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Collaborative Law for In-House Counsel

Fri, 04/22/2016 - 09:08 -- admin25

by Wesley E. Schlenker and Lawrence R. Maxwell, Jr.

Wes (in-house counsel): Bullet-point it for me. What are the main tools from the collaborative law process that I can employ?

Larry (collaborative law practitioner):

  • The process is voluntary and discussions are confidential.
  • All relevant information is promptly and voluntarily disclosed.
  • Goals and concerns are openly shared, then options are developed.
  • If an expert witness or professional is necessary, a single one is agreed upon.
  • If the matter proceeds to litigation, attorneys agree to withdraw.

Wes: In-house attorneys often use these tools without realizing they are doing “collaborative law.” In construction disputes, I have approached the other side and asked them if we could save costs and hire one expert who would tell us whether the concrete was bad, or whether the extra cost of completing the railroad bridge was necessary. In one situation, the other side backed down after reading the collaborative expert report; and in the other, the expert report helped me persuade my executives to fund the disputed costs before litigation ensued.

In another dispute with a customer who claimed $3mm of damage from bad construction materials, we agreed to voluntarily provide all relevant information. We felt naked and exposed as we handed over a notebook showing that their damages were likely due to contamination in our bulk material. But, their in-house counsel was so impressed with our promptness and frankness that he worked out a cash-free settlement requiring his company to greatly expand the product lines it purchased from our company, at a large discount. The customer remained loyal long after the discount was discontinued, more than offsetting the cost of settlement. 

Larry: Which collaborative tool do you think will bring the greatest cost savings to a company?

Wes: The biggest cost in most business litigation is discovery, especially electronic discovery. Mediation does not effectively reduce this cost, because most mediation occurs after the key discovery is complete. Voluntary discovery is much less expensive, and the costs can be shared.

Larry: You mentioned two collaborative tools you have used, expert-sharing and voluntary discovery. Have you been able to attach privilege to your collaborative discussions?

Wes: Sometimes, we sign a document that says our discussions will not be used in litigation and constitute an “offer in settlement,” and are therefore privileged and confidential. If you involve a mediator, you can attach a mediation privilege to the proceeding. But these privileges do not always fit the “collaborative law” situation. Is there a better way to be sure that privilege attaches?

Larry: Currently, in Texas there is no collaborative law statute that applies to civil disputes outside of family law. However, collaborative lawyers are adapting procedures to expand the process beyond family law. The Uniform Collaborative Law Act (UCLA), which has been enacted in 13 jurisdictions, creates a statutory privilege and confidentiality for discussions in the process. The UCLA will be introduced in the 2017 Session of the Texas Legislature.

What about attorneys who agree to withdraw if the matter is not settled? Would you see value in that from an in-house perspective?

Wes: All litigation attorneys face a conflict of interest, one which is generally ignored in discussions of attorney ethics. Litigators make less money if a dispute is settled extremely early in the dispute process. We generally trust our own litigation counsel to refrain from encouraging litigation that would enrich only themselves. But we distrust the other party’s litigation attorney, believing that he will try to torpedo a settlement in order to maximize his income. Because we distrust the other attorney, we are afraid to engage in voluntary disclosure, believing that he will take the free discovery and then litigate anyway.

If we know the other attorney must withdraw if the matter does not settle, both sides are much more trusting and willing to take risks in order to achieve a settlement. This concept appears to be the bedrock of collaborative law success. How can in-house attorneys begin to put this bedrock principle in place?

Larry: By understanding that the withdrawal provision discourages lawyers who would attempt to take advantage of discovery. It also allows lawyers to focus 100 percent of their skills on resolution, and provides a safe environment for parties to share information knowing that the other lawyers will never be able to cross-examine them in an adversarial proceeding. The collaborative process is not for every attorney, company, or individual person having a dispute. All parties must accept responsibility for their part in the dispute and agree to move forward honestly and in good faith.

Larry Maxwell is a collaborative lawyer, co-founder and a past chair of the DBA Collaborative Law and ADR Sections. He may be reached at lmaxwell@adr-attorney.com. Wes Schlenker is an experienced General Counsel involving the high-tech and construction materials industries. He may be reached at wes@schlenkerlaw.com

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