Conflict Resolution|International|systems design

International Panel on ADR as Cost-Cutting Device

As a final report on the proceedings of the recent IBA Annual Conference, on Thursday November 3 Jane Player and I co-chaired a Panel on “The Use of ADR in the Management and Control of Dispute-Related Costs.” 

I opened the session with an overview of cost-driven ADR systems that have been successfully adopted by corporations.  Two examples were offered:  employment dispute management programs and medical malpractice policies followed by the University of Michigan Hospital and others.  In both cases, conflicts were anticipated (if not capable of precise prediction) and recognized as contingent liabilities.  And in both cases the enterprise approached these contingencies with managerial processes designed to confront the problems, manage them to the mutual satisfaction of the company and the counterparty, and yield an expense outcome substantially superior to the track record of arbitrated or litigated outcomes.

Jane Player discussed a product offered to clients of Bird & Bird whereby, for a fixed fee, a potential litigation was subjected to early analysis of varied granularity.  The result was not simply a budget (though that was one product) but also strategic recommendations, cost estimates for various routes including ADR, projections of “windows of opportunity” for settlement discussions, and an analysis of the curve denoting ever-increasing settlement values as cumulative costs are invested by both parties over the life of the litigation.

 Kathryn Britten of KPMG in London explained the uses of forensic accountants, not merely as expert witnesses or accounting assistance in preparation for trial of damages, but in review and analysis of documents and other evidence while monetizing the dispute.  She demonstrated a tool by which vocal recordings such as telephone calls could be searched to find instances of a word or a phrase being spoken.

 Muna Dandan, Chief Legal Officer of Barclays Dubai, related the extensive use of mediation and negotiation in Barclays’ operations worldwide.  She emphasized the training of in-house counsel in negotiation skills, and the necessity that the bank directly intervene at an early stage in a troubled loan or financing in order to procure an optimal outcome.  In this sense, she acknowledged that the bank has developed, as part of its daily operations, a problem-identification and dispute-avoidance capability.

 Justice Ali Al Madhani of the Dubai International Financial Centre Courts and Jehad Kazim of the ADR Group of the Dubai Chamber of Commerce outlined the present state of mediation and (to a lesser degree) arbitration in this foremost commercial center in the Middle East.  Fees for these services are low and the instances of parties’ availing themselves of the services are growing exponentially.  Judge Al Madhani also noted the longstanding tradition in Arab countries of negotiation, sometimes through the good offices of a jaha (or wise and respected elder) in both personal and business disputes.  In such cases, explained the judge, there was never an issue of failure to abide by the agreed-upon outcome, because to fail to do so would be disrespectful of the jaha.   He thus touched upon, but did not pursue, the concept that a commercial mediator or arbitrator should not be a “distant neutral,” but rather someone that both parties know and trust.

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