Add Your PerspectiveJune 26, 2009

UDR: An Introduction to Unconventional Dispute Resolution

As I have said before, if you really want to cut your litigation costs, step one is to have less litigation.  Step two, however, is just as important:  actively manage what’s left.  This post will explore a great way to do both — UDR.

We’re at a point where lawyers who are effective at getting cases settled are often thought to be afraid of trial, yet real trial lawyers often forget that their clients have more important business than litigation.  Which approach will you choose as your next case begins?  With Unconventional Dispute Resolution you can integrate both, so you don’t have to choose either — until the choice is actually yours.

What is UDR?

So what is UDR?  There’s no single element of Unconventional Dispute Resolution that’s truly new, but UDR combines 7 component parts in a way I haven’t seen before.  These elements — each of which is critical to the success of the whole — include:

1. Early Case Assessment
2. Aligned Fee Agreements
3. “BATNA” Changes
4. Custom Procedures and Structures
5. The Relationship
6. To Get the Deal Done
7. While Always, Always Preparing for Trial

It’ll take more than one post to fully explore UDR, but my old friend Robert Manley and I began the conversation in a recent presentation to the Austin Chapter of the Association of Corporate Counsel.  A quick recap of each element, and how it relates to the success of UDR as a whole, is below.

The 7 Elements of UDR

1. Early Case Assessment: This site has fully explored Early Case Assessment in a series on ECA already, so we won’t repeat it all here.  Succinctly put, without a sufficient understanding of the case, there’s no way to assess how to resolve it — thus ECA is an indispensable first step in UDR.
2. Aligned Fee Agreements: What’s the optimal alternative fee arrangement for your case — a reverse contingency fee?  An early resolution bonus?  Or something else?  How do you know?  I often see articles on how great it would be to get rid of the billable hour like those seen here, here and here, and I agree with them.  The trouble is that, in the corporate context at least, virtually no one has.  To me one of the biggest roadblocks to alternative fee agreements is a lack of understanding of the case when alternatives to the billable hour could be considered.  Without a real understanding of the case, a fee arrangement that aligns the interests of client and counsel cannot be achieved.
3. “BATNA” Changes: We’ll explore the BATNA concept, meaning the Best Alternative to a Negotiated Agreement, in a later post, but for now we all know that lawsuit settlement and dispute resolution often hinge on the parties’ alternatives to a negotiated agreement.  What will happen if the case doesn’t settle?  Will the case go to trial? Even if you’re prepared for trial, what else is at stake?  Will your opponent’s customers have to testify?  Would a counterclaim that puts your opponent’s other patents at risk drive a settlement?  These questions often get lost in the battle until it’s too late.  Don’t let that happen.  Change your opponent’s alternatives and your own as early as you can — and make sure he understands you have done so when the time is right.
4. Custom Procedures and Structures: This dispute is your problem, and you have to take the initiative to get it solved.  Don’t let litigation be something you spend $100,000 a month on until you’re ready to deal with it.  Work with your counsel, appropriately incented, and the other side early on to find a streamlined way to get it resolved.  For a few tips on how to get this done, take a look at Settlement Perspectives and its series on Settlement Structures — you’ll find ways to settle your case halfway (and why you might want to), paired with practical tips on nonbinding arbitration, blind bidding enhancement, high-low agreements, and more.
5. The Relationship: As a longtime in-house litigator and past Chair of the Association of Corporate Counsel’s National Litigation Committee, I have listened to a hundred ways to cut litigation costs, but to me it all comes back to the relationship between counsel and client.  I have to trust my outside counsel — and they have to trust me — before we’ll achieve long-term success.  I know that I’ll need to waive conflicts of interests when they don’t really impact my client, and I expect my counsel to give presentations on litigation prevention to my team every now and then — even if there isn’t a convenient billing number nearby.  I hope to see young lawyers tagging along at depositions, I don’t call on Saturdays if I don’t have to, and I expect similar treatment in return.  After a time, outside counsel is no longer my vendor; she has truly become my partner — and we both know she’ll go that extra mile to get her partner’s case resolved.
6. To Get the Deal Done: It’s time to take advantage of your knowledge of the case and the alignment of interests you share with your counsel or client.  You have done what’s necessary to change your opponent’s alternatives, and you have streamlined the procedures to get a deal done.  Now is the time to execute.
7. While Always, Always Preparing for Trial: We have discussed before the Sid Hill Rule — that the power to negotiate is the power to walk away.  I have seen what happens when parties and lawyers fail to prepare for trial.  As we know, trial isn’t for everybody; make sure your lead counsel is comfortable with it and ready for it.

There’s More on UDR to Come

Come back for more on UDR, which we’ll post here.  You’ll be glad you did.

Categories: ADR,ECA,Miscellaneous,Settlement

I welcome comments on this or any post. Please feel free to comment in the “Add Your Own Perspective” area below, whether you use your actual name or pseudonym. If you don’t feel comfortable commenting directly on this site, I can easily be reached by email at jd@johndegroote.com.