5-1 Chapter 5— Negotiation and Alternative Dispute Resolution Systems REED SHEDD PAGNATTARO...
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Transcript of 5-1 Chapter 5— Negotiation and Alternative Dispute Resolution Systems REED SHEDD PAGNATTARO...
5-1
Chapter 5—Negotiation and
Alternative DisputeResolution Systems
REED SHEDDREED SHEDD PAGNATTARO PAGNATTARO MOREHEAD MOREHEAD
F I F T E E N T H E D I T I O NF I F T E E N T H E D I T I O N
TheThe Legal & Legal & RegulatoryRegulatory Environment of of BusinessBusiness
McGraw-Hill/IrwinCopyright © 2010 by The McGraw-Hill Companies, Inc. All rights
reserved.
5-2
Learning Objectives To understand why disputing parties seek alternative to the litigation process.
To appreciate the importance of effective negotiation and to recognize the basic methods of negotiation.
To evaluate the various forms of ADR systems.
To be able to explain the differences between arbitration and mediation.
To comprehend why courts have a very limited role in reviewing the actions of arbitrators and mediators.
5-3
think
TANKthink
TANKthinkthink
TANKTANKCan a pie be cut in more than one way?Can a pie be cut in more than one way?
a.a. YesYesb.b. NoNo
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General Rule
95% or more of the lawsuits filed settle prior to the completion of the litigation process.
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Conflict and Disputes
Conflict leads to disputes when one party makes claim that
other denies.
Point of View
Point of ViewCONFLICT
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Negotiation
The process used to persuade or coerce someone to do what you want them to do.
DefinitionDefinition
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Negotiation Styles
[Insert Side bar 5.1]
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Methods Of Negotiations
Positional Parties state opinions Begins competitively Involves give and take
Principled
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High PriceHigh Price
Low PriceLow Price
Zone of Zone of AgreementAgreement
Buyer’s Buyer’s
Resistance PointResistance Point
Seller’s Seller’s
Resistance PointResistance Point
Positional Negotiation
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High PriceHigh Price
Low PriceLow Price
Buyer’s Buyer’s
Resistance PointResistance Point
Seller’s Seller’s
Resistance PointResistance Point
No Zone of No Zone of AgreementAgreement
Positional Negotiation
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Principled Negotiation:7 Elements
I. CommunicationI. Communication
IV. OptionsIV. Options
II. RelationshipII. Relationship
III. InterestsIII. Interests V. LegitimacyV. Legitimacy
VII. CommitmentVII. Commitment
VI. AlternativesVI. Alternatives
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Range of Alternative Dispute Resolution Options
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CostsCosts• Attorney’s feesAttorney’s fees• Court costsCourt costs
Personal reasonsPersonal reasons• Compromise is instinctiveCompromise is instinctive• Dislike of troubleDislike of trouble• Opinion of othersOpinion of others
Business reasonsBusiness reasons• Bad for businessBad for business• Sympathetic juriesSympathetic juries
CostsCosts• Attorney’s feesAttorney’s fees• Court costsCourt costs
Personal reasonsPersonal reasons• Compromise is instinctiveCompromise is instinctive• Dislike of troubleDislike of trouble• Opinion of othersOpinion of others
Business reasonsBusiness reasons• Bad for businessBad for business• Sympathetic juriesSympathetic juries
Reasons for Settlement without Litigation
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$4.85Billion $1.6
Billion
Merck Citicorp
Major Settlements
$1.2Billion
Eli Lilly
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Third party (arbitrator) makes final decision
Mandatory v. Voluntary Final decision (award)- binding Reasons
Quick/inexpensive resolution Ease court dockets Expert assistance
Arbitration
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Arbitration- Submissions Parties agree to arbitration -
written Specific matters agreed to
arbitrate Matters for arbitration
Questions of fact Questions of law Fact & law
Trend toward arbitration
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Chosen By Disputing Parties
Beyond Legal
Number = 1- 3
Authority- Authority- Granted By Granted By AgreementAgreement
Expert
5-18
think
TANKthink
TANKthink
TANKAll of the following are advantages of All of the following are advantages of arbitration over litigation except:arbitration over litigation except:a.a. Right to appealRight to appealb.b. Takes less timeTakes less timec.c. NonpublicNonpublicd.d. Not as expensiveNot as expensive
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Arbitration - AwardsDisclosure of findings & reasons
• Not needed unless required by statute or agreement
•Parties bound by award
Court favors award & broad scope of authority
Final on submitted Issues – filed with court clerk & enforced by court
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“Role”•Enacted 1925 & 1947
•Covers any Arbitration clause involving Interstate
Commerce.
“Role”•Enacted 1925 & 1947
•Covers any Arbitration clause involving Interstate
Commerce.“Impact”
•Court assumes intention•May set aside state
laws under commerce andsupremacy clauses
“Impact”•Court assumes intention
•May set aside statelaws under commerce and
supremacy clauses
Federal Arbitration Act
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States adoptingStates adoptingSpeeds up processSpeeds up processMany qualified Many qualified
arbitratorsarbitratorsTypes of casesTypes of cases
• <$15,000<$15,000• Specific subject matterSpecific subject matter
Record of proceedings Record of proceedings requiredrequired
States adoptingStates adoptingSpeeds up processSpeeds up processMany qualified Many qualified
arbitratorsarbitratorsTypes of casesTypes of cases
• <$15,000<$15,000• Specific subject matterSpecific subject matter
Record of proceedings Record of proceedings requiredrequired
Mandated Arbitration
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Mandatory Arbitration- Procedures
Submit ClaimSubmit Claim
Arbitrator Determines:Arbitrator Determines:Admissibility Of EvidenceAdmissibility Of Evidence
Law/Facts Of CaseLaw/Facts Of CaseObjectionsObjections
HearingHearing
DiscoveryDiscovery
8 Months8 Months
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Parties AgreeTo Method By:
1) “Pre- DisputeArbitration
Clause” and
2) “Post-Dispute ArbitrationClause”
Voluntary/Contract-Based Arbitration
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Judicial Review of Arbitration
Voluntary/Contract-Based Award is final Findings of fact/law- conclusive Limited review by court Correct fraudulent/arbitrary actions/against public
policy Statutorily-Mandated
In accord with procedural/due process of law Constitutional challenges De Novo Review
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Judicial Review Under Federal Arbitration Act
Interstate Commerce issues – FAA Applies
Arbitration award may be vacated if:
•Fraud•Arbitrators corrupt•Misconduct•Exceed powers
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Third party assists in resolving Third party assists in resolving dispute- avoid litigationdispute- avoid litigation
Parties agree to useParties agree to use
Reduces court caseload- no Reduces court caseload- no judicial reviewjudicial review
Settlement = mutual choiceSettlement = mutual choice
Third party assists in resolving Third party assists in resolving dispute- avoid litigationdispute- avoid litigation
Parties agree to useParties agree to use
Reduces court caseload- no Reduces court caseload- no judicial reviewjudicial review
Settlement = mutual choiceSettlement = mutual choice
Mediation
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MediationAdvantage To Parties
•Determine Determine To PursueTo Pursue
•Retain Retain Control Of Control Of OutcomeOutcome
Disadvantage
•No No EnforcementEnforcement
•Selection Selection Mediator- Mediator- QualificationsQualifications
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Informal- Controlled By PartiesInformal- Controlled By PartiesInformal- Controlled By PartiesInformal- Controlled By PartiesMediatorMediator
Opening Statement/RulesOpening Statement/Rules
PartiesParties•View StatementView Statement
•ExchangeExchange•Discuss Options - CaucusDiscuss Options - Caucus
AgreementAgreement
Written/SignedWritten/Signed
Mediation Procedures
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Other Alternatives Combination Mock trial
Citizen review Reality for Plaintiff
Minitrial – Confidential Focus on central issues Back to business problem
5-30
pop
QUIZpop
QUIZpop
QUIZIf the parties to a mediation sign an If the parties to a mediation sign an agreement at the end, that agreement is agreement at the end, that agreement is usually legally binding (can be enforced usually legally binding (can be enforced in court.)in court.)
a.a. TrueTrueb.b. FalseFalse