly pertinent at the Appellate Division, First Department.

With New York’s position as a leader in the global economy, and many financial institutions having offices in close proximity to Wall Street, new and complex disputes involving financial transactions are the subject of much litigation in this department.

At the same time, businesspeople are increasingly relying upon the Internet and electronic communication to conduct global transactions. The exponential growth of multinational transactions has changed the landscape of litigation in this state.

The Delaware Chancery courts have been settling commercial disputes for over 200 years. However, it was New York that established the viability of specialized commercial courts designed to provide litigants efficient and effective resolution to business and technology cases.

As a result, “[r]ecent empirical work…establish[s] that New York law is chosen in over 45 percent of the material contracts of public companies [and] dominates forum-selection clauses, being selected in 41percent of the contracts that specified a forum for resolving disputes.”1

The Commercial Division began as an experiment in case load management because back in “the early 1990s, New York courts were so overburdened that the business community and commercial bar often turned to federal courts and alternative private forums.”2

To reverse this trend, the New York County Supreme Court, Civil Branch, established four commercial parts with “[t]he aim…to test whether it would be possible, by concentrating commercial litigation in those Parts, to improve the efficiency with which such matters were addressed by the court and, at the same time, to enhance the quality of judicial treatment of those cases.”3

The experiment was a success, and “[i]n 1995, the New York State Unified Court System established the Commercial Division…to resolve complicated commercial disputes.”4

Gone is the perception that the New York state court system is ill-equipped and too inefficient to handle complex business disputes. Indeed, improved efficiency has been one of the main ingredients to the Commercial Division’s success.

After the first 10 years of the Commercial Division’s creation, the average overall length of time it takes to process “contract” actions dramatically decreased.

Where transactions are conducted over the Internet, factors traditionally used to determine jurisdiction, venue and choice of law (where not expressed in the documents) no longer apply. Lawyers must adapt their practices to respect cultural differences and become knowledgeable about other countries’ legal systems.

Because traditional methods of lawyer-client communication (face-to-face or over the phone) no longer apply, new technology must be used to preserve lawyer-client confidences and to maintain the privilege of documents.

Implementing E-Filing

From a procedural perspective, the First Department has made great strides towards ensuring that the court keeps pace with the evolution of technology. Indeed, “mandatory e-filing will commence in New York County Supreme Court in commercial cases involving $100,000 or more beginning on May 1, 2010.”5

The First Department has also been actively collaborating with the Unified Court System’s designers who created the e-filing model now in use in selective counties across the state and will soon be employing its own e-filing system.

I believe that attorneys, pro se filers, paralegals and the public will be better served by the e-filing system because it will simplify litigation. Electronic filing of all papers, including motions, will reduce litigation costs. The e-filing system will ultimately allow the public greater access to documents filed with the courts.

Electronic Discovery

One challenge facing the courts within the First Department is how to resolve the issue of electronic discovery.

“It is a major, if not the predominant, factor behind rising litigation costs and delays and presents serious challenges to the court system’s ability to resolve disputes ranging from commercial matters to personal injury cases, in an efficient, cost-effective manner.”6

Litigants must pledge to move away from the tradition of adversarial discovery that has been shown to increase the cost and delay the resolution of cases and embrace a more cooperative approach in tackling discovery issues. Indeed, “the courts have a right to expect that litigants and counsel will take the necessary steps to ensure that relevant records are preserved when litigation is reasonably anticipated, and that such records are collected, reviewed, and produced to the opposing party.”7

We are mindful, on this Law Day, that respect for the rule of law is vital in this time of tremendous growth and change. The principles that have historically informed our decisions transcend technological advances. I use an analogy to make my point.

In our courthouse, there is a small room next to the courtroom that has old hat hooks and umbrella rings mounted to the wall. Out of respect for the court, lawyers coming to argue left their hats and umbrellas in this corridor.

When our courthouse was renovated, this room was maintained and it stands as a reminder of our history and an institutional tradition. Today, however, attorneys rarely leave coats, hats or umbrellas in this room. Instead, they are commanded to please turn off cellphones, BlackBerry and other electronic devices before the judges enter the courtroom. This rule is strictly enforced.

The customs in our court may have changed, but respect for the court and the rule of law remains steadfast. We can only thrive by maintaining a healthy combination of respect for tradition, and an appreciation for the demand to respond to technology.

Luis A. Gonzalez is Presiding Justice of the Appellate Division, First Department.

Endnotes:

1. Geoffrey P. Miller and Theodore Eisenberg, “The Market for Contracts,” 30 Cardozo L Rev 2073, 2073 (2009).

2. Judith S. Kaye, Symposium: “Refinement or Reinvention: The State of Reform in New York,” 69 Alb L Rev 831, 839-840 (2006).

3. New York State Supreme Court Commercial Division, A Brief History, available at http://www.nycourts.gov/courts/comdiv/history.shtml (accessed April 6, 2010).

4. 3 Commercial Litigation in New York State Courts §31:1, at 87 (West 2d ed 2007).

5. Jonathan Lippman, Chief Judge of the State of New York, “New York Bench and Bar: Working Together to Improve the Administration of Justice,” The Metropolitan Corporate Counsel, Northeast Edition, March 11, 2010, pg 5, Vol 18, No 3.

6. The New York State Unified Court System, “A Report to the Chief Judge and Chief Administrative Judge: Electronic Discovery in the New York States Courts,” pg 5, available at http://www.nycourts.gov/courts/comdiv/PDFs/E-DiscoveryReport.pdf (accessed April 7, 2010).

7. University of Montreal Pension Plan v. Banc of America Securities, 2010 US Dist LEXIS 1839, *1-2 (S.D.N.Y. 2010).