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Alternative Dispute Resolution
St. Johns University School of Law
Kirgis, Paul F.

Alternative Dispute Resolution – Kirgis – Fall 2014

· Progress of conflicts

o Grievance: Any instance in which one person believes another has done something to cause them harm.

§ Happens frequently in real life. We just forget about it instead of suing, normally.

o Claim: When a person brings the grievance to the other’s attention.

o Dispute: The claim has to be rebuffed.

§ In order for there to be a dispute, the person has to refuse to satisfy/remedy the other person.

· Generally we just say “oops, sorry” and move on.

o Lawyers get hired

o Lawsuits: Lawyer escalates the situation by filing a lawsuit after the grievance.

· The disputing pyramid (numbers all approximations):

o 70% of grievances had claims

§ Half of those had disputes

· 10% of those went to lawyers

o 50% of those had lawsuits

o In employment discrimination situations only 30% had claims, almost all of them were disputed, and almost none of them went to lawsuit.

· How are civil lawsuits resolved

o Study from 1986 (and approximations)

§ 7% of lawsuits end in a trial

§ 9% Judicial decision on the merits (summary judgment)

§ 20% Arbitration

§ 18% Default/Dismissal by Judge

§ 63% Settlement (including voluntary dismissal by plaintiff)

o Most disputes are settled through negotiation (which is generally private)

§ Some are settled through mediation and arbitration though.

§ Adjudication rarely happens, but it’s always looming.

· (“The Shadow of Adjudication.”)

· In order to be a good settler-lawyer you MUST be a good trial attorney

o If you can’t try a case, there’s no threat for the other side. They’ll just fuck you up at trial if they don’t get a settlement they like.

o (According to Kirgis, TRIALS are really the “Alternative Dispute Resolution.”)

· Litigation:

o Counterpart to ADR

o NY has one of the few court-connected ADR programs

o Often times ADR happens in the context of litigation

§ Litigation takes a long time to resolve (but lawyers like it because it’s expensive?)

· In NY Court, usually takes 5-7 years:

o File a complain

o Defendant files an answer

o Scheduling order is set up by the judge. This sets out when everything will happen. (ex: Sets out when Discovery needs to be completed)

o Motion Practice

o NY allows interlocutory appeals on almost every decision a judge makes

o Then you get put on the trial calendar

· Dispute Resolution Spectrum:

§ More participant control to Less participant control

· Litigation -> Facilitative Mediation -> Evaluative Mediation – Advisory Arbitration -> Binding Arbitration -> Adjudication

· Arbitration:

o Still a relatively new process

§ Judges used to not even enforce arbitration agreements

§ 1920’s saw a law passed that made arbitration more prevalent

§ There was no contractually binding arbitration, only voluntary arbitration

o A lot easier for lawyers because clients are a pain in mediation/negotiation.

§ “Why can’t you get more? DO YOUR JOB LAWYER.”

§ Easier to lose in arbitration and blame the arbitrator.

o Mandatory Pre-dispute Arbitration:

· Mandatory: You can’t get out of this.

· Pre-dispute: Before a dispute arises

§ Parties that have a contractual agreement and part of that agreement says that if a dispute arises you have to go to arbitration (aka: Arbitration clause)

§ Federal Arbitration Act (FAA) REQUIRES courts to enforce arbitration clauses

o Adhesory Arbitration

§ Consumers and Employment

§ New branch of arbitration

§ Governed by the FAA

§ Motive for this sort of arbitration is to reduce or limit the liability for corporations and firms

o Common areas for arbitration:

§ Securities: Think stockbroker took unreasonable risks, you go to FINRA.

· Pretty much every securities claim goes to arbitration

§ Construction

§ Labor (unions)

§ International Commercial Transactions

· American corporation contracts with supplier in Mexico

o We don’t want to litigate in Mexico because we’ll get fucked, and they feel the same way about American court.

§ So, there’s International Arbitration centers

et an award in Mexico, Mexico has to pay the US firm

§ Parties Agreements

· Parties CANNOT contract around FAA

o But they can provide for anything else

§ Ex: Can contract for panel of 3 arbitrators with specific experience

· Arbitration Rules – Arbitration Providers


o If you contract to arbitrate before AAA, AAA’s rules become a part of the arbitration agreement

· State Arbitration Laws

o Largely pre-empted by FAA

§ So now we’re not sure if these even matter anymore

§ First Options of Chicago v. Kaplan

· Kompetanz – Kompetanz

o Arbitrator is competent to decide his own jurisdiction

o Normally this rule is in the International context

§ Which makes sense, because everyone wants to avoid foreign courts

o If you have an arbitration clause, you go to the arbitrator and then he decides if he has jurisdiction to hear the case

· Kaplans have money from First Options for their hedge fund MKI. MKI goes under, so the Kaplans owe First Options.

o First Options and MKI signed an arbitration agreement.

§ Kaplans didn’t though.

· Question of arbitrability

o 3 Issues set out by court

§ 1) Who decides whether dispute is subject to arbitration?

· When the parties have submitted to arbitration, the arbitrator chooses if its subject to arbitration

o How do the parties submit?

§ Need CLEAR AND UNMISTAKABLE LANGUAGE that the parties are submitting to arbitration

§ If there isn’t clear and unmistakable language, then there is a presumption that the parties did NOT submit.

o What if the parties didn’t submit?

§ Court decides.

o If the agreement is vague about arbitration, read in a pro-arbitration way