Transcript Slide 1

www.GovContractsLitigation.com
April 5, 2006
Beyond Mediation and Arbitration:
How to Effectively Use ADR in
Government Contracts Disputes
Presented by:
Richard L. Hanson
Mark G. Jackson
Interests and Perspectives
 Common interests:
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Successful contract completion
Workplace safety
Dispute avoidance or resolution
Maintain good business relationship
- Not all relationships are the same
- Contract performance continues despite dispute
- Past performance evaluations are important
 Differing perspectives
o Contractor—bottom line
o Government—regulatory, legal principles
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Tools Available
Tools available (in preferred order):
o Dispute avoidance techniques
o Settlement, negotiated resolution
o ADR
o Litigation
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Dispute Avoidance, Early Resolution
Contractual provisions for:
 Issue escalation
o Uses existing structure, no added neutrals
o Pre-set levels, time allowed
 Dispute review board
o 1 or more neutrals (3’s typical)
o Resource during performance
o Mediation, not arbitration
 Partnering
o Communication and comfort fostered
o Early get-acquainted sessions, shared mission
 Commitment to ADR
o Shared reassurances, typically high-level
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Dispute Resolution, Streamlining Tools
 Traditional, unassisted settlement negotiations
 Dispositive motions
 Cases decided solely on the record
 Expedited/Accelerated Appeals (120-180 days)
 ADR
 Compressed, accelerated litigation
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Telephone depositions
Telephone hearings
Aggressive trial schedules
Selective motion practice (in limine, etc.)
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Because Our Focus is Federal . . . .
ADR Is U.S. Public Policy
(examples)
 Administrative Dispute Resolution Act
(ADRA), 5 U.S.C. §§ 581-593
 Executive Order No. 12998 (Feb. 5, 1996)
 FAR 33.204 (disputes & appeals, ADR policy)
 32 C.F.R. § 34.53 (grants & agreements)
 FAR 8.406-6 (Federal Supply Schedules)
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ADR—DOJ Guidelines—Factors Favoring ADR
 Continuous relationship between parties
 Client needs to hear from opposing side
 Party would be influenced by neutral
 Unrealistic opposition
 Need for swift resolution
 Complex facts, technical complexity
 Hostile forum (or, perceived problems w/judge)
 Flexibility in relief is desired
 Trial preparation will be difficult, costly, or lengthy
 Need to avoid adverse precedent
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ADR—5 USC § 572(b): “consider not using if”
 Precedential decision is needed
 Significant government policy issues that require
procedural development
 Maintaining established policy is important
 Significantly affects non-parties
 Full public record is important
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ADR—DOJ Guidelines—Factors Disfavoring
 Case likely to settle soon without assistance
 Case likely to be resolved efficiently by motion
 Opposing counsel are not trustworthy
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ADR—Additional Considerations
+ Communication difficulties between parties
+ Communication difficulties between lawyers
and their clients
+ Facts sufficiently developed within time span
+ Lawyers are willing to consider ADR
+/- Factual or technical complexity
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Desire for vindication
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Fraud is involved (FAR 33.210)
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ADR Pro/Con?
It depends
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ADR Advantages (Contrast w/Litigation)
 Cost
 Speed
 Lessens Impact on Business Relationship
 Recovery
 Non-precedential, unpublished
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ADR Disadvantages (Contrast w/Litigation)
 Risk of inconsistent results
 Non-precedential, unpublished
 Limited opportunities to learn
 Discovery rules provide disclosure enforcement
 Fewer safeguards for truth
 Settlement funding issues
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ADR—Whether ADR Should Be Considered
 There isn’t a case where
ADR should not be considered.
 There isn’t a case where
litigation should not be considered.
 Likely success or loss in litigation shouldn’t
determine whether to settle.
 Finding a good settlement is why you settle.
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ADR—Timing, When Should It Be Considered?
ADR Practice Tip #2:
“Implement your decision to use ADR at the
appropriate time (it’s never too late, but it
may be too early).”
--ASBCA Administrative Judge Carol N. Park-Conroy,
January 19, 2006 ABA Teleconference Program
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ADR—Timing, When Should It Be Considered?
 Early
o Contractor has the advantage
o Virtually eliminate costs of claim prosecution
 After, or in conjunction with, basic discovery
o Can achieve comfort level through limited discovery
o Bulk of litigation costs not yet incurred
 When discovery’s complete, trial is looming
o Good opportunity for risk assessment
o Significant litigation costs ahead, plus disruption
 Post-trial, pre-decision
o Weakest—or strongest—bargaining position
o Little to be saved, except decision time lag
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Effect of Forum Selection
 Board v. Court (some factors)
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BCAs and CoFC on same level
Procedural rigor, higher cost with court
Greater expertise probable with BCA
But, that depends on which BCA and which judge
 Agency v. DOJ
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Greater settlement flexibility with agency
More procedural hurdles with DOJ
More genuine interest in ADR at some agencies
But, what if you can’t get along with agency?
Money issues
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ADR—Choosing the Process
ADR Practice Tip #3:
“Use an ADR process that is right for the
dispute at hand, taking into consideration the
personalities of the parties and the lawyers,
and craft an ADR agreement that can
implement that process.”
--ASBCA Administrative Judge Carol N. Park-Conroy,
January 19, 2006 ABA Teleconference Program
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Selecting the Right ADR Method
 Mediation
 Outcome prediction
 Fact-finding
 Binding arbitration
 Settlement judge
 Two-step
 Advisory opinion
 Mix & Match
 Mini-trial (which isn’t a trial)
 Structured settlement process
 Summary trial with binding decision
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Selecting the Right ADR Method
 Fact finding
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Neutral selected by parties
Usually with subject matter expertise
If good chance of settlement, disagree on damages
If complex issue, wish to narrow issues
If opposition needs realistic view
 Mediation (Settlement Judge)
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Neutral participant in settlement negotiations
Broad “zone of reasonableness”
If creative problem solving, flexibility is needed
Recognition of merit to each side’s case
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Selecting the Right ADR Method
 Outcome prediction
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Structured presentations by each side
Seeking to resolve case, or specific issues
Neutral predicts legal or fact-based decisions
Useful if opposition needs realistic view of case
 Mini-Trial (not a trial)
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Neutral plus decision-maker from each side
Expedited, but structured presentation
Presentations of both facts and law
Neutral as facilitator after presentations
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Selecting the Right ADR Method
 Summary trial with binding decision
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Expedited appeal schedule
Try appeal informally before judge(s)
Agreement to abide by bench decision
If need for rapid decision, no precedent
If opposition needs realistic view
 Arbitration
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Neutral third-party reviews evidence, arguments
Could be binding or non-binding (advisory)
Useful if parties disagree on, e.g., damages
Binding arbitration, U.S. has right to renege
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Choosing the Right Third Party Neutral
 What distinguishes ADR is assistance of Neutral;
thus selection is very important
 Fish early (and foster early involvement)
 Temperament (different folks for different scenarios)
 Experience, expertise
 Lack of bias
 Track record (BCA judges, record’s published)
 Cost?
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ADR Agreement
 Very important, for parties and Neutral
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Often difficult to achieve (but shouldn’t be)
Cover timing, boundaries, process, procedures, etc., etc.
Define Neutral’s role
Have Neutral agree to parties’ terms
 Considerations:
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Audit
Changes to agreement
Confidentiality
Costs, fees, expenses
Discovery
Documents
Evidentiary (un)availability
Form of decision
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Location
Motion practice
Neutral
Participants
Position paper
Record
Schedule for ADR (when)
Schedule/form presentations
Termination of agreement
Witnesses
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Making a Successful Presentation
 Provide pre-presentation package
 Focus on what’s really important
 Good results depend on good advocacy
 Think about presenters, audience
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 Avoid showy glitz (distracting)
 But make it smooth
 Focus on key documents
 Electronic presentation if affordable
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 Practice, be prepared
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Unavoidables
 Claim certification
 Government may withdraw after decision,
within 30 days after arbitration award,
5 U.S.C. § 580(b)
“The award in an arbitration proceeding shall
become final 30 days after it is served on all
parties. Any agency that is a party to the
proceeding may extend this 30-day period for an
additional 30-day period by serving a notice of
such extension on all other parties before the end
of the first 30-day period.”
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Conclusion
 The stakes are high
 There’s a lot to consider
 It’s worth the effort
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Questions?
Thank you!
Please contact us anytime with additional questions.
Richard Hanson
[email protected]
Mark Jackson
[email protected]
For more information on government contracts litigation issues, please visit
www.GovContractsLitigation.com.