Healthcare Neutral ADR Blog

Why Not More Corporate ADR?

     A fundamental premise of the alternative dispute resolution ("ADR") movement is that when properly applied, ADR can resolve most disputes faster, cheaper and better than conventional litigation. I'm convinced this is true, as are most ADR practitioners. When asked, most lawyers will say something positive about ADR, but fall short of endorsing its universal application (e.g., "I think ADR is great for the right case").

     This week I noticed two articles that brought home just how far ADR has to go in penetrating the world of corporate and commercial disputes. Writing in Corporate Counsel at LAW.COM, Craig Bleifer listed 10 Questions CEOs Should Ask GCs About the Legal Business Plan. It's a thorough list that attempts to remind GCs that in-house legal operations should make sense from a business standpoint, just like every other major department of the corporation. Notably absent from the article are the words "alternative dispute resolution" or anything else to suggest a rethinking of how the company handles disputes.

     I also noticed an article by Jennifer Smith on the Wall Street Journal's Law Blog entitled Getting More for Less. It covers an announcement by the Association of Corporate Counsel recognizing its 2012 Value Champions, "a handful of business and law firms who came up with innovative ways to boost efficiency and cut legal spending." The focus of the article is on alternative fee arrangements, and does not mention the use of ADR. It also ends by noting that smaller companies (under $5 billion in revenue) can't seem to benefit from alternative fee arrangements, which require "lawyers to predict outcomes and set the appropriate fees." (To be fair, in reviewing the actual ACC list, two of the firm's honored, Whirlpool and Wheeler Trigg, did emphasize an effort to seek "early resolution" of lawsuits, although not necessarily via ADR.)

     Why the devotion to "efficiency" in using law firms but no mention of ADR? The forces that are pushing towards "efficiency" should be having the same effect on increasing the use of ADR in the corporate setting. I think this is not occurring because in-house counsel are still lawyers. They have been trained to think like their outside counsel, are often former outside counsel themselves, and spend much of their time talking with their outside counsel about their corporations' disputes. As for the outside counsel, litigators do what they know best: litigate. In addition, there are more of them now than ever before, all looking for the same work.

     There are ways to bring the forces for efficiency and the value of ADR together. Success fee billing and ADR are made for each other. But more fundamentally, those who run corporations and manage their legal disputes need to be better "sold" on the value of ADR  -  a notion that does not fit neatly within the customs, habits and organizational structures of the law firms these same corporate leaders have come to trust and depend upon.

[Image: Large herd of red deer on Borrobol Estate, Scotland, November 1991, by Evelyn Simak]

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