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The System Doesn't Work

How can he see he's got flies in his eyes if he's got flies in his eyes? (Orr to Yossarian in Catch 22) 

Comments on the blog raise a number of interesting points that deserve to be unpacked and looked at, like hardball litigation tactics and certification. And I'm delighted by the participation. But my plan in the blog’s main posts is to sustain a coherent, ordered, discussion of issues related to dispute resolution. My topic today is that the system doesn't work for today's business needs.

We trial lawyers get warped by the legal system, and our clients buy into it. When businesses bring us disputes, we have our speech ready, which goes something like this:

…will be expensive and take some time… maybe mediation… probably two to three months… but need documents, depositions… probably 4-6 months… or arbitration…  few months to pick arbitrator, then… or trial…  probably 12-18 months… then possibly appeal….

If an employee or a salesman ever gave that talk to a business owner who wanted something, the business owner’s head would explode in frustration.  Yet business owner's heads don’t explode when we lawyers give them the speech.  They understand that the system dictates the process.

My hunch, though, is that, for business, the system is slowly eroding and will soon crash.  Businesses are demanding fast, cost-effective resolutions for every aspect of their companies, and dispute resolution should not be any different.  So the question becomes: How do we resolve disputes cheaper, faster, fairer, and better? 

I know that there are all sorts of institutional, economic, and psychological barriers that make dispute resolution different from, say, a company's finding a new supply source for materials.  And I hope to try to systematically unpack and consider those.  I also know that some businesses choose a strategy of hardball litigation.  They are not seeking a better way to resolve disputes, and that’s their choice. But my sense is that most businesses are seeking a better way.

Just to get some vision of what a new system could look like, imagine a franchisor using a dispute resolution clause like this in its franchise agreement. The clauses in italics would take some explaining, which is part of what I’ll explore in this blog.

Either of us should notify the other in writing when a dispute arises.  We then have seven days to resolve it by effective negotiation principles.  If we can’t solve the dispute, the Franchise Dispute Resolution Association (FDRA) shall administer the dispute.  FDRA shall assign a mediator, who will than have seven days to seek resolution.  If we don’t resolve the dispute in mediation, we’ll agree on exchanging documents and short depositions if either are needed.  If we can't agree on information exchange, the mediator will decide and we're each bound to comply.  We'll then arbitrate the case no later than14 days later with one arbitrator.  The arbitrator’s decision will be final.  Each party’s lawyer must be certified in effective dispute resolution.  Each side may spend no more than $50,000 in attorney’s fees.  The arbitrator may apportion the costs of the arbitration and the arbitrator's fees, and may award the prevailing party it's costs and reasonable attorney's fees.


This is part 2 of a blog that begins here.

About the Author:  Peter Silverman is a franchise lawyer, mediator and arbitrator. You can reach him at Read his biography page.  Any thoughts he offers on Blue Mau-Mau are his personal opinion and are not legal advice.

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About Peter Silverman

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PETER R. SILVERMAN is a partner with Shumaker, Loop & Kendrick, LLP, focusing on commercial litigation and alternative dispute resolution.