Tuesday, July 21, 2015

Corporate Counsel: Skeptical About Collaborative Law in the Business World? Think Again!

By Guilene F. Theodore

     Collaborative law, which got its start in Minnesota in 1990, “involves a commitment to collaborative, good faith negotiation and a written commitment by the lawyers and their clients to work together to achieve a settlement, and to refer the case to other counsel if they fail.” Collaborative Law in the World of Business, David A. Hoffman, The Collaborative Review, vol. 6, no. 3 (Winter 2003). Although collaborative law has caught on quite well in divorce cases, the business world has been slower to embrace it. Corporate counsel generally have a special relationship with business clients and are well-positioned to recognize that one can make just as compelling a case for using collaborative law in business disputes as in family law disputes. While the dynamics of family matters are different from those in business disputes, factors that have contributed to client satisfaction in collaborative divorce also exist for business disputes.
  1. Common Interests. Collaborative law reduces costs by motivating parties to stay at the bargaining table, thereby reducing antagonism. In divorce cases, parents have a common interest in reducing both resentment and transaction costs in order to safeguard their children’s emotional and financial well-being. At the very least, business adversaries have an interest in reducing transaction costs associated with dispute resolution. Even parties with deep pockets may have a limited legal budget. 
  2. Need for Ongoing Relationships. Collaboration in the resolution of disputes provides a greater opportunity for success in ongoing relationships. For example, in divorce situations, even when the parties do not have children requiring co-parenting arrangements, they often have common property interests that require their continued attention. Many business relationships that lead to disputes are transient. However, a large number of disputes arise among business partners with long-standing relationships that are worth preserving long after the dispute is settled. Moreover, in some cases, the performance of obligations under a settlement agreement may occur over time.
  3. Self-Determination/ Privacy and Intangible Costs. Through the use of a participation agreement, parties set the schedule, make joint use of experts, and agree on the timing and scope of discovery, as well as the timeframe for resolution in a private collaborative setting. Litigation can be just as intrusive for businesses as it is for married couples. Companies that are required to produce voluminous documents and defend numerous depositions face a greater risk of adverse publicity because their cases are more likely to be of interest to the media. Disruption costs to the business are immeasurable.

     Incentives for using collaborative law are based on economics, privacy concerns, efficiency, preservation of relationships, and speedy resolution. Kathy A. Bryan, former in-house litigation manager for Motorola, cites similar reasons for stating that collaborative law techniques should be added to the business dispute resolution toolbox. Why Should Businesses Hire Settlement Counsel, 2008 J. Disp. Resol. Issue 1. (2008). By thinking outside the box, corporate counsel can offer collaborative law to clients as a powerful tool in the company’s dispute resolution arsenal.