Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning Chapter 3 Legal Representation and Alternative Dispute Resolution

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 2 Roles of an Attorney Adviser – advises a client on steps to take to avoid possible legal problems.Adviser – advises a client on steps to take to avoid possible legal problems. Drafter – writes contracts and other documents for clients.Drafter – writes contracts and other documents for clients. Negotiator – persuades, argues, or settles with another party on a client’s behalf.Negotiator – persuades, argues, or settles with another party on a client’s behalf. Advocate – presents a client’s position in court.Advocate – presents a client’s position in court.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 3 Attorney-Client Relationship A client must disclose all relevant information to his or her attorney so the attorney can determine the best course of action.A client must disclose all relevant information to his or her attorney so the attorney can determine the best course of action. The attorney must keep the information confidential—the attorney-client privilege prevents a court and other government bodies from compelling disclosure of the information.The attorney must keep the information confidential—the attorney-client privilege prevents a court and other government bodies from compelling disclosure of the information.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 4 Role of the Court Search for truth is served by adversarial positions.Search for truth is served by adversarial positions. Dispute must be a ‘real’ dispute with a tangible injury or the immediate threat of one.Dispute must be a ‘real’ dispute with a tangible injury or the immediate threat of one. Court rules on questions of law and admissibility of evidence.Court rules on questions of law and admissibility of evidence.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 5 Decision to File a Lawsuit Factors include: –Whether the law provides a remedy. –Whether the person can expect to prevail. –Whether the expected benefit will compensate for expenses and other costs, including any business lost as a result of the lawsuit and accompanying publicity. –Settlement Considerations.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 6 Decision to Defend Against a Lawsuit Factors include: –Whether the relationship with the plaintiff is too valuable to risk. –Whether the publicity surrounding a trial would damage the defendant’s reputation or image. –Whether the dispute could be resolved in a less costly manner.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 7 The Search for Alternatives to Litigation Forms of ADR include: Negotiation Summary Jury Trial Mediation Mini-trial Rent-a- Judge Rent-a- Judge Arbitration

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 8 Negotiation and Mediation Alternative dispute resolution methods differ in the degree of formality involved and the extent to which third parties participate in the process.Alternative dispute resolution methods differ in the degree of formality involved and the extent to which third parties participate in the process. What is the primary difference between negotiation and mediation?What is the primary difference between negotiation and mediation?

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 9 Negotiation and Mediation Negotiation: The parties come together, with or without attorneys to represent them, and try to reach a settlement without the involvement of a third party. Negotiation: The parties come together, with or without attorneys to represent them, and try to reach a settlement without the involvement of a third party. Mediation: The parties themselves reach an agreement with the help of a third party, called a mediator, who proposes solutions. Mediation: The parties themselves reach an agreement with the help of a third party, called a mediator, who proposes solutions.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 10 Arbitration A more formal method of ADR in which the parties submit their dispute to a neutral third party, the arbitrator, who renders a decision, which may or may not be legally binding, depending on the circumstances.A more formal method of ADR in which the parties submit their dispute to a neutral third party, the arbitrator, who renders a decision, which may or may not be legally binding, depending on the circumstances. Some courts refer certain cases for arbitration before allowing the cases to proceed to trial; in most cases, this kind of arbitration is nonbinding on the parties.Some courts refer certain cases for arbitration before allowing the cases to proceed to trial; in most cases, this kind of arbitration is nonbinding on the parties.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 11 The Federal Arbitration Act The Federal Arbitration Act (FAA) does not establish a set arbitration procedure.The Federal Arbitration Act (FAA) does not establish a set arbitration procedure. The FAA provides the means for enforcing the arbitration procedure that the parties have established for themselves.The FAA provides the means for enforcing the arbitration procedure that the parties have established for themselves. The FAA covers any arbitration clause in a contract that involves interstate commerce—even where the business activities may have remote connections or minimal effects on interstate commerce.The FAA covers any arbitration clause in a contract that involves interstate commerce—even where the business activities may have remote connections or minimal effects on interstate commerce. Does the FAA Employment Contracts? Case 3.1 Circuit City Stores, Inc. v. Adams (2003).Does the FAA Employment Contracts? Case 3.1 Circuit City Stores, Inc. v. Adams (2003).

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 12 State Arbitration Statutes Thirty-four states and the District of Columbia have adopted the Uniform Arbitration Act, under which courts generally give full effect to voluntary agreements to arbitrate disputes between private parties.Thirty-four states and the District of Columbia have adopted the Uniform Arbitration Act, under which courts generally give full effect to voluntary agreements to arbitrate disputes between private parties. Those states that have not adopted the Uniform Act nonetheless follow many of the practices specified in it.Those states that have not adopted the Uniform Act nonetheless follow many of the practices specified in it.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 13 The Arbitration Process The three steps of arbitration are:

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 14 Enforcement of Agreements to Submit to Arbitration When a dispute arises as to whether or not the parties have agreed to submit a particular matter to arbitration, one party may file suit in court to compel arbitration.When a dispute arises as to whether or not the parties have agreed to submit a particular matter to arbitration, one party may file suit in court to compel arbitration. The court’s role is essentially interpreting a contract, either the arbitration clause or submission agreement, to determine to what the parties have committed themselves.The court’s role is essentially interpreting a contract, either the arbitration clause or submission agreement, to determine to what the parties have committed themselves. Case 3.2 Morrison v. Circuit City Stores, Inc. (2003).Case 3.2 Morrison v. Circuit City Stores, Inc. (2003).

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 15 Setting Aside an Arbitration Award No award will be enforced if compliance with the award would result in commission of a crime or would violate public policy.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 16 Setting Aside an Arbitration Award An arbitration award may also be set aside because of defects in the arbitration process: –Award was result of corruption, fraud, etc. –The arbitrator exhibited bias or corruption. –The arbitrator’s actions substantially prejudiced the rights of one of the parties. –The arbitrator exceeded his or her powers.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 17 Setting Aside an Arbitration Award Arbitration awards may be set aside for a number of reasons, but courts do not generally look at the merits of the dispute, the sufficiency of the evidence presented, or the arbitrator’s reasoning in reaching a particular decision.Arbitration awards may be set aside for a number of reasons, but courts do not generally look at the merits of the dispute, the sufficiency of the evidence presented, or the arbitrator’s reasoning in reaching a particular decision. Since the parties freely contracted to enter into arbitration, the courts will not interfere simply because one side feels that it received a “bad bargain.”Since the parties freely contracted to enter into arbitration, the courts will not interfere simply because one side feels that it received a “bad bargain.”

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 18 Disadvantages to Arbitration Arbitration has some disadvantages: –Unpredictable, since arbitrators are not required to follow prior precedents, but must only follow whatever rules have been provided by the parties. –Expensive, sometimes as expensive as litigation. –Time consuming, since discovery is often unavailable, the parties may have to call more witnesses than they would in litigation.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 19 The Integration of ADR and Formal Court Procedures Many jurisdictions at both the state and federal levels are integrating alternative dispute resolution into the formal legal process.Many jurisdictions at both the state and federal levels are integrating alternative dispute resolution into the formal legal process. Utilizing methods such as arbitration and mediation within the traditional framework may relieve the logjams afflicting most of the nation’s court systems.Utilizing methods such as arbitration and mediation within the traditional framework may relieve the logjams afflicting most of the nation’s court systems.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 20 Court Annexed ADR Some states require the parties to undergo non- binding arbitration before proceeding to trial.Some states require the parties to undergo non- binding arbitration before proceeding to trial. Note that in court-annexed arbitration, either party may reject the award.Note that in court-annexed arbitration, either party may reject the award.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 21 Court-Mandated ADR Most states (and about half the federal courts) have adopted programs to encourage the parties to settle their disputes through ADR.Most states (and about half the federal courts) have adopted programs to encourage the parties to settle their disputes through ADR. Some courts require parties to submit to ADR before proceeding to trial.Some courts require parties to submit to ADR before proceeding to trial.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 22 Court-Related Mediation Today, courts are increasingly turning to mediation rather than arbitration as an alternative to litigation.Today, courts are increasingly turning to mediation rather than arbitration as an alternative to litigation. One reason for its popularity is that its goal, unlike litigation, is for opponents to work out a resolution that benefits both sides, resulting in a high rate of satisfaction with the outcome.One reason for its popularity is that its goal, unlike litigation, is for opponents to work out a resolution that benefits both sides, resulting in a high rate of satisfaction with the outcome.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 23 Summary Jury Trials A kind of trial in which litigants present their arguments and evidence and the jury renders a nonbinding verdict.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 24 ADR Forums and Services Services facilitating dispute resolution outside the courtroom are provided by both government agencies and private organizations.Services facilitating dispute resolution outside the courtroom are provided by both government agencies and private organizations. Sources of private arbitration services include:Sources of private arbitration services include: –American Arbitration Association (AAA). –State and local arbitration organizations. –Better Business Bureau. –Industry-wide programs. –Online Forums Negotiation services: e.g., Cybersettle.com.Negotiation services: e.g., Cybersettle.com. Arbitration services: CAN-WIN conferencing system.Arbitration services: CAN-WIN conferencing system.

Miller Cross 4 th Ed. © 2005 by West Legal Studies in Business / A Division of Thomson Learning 25 International Dispute Resolution Forum selection and choice-of-law clauses.Forum selection and choice-of-law clauses. –Designate the jurisdiction of court or country over a contract. –What about enforcement of awards? Arbitration Clauses.Arbitration Clauses. –The ‘New York Convention.’ –AAA. –International Chamber of Commerce.