Conflict Resolution|Negotiation|systems design

Planned Early Resolution — ABA DR I

This is the first of a series of posts on panels presented at the 16th ABA Dispute Resolution Section Annual Meeting, in Miami, Florida, April 2-5, 2014.

John Lande, Kurt Dettman, Phil Armstrong and Deborah Masucci gave a panel on early planned dispute resolution.  The goal of the integrated approach is “to satisfy the parties’ interests at the earliest appropriate time.”

Collaboratively among counsel and client, an Early Case Assessment is made, and a determination is made when to negotiation, use mediators and experts as needed.  Lande talked about “escaping lawyers’ prison of fear” of departing from conventional case management approaches.  In particular, he refers to the fear of initiating the suggestion of negotiation, of losing clients’ confidence, and of losing income from working the case.  These can be managed by routinely and predictably using PEDR, explaining the proposed strategy to the client, and negotiating a fee enhancement for early resolution.

Phil Armstrong and Debbie Masucci addressed how these management principles are applied in the corporate environment.  Masucci, formerly of AIG, noted the role of the claims professional, whose job is to settle the case.  It is necessary to acknowledge the diverging interests of the insured and the insurer, particularly where the self-insured retention might settle the case.  There are also primary, excess and coverage issues that drive parties’ negotiating strategies into potentially divergent interests.   Insurance companies should be using PEDR with greater effectiveness than other industries, according to Masucci.

Armstrong, formerly of Atlanta-based Georgia-Pacific, reported that his former employer would receive 250-300 lawsuits per year.  Businesspeople would resolve informal business disputes every day, but if formal litigation were threatened, the process ceased to be a business problem to be solved, but a war to be won; business people would be instructed not only to cease seeking a business solution, but indeed affirmatively not to talk to the other side.  This practice wasted money and compromised relationships.  The dispute always settled, but only after nearly all transaction costs had been incurred.  An ADR program was initiated in 1995-96, one part of which was to invite counterparties to meet with business people to resolve the problem.  Discussions took place early, and if they were unsuccessful a mediator was brought it.  Problem-solving became the goal.  Nevertheless, the approach was unevenly applied and litigation practice continued.  Armstrong was unable to have an integrated management system accepted.  Adoption of such an integrated method across the company would require education, support of the C-suite, and a culture change.  Hiring an outside law firm and asking to be kept posted is an indication of lack of managerial control.

PEDR has a web site with resources such as a User Guide; power point presentations for business and legal audiences; a podcast produced for the ABA Litigation Section.

Toro’s program was cited as a success story of the use of PEDR.  By contrast, AAA’s Sandy mediation program was less successful because many cases were sent to mediation too early, before claims adjusters had reported and critical information needed to resolve the case was at hand.  An audience member cited the medical school policy of “disclose and offer,” resolving matters that could otherwise evolve into medical malpractice suits.

1 Comment
  1. Thanks Peter for reporting on Planned Early Resolution, which is a step in the right direction of moving the dispute resolution process “upstream” closer to the source of the dispute. I was particularly interested in Phil Armstrong’s perceptive comment about the counter-productive adversarial culture where “The dispute always settled, but only after nearly all transaction costs had been incurred.”

    I have read the PEDR User Guide and was pleased to see that it recommended the use of a number of “pre-dispute” processes such as (1) Assessing the Business’s Dispute History, (2) Doing Pre-Dispute Planning and having contracting parties design a Dispute System in advance of any disputes, and (3) using “Prevention and De-escalation” processes such as Partnering and Dispute Review Boards as part of a Dispute System.

    One corporate counsel told me that by solving just one problem and keeping it from escalating into a lawsuit she could save her business transaction costs equivalent to her yearly salary; and by solving more problems she could actually add value to her company.

    It would be interesting to hear from readers of your Blog as to how many corporate law departments (if any) follow any of these principles, or avail themselves of the innovative Dispute Prevention and De-Escalation Practice Materials advocated by CPR a few years ago?

    (I recommend that you add the terms “Prevention,” “De-Escalation” and “Pre-Dispute” to your lists of Tags and/or Categories.)

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