Law Times

lAw Times • April 20, 2009 NEW An online resource tool 1.800.263.3269 Bestcase earlug.indd 1 3/26/08 11:52:01 AM Focus On ADR / MEDIATION Arbitrations versus court Both can be costly if not managed well BY DARYL-LYNN CARLSON For Law Times I t's not necessarily the slump- ing economy that is driving more complex commercial disputes to seek out mediation or arbitration, practitioners say. While it may be too early to determine whether parties in dispute are resorting to ADR processes to save costs during the downturn, there are several ini- tiatives to promote alternatives for commercial clients that may be fuelling a volume of cases for some practitioners. Th e ADR Chambers, for example, has introduced new Expedited Arbitration Rules tai- lored for complex commercial cases, which on its web site is touted as "fast and cheap. And there's no wiggle room." Former Superior Court jus- tice George Adams, who left the bench to establish his own neu- tral dispute resolution practice, says he is seeing more multiple- day mediations. "I don't really see the trends because I'm working in it," he acknowledges. But that he's been dealing with commercial dis- putes that require several days to resolve means the matters are indeed more complex. "Th at tells me that more complex cases are being mediated and we're prob- ably seeing more higher-value cases being started, which tells me that cases are being brought from the courts into mediation." Adams points out that in his book, Mediating Justice, he in- cludes statistics that indicate 95 per cent of all cases get resolved outside of court, and during a recession that number surpasses 95 per cent. Th e Law Society of Upper Canada also mandates lawyers to encourage compromises or settlements in its rules of pro- fessional conduct. "It happens behind closed doors so people don't realize how principled and profes- sional those settlements are," he says. "Of course, it doesn't work if there aren't conse- quences to not agreeing and these settlements being driv- en by very ethical professional courts that are there so if you don't settle, you're going to be visiting the judge and she is going to decide who wins and who loses and it's going to be quite costly." He says if the recession isn't driving more parties to mediate or arbitrate their disputes, the alternative is no less catching on, albeit incre- mentally. "I think there are more cases going to mediation than might otherwise be the case because it's cost eff ective; it produces a more conclusive, early resolution of diff erences," says Adams. "I think people are simply unwill- ing to aff ord going to court." Adams, who does a signifi cant volume of complex commercial matters, says the nature of mat- ters he works with is "fascinat- ing. It's interesting for somebody like me to see the elegant out- comes you see in mediation. In court, you win or you lose and it's black or white. Th ese cases are fabulously complex and say- ing there ought to be a winner or a loser really doesn't capture the shades of grey that explain that confl ict." He notes, "Th ey're really a product of a failed relationship that has a lot of psychology and sociology involved in them. So when you see these settlements, they are really elegant in the sense that they are tailored to the needs of those clients and the complex reasons behind that confl ict. I think it's good for business or the organizations that are involved and it's probably a better place to put their resources than the fi repower of a trial." Claude Th omson, an inter- nationally recognized arbitra- tor, mediator, and independent counsel specializing in the reso- lution of complex commercial disputes, says he's been making eff orts to fi nd out why more law- yers are bringing more cases into alternative processes. "Over the last two or three months, I've had a number of meetings with lawyers who are prominent in both arbitration and litigation in order to explore with them why there aren't more commercial cases that are being resolved in arbitration rather than litigation and what I've been learning is that too often, arbitration becomes an expen- sive form of litigation conducted April Specials Visit our web site and save 20% Dispute Resolution in the Insurance Industry: A Practical Guide Anne E. Grant Mediating Commercial Disputes Allan J. Stitt Mediating Employment Disputes Barry Kuretzky and Jennifer MacKenzie Mediating Estate Disputes Susan A. Easterbrook and Francine A. Herlehy before an arbitrator because the arbitrator tends to allow parties to manage the case without any particular kind of supervision. So the case will be every bit as long," says Th omson. "What they are looking to are arbitrators who will achieve some form of direc- tion." He cites the confi dentiality that is provided in arbitration as a signifi cant advantage for com- mercial parties in dispute, along with an expedited process and lower cost if the arbitrator is ef- fi cient. Th omson adds, "Th is is a complicated problem because counsel themselves are some- what to blame if they complain proceedings take too long." "But I'm also receiving some enthusiastic support from law- yers when I'm talking to them about processes that make arbi- tration more cost effi cient and more desirable and I'm encour- aged by that." Gerald Ranking, chairman of Fasken Martineau DuMou- lin LLP's litigation group and former head of the fi rm's ADR practice, agrees arbitra- tions can become costly. "It's probably safe to Former Superior Court justice George Adams says he is seeing more multiple-day mediations. say that a great deal more thought is going in to con- sider what process the clients are going to use to resolve disputes but they aren't nec- essarily choosing ADR," says Ranking. Depending on the nature of the dispute and degree of acrimony, "arbitration can be almost like another form of court," says Ranking, whose fi rm serves many Fortune 500 clients. "But if adverse parties genuinely want to re- solve their disputes, ADR can be very eff ective." But he affi rms the key to an expeditious process resides with the arbitrator chosen to fa- cilitate the matter along with the management of time and ensur- ing means to accommodate all the parties involved. "To get everybody back in the same room can take six months," he says. "Arbitration can be very expensive but it also can be a lot quicker." Beyond the urban centres of Ottawa and the Greater Toronto Area, the economic downturn is prompting more business clients to seek out alternatives to court. In Goderich, mediator Norman Pickell is seeing an increase in business matters. "Th ere are three reasons why I think people see it as an advan- tage. It's faster, it's cheaper, and of course, it's private. You don't air all that laundry out in pub- lic," Pickell says. "Right now, a confl ict takes time and energy, and parties lose productivity. It can be very draining." pAGe 9 LT www.lawtimesnews.com Web Discount (LT 1-4x5).indd 1 4/15/09 4:13:43 PM

• Cover
• Fight Over Fees
• Financial Matters
• Focus On ADR/Mediation