In-house lawyers ´must educate CEOs´ about ADR

In-house lawyers need to educate company CEOs about the benefits of alternative dispute resolution [ADR] methods, attendees at an event in Madrid heard.

Noah Hanft, president and CEO of CPR [International Institute for Conflict Prevention & Resolution], said it was important to raise awareness among CEOs – as well as CFOs and chief procurement officers – about the business case for ADR.

“Alternatives to litigation are the best way to go and this ethos needs to be embedded in the organisation and needs to drive the way contracts are created,” said Hanft, who was speaking at an event hosted by Herbert Smith.

“We need to move towards a mediation culture through the efforts of in-house counsel.”

Hanft, who was formerly general counsel at MasterCard WorldWide, added that the “beauty of mediation” is that you fashion a solution that meets the needs of the parties. “The value of mediation is parties own the process and the parties agree to construct the process – every contract should have a CPR mediation provision,” he said.

Blanca Rivilla Calle, head of compliance and legal at the Ahorro Corporación, echoed the view that it is important to “take the discussion [about ADR] to non-lawyers”.

She added that Spain was “far behind” other jurisdictions on this issue. “It´s important because cost is important,” she said. “Arbitration is close to litigation in terms of cost and the relationship with the counterparty [in arbitration] is the same as litigation, but arbitration takes less time, and, in my case, time is of the essence.”

Maurice J. H. Kuitems, managing general counsel at Fluor – which has signed the “CPR pledge” that commits organisations to exploring ADR options before pursuing litigation – said that signing the pledge made it easier for companies to talk as the believed in the CPR ethos.

“It´s important to be clear up front what procedure to follow – first we move the matter up to the CEOs to try and resolve the dispute,” he added. Kuitems said litigation can damage a company´s reputation. “If you litigate for many years, it´s bad for your reputation and you may not get a chance to work with the client again.”

Kuitems argued that there was sometimes a perception that mediation had “something soft to it”. However, he added that companies must accept there are “other ways to resolve disputes rather than do it the hard way”. Yet, companies often have misconceptions about mediation, Kuitems said. “They [companies] often ask who will be the mediator – they think the mediator will decide, but they merely facilitate, the parties decide.”