Please ensure Javascript is enabled for purposes of website accessibility

Platt: Don’t rule out ADR for business cases

The courthouse of the future will have multiple doors and many methods of dispute resolution available behind them. In fact some of those doors may lead to locations outside the courthouse itself where disputes will be resolved with the assistance of technology and professionals from other disciplines besides the law.

These disciplines may include medicine, psychology, engineering and other scientific fields. The use of professionals and technology in these fields will be limited only by the current and developing state of our knowledge in these areas, our individual and collective ability to innovate, and hopefully our acknowledgement of the need for the application of due process and respect for the rule of law to be incorporated in all methods of dispute resolution.

I have in previous columns pointed out that the growth and development of alternative dispute resolution, or ADR, and specialized problem-solving courts have paralleled each other, not coincidentally. That is particularly true with respect to the establishment of “business courts,” the need for which was presaged over 135 years ago with comments by the then-leader of the New York Chamber of Commerce, Elliott C. Cowdin, before the New York legislature.

Even then the Chamber was advocating the creation of a “Specialized Court” with the ability to provide through the process of arbitration — a form of Alternative Dispute Resolution — for the resolution of business disputes by a “Judge-Arbitrator” with special knowledge and experience.

Cowdin and the New York Chamber were clearly advocating a “specialized arbitration forum” as the solution to the perennial problem identified then and now as follows: “Our legal tribunals have been altogether inadequate to speedily investigate and promptly decide upon purely commercial and business disputes.” Cowdin then explained that “in the vast majority of cases promptness of decision by a competent and disinterested arbitrator is their ideal of justice.”

A need for speed

Judge Ben F. Tenille, chief judge of the North Carolina Business Court, Lee Applebaum, Esq. and Anne Tucker Nees, assistant professor of law at Georgia State University, have pointed out in an article that will appear in Vol. 11, Issue I of the Pepperdine Dispute Resolution Journal entitled “Getting to Yes in Specialized Courts: The Unique Role of ADR in Business Court Cases,” that “ADR, with its stated goal of promoting party-driven solutions, which means avoiding trial, may seem incompatible with specialized business courts, where the goal is to provide the parties with expedited, expert judicial attention in the context of the pre-trial motions, case management, and ultimately a trial.”

However, a closer look suggests a “certain compatibility” between ADR and specialized business courts.

This compatibility was first noticed by Thomas J. Stipanowich in his article “ADR and The Vanishing Trial: The Growth and Impact of Alternative Dispute Resolution,” which appeared in the Journal of Empirical Legal Studies. Stipanowich reported that a study of ADR use among Fortune 1,000 corporations conducted by Cornell University in 1997 found that 80 percent of the companies reported using some form of ADR — evidence of the appeal of ADR to those with business disputes.

He further reported that “the motivating concerns were not only the cost of judgments or settlements, but also transaction costs, including the expense of legal counsel, supporting experts, preparation time, and discovery — costs that are often a multiple of the amount of the settlement.”

The economics of doing business in the “flattened world” brought on by “Globalization 2.0” described by the author Thomas L. Friedman and the economics of the practice of law in that world described in my last few columns will clearly compel re-examination, diversification and expansion of both the public and private forums and institutions that provide the settings for the resolution of disputes between increasingly interdependent parties and counsel.

These forces will also drive much more directly the selection of which dispute resolution techniques will be utilized by the parties and their counsel to resolve their disputes.

The selection of the technique that will be used to resolve these parties’ disputes today is usually limited to litigation, neutral case evaluation, judicial settlement conferences, mediation and arbitration. So far, of these techniques, the only ones that have been made available in the traditional courthouse setting except in the Chancery Court of Delaware are litigation and judicial settlement conferences.

The Delaware court has as usual led the country in pioneering the diversification and expansion of these dispute resolution services. They now offer an evaluative form of mediation and arbitration by the chancellors with substantially greater filing fees to cover their additional time and costs.

The driver of these expanded choices, which I predict will become more prevalent as more courts recognize that the public demands them, will be the costs of litigation described earlier, and in particular the extent of the costs of discovery.

Facts galore

As Craig Ball, an attorney knowledgeable in the emerging field of electronic discovery has pointed out, there is now more information available than at any time in history, including information essential to the resolution of legal disputes. This abundance of information makes it difficult for a litigant to lie and rewrite history so as to win a lawsuit.

The few gems of information that are usually important to a legal dispute’s resolution in a manner that ensures that justice will be provided to all parties may be buried, but they do exist. The central question, which will have to be answered when a party chooses the method by which a dispute will be resolved, is how much and how costly is the process that is due to the parties and what price the parties are willing to pay for it.

The answers to these questions will no doubt differ based on who is addressing them. The economics, the ethics, and the professional standard of care required of lawyers representing clients will no doubt cause lawyers to favor a much more rigorous discovery and expert witness protocol than the bottom line cost-benefit analysis that a business CEO or CFO would apply to answer this same question. The cost of litigation will of course vary directly with the extent of discovery and the use of expert witnesses.

The choice of dispute resolution techniques — litigation, arbitration, mediation, neutral case-evaluating, neutral fact-finding, mini-trials and others limited only by our capacity for innovation and collaboration on dispute resolution process — dictates these choices as well. How these choices will affect the nature and quality of the resolution of disputes will be discussed in future columns.

Steven I. Platt, a retired associate judge on the Prince George’s County Circuit Court, writes a regular column for The Daily Record. He can be reached at info@apursuitofjustice.com.


One comment

  1. The concept and term “multi-door courthouse” was coined by Frank Sander (and a couple of colleagues – Sander typically is given the credit; except not by you), over fifty years ago, as was the prediction that the “courthouse of the future will have multiple doors,” and yet all we’ve seen in that time are the incremental changes you describe here. It would be interesting to know what you have in mind when you refer to the “future.” Is it something that will occur before the asteroid hits? The academic ADR literature is full of the kind of pollyanish fantasy grounded in taste, ideology, and self-interest that you endorse so enthusiastically here and, thankfully, it has had little if any significant effect on the world of law practice (save for the oppressive arbitration procedures built into most commercial contracts). There is little if any reason to expect something different in the next fifty years. After all, the Federal Rules were the ADR experiment of their generation and look what happened to them.