Alternative Dispute Resolutionand Attorney-Client Privilege
HA 8450
Professor Nancy R. Mansfield
Objectives• Identify the purpose of ADR• Compare & contrast ADR methods
– Negotiation, mediation, arbitration, hybrids
• Evaluate alternative ways to settle disputes– Which are best suited to business?– Which are best suited to health care?
• List the advantages and disadvantages of ADR
Why ADR? Litigationis Expensive …
• Total cost of litigation is estimated at $210 billion, equivalent to one-third of the after-tax profit of the Fortune 500– Total cost is increased by
delaying case resolution – Fortune 500 companies
spend an average of 3 years to resolve litigation
– Only 3% of cases are tried John B. Henry, elaw Forum
Metropolitan Corporate Counsel (Feb 2008)
Resolution of Fortune 500 Cases by Trial (Feb 2008)
Reducing Litigation Costs
• How can we reduce the cost of litigation in the US?– Penalize frivolous lawsuits– Cap damage awards– Require mediation or arbitration
• Also reduces congestion in courts
ADR Methods
• In order of party control:– Negotiation– Mediation– Med/Arb– Arbitration– Litigation
Negotiation Med/Arb Litigation
Mediation Arbitration
Classic ADR ModelsNegotiation Mediation Arbitration
How represented By selves or counsel By selves or counsel By counsel
Who decides Parties Parties If binding, arbitrator
Rules and procedures
Parties decide Parties decide Arbitration rules, such as AAA
Standard for resolution
Mutual agreement Mutual agreement Arbitrator’s sense of fairness
How enforced Enforceable contract Enforceable contract By courts
Who pays Each pays his own Parties decide Parties decide
Negotiation• Simplest form of ADR• Parties attempt to settle a dispute
– Attorneys may negotiate on behalf of party– More than 90% of corporate lawsuits are
resolved before trial
• Preparation is essential– Identify BATNA (Best Alternative To
Negotiated Agreement) – Rank issues to identify possible “trade-offs”
Negotiation: Planning
Mediation
• Neutral third party helps parties reach a solution• Role of the mediator
– Help parties identify their interests, positions, and options
– Build trust between the parties to facilitate communication and resolution of their dispute
• Role of parties
Standard Mediation Clause
• “The parties shall endeavor to resolve any dispute arising out of or relating to this Agreement by mediation under the CPR Mediation Procedure. Unless otherwise agreed, the parties will select a mediator from the CPR Panels of Distinguished Neutrals.”
“Mediating Disaster” Problem(page 229 Furrow Health Law text)
• Advantages:
• Disadvantages:
Arbitration Options for Medical Malpractice
A. Mandatory Non-binding Arbitration
B. Mandatory Screening Panels
C. Mandatory Binding Arbitrations
D. Voluntary Pre-Dispute Contract of Binding Arbitration
Arbitrator
Dispute
Decision
A B
Arbitration
Contract
Arbitration
• Resolution of the dispute by a neutral third party– Voluntary (contractual) or– Compulsory (public sector employees)
• Arbitrator’s decision final & binding
Federal Arbitration Act (FAA)
• Enacted by Congress in 1925
- covers any arbitration clause in a contract that involves interstate commerce
• Federal policy clearly favors arbitration of commercial disputes
• Courts are to “rigorously” enforce arbitration agreements
Standard Arbitration Clause“Any controversy or claim arising out of or
relating to this contract, or the breach thereof, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction thereof.”
Other Arbitration Terms
• Arbitration clause should also specify– Scope – types of issues to arbitrate– Where and when arbitration will occur– Selection of arbitrators, e.g., number, kind,
and source – Procedures, e.g., scope of permissible
discovery, timetable, and types of damages that can be awarded
Arbitration Process• Parties agree to submission • Pre-Hearing phase
-Selection of arbitrator
-Limited discovery
-Parties submit statements and briefs
• Adversarial hearing
- Arbitrator has subpoena power
- Less formal rules of evidence
Judicial Review of Awards
• Under FAA, courts may set aside an arbitrator’s award only if– Award was obtained by fraud or corruption– Arbitrator was “demonstrably impartial or
corrupt” or “manifestly disregarded the law”– Misconduct by arbitrator– Arbitrator exceed his/her authority
• Awards that violate public policy may be struck by courts
Case Discussion—Arbitration in Health Care
Problem: Arbitrating Disaster (Furrow Health Law text p. 228 -229)
Query: Will Consumers suffer if Arbitration is used in a health care setting?
Outline the Arguments:
• in support of the agreement
• in opposition of the agreement
Unconscionable Agreements
• When is an agreement “unconscionable?”– If its terms are harsh and oppressive, grossly
unfair and/or one-sided
• Unconscionable arbitration clauses will not be enforced
Engalla v. Permanente Medical Group Inc.
64 Cal. Rptr. 2d 843 (Cal. 1997) The CA. S. Ct. held
1. HMO fraudulently induced pt. to agree to arbitrate
2. HMO waived rt. To arbitrate through dilatory tactics
3. Arbitration agreement was not per se unconscionable
Mediation vs Arbitration
MEDIATION ARBITRATION
Objective Compromise Adjudication
Authority None: Parties must agree
Decision is legally binding
Scope of
Authority
Free to fashion solution agreeable to both parties
Must remain within “four corners” of agreement
Mediation vs Arbitration (cont’d)
MEDIATION ARBITRATION
Role Facilitator Judge-like decision-maker
Qualifications None Labor exper. &/or
Academic creden.
Selection Criteria
Acceptable to
both parties
Acceptable to both parties
Hearing
Format
Less structured; informal
Similar to a trial
Hybrid Forms of ADR
• Med-Arb– If settlement isn’t achieved, parties agree to
binding arbitration– Agreement should specify that the same person
doesn’t serve as mediator and arbitrator
• Mini-trials– Summary presentation of case in trial format after
discovery and submission of briefs– After hearing adversary’s case, parties may settle
or third party may issue non-binding opinion
Hybrids (cont’d)• Summary jury trials
– “Real” jury hears abbreviated case and renders non-binding decision
– Attorneys “debrief” jurors to understand why they reached a decision
– Parties often able to negotiate a settlement
Advantages of ADR over Litigation
• Less adversarial – Win-win solutions possible
• Less formal discovery, procedure
• Less costly• Faster, less time-
consuming• More control over
outcome• Agreements & awards
can remain private• Favored by legal system
Additional Advantages of Arbitration
• Professional arbitrators can hear specialized disputes– Labor arbitrators– Commercial arbitrators– Health care
• Produces binding, final result
• Can include punitive damages
Is arbitration always the answer?
• If prior rulings are NOT precedent, are the results less predictable?
• If the parties establish the rules that govern the proceeding, is there any guarantee that they will be fair to both parties?
• Is arbitration always cheaper than litigation?
Arbitration Fairness Act of 2011
• http://www.govtrack.us/congress/bill.xpd?bill=s112-987• Similar legis. introduced in 2009 by Senator Russ
Feingold (WI) and Representative Hank Johnson (GA)• Would amend FAA by invalidating pre-dispute agreements
that require arbitration of– an employment, consumer, or franchise dispute, or – a dispute arising under any statute intended to protect civil rights
or to regulate contracts or transactions between parties of unequal bargaining power
• Would give the courts (under federal law) final authority to determine the validity or enforceability of an agreement to arbitrate (not the arbitrator)
• Referred to House and Senate Judiciary Committees
Supporters of the Legislation
• Earlier versions of the bill were favored by Public Citizen and consumer groups who say– We can’t trust companies
“to do the right thing”– AFA “supports people over
profits” and– “levels the playing field” for
average Americans
– Arbitration clauses in everyday contracts force individuals to forgo their right to court/jury, pre-trial discovery, etc.
Opponents of the Legislation• Earlier versions of the bill were opposed by US
Chamber of Commerce, Consumer Bankers Association, etc
• Their arguments:– If enacted, the bill would eliminate “efficient, less
costly means of resolving consumer disputes”– By casting doubt on arbitration agreements, it would
cause “widespread uncertainty” and higher costs (discovery, legal fees, and court costs)
– Unnecessary as current law protects against unfair and unconscionable contracts
• What are your thoughts?
Attorney-Client Privilegeand
Physician –Patient Privilege
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What are the elements of the privilege?
What is the scope of protection?
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Attorney - Client Privilege
Communications are privileged if made:
• With an attorney (acting as counsel for the clients)
• For the purpose of gaining legal advice
• In confidence
Attorney Work Product
Documents are privileged if developed
• By or under the direction of an attorney
• In anticipation of litigation
• In confidence
Recent Developments
• SOX section 307—requires reporting “up the ladder”
• “noisy withdrawal”—withdraw from representation and inform the SEC
• ABA Model Rules now permit attorneys to reveal client confidences
• Federal Sentencing Guidelines may require waiver of attny-client privilege
Policy Issues
• What are the benefits of the privileges to the client?
• What is the benefit to society of these rules?
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