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Alternative dispute resolution is the single best litigation management tool available to businesses. When I was the ADR coordinator at Motorola, I made ADR a central element of our litigation strategy. This approach not only reduced costs and business disruption caused by prolonged litigation but also resulted in many early settlements. Although ADR has been around for years and has long since proven its efficacy, I continue to meet many in-house counsel who are unfamiliar with these techniques or reject ADR offhand as either a waste of time or a bad idea. The reality is that most commercial litigation must be viewed as a part of the cost of doing business. The goal is to reduce that cost to a level that achieves the business strategy without hurting the company’s health. Recently, several corporations that had built reputations for their “scorched earth” approach to litigation such as Microsoft have dramatically shifted their focus to ADR. ADR, of course, comprises a suite of individual techniques, all of which are designed to assist warring parties in quickly and efficiently ending disputes. Typically, ADR involves enlisting a neutral third party to help resolve the dispute through a narrowly tailored private mini-trial (arbitration) or through somewhat structured negotiations facilitated by an expert mediator (mediation). The benefits are enormous. An arbitrated settlement can be anywhere from 25 percent to 50 percent cheaper than a court trial. This approach also can lead to a much quicker resolution as long as the parties agree to narrow the arbitration scope and limit the amount of discovery before presenting the case to the arbitrator. The result is that the parties can more quickly and less painfully put the matter behind them and return to focusing on their core business objectives, and usually with a greatly reduced sense of animosity. While mediation is an entirely different approach, it is still a cost-effective and attractive process. I have been involved in a number of mediations that not only saved a strained business relationship between, say, a manufacturer and a supplier but also resulted in commitments to expand the volume of business between them. In attempting to achieve settlement, a mediator will work to soften the resolve on the part of individual parties by focusing on their weaknesses and the risks they may face by going to trial. Good mediators also look for common interests between the parties. Another key benefit is that ADR provides an in-house litigator with a host of private forums as opposed to the traditional public courtroom. The attraction here is that if a matter is particularly sensitive or involves confidential information, the proceedings will take place behind closed doors. I have used ADR to avoid taking the risk that a particular dispute, if handled through the public courts, might confuse or disrupt a related high-profile case or create the potential for copycat cases. For example, multiparty cases such as toxic tort actions often include disputes among the defendants about how liability and the cost of any judgment should be allocated. When a related dispute cannot wait for the resolution of the primary litigation, such as in the case of the cleanup of a Superfund site that is at the heart of a toxic tort suit, arbitration provides a confidential forum where defendants can settle on the cleanup costs without publicly revealing arguments or evidence that could be used by the plaintiffs in the underlying toxics case. Confidentiality is an even greater advantage in an intellectual property dispute, whether it involves trade secrets or the legal validity of a patent important to a broader licensing program. For example, if a dispute over the validity of a plaintiff’s patent goes to trial and the patent is found to be invalid, it has no further value. However, an arbitrator’s determination that a patent is invalid has no binding effect. The unsuccessful plaintiff is still free to use the patent in licensing negotiations with others. Despite the fact that ADR has been used for years, there are a number of persistent negative but unfounded perceptions. Some in-house attorneys fear that the mere suggestion of ADR will be viewed as a lack of resolve on the company’s part. But these lawyers need to keep in mind that litigation is expensive, uncertain and risky. Another common concern is that ADR will provide the opposing side with “free discovery.” Since all forms of ADR require that parties enter the process ready to persuade each other and the neutral of the strength of their cases, the parties must present, perhaps in an abbreviated form, their strongest arguments and evidence. But this now happens in litigation as well. Under modern discovery rules, which require virtually complete disclosure of all evidence and legal arguments before trial, the days of “litigation by ambush” are over. Therefore, any minor loss of the element of surprise is outweighed by the potential for a cost-effective and early resolution. One further issue is that companies often fail to consider both litigation and ADR in the course of planning and operating their corporate law departments. I favor a tactic that I’d describe as parallel strategies. As senior litigation counsel for Motorola, I managed a very large litigation portfolio with potential exposure in the hundreds of millions of dollars. For each new matter, I established parallel litigation and ADR strategies based on the premise that timing is everything. Of course, the first strategy usually involved an aggressive litigation plan with every intention of going to trial. But the second strategy identified the points in the case that most lent themselves to ADR and, since it was difficult at times to get the other side to the bargaining table, the best time to suggest this track. I always tried to analyze the other side’s position to determine when they were likely to be most amenable to negotiation. That time might have arrived shortly after a case was filed and before either side had expended considerable attorneys fees. Or the right time might have been just after summary judgment briefing was completed but before any decision by the court. Through this type of planning, I achieved many very favorable settlements at highly discounted values and usually eliminated most subsequent attorneys fees. One of the best places to integrate ADR is before a dispute arises, with appropriate language in a company’s transactional documents. The inclusion of ADR clauses establishes a process in the event of a dispute and avoids the necessity of having to persuade an opposing party to try ADR after tempers have already flared. The CPR Institute for Dispute Resolution www.cpradr.org — a nonprofit alliance of corporations, law firms, scholars and public institutions — helps companies and law firms select the most appropriate ADR clauses. The Army Corps of Engineers has had great success in limiting litigation by creating a more complex variation of this strategy. The Corps assumed that about 80 percent of its projects would result in some kind of post-construction litigation. In response to that enormous cost, the Corps came up with a strategy that established milestones in its projects. The parties are required to identify and resolve through ADR any disputes that arise at different points rather than fight it out at the end. As a result, Corps officials estimate that litigation now arises in only about 25 percent of its projects. Although earlier is definitely better, one of the great benefits of arbitration and mediation is that you can effectively turn to them even after a dispute has arisen. Admittedly, it does become more difficult once tempers begin to flare. In fact, the Annenberg Institute has concluded that the longer a complaint or injury goes without resolution, the more crystallized the parties become in their positions and the less likely they are to compromise and amicably resolve the dispute. I once had a case that involved a defect in a large and expensive piece of manufacturing equipment. After months of dealing with the excuses and justifications of the division president, I got the attention of the parent company’s general counsel. In our first meeting, he agreed that his company had exposure for the defect. We then quickly moved to mediation and, in two hours, hammered out a deal that provided an alternative to the defective equipment and established a future business relationship. In-house counsel should evaluate each new dispute or potential dispute with an eye toward the possibility of getting the parties together for an early attempt at resolution — before the relationships are irrevocably broken and battle lines are completely drawn. Litigation is often described as a chess game. If so, the failure to consider ADR as part of the strategy is like giving up a crucial chess piece at the start. Considering that a company’s goal is to avoid spending money and disrupting business, the successful in-house counsel will be the one who looks for the best time to play the ADR piece. The legal economy is evolving. ADR is part of that evolution. Litigation will always be with us. But in the business arena, resolution through trial will continue to evolve into something more akin to a last resort. Lean, fast-paced global businesses no longer have the patience or resources for protracted litigation. While the number of business disputes continues to grow, decisions need to be made quickly. Those who do not catch the ADR wave may drown in an ocean of paperwork, unnecessarily burdening themselves and their clients. It’s a distinct disadvantage in the world of business. Robert F. Copple, of counsel at Lewis & Roca in Phoenix, is a former senior litigation attorney in Motorola’s corporate law department.

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