April 5, 2006

www.GovContractsLitigation.com April 5, 2006

Presented by:Richard L. HansonMark G. Jackson

Beyond Mediation and Arbitration:How to Effectively Use ADR in Government Contracts Disputes

www.GovContractsLitigation.com

Interests and Perspectives

Common interests: o Successful contract completion

o Workplace safety

o Dispute avoidance or resolution

o Maintain good business relationship- Not all relationships are the same

- Contract performance continues despite dispute

- Past performance evaluations are important

Differing perspectiveso Contractor—bottom line

o Government—regulatory, legal principles


Tools Available

Tools available (in preferred order):

o Dispute avoidance techniques

o Settlement, negotiated resolution

o ADR

o Litigation


Dispute Avoidance, Early Resolution

Contractual provisions for: Issue escalation

o Uses existing structure, no added neutralso Pre-set levels, time allowed

Dispute review board o 1 or more neutrals (3’s typical)o Resource during performanceo Mediation, not arbitration

Partneringo Communication and comfort fosteredo Early get-acquainted sessions, shared mission

Commitment to ADRo Shared reassurances, typically high-level


Dispute Resolution, Streamlining Tools

Traditional, unassisted settlement negotiations

Dispositive motions

Cases decided solely on the record

Expedited/Accelerated Appeals (120-180 days)

ADR

Compressed, accelerated litigationo Telephone depositions

o Telephone hearings

o Aggressive trial schedules

o Selective motion practice (in limine, etc.)


Because Our Focus is Federal . . . .

ADR Is U.S. Public Policy (examples)

Administrative Dispute Resolution Act (ADRA), 5 U.S.C. §§ 581-593

Executive Order No. 12998 (Feb. 5, 1996)

FAR 33.204 (disputes & appeals, ADR policy)

32 C.F.R. § 34.53 (grants & agreements)

FAR 8.406-6 (Federal Supply Schedules)


ADR—DOJ Guidelines—Factors Favoring ADR

Continuous relationship between parties

Client needs to hear from opposing side

Party would be influenced by neutral

Unrealistic opposition

Need for swift resolution

Complex facts, technical complexity

Hostile forum (or, perceived problems w/judge)

Flexibility in relief is desired

Trial preparation will be difficult, costly, or lengthy

Need to avoid adverse precedent


ADR—5 USC § 572(b): “consider not using if”

Precedential decision is needed

Significant government policy issues that require procedural development

Maintaining established policy is important

Significantly affects non-parties

Full public record is important


ADR—DOJ Guidelines—Factors Disfavoring

Case likely to settle soon without assistance

Case likely to be resolved efficiently by motion

Opposing counsel are not trustworthy


ADR—Additional Considerations

+ Communication difficulties between parties

+ Communication difficulties between lawyers and their clients

+ Facts sufficiently developed within time span

+ Lawyers are willing to consider ADR

+/- Factual or technical complexity

- Desire for vindication

- Fraud is involved (FAR 33.210)


ADR Pro/Con?

It depends


ADR Advantages (Contrast w/Litigation)

Cost

Speed

Lessens Impact on Business Relationship

Recovery

Non-precedential, unpublished


ADR Disadvantages (Contrast w/Litigation)

Risk of inconsistent results

Non-precedential, unpublished

Limited opportunities to learn

Discovery rules provide disclosure enforcement

Fewer safeguards for truth

Settlement funding issues


ADR—Whether ADR Should Be Considered

There isn’t a case where

ADR should not be considered.

There isn’t a case where

litigation should not be considered.

Likely success or loss in litigation shouldn’t determine whether to settle.

Finding a good settlement is why you settle.


ADR—Timing, When Should It Be Considered?

ADR Practice Tip #2:

“Implement your decision to use ADR at the appropriate time (it’s never too late, but it

may be too early).”

--ASBCA Administrative Judge Carol N. Park-Conroy, January 19, 2006 ABA Teleconference Program


ADR—Timing, When Should It Be Considered?

Earlyo Contractor has the advantageo Virtually eliminate costs of claim prosecution

After, or in conjunction with, basic discoveryo Can achieve comfort level through limited discoveryo Bulk of litigation costs not yet incurred

When discovery’s complete, trial is loomingo Good opportunity for risk assessmento Significant litigation costs ahead, plus disruption

Post-trial, pre-decisiono Weakest—or strongest—bargaining positiono Little to be saved, except decision time lag


Effect of Forum Selection

Board v. Court (some factors)o BCAs and CoFC on same levelo Procedural rigor, higher cost with courto Greater expertise probable with BCAo But, that depends on which BCA and which judge

Agency v. DOJo Greater settlement flexibility with agencyo More procedural hurdles with DOJo More genuine interest in ADR at some agencieso But, what if you can’t get along with agency?o Money issues


ADR—Choosing the Process

ADR Practice Tip #3:

“Use an ADR process that is right for the dispute at hand, taking into consideration the personalities of the parties and the lawyers, and craft an ADR agreement that can implement that process.”

--ASBCA Administrative Judge Carol N. Park-Conroy, January 19, 2006 ABA Teleconference Program


Selecting the Right ADR Method

Mediation

Fact-finding

Settlement judge

Advisory opinion

Outcome prediction

Binding arbitration

Two-step

Mix & Match

Mini-trial (which isn’t a trial)

Structured settlement process

Summary trial with binding decision



Fact findingo Neutral selected by parties

o Usually with subject matter expertise

o If good chance of settlement, disagree on damages

o If complex issue, wish to narrow issues

o If opposition needs realistic view

Mediation (Settlement Judge)o Neutral participant in settlement negotiations

o Broad “zone of reasonableness”

o If creative problem solving, flexibility is needed

o Recognition of merit to each side’s case



Outcome predictiono Structured presentations by each sideo Seeking to resolve case, or specific issueso Neutral predicts legal or fact-based decisionso Useful if opposition needs realistic view of case

Mini-Trial (not a trial)o Neutral plus decision-maker from each sideo Expedited, but structured presentationo Presentations of both facts and lawo Neutral as facilitator after presentations



Summary trial with binding decisiono Expedited appeal scheduleo Try appeal informally before judge(s)o Agreement to abide by bench decisiono If need for rapid decision, no precedento If opposition needs realistic view

Arbitrationo Neutral third-party reviews evidence, argumentso Could be binding or non-binding (advisory)o Useful if parties disagree on, e.g., damageso Binding arbitration, U.S. has right to renege


Choosing the Right Third Party Neutral

What distinguishes ADR is assistance of Neutral; thus selection is very important

Fish early (and foster early involvement)

Temperament (different folks for different scenarios)

Experience, expertise

Lack of bias

Track record (BCA judges, record’s published)

Cost?


ADR Agreement

Very important, for parties and Neutralo Often difficult to achieve (but shouldn’t be)

o Cover timing, boundaries, process, procedures, etc., etc.

o Define Neutral’s role

o Have Neutral agree to parties’ terms

Considerations:o Audito Changes to agreemento Confidentialityo Costs, fees, expenseso Discoveryo Documentso Evidentiary (un)availabilityo Form of decision

o Location o Motion practiceo Neutralo Participantso Position papero Recordo Schedule for ADR (when)o Schedule/form presentationso Termination of agreemento Witnesses


Making a Successful Presentation

Provide pre-presentation package

Focus on what’s really important

Good results depend on good advocacy

Think about presenters, audience---------------------------

Avoid showy glitz (distracting)

But make it smooth

Focus on key documents

Electronic presentation if affordable-----------------------------

Practice, be prepared


Unavoidables

Claim certification

Government may withdraw after decision, within 30 days after arbitration award, 5 U.S.C. § 580(b)

“The award in an arbitration proceeding shall become final 30 days after it is served on all parties. Any agency that is a party to the proceeding may extend this 30-day period for an additional 30-day period by serving a notice of such extension on all other parties before the end of the first 30-day period.”


Conclusion

The stakes are high

There’s a lot to consider

It’s worth the effort

Questions?

Thank you!

Please contact us anytime with additional questions.

Richard [email protected]

Mark [email protected]

For more information on government contracts litigation issues, please visit www.GovContractsLitigation.com.

April 5, 2006

Documents

Transcript of April 5, 2006