Alternatives to Litigation

From Uni Study Guides
Jump to: navigation, search

This topic is within Resolving Civil Disputes.

Contents

Required Reading

Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters, [4.10]-[4.240].

M. Legg (ed), Future of Dispute Resolution LexisNexis (2013), Chapters 12 and 15.

Introduction

[1] Alternative Dispute Resolution (ADR) is becoming increasingly more prominent. It is important to consider how various ADRs might achieve a better result for a client.

  • According to the Advocacy Rule A.17A, lawyers need to explain the various ADRs available to their clients unless the clients already understand them.

Growth of ADR

[2] There has been significant growth of ADR lately. The Victorian Law Reform Commission reports that “settlement rates for ADR are often very high, usually between 50% and 80%”. Nevertheless, there is still a 'litigation mindset' in the legal profession.

  • The 'litigation mindset' most likely stems from the nature of the adversarial system.
  • The fact that law schools focus on litigated cases fosters this mindset. Students get used to only think about the substantive law and not the wide array of mechanisms available.
  • However, the costs and inefficiency of the adversarial system meant that ADR have become more popular despite the litigation mindset.

Julie Macfarlane notes that:[3]

  • Instead of assuming that disputes will be resolved by an argument over rights before a third party decision maker or judge, lawyers should recognise that they will usually be resolved through negotiation, which will take place in the shadow of the law and rights entitlements but not be determined by it.

Advantages and Disadvantages of ADR

[4] The Victorian LRC noted the following benefits and detriments of ADR:

Benefits Detriments
Allows access to justice by being time and cost efficient, thereby making it more accessible than traditional litigation avenues May not be suitable for some matters
It can be fasted and a case may be resolved in a matter of months or weeks as opposed to years ADR is not afforded the same safeguards afforded to the courts, such as the right to reasons for the decision
Reduces the costs of court and lawyers’ fees and experts’ fees. There can also be a wider resource saving for the government Lack of enforceability
Permits more participation by allowing both parties to engage and tell their side of the story, thereby enhancing their control over the outcome Disclosure of information
Flexible and creative - in mediation, the parties may decide how to resolve their dispute which may include remedies not available in litigation (change in the policy or practice of a business) Practitioners may charge for their involvement in the ADR and if it is not successful this is an additional expense to the traditional route.
It enhances cooperation between the parties thereby enabling them to preserve their future relations May add an extra step if not successful and therefore adds to a delay.
Reduces stress as there are fewer court appearances and it may produce good results and be more satisfying It may not promote fairness in the sense that there may be a power imbalance between the parties if they are not represented.
Remains confidential It may be used by cunning litigators as a delaying tactic to obtain useful intelligence on an opponent before proceeding with litigation
A party may be vulnerable where there is an unequal power relationship particularly if the party is not represented.

Extracts

[5]Stephen Subrin notes that there is uncertainty in litigation:[6]

  • Lawyers represent clients who want to know what the result will be if the case reaches final judgement. Given the multiple points of uncertainty, it is very difficult to advise the client with any degree of precision. At best, the attorney can advise as to a range of possible results, some of them extremely unpleasant to the client. Settlement is a rational means of avoiding the risk of the possible results that would be worse than settlement.

Julie Macfarlane notes that maintaining competitiveness in the business world means avoiding the absorption of corporate energy and monies in litigation and instead finding a smart route to settlement.[7]

  • On the other hand, Phillip Armstrong says that companies tend to litigate rather than employ ADR when:[8]
    • An important principle is involved
    • Need for legal precedents
    • Need to send a message to the marketplace
    • Settlement would open the floodgates to frivolous litigation
    • The claim is too large, which justifies litigation
    • The law is weighted heavily in their favour
    • Senior management is unalterably opposed to settlement
    • There are multiple parties such that consensus on settlement will be difficult to achieve

Owen Fiss argues against settlements:[9]

  • In our political system, courts are reactive institutions. They do not search out interpretive occasions, but instead wait for others to bring matters to their attention.
  • They also rely for the most part on others to investigate and present the law and facts.
  • A settlement will thereby deprive a court of the occasion, and perhaps even the ability to render an interpretation.

Carrie Menkel-Meadow argues in the favour of ADR:[10]

  • People may choose settlement precisely because legislatively enacted “legal” solutions do not meet the underlying needs or interests of parties in particular cases. Through individually adaptive solutions in settlement we may see the limits of law and explore avenues for law reform.
  • Much of the critique of settlement rests on claims that negotiated settlements, more than adjudicated claims, will be determined by the raw bargaining power of one party over another. Assumptions abound here that power imbalances do not occur at trial, or if they do, they can be corrected by the neutral third party cloaked in a judge’s robe…

Chief Justice Robert French said the following regarding the conflict between the courts and ADR:[11]

  • It is the courts and only the courts which carry out the adjudication function involving the exercise of judicial power. Their special position as the third branch of government is made explicit in the Commonwealth Constitution and is a matter of convention in the States.
  • It is in the public interest that the constitutional function of the judiciary is not compromised in fact or a matter of perception by blurring its boundaries with non-judicial services. So long as the clarity of the distinction is maintained, and appropriate quality controls, including evaluative and cost-benefit assessments undertaken the ADR has much to offer in connection with the judicial process.

Types of ADR Processes

[12] ADR processes can be classified into 4 broad categories:[13]

  1. Facilitative dispute resolution process
    • Focuses on assisting the parties to identify the disputed issues, develop options, consider alternatives and endeavour to reach an agreement about some issues or the whole dispute.
    • For example: mediation, facilitation or facilitated negotiation.
  2. Advisory dispute resolution processes
    • Focuses on considering and appraising the dispute and providing advice as to the facts of the dispute, the law and in some cases, possible or desirable outcomes, and how these may be achieved.
    • For example: expert appraisal, case presentation, mini trial and early neutral evaluation.
  3. Determinative dispute resolution processes
    • Focuses on evaluating the dispute (which may include a hearing of formal evidence from the parties) and makes a determination.
    • For example: arbitration, expert determination, private judging.
  4. combined or hybrid dispute resolution processes
    • Multiple roles.
    • For example: conciliation, conferencing where a practitioner may facilitate discussion and provide advice on the merits of the dispute.

More particularly, there is a glossary of terms provided by the National Alternative Dispute Resolution Advisory Council, which can be accessed here

Negotiation

[14] Negotiation involves no third party to facilitate, advise or determine the resolution of the dispute - the parties are very much left to their own devices as to how the negotiation process should proceed and what the substances of the negotiation should be about.

  • Positional negotiation is traditionally associated with lawyers and is also referred to as a zero-sum game approach to negotiation as it mirrors litigation in the sense that one party’s gains are another party’s losses.
  • Interest based negotiations’ focus is shifted to why something is desired they it may be possible to create solutions beyond that originally envisaged.

Below is a comparison between positional and interest-based negotiation:

Positional Negotiation Interest-Based Negotiation
Parties are opponents Parties are collaborative problem solvers
Goal is to win or give up as little as possible Goal is to satisfy all parties’ interests
Assert correctness of position/demand Identify interests
Make minimal concessions in relation to position/demand Develop options- expand the pie
Avoid disclosure of information-communication is limited Share and seek out information- communication is enhanced
Assert rights that support position/demand Determine independent criteria for assessing options
Disagree with opponents position Listen to parties explication of their interests
Make concessions slowly and incrementally to try and obtain agreement Evaluate options to satisfy interests.

What role does the law play in interest base negotiations? The law supports a right to be compensated for breach of contract. In interest based negotiation the law may be utilised to determine a person’s “Best Alternative to a Negotiated Agreement” and to develop independent criteria.

Mediation

[15] Mediation is basically a negotiation but with the use of a neutral third party (the mediator). It is the most commonly used type of ADR. The mediator is chosen by parties unless mediation is connected to a court order (example: family law mediation). Six examples of models of mediation are as follows:

  1. Expert advisory mediation: specialist legal or technical skills to guide the parties towards a settlement within a positional bargaining framework
  2. Settlement mediation: mediator specialises in process but aims to guide the parties towards a settlement within a positional bargaining framework.
  3. Facilitative mediation: mediator specialises in process but employs interest based negotiation thus encouraging parties to develop their own solutions
  4. Wise counsel mediation: usually selected because of their standing in the community which may result from their specialist legal, technical or diplomacy skills but they adopt interest based negotiation to encourage the parties to develop their own solutions.
  5. Tradition based mediation: similar to wise-council mediation but more concerned for interests beyond the parties such as the community or society. It is frequently associated with indigenous societies.
  6. Transformative mediation: process, not just of negotiation but of psychology and reconciliation, and goes beyond interest-based negotiation with a view to restoring relationships.

Mediation Process

The mediation process is usually conducted as follows:

  1. Introduce themselves and set the “ground rules” for the mediation
  2. Opening statements- express their views of the dispute and the issues involved
  3. Identification of issues and development of an agenda
  4. Mediator supports the exploration of issues and encourages and guides discussion between parties
  5. Confidential private sessions- mediator can test or develop options, while other party has time to consider their options and discuss options with advisors.
  6. Evaluation of options or offers
  7. Parties negotiation an agreement or terminate the mediation
  8. If participants agree on some or all of the issues an agreement is prepared and signed

Why Choose Mediation?

There are a number of reasons of why to choose mediation:

  • Parties may be required to mediate by law or contract
  • Can be faster and cheaper than litigation, assuming a resolution is reached
  • It can narrow issues for litigation if unsuccessful
  • Provides confidentiality
  • Provides broader or more flexible remedies than court
  • Maintain relationships
  • Provides greater client satisfaction through increased involvement and ability to communicate directly with an opponent

In comparison to negotiation, mediation is advantageous as it is more structure and promotes a framework for exploring resolution which may be followed and there is an independent third party who can break impasses, facilitate the devising solutions and generally keep the parties focused and moving forward.

  • Mediation may however be an unsuitable avenue where a party is not trustworthy or not prepared to act in good faith.

Role of the Lawyer

Lawyer may:

  • Advise if the dispute is suitable for mediation,
  • Describe the process of mediation to the client,
  • Contact the other party and or mediator for the client,
  • Negotiate on the client’s behalf,
  • Prepare the matter for mediation (legal analysis, fact gathering and drafting of position interest papers),
  • Attend the mediation with the client in order to advise during the course of the mediation,
  • Reduce the power imbalances,
  • Seek to protect the client’s interest,
  • Draft a settlement agreement and
  • Obtain a court order to put an end to proceedings.

The Continuing Role of Litigation

[16] Despite its many faults, litigation still has its advantages and will continue to play an essential role in the justice system. Litigation is actual way in which the law and concepts like the rule of law and human rights are enforced.

  • Not everything is about reaching a peaceful resolution - it is about ensuring justice is being done, for society in general. A peaceful settlement between two parties may not actually achieve justice.
  • Thus, cases involving the enforcement of rights or public law cases (eg, involving government regulation or constitutional issues) are probably better served through litigation as opposed to any ADRs.
    • Where there is a need for deterrence, litigation is probably the better option as well.
  • Also, litigation develops the doctrine of precedent which allows our law to be formed (and thus evolve). Since ADRs rely on precedent as well, it needs litigation to ensure that it continues to evolve.
  • Litigation involves procedural protections, which helps in situation where there is a power imbalance between the parties.
  • In litigation, a court can compel the disclosure of information through processes such as preliminary discovery, discovery and subpoenas.
  • Litigation offers urgent relief. Forms of urgent relief include:
    • Interim or interlocutory injunctions.
    • Freezing orders ('Mareva' orders) - restrains a defendant from removing assets or diminishing their value.
    • Search orders.

A Broader View of Justice?

[17]

  • Justice, per Socrates and Aristotle, is a virtue where its existence was demonstrated by abidance with law and fairness.
  • Essential part of justice was to be found in the relationships that existed between people and the notion of fairness
  • Does an adjudicated outcome deliver justice more-so than those that aren’t? According to Genn, despite the private nature of ADR, it is argued that diverting legal disputes away from the courts and into mediation is, in fact, a strategy that will increase to justice. However, mediation does not contribute to substantive justice because it requires the parties to relinquish ideas of legal rights and instead focus on problem-solving.

End

This is the end of this topic. Click here to go back to the main subject page for Resolving Civil Disputes.

References

BKL refers to Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters.

FDR refers to Michael Legg (ed), The Future of Dispute Resolution (2013) LexisNexis.

  1. BKL, pp. 203-4.
  2. BKL, p. 204-7.
  3. Julie Macfarlane, The New Lawyer:How Settlement us Transforming the Practice of Law (2008).
  4. Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008) in BKL, p. 207-8.
  5. BKL, p. 208-14.
  6. Stephen Subrin "A Traditionalist Looks at Mediation: It's Here to Stay and Much Better Than I Thought" (2002-2003).
  7. Julie Macfarlane, The New Lawyer: How Settlement us Transforming the Practice of Law (2008).
  8. Phillip Armstrong, ‘Why we still litigate’ (2008).
  9. Owen Fiss, ‘Against Settlement’ (1984).
  10. Carrie Menkel-Meadow, ‘Whose dispute is it anyway?’ (1995).
  11. ‘Courts as the Third Branch of Government’ (2009).
  12. BKL, 214-7.
  13. NADRAC, Dispute Resolution Terms, The Use of Terms in (Alternative) Dispute Resolution (September 2003).
  14. BKL, 217-20.
  15. BKL, p. 220-222.
  16. FDR, p.117-21.
  17. FDR, chapter 15.
Personal tools
Namespaces

Variants
Actions
Navigation
Toolbox