CPR: A Holistic, User-Friendly Approach To Dispute Resolution (MCC)
August 10, 2009
Published: August 5, 2009
The Editor of Metropolitan Corporate Counsel interviews Kathy Bryan , President and CEO of the CPR Institute, regarding soaring litigation costs, early case assessment, e-discovery, the Fairness in Arbitration Act, and how CPR is responding to the growing need for hybrid commercial ADR solutions and systems.
Editor: How did CPR get started?
Bryan: Our founder and a group of general counsel concluded that the cost of litigation was too high and created CPR to find better ways to manage conflict. More than 30 years later, CPR has become the destination for corporations and law firms who want to develop sophisticated approaches to resolving commercial disputes. CPR bridges the gap between thought leadership and court ADR mandates, helping to make dispute resolution integral to how business is done.
Editor: Please tell our readers about your background.
Bryan: I was in charge of worldwide litigation at Motorola for many years. That's how I became acquainted with CPR. I started attending CPR meetings 10 years ago and found that it was the place to go to find the latest trends and most creative ideas in dispute resolution - and to hear directly from other Fortune 500 in-house counsel, outside lawyers and academics. So, when I learned of the opportunity to serve CPR as CEO, I welcomed their call. It has been a dream job for almost three years now.
Editor: I gather that controlling soaring litigation costs is an important goal of CPR?
Bryan: Yes. One of CPR's roles is that of a think tank. We generate ideas, develop protocols and come up with the solutions that influence the next generation of dispute resolution. CPR is now moving to that generation, encompassing a holistic, more customized, and systemic approach to conflict resolution involving the use of a full "toolkit" of dispute resolution techniques.
We recognize that business competitiveness requires effective dispute resolution. We start with the premise that prevention is the best policy. We look at ways to avoid disputes by resolving them before they bubble up. And, when they do bubble up, we offer approaches to resolve them at the earliest possible time.
We also suggest tools that can be used if you are faced with a more-intractable dispute. We are dedicated to offering techniques at each of the stages in a way that will keep costs down without disrupting relationships - which our court system cannot do.
Companies are moving to the model of hiring a head of litigation with sophisticated business acumen to manage their dispute resolution portfolios. Before litigation became such an important part of corporate legal budgets worldwide, the general counsel personally managed litigation. Today, litigation averages as much as 50-70 percent of a law department's budget. That may not even include all litigation costs incurred by outside firms. It has been estimated that, if all costs are included, Fortune 500 companies' total litigation costs average about one-third of their after-tax profits. See The Metropolitan Corporate Counsel , p. 28 (February 2008).
Editor: Why is early case assessment an integral part of that holistic approach?
Bryan: In 2005, we started a committee composed primarily of corporate counsel that shared best practices in early case assessment. We developed a set of early case assessment guidelines for use by both corporate counsel and law firms, which could be customized to fit the circumstances of a particular dispute. These guidelines help analyze all aspects of a dispute and set a strategy that would either resolve it more quickly through mediation, arbitration or negotiation, or, if that is not possible, put it on a litigation track, but with the view of revisiting the assessment process at a later point so that the alternatives to continued litigation could again be considered.
The guidelines allow users to leverage best practices. They are now available for free on our website.
Acceptance of early case assessment has come a long way in a few short years. When in my in-house role I suggested to our outside counsel that the firm use early case assessment shortly after a case filing, the attorneys would frequently say "Oh no, we can't do it now because we need to have some discovery first or we have a good motion for summary judgment or we have to do this or that before we can begin the early case assessment process."
That attitude is exactly what we are working to change. We think that the sooner early case assessment can be done - and it can be done 30 to 60 days after a complaint is filed - the greater the likelihood of an early resolution at minimum cost.
Editor: Does CPR's interest in early case assessment indicate that it is looking at dispute resolution as a hybrid process, where even litigation may be part of the toolkit?
Bryan: We emphasize using combinations of the tools to achieve the best result. We think of these combinations as hybrid processes - which may include collaborative law, mediation, arbitration, input from settlement counsel, and, yes, litigation.
We believe that the wave of the future is using an appropriate combination to meet the needs of the particular matter. The individual tools can be adapted to meet particular needs. Use of hybrid processes is really just starting to take hold. I think that the future will see many more innovative combinations.
Editor: This may be the appropriate time to raise the question of e-discovery.
Bryan: The advantage of private dispute resolution is that the parties can agree on a different approach where they can customize the level of discovery or disclosure to meet their needs as opposed to having it imposed by the Federal Rules of Civil Procedure. This opportunity will greatly increase the future use of the arbitration alternative.
CPR recently issued a protocol on disclosure of documents and presentation of witnesses in commercial arbitration that is unique in the field in that it allows the parties to agree on a level of disclosure and select electronic information disclosure methods ranging all the way from disclosure "lite," to applying all the requirements of the Federal Rules of Civil Procedure.
The concerns about e-discovery are particularly important where large companies are involved, since the burden mounts with the complexity of the organization and the numbers of people who may be generating e-mail traffic.
For larger companies, e-discovery costs, even in what appears to be a simple case, may be so large that it may be less costly to settle rather than to pursue an otherwise winnable case. So, there is opportunity through alternative processes to determine what level of information you really need to resolve the dispute.
For example, in an early case assessment process in the context of mediation, the mediator may request or suggest to the parties that they share initially only a certain amount of information. In an arbitration, the parties working with the arbitrator can actually craft the level of disclosure or discovery.
Smart use of leading-edge technology can also reduce e-discovery cost. CPR has a panel of neutrals comprising experts in technology and e-discovery. These neutrals can help resolve e-discovery disputes where one party feels that the other party hasn't provided sufficient e-discovery.
Editor: Isn't the comfort level enhanced if the conflict resolution system is geared to the characteristics of particular business sectors?
Bryan: There isn't a single conflict system that fits all. We have conflict resolution systems designed for different industries. We have a product liability committee that is looking at how product liability disputes can be resolved earlier and better, a healthcare-focused committee that develops industry systems, and many other committees that develop sector-specific conflict systems that are responsive to the needs of particular industries.
Editor: What improvements are being made in arbitration?
Bryan: At CPR's past two annual meetings, general counsel were vocal about their concern that arbitration was no better than litigation. So, we responded with a number of changes to our arbitration rules and to the way that we are handling arbitrations. For example, we have a protocol designed to reduce disclosure burdens, and we will soon be issuing rules that will speed the arbitration process and shorten the time period for completing arbitrations.
A frequently voiced concern is that some arbitrators may let a case linger because they have a self-interest in running up fees. We responded by providing a comprehensive evaluation of our neutrals to people who use CPR's arbitrators. It is designed not only to be fair to the arbitrators, but also to provide greater transparency. CPR's work is driven by companies and their law firms. The benefits are not limited to user-oriented evaluations of the performance of our neutrals; it carries over to the policy positions we advocate on such things as early case assessment and efforts to accelerate the ADR process.
Editor: What role does CPR play in a non-administered arbitration?
Bryan: The key to a successful non-administered arbitration is finding the right arbitrator. CPR helps users find answers to questions about arbitrators such as, what is their technical or industry or other kind of expertise? Will they relate well to the parties? Are they available? Will they move the arbitration along in timely way? How have clients in other arbitrations evaluated their performance?
For the most part arbitrators are able to conduct the business of the arbitration itself effectively, and the administering institutions don't add enough value. CPR has promulgated non-administered arbitration rules that allow the parties and the arbitrator to take control of the handling of a matter and eliminate delays attributable to an administering body. But, if parties want to have some level of institutional administration going forward, we offer that as well.
For example, we are now offering "Assisted Arbitration" so that, in addition to having a non-administered option, you can also choose the level of support you need from CPR. Arbitrations are becoming much more customized, and with a focus on making the process fit the user's needs. Arbitration clients are opposed to a one-size-fits-all approach.
Editor: Have you seen an increase in cases growing out of the economic and financial crisis?
Bryan: We have not seen an unusual volume of cases growing out of the crisis. Some of the activity may be finding its way to the Securities Industry and Financial Markets Association (SIFMA). And, obviously a fair amount is happening with respect to foreclosures. My assumption is that other disputes are either being negotiated or plaintiffs are biding their time. It usually takes some time after an event before you start to see lawsuits or ADR proceedings initiated. It may just be that it is still too early.
Editor: The stimulus package involves major expenditures in a number of areas such as of healthcare, energy and infrastructure. Do you see an increase in the use of ADR as these programs are rolled out?
Bryan: Yes. We are exploring how these disputes can best be handled. CPR's new healthcare committee is analyzing how disputes can be most effectively resolved as reforms are rolled out. We have identified mediators and arbitrators with particular healthcare expertise to assist in that process.
Some of the principles that we have advocated to manage construction industry disputes could also be applied to prevent and resolve disputes relating to the roll-out of the stimulus package. A dispute review board is set up to resolve disputes as the construction proceeds. This provides monitoring to avoid having the entire project come to a halt because of a dispute. Our experience with the use of this technique in construction disputes suggests a whole host of triggers that can be identified and solutions that can be applied to prevent and control disputes.
An interesting model was developed in connection with the Michigan Green Enterprise Zone. Michigan developed a dispute resolution process as part of its efforts to attract business to the Zone. The elements of that process include arbitration, claims procedures, standing neutrals, and innovation directed toward effectively resolving disputes at the earliest possible stage. The Michigan process might be considered as a template for resolution of disputes that arise in connection with the roll-out of the individual elements of the stimulus package.
Editor: Does CPR actively promote the use of ADR internationally?
Bryan: Yes. Arbitration has a long history as an effective tool for resolving cross-border disputes. It is the most important way of enforcing the contract rights of global companies in developing countries. We are looking for ways to improve it.
We have set up a European Advisory Committee. We have also organized a number of European Congresses to address the continent's unique ADR issues. CPR has a U.S. - China Mediation Center that develops procedures to more effectively handle cross-border mediation.
CPR is a leading advocate of the use of mediation to resolve cross-border disputes and has actively supported process improvements. Mediation is very well accepted in the U.K. and in some parts of Western Europe. But there is more to be done. In much of the world, mediation is in its infancy. The quality of mediators and the process needs to be improved.
There is a need to familiarize the courts with how mediation works and how it can help overloaded judges better manage their caseloads. We have international projects in Asia and in Eastern Europe to improve mediators and evaluate how to remove the barriers to mediation in some of the countries.
Editor: Is the proposed Arbitration Fairness Act of concern?
Bryan: Yes. The proposed Arbitration Fairness Act which is now pending in Congress bans all predispute arbitration agreements requiring arbitration of consumer, employment and franchise disputes, and of disputes under any statute intended to protect civil rights. Undoubtedly, any agreement may contain unfair provisions. But legislation banning all predispute arbitration agreements regardless of whether the provisions are fair creates a negative impression of arbitration. It treats arbitration as unfairly taking away an individual's rights.
Arbitration is a tool which, if properly used, provides a speedy, effective and fair result-even and including in consumer, employment and franchise cases. The proposed Act does arbitration a disservice by treating it as an unfair process when in fact it can and will deliver a superior result for both parties by providing solid, fast, and effective solutions, for all parties.
Editor: Do you have any closing comments?
Bryan: The economic crisis means that businesses must change. Disputes are an inevitable part of doing business, but we no longer have the luxury of ignoring the cost of resolution. Businesses must now look at the total cost of resolving conflicts and use all available tools to reduce costs. CPR is dedicated to helping them do this. Companies and law firms that work together to achieve that goal will have a healthy future. CPR helps ensure that viability by being their go-to source for building control into their conflict resolution management processes.
View the story online here.
Download a pdf of this article here.