This conversation started with my post about planned early dispute resolution (PEDR). My friend, Peter Benner, and I exchanged comments in that post. Here are links to Part 2-ish and Part 3 in this conversation.
Peter, I think that your post helps move us closer to understanding the motivations of the players in corporate DR and perhaps some ideas about what might make them more open to using PEDR and really institutionalizing it in their companies.
Your description of the executives of big companies suggests that they generally don’t think too much about DR unless there is unusually large potential liability.
Presumably, their companies have a continuing flow of smaller disputes that they consider as part of the overhead, perhaps like accounting, which is necessary but not worthy of their limited time. Indeed, if top execs stick their noses into routine operations too much, they could interfere with smooth functioning. So they may figure, perhaps correctly, that it’s generally best to leave them alone.
My impression is that there was a major corporate retrenchment as a result of the 2008 recession and that many businesses insisted on greater control over litigation costs as a result.
The legal profession has shrunk since then, largely due to contraction of the big law firms, according to an analysis by Professor Bernard Burk. He argues that the legal job market is not likely to revert to prior levels as the economy improves. He contends that there have been structural changes in the legal market as clients that hire big law firms have learned that lawyers can operate more efficiently in various ways and the clients are not likely to accept a return to less-efficient services.
My impression is that there has been a trend, even before the recession, that many companies didn’t just rely on their outside litigators but started demanding budgets, litigation plans, etc. Did that not happen very much? Or, if it did, have those controls loosened as the economy improved?
Are we in the famous “New Normal”? If so, I wonder if it has settled in place (until the next big crisis) without much PEDR.
For the message to get through to the top execs, do we need (1) a big crisis, (2) executives’ perceptions that using PEDR would provide a major competitive advantage, and/or (3) executives’ perceptions that not using PEDR would create a major competitive disadvantage? Even if these things happened, would that be enough? Are there other things that would prompt them to seriously consider PEDR?
In an earlier comment, you wrote:
From my experience, pursuit of PEDR approaches within companies has depended on someone in a position of authority who understands and believes in the benefits to her/his company. There are examples of large companies that have adopted early dispute resolution initiatives (taking the CPR pledge seriously) under the leadership of either an in-house attorney for a businessperson who has the insight and determination to introduce the necessary steps to take resolution processes in a direction different from default to litigation guided by in-house and/or outside counsel. When that person moves on, inside or outside the organization, without someone to step in who has a like mindset, the company’s commitment to those alternative options wanes or dissipates altogether. For that reason, studying businesses or law firms that have pursued a PEDR approach may not yield much insight.
Of course, you are right to want PEDR to be institutionalized independent of particular individuals, who inevitably will be gone at some point.
At this point, I would be happy to have more organizations use it, even provisionally for a while. Of course, it would be important to plan for maintaining high quality and institutionalization.
Presumably it has to start with some individuals in particular organizations. I still wonder if there are common patterns that prompt people to promote PEDR despite all the inertial forces resisting change such as “custom, training, . . ., risk aversion, and self-interest” that you mentioned.
What do you think?