Alternative Dispute Resolution Outline

Alternative Dispute Resolution

Professor Sandra Albright

Fall 2011

Test Strategy:

· KEY Note: the last two years, Professor Sandra Albright’s (hereinafter “SA”) exams have focused narrowly on a few specific topics in arbitration and mediation, such as:

o How to determine the scope of arbitration agreements – who decides the issue, and how they usually decide it:

§ Whether arbitration clause in a contract is valid

§ Whether the contract itself is valid

o The effect of confidentiality agreements and rules on disputes about whatever agreement comes out of the settlement

o The Texas Arbitration Act and the Federal Arbitration Act, and how they compare

o ZOPA, WATNA, BATNA, RP

· However, the exam is only half the course grade. The other half is writing journals and pleasing your TQ with participation in exercises.

Distributive Bargaining

Key Terms

· Best Alternative to Negotiated Agreement (BATNA)

o In Opera negotiation hypo, the $25k understudy is the BATNA

· Reservation Price (RP)

· Worst Alternative to Negotiated Agreement (WATNA)

· Zone of Possible Agreement (ZOPA)

Competition: Creating value through distributive bargaining

· Ie. A 0-sum proposition of dividing a money judgment

Cooperation: Creating value through collaborative bargaining

· Ie. Enlarging the size of the pie with mutually beneficial, broad outcomes

The ideal of ADR is to use collaboration rather than conflict to resolve disputes, on the theory that settlement is cheaper, better preserves relationships, and better serves the needs of the parties than an acrimonious money judgment after an expensive trial.

· SA says there are two key priorities in negotiation: working on preserving a relationship between the parties, and working on attaining your client’s goals no matter what

· There are 5 negotiation styles, each with their own measure of goal and relationship orientation:

o Avoidance: low relationship, low goal orientation

o Competitive: low relationship, high goal orientation

o Compromise: medium relationship, medium goal orientation

o Accommodating: high relationship, low goal orientation

o Collaborative: high relationship, high goal orientation

· Out of all of these, Collaboration is best because it emphasizes both of the key priorities:

Key Rules of Negotiation

· Zeno’s Paradox of negotiation: In negotiations, each concession tends to about half the size of the last concession and takes twice as long as the one that preceded it.

· Negotiations are usually completed at mid-point between first two reasonable offers:

o But what is reasonable? If $100k was reas, then midpoint between $308 and $100 was 204. But if $210 and $277 were first reas offers, then mid-point is $243

· An early offer near the midpoint will not end the dance, but will just encourage the other party to use it to claim more value* (unless you have a relationship with other party)

SA’s graph of the “zone of agreement:”

Insulting, extreme, credible, borderline, reasonable, borderline, credible, extreme, insulting

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But how should you approach these zones? Don’t necessarily have to start at borderline or reasonable:

· One overriding principal: avoid insulting the pa