Business Conflict Blog by Peter Phillips
Jean-Claude Najar has labored in the fields for General Electric in such onerous assignments as Florence and Paris. He nevertheless maintained his good cheer, and from his new position as international counsel at Curtis, Mallet-Provost, Colt & Mosle he has contributed a terse and sane statement of best practices, appearing in the September 2014 edition of IBA’s publication Business Law International. The title is Corporate Counsel in the Era of Dispute Management 2.0.
Najar, his colleague Michael McIlwrath, his former colleague PD Villarreal, and others at General Electric were responsible for pounding into my head two distinctions. The first was the concept of “dispute management” rather than “dispute resolution,” and the other was “Early Dispute Resolution” rather than “Alternative Dispute Resolution.” Pondering the implications of the distinctions they were making — and trying to master the practice of requiring Early Case Assessments from outside counsel — led to an appreciation of commercial conflict practices that has framed my thinking ever since.
In his recent article, Najar credits Villarreal with the perception that “reducing litigation costs would require transforming GE’s legal policy fundamentally,” implicating not only an institutionalized ADR program but “changing how lawyers viewed their role, how the company viewed its legal docket and how managers worked with lawyers to handle disputes.” Najar — quite correctly in my view — cites the resulting realignment as a paradigm for multinational companies involved in the global economy.
Central to the redefinition of the role of the lawyer in the company is the critical concept of conflict management. Disputes conclude either through agreement or adjudication, and the former is far more business-rational (as well as less expensive to accomplish). So companies have evolved, says Najar, to incorporate management of disputes into their culture, for “true pragmatic/economic reasons.” In the case of GE Oil & Gas, Najar hired Michael McIlwrath to “manage” (rather than “prosecute”) the company’s litigation docket, yielding a reduction in large litigations from 143 in 1999 to 25 in 2002. Najar cites such initiatives as the CPR Pledge as prompting efficient, realistic dispute management policies, and the 2013 Fidal/AAA/ICDR survey as documenting their impact.
Increased company involvement in international arbitration proceedings has also been salutary. As the primary users of the process, says Najar, “companies have made real efforts to regain control over their disputes by increasing their involvement in the decision-making process related to arbitration,” arising from the understanding that “arbitration could not be perceived separately from the conflict itself that led to the arbitral process,” and therefore mediation and other conflict management tools played a vital role in the resolution of many disputes.
The key to modern corporate conflict management is “corporate culture, communication and a more horizontal involvement of the legal department.” Early Dispute Resolution protocols act as a “toolkit” encouraging business managers to assess the costs of pending disputes and to consider creative — business-oriented — ways to solve them.Among the resources at the disposal of corporate managers is the newly launched Effective Management of Arbitration: a Guide for In-house Counsel and Other Party Representatives, released 6 June 2014.
Few commentators emphasize, as Najar does, the role of leadership at the highest executive level in order for the culture shift to take place on which change depends. General Electric’s experience continues to act as a rewarding case study.