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Avoiding The Litigation Spiral

Avoiding The Litigation Spiral

chuttersnap-179220Fisher and Ury’s ‘Getting To Yes‘ in 1981 was influential because it changed our prevailing attitudes from time-honored positional bargaining towards a more 21st Century interest-based negotiation. Thirty years later, Professor John Lande at the University of Missouri School of Law presented another important philosophical approach to dispute resolution in his book ‘Lawyering with Planned Early Negotiation’ (2011), which is directed at external counsellors.

He directly challenges the default approach to dispute resolution, which he calls litigation as usual” or LAU. Professor Lande points to the paradox of the “vanishing trial“, that despite LAU, only about 10% of cases in state courts and about 2% of cases in the federal courts actually get to a full-blown trial. Almost all are settled. The problem is that the 90% or 98% that settle are mainly resolved very late in the litigation life cycle, after most of the time and cost consumed in litigating have been spent.

Losing control

There are numerous reasons for this phenomenon. First, as in all fights and contests, parties revel in the fantasy that the other party is a demon that will run out of steam, back off and eventually capitulate. They fail to fully anticipate counterclaims and other forms of revenge, both in and beyond the courtroom, and often underestimate the costs and stress involved until they are locked into the litigious spiral. They are goaded on by their counsel, who invariably want more information, if not all information, before advising on settlement strategies, and meanwhile want to keep the parties apart in case they say too much and compromise their case.

External counsel remain acutely aware that the longer the case continues, the more fees it generates, and they all have budget targets to meet within their firms. Even if they do not deliberately place their own interests ahead of their client, which many consciously and genuinely do not, there is an irrepressible psychological force that encourages the case to continue along the winding adversarial path and follow the fixed process prescribed by legal rules for resolving disputes. Like a runaway wagon, the case is locked onto procedural railroad lines, gathering momentum. The parties cannot get off and become unable to think of another way to arrive at their destination until the courtroom steps, and the risks of losing, come into view.

A prison of fear?

Parties and their counsel often have unrealistic expectations, and it takes time for reality to kick in. Some parties just want to “have their day in court” or to feel vindicated, or, since revenge is a dish best served cold, they simply want to inflict injury on the other party – until they realise how the costs are mounting for themselves. Or they fear expressing weakness if they take the initiative to propose settlement talks. All these motivations forcefeed calories into the expanding litigation waistline, until it is fit to burst.

Professor Lande calls this a prison of fear where parties dare not negotiate because doing so may appear weak; or the other party may take advantage of you in a negotiation; or you will give away too much. External counsel may fear their client will be disappointed in them if they are not seen and felt to be litigating relentlessly, that they may be sued by the client for incompetence, or that they will lose fee income if the case settles too early.

Written by Michael Leathes.

This is an adapted extract from his book ‘Negotiation: Things corporate counsel need to know but were not taught’ (from pages 148-149).

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Michael Leathes spent his career as a corporate counsel with Gillette, Pfizer, International Distillers & Vintners and BAT based variously in Brussels, New York and London. His pro bono duties included board memberships of CPR Institute (2003-2006) and the International Mediation Institute (2007-2015).

Posted by Michael Leathes in Negotiation
Global Pound Conference Berlin

Global Pound Conference Berlin

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The Berlin Global Pound Conference, held on 24 March 2017 at the International Chamber of Commerce in the heart of the capital, was the first I had attended in the series of 39 worldwide events. The conference brought together an effective representation of Germany’s dispute resolution community, with handpicked in-house and external lawyers, institutional representatives, ADR specialists, academics and others, all stakeholders were well represented. Continue reading →

Posted by Natasha Mellersh in LOC Coverage, Negotiation

When arbitration is used and why

photo-1431540015161-0bf868a2d407-1In almost all instances, arbitration must be contemplated at the contract drafting stage. Parties may, of course, agree to take a dispute to arbitration at any stage, but once a dispute has broken out, positions become polarised, and agreement is accordingly less likely.

The reasons for preferring arbitration clauses to the more usual reference to the courts – in a commercial context – boil down to the so-called “three Es”: expedition, expertise and enforcement. Read more

Posted by Matthew Rushton in Introductory Guide

Chart Of Dispute Resolution Stages And Steps

 

Today, because of the flexibility, adaptability and versatility of ADR, Users of dispute resolution processes have available to them a wide variety of techniques that can be used to prevent, control and resolve disputes. New techniques are constantly being developed to deal with the wide variety of potential disputes that can occur in any kind of relationship, and at any stage in the development or escalation of a problem or dispute.

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Posted by James P. Groton in Introductory Guide