CPR INSTITUTE FOR DISPUTE RESOLUTION WWW.CPRADR.ORG VOL. 17, NO. 3 MARCH 1999

CONSTRUCTION ADR ........... Page 41 If there must be startup problems, then there probably was no better place for them than the New Hong Kong International Airport. David 1. Sandborg, a law professor at the City University of Hong Kong, provides details about the comprehensive ADR procedures that helped make the project work.

ADR SKIILLS ....................... Page 41 Los Angeles mediator Jeffrey 6. Kichaven writes that effective mediation advocates possess litigators’ skills. In his article, he describes how business mediation equates with good lawyering.

CPR NEWS.......................... Page 42 Members of CPRs recently formed Entertainment Law Panel of Distinguished Neutrals are listed. Also included is an update on the CDR Year 2000 ADR Commitment.

SPECIAL SUPPLEMEN’T: ADR 2000........................,. Page 43 Excerpts from the second CPR online seminar, “Inside the Law Firm: Dealing with Financial Disincentives to ADR,” highlight business strategies that make ADR more compatible with litigation and corporate practices.

ADR BRIEFS ....................... Page 55 This month: New ADR terminology is really part of an old multistep ADR practice, and the University of Missouri-Columbia announces an LL.M. in Dispute Resolution.

DEPARTMENTS CPR News ........................... Page 42 ADR Briefs .......................... Page 55 Cartoon by Cullurn ............. Page 55 CPR 20 Past, 20 Future ...... Page 56 Online Info ................... Page 57, 64 Index Info ..................... Page 59, 62

Multistep ADR Gets Creative At Hong Kongs New hrport BY DAVID L. SANDBORG Although its opening last year was marred by technical glitches, the new Hang Kong In-

At the peak of construction, the Hong KO% airport Probably was the world’s 1%- est infrastructure construction project. The

development involved not only ternational Airport is not only a superb engineering and archi- tectural achievement but an ex- cellent case study of multistep dispute resolution techniques applied to a monumental con- struction project.

Two official reports have been issued on the start-up problems, and a third is being readied. The

the airport terminal, runways, and ancillary structures at Chek Lap Kok, but also a massive amount of related construction comprising 10 interrelated parts that together were known as the Airport Core Programme, or ACP.

The ACP included a third

How Advocacy Fits In Effective Mediation BY JEFFREY G. KICHAVEN of Professional Responsibility: “The duty of

a lawyer, both to his client and to the legal system, is to represent his client zealously within the bounds of the law. .....

California courts have long acknowl-

. -winning isn’t everything, it: the ONLY thing!”

‘2 winner never quits, and a quitter never wins.”

No matter how we put it, we are obsessed with winning, both for our clients and for ourselves. Whether in court or the nego- tiation room, we go to great ex- pense, risk and hassle to avoid the reality, the perception, and the stigma of a loss.

- edged this obligation. See, e.g., Smith v. Lewis, 530 P2d 589 (1975); Munoz u. Davis, 141 Cal. App. 3d 420, 430, 190 Cal. Rptr. 400 (1983); Norton ZI Hines, 49 Cal. App. 3d 917, 924,123 Cal. Rptr. 237 (1975). Attorneys are supposed to press every lawful advantage, right

Generally speaking, we are ’ ‘ up to the “bounds” of the law, to be zealous advocates for their clients. In other words, to win.

(continued on page 61)

right to do so. Attorneys’ duties are well stated in, for example, Ethical Consideration 7-1 of the American Bar Association’s Model Code

Multistep ADR at Hongkongs New Airport (continued from previous page)

The panel is given broad powers and wide latitude in determining its procedures. The wide discretion given to the panel seems simi- lar to that given to the adjudicator under the HKG procedures for the government works‘ parts of the ACI? Under Article 4, the panel has the power to adopt an inquisi- torial procedure and may even refuse to per- mit witness cross-examination. Moreover, the panel has the power to rule that there shall be no witnesses and may decide the dispute on documents only.

Perhaps responding to popular construc- tion industry sentiment against lawyers, Ar- ticle 4 also provides that lawyers may not represent any party at a meeting, inspection, or hearing. The only exception to this rule is if the panel can be convinced that there are reasons justifying attorney involvement.

Article 5 of the procedures gives the panel exceptional powers in conducting the pro- ceedings. As with the adjudicator under the HKG procedures, the panel can examine any witness or inspect property, or anything rel- evant to the dispute, outside the parties’ pres- ence. The panel may order any party to produce any document that it determines to be relevant, and has the discretion to by- pass the parties and obtain expert evidence from an independent source. The panel also may obtain a decision on any question of law from the convenor.

After the Dispute Review Panel has given its decision under to Article 6 of the Dispute Review Procedure (or fails to give a decision within the specified time period), the dispute settlement process re- verts back to Clause 75 of the AA Gen- eral Conditions and either party may request arbitration. It is important to note, however, that Clause 75.10 provides that any dispute referred to arbitration is deemed to be a domestic arbitration, and Part I1 of the Hong Kong Arbitration Or- dinance (Cap.341) applies.

Deeming arbitrations under the AA con- tracts to be domestic has important ramifica- tions. For example, the domestic arbitration law permits consolidation of arbitrations, while the ordinance provisions pertaining to international arbitrations do not. In complex

How Advocacy Fits (continued from front page)

Nobody seriously questions this articula- tion of attorneys’ obligations. But the trickier questions are, what does it mean to win, and which processes and tools are best designed to accomplish a win, properly defined?

Clients and attorneys generally have one of two conceptions of what it means to win. Some define winning as “clobbering the other side.” Others see it as “the satisfaction of our own needs,” regardless of whether the other side suffers along the way.

~~

Jeffrey 6. Kichaven is a mediator and arbitrator i n private pram’ce i n Los Angeles. He is a member of the ABA Section of Dispute Resolution’s governing council and the ADR Committee of the State Bar of California. His services are available through ADR Services, a Los Angeles firm. This artkle is derived from materials the author prepared for California Forms of Pleading and Practke, vol. 4, ch. 39, and California Alternative Dispute Resolution Practice,

1998 by Matthew Bender & to.

in Mediation The definition attorneys favor informs

how they handle the matters their clients entrust to them, and, in many cases, their ability to deliver processes and results that will produce client satisfaction--the critical measure of the degree to which attorneys will succeed, prosper and flourish in the business and practice of law.

In the litigation context, and in many oth- ers, clients often start out in a “clobbering” mode. They may believe they have been “done wrong,” and may want revenge. And more revenge. And more.

This is a serious problem for lawyers. Such a client is almost never satisfied with the result, the process, or with counsel’s per- formance, because the other side, no matter how badly clobbered, rarely has suffered enough. A vengeful client out to clobber generally has a hard time planning, in ad-

(continued on following page)

construction projects, consolidation of arbi- tration proceedings often is important for the parties. Without the provision deeming all arbitrations to come under the domestic law, many disputes undoubtedly would come under the international arbitration regime because of the large number of foreign con- tractors involved in the Airport Core Programme.

Although there are significant differences between the HKG and the AA dispute settle- ment procedures, the same underlying phi- losophy appears evident. Early identification of disputes, prompt initiation of procedures, tight time requirements at each stage, and a multi-tiered process beginning with the least adversarial and confrontational methods are characteristics of the procedures in both HKG and the AA contracts. The overriding objective is to minimize the frequency of disputes, and to resolve those which do ripen as quickly and efficiently as possible.

HOW ARE THEY DOING? Have the HKG and the AA dispute settle- ment procedures been effective? Available information seems to indicate that both pro- cedures have worked well for a project ofsuch magnitude. The information below summa- rizes results available as of July 3 1, 1998.

In connection with the HKG contracts, 126 disputes had been “notified-that is,

Notices of Dispute that were served on the engineer and the other party. Of this num- ber, 116, or 92%, had been resolved. Of that number, 41, or 35%, were settled before me- diation; 60, or 52%, settled within the me- diation stage; eight were resolved in the adjudication stage; and seven at the arbitra- tion stage.

Out of more than 100 AA contracts, 14 disputes were “notified.” Four were resolved at the project manager level. Of the remain- ing 10 disputes, five were consolidated and referred to a Dispute Review Panel follow- ing which, upon rejection of the panel’s de- cision, they were referred to arbitration. Two other disputes went to Dispute Review Panels and two more were referred to arbi- tration.

O n the surface, the statistics would seem to indicate that the procedures have worked well. Of course, it is possible that the govern- ment paid too much to settle or that the con- tractors settled for too little. Certainly, construction of the new airport in Hong Kong, commenced under British colonialism and completed after reversion of sovereignty to China, occurred under unique political cir- cumstances. Further analysis and research would be necessary to determine the criteria used to settle these disputes, what factors might have influenced the settlements, and whether the settlements were reasonable. fi

How Advocacy Fits in Effective Mediation (continued from previous page) vance, the specific result to be achieved or the goal against which success or failure will be measured. No matter what happens to the other side, it could always have been worse! They’re disappointed if adversaries leave the courtroom under their own power without the next stop being the emergency room or the bankruptcy court.

These clients believe that their attorneys have failed them. Yet the lawyers have done all that they can, and produced results which, objectively viewed, are probably pretty good. It hardly serves attorneys’ interests, in the business and practice of law, to have clients who perceive legal work in this way.

Far better is the situation in which the client focuses on the satisfaction of his or her own needs. This client is better able to give clear instructions, based on a clear defi- nition of what success looks like in his or her eyes; for example, recovering sufficient money to pay off a debt, buy a new build- ing, or achieve some other concrete goal. If this client’s own goals are satisfied, it doesn’t matter very much whether the other side suffers a lot, a little, or even at all. After all, the other side’s suffering generally cannot be used to pay your client’s bills, grow your client’s business, or otherwise make your client’s life any better.

Most litigators have been in the frustrating situation of having clients who insist that win-

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ning requires the infliction of unachievable amounts of suffering on the other side, when they would be much better off if they would focus only on setting realistic goals for them- selves, and then working to accomplish them, regardless of what happens to the other side.

resemble closing arguments to a jury. They can be forceful and persuasive.

For each side, it is generally the first op- portunity to see the case as the other side sees it, with the other side’s spin and focus, with the vigor of the other side’s advocacy, as it is

Lawyers wi l l value mediation ski l ls more highly as clients and courts require

more mediation.

This second conception of “the win” should be equally if not more compelling. It benefits the clients as well as the lawyers. It’s measur- able, and so all the more meaningful. It’s a frame of mind which lawyers can, with full integrity, work hard for their clients to adopt.

Mediation has an important role in the pursuit of this second concept of the win. It is a tool that lawyers can use to help clients achieve the measurable, meaningful goal of the satisfaction of their interests.

AN U N E X P E C T E D SOURCE The actual structure of a business mediation shows that it can be a helpful tool in the pur- suit of this worthy end. In the hands of skilled mediators and counsel, the process can be de- signed to minimize the incentives to clobber and enhance the likelihood that the parties will engage in goal-oriented, client-satisfying ne- gotiation. It‘s not magic. It comes from the ability of all parties and counsel to listen and to talk. It‘s typically set in motion at the start of the process. Its effectiveness with the client flows from a source attorneys might not ex- pect- the skill of opposing counsel.

In civil litigation, most mediations begin with a joint session that includes the media- tor, the plaintiff and defendant or their rep- resentatives, and their lawyers. Everyone generally is given the opportunity to talk and the accompanying responsibility to listen. Lawyers generally deliver a summation of the strengths of their case, based on the facts and law available to them. These presentations

likely to be seen by a judge and jury. Attor- neys do this reflexively, almost by rote some- times, when mediation begins. But the benefits of this opening ritual are as vast as they are subtle, and deserve a fuller discus- sion than they usually get. Consider:

When you address the other si&. You have been concerned that the other side is incorri- gibly combative; that it will not respond ra- tionally to a presentation of the true strengths ofyour case. As a result, you have been reluc- tant to show flexibility or openness in nego- tiations. If they are intent on clobbering you, most negotiation “theorists” would acknowl- edge that you are correct to clobber right back.

But when you actually present your case to the other side, face to face, the reaction generally is quite different. The folks on the other side rarely are so stubborn or ideologi- cal about the matter that they fail to respond appropriately to what you have to say. You often can see it on their faces and in their body language, if not hear it in their words. Once you see that the other side is not so incorrigible and responds rationally to you, the incentive to engage in combative rather than collaborative negotiation disappears.

W%en the other side addressesyou. No longer are you and your client ensconced in the com- fort and privacy of your office. In the adver- sary crucible of the mediation, you have the opportunity-if not the obligation-to lis- ten to what the other side has to say. In al- most every case, there are at least two sides

to the story. When you hear the other side spin its tale in its own words, with the vigor of its own advocate, you may realize that your case is not a lead-pipe cinch. Of course, few cases are cinches, particularly when the task of adjudication is left to an often-unpredict- able jury. So another important incentive to engage in combative rather than collabora- tive negotiation is minimized as well.

In mediation after mediation, clients and lawyers so chastened come to change their negotiating tune. The desire for revenge is trumped by a desire for finality: A desire to eliminate the newly perceived enhanced risks of continued litigation; to eliminate the certainty of the mental, emotional and financial drains of continued litigation; and to get on with one’s career and life with a “bird in the hand” settlement that satisfies the client‘s needs reasonably well. It is a clear “win,” albeit differently defined. It is the best opportunity available for the satisfac- tion of the client’s needs. When attorneys enable their clients to achieve this goal, it exquisitely fulfills the obligation under Ethi- cal Consideration 7-1 and California law to represent and advocate clients’ interests with zeal.

The key to all this, however, is profoundly counterintuitive. In mediation, your effec- tiveness as an advocate will vary in direct proportion to that of opposing counsel- not the inverse proportion you might expect in the generally “clobbering” mode of tradi- tional litigation. What you and an effective opponent exchange in powerfd openings are more than tools for each other. They are gifts. They are the stuff lawyers use-typically in private caucuses and with the assistance of the mediator-to disabuse your respective clients of the unrealistic expectations that so often develop, and which fuel the flames of the “craving to clobber.”

In this sense, you and opposing counsel have become each other’s best friends. You have given each other’s clients what you of- ten cannot give your own: The means by which one can achieve a balanced perspec- tive from which rational decision can best be made, with the craving to clobber taking a back seat.

DEALING W I T H BAD NEWS Let’s face it: It’s tough for a lawyer to break bad news to his or her own client. It’s tough on clients, too, to go beyond denial, even when that bad news is broken with candor and compassion. Yet in virtually every un-

settled case, bad news needs to be broken and accepted. In some cases, it’s the other side that needs it. In others, it‘s your side. In most cases, there’s plenty of bad news to go around.

In mediation, you and opposing coun- sel have found uniquely qualified messen- gers to deliver this essential communication-each other. The mediator works along with you to make sure that the bad news is not only delivered to your cli- ent, but also received.

Mediation’s ultimate irony is that each lawyer’s effectiveness in turning his or her own client away from a craving to clobber can depend on the opposing lawyer’s abil- ity to demonstrate that exact clobbering ability in his or her own client’s behalf. Ef- fective mediation advocates, therefore, must be able to hold both conceptions of “the win” in mind simultaneously, side by side, each in its appropriate place, each concep- tion taking the forefront when appropri- ate. Effective mediation advocates need to know how to deal with their own clients after bad news has been broken, to help steer the dialogue to more collaborative, final- ity-oriented paths. Sometimes, it’s just the ability to sit in silence-a silence that may last seconds but seems to take hours and with which so many orally gifted lawyers are uncomfortable-while the client consid- ers his or her choices.

The effective mediation advocate thus needs all of the litigator‘s traditional skills, and other skills as well, and the ability to shift between conceptions of “the win” and different appropriate modes of conduct, fast and often. Lawyers will value this set of skills more and more highly as clients and courts require more and more cases to be medi- ated.

Although many clients and lawyers leave these mediations with some lingering sense of disappointment because they may not get everything they came in to achieve, these settlements generally grow on clients and look better and better with each passing day. Many clients did not realize how painful litigation was until it ended. The lawyer’s most important new skills, therefore, may be the ability to be patient; the ability to give the client time to appreciate the ben- efits of living litigation-free; and the ability to allow the client to take the time neces- sary, both in the mediation and later, to give the lawyer the credit he or she deserves for that result. i

You need a quick answer about a consumer

ADR policy question. Here’s how CPR‘s

Alternotiwes can help: 0 . .

Go to your bookshelf and check “Consumer ADR in the

Alternatives index appearing every February.

0 . .

Log onto the CPR Web site, www.cpradr.org.

Click on PUBLICATIONS, then ALTERNATIVES, then click on

INDEX TO VOLUME 14 (1996), INDEX TO VOLUME 15 (1997)

or INDEX TO VOLUME 16 (1998).

You will find entries for Consumer ADR articles.

0 . .

Go to LEXIS-NEXIS, select the ADR library, then enter

< ahern>. Search “Consumer A D R for all Alternatives

references dating back to 1993 or for the specific titles you

found in an index. 0 . .

Go to WESTLAW, enter <db ALTHCL>. Search

“Consumer ADR for all Alternatives references dating

back to 1991 or for the specific titles you found in an index.