chapter 6 dispute resolution davidson, knowles & forsythe business law: cases and principles in...

CHAPTER 6CHAPTER 6DISPUTE RESOLUTIONDISPUTE RESOLUTION

DAVIDSON, KNOWLES & FORSYTHE DAVIDSON, KNOWLES & FORSYTHE

Business Law: Cases and Principles Business Law: Cases and Principles in the Legal Environmentin the Legal Environment (8 (8thth Ed.) Ed.)

BUSINESS LAW: BUSINESS LAW: Cases & PrinciplesCases & PrinciplesDavidson Davidson • Knowles • Forsythe 8• Knowles • Forsythe 8 thth Ed. Ed.

DISPUTE RESOLUTIONDISPUTE RESOLUTION

Introduction.Introduction.– Chapter discusses questions: Chapter discusses questions:

What is done?What is done?Why it is done? Why it is done? How it all ties together within the How it all ties together within the

workings of the judicial system in a workings of the judicial system in a civil suit?civil suit?

COSTS OF LITIGATIONCOSTS OF LITIGATION

Before pursuing litigation, an individual or Before pursuing litigation, an individual or business should consider the costs.business should consider the costs.

There are direct and indirect costs.There are direct and indirect costs.Amount of fees vary depending on the type Amount of fees vary depending on the type

of litigation.of litigation.Parties should consider alternate dispute Parties should consider alternate dispute

resolution.resolution.

Before pursuing litigation, an individual or Before pursuing litigation, an individual or business should consider the costs.business should consider the costs.

There are direct and indirect costs.There are direct and indirect costs.Amount of fees vary depending on the type Amount of fees vary depending on the type

of litigation.of litigation.Parties should consider alternate dispute Parties should consider alternate dispute

resolution.resolution.

CLIENT’S INTERVIEW CLIENT’S INTERVIEW WITH A LAWYERWITH A LAWYER

Consult your local bar association to refer you to an Consult your local bar association to refer you to an attorney.attorney.

Once having an attorney ask him/her questions.Once having an attorney ask him/her questions.– Including payment terms.Including payment terms.– Opportunities to negotiate or arbitrate a Opportunities to negotiate or arbitrate a

settlement.settlement. Discuss, read, and sign the client-attorney contract. Discuss, read, and sign the client-attorney contract.

Consult your local bar association to refer you to an Consult your local bar association to refer you to an attorney.attorney.

Once having an attorney ask him/her questions.Once having an attorney ask him/her questions.– Including payment terms.Including payment terms.– Opportunities to negotiate or arbitrate a Opportunities to negotiate or arbitrate a

settlement.settlement. Discuss, read, and sign the client-attorney contract. Discuss, read, and sign the client-attorney contract.

INVESTIGATION OF THE INVESTIGATION OF THE FACTSFACTS

Lawyer gathers information concerning the Lawyer gathers information concerning the case.case.

Once all the information is in the file, the Once all the information is in the file, the preliminary investigation is finished. preliminary investigation is finished.

Lawyer determines if there is basis for a Lawyer determines if there is basis for a suit.suit.

Lawyer gathers information concerning the Lawyer gathers information concerning the case.case.

Once all the information is in the file, the Once all the information is in the file, the preliminary investigation is finished. preliminary investigation is finished.

Lawyer determines if there is basis for a Lawyer determines if there is basis for a suit.suit.

NEGOTIATION OF A NEGOTIATION OF A SETTLEMENTSETTLEMENT

Letter of notice is sent to the defendant.Letter of notice is sent to the defendant.Defendant negotiates a settlement with the Defendant negotiates a settlement with the

plaintiff.plaintiff.Plaintiff can accept or reject the settlement.Plaintiff can accept or reject the settlement.If plaintiff rejects settlement can initiate a If plaintiff rejects settlement can initiate a

suit by filing a complaint before the statute suit by filing a complaint before the statute of limitation expires.of limitation expires.

Letter of notice is sent to the defendant.Letter of notice is sent to the defendant.Defendant negotiates a settlement with the Defendant negotiates a settlement with the

plaintiff.plaintiff.Plaintiff can accept or reject the settlement.Plaintiff can accept or reject the settlement.If plaintiff rejects settlement can initiate a If plaintiff rejects settlement can initiate a

suit by filing a complaint before the statute suit by filing a complaint before the statute of limitation expires.of limitation expires.

A CIVIL SUITA CIVIL SUIT

Filing the Suit.Filing the Suit.Pretrial Proceedings.Pretrial Proceedings.The Trial.The Trial.Post-Trial Proceedings.Post-Trial Proceedings.A Comment on Finality.A Comment on Finality.

Filing the Suit:Filing the Suit:– Complaint should be definite and contain Complaint should be definite and contain

sufficient information for the defendant to sufficient information for the defendant to understand the nature of the litigation.understand the nature of the litigation.

– The defendant is served with a copy of the The defendant is served with a copy of the complaint.complaint.

– If defendant does not answer the complaint, the If defendant does not answer the complaint, the court will enter a default judgement. Defendant court will enter a default judgement. Defendant files an answer, trial process begins. files an answer, trial process begins.

Filing the Suit:Filing the Suit:– Complaint should be definite and contain Complaint should be definite and contain

sufficient information for the defendant to sufficient information for the defendant to understand the nature of the litigation.understand the nature of the litigation.

– The defendant is served with a copy of the The defendant is served with a copy of the complaint.complaint.

– If defendant does not answer the complaint, the If defendant does not answer the complaint, the court will enter a default judgement. Defendant court will enter a default judgement. Defendant files an answer, trial process begins. files an answer, trial process begins.

A CIVIL SUITA CIVIL SUIT Pretrial Proceedings:Pretrial Proceedings:

– Depositions.Depositions.– Interrogations.Interrogations.– Production of Documents and Things.Production of Documents and Things.– Physical or Mental Examination.Physical or Mental Examination.– Request for Admission.Request for Admission.– The Result of Discovery.The Result of Discovery.– Pretrial Conferences.Pretrial Conferences.– Demurrer.Demurrer.– Motion to Dismiss.Motion to Dismiss.– Motion for a Summary Judgment.Motion for a Summary Judgment.

Pretrial Proceedings:Pretrial Proceedings:– Depositions.Depositions.– Interrogations.Interrogations.– Production of Documents and Things.Production of Documents and Things.– Physical or Mental Examination.Physical or Mental Examination.– Request for Admission.Request for Admission.– The Result of Discovery.The Result of Discovery.– Pretrial Conferences.Pretrial Conferences.– Demurrer.Demurrer.– Motion to Dismiss.Motion to Dismiss.– Motion for a Summary Judgment.Motion for a Summary Judgment.

A CIVIL SUITA CIVIL SUIT The Trial:The Trial:

– Jury Selection.Jury Selection.– Removal of Judges.Removal of Judges.– Opening Statements.Opening Statements.– Direct Examination.Direct Examination.– Expert Witnesses.Expert Witnesses.– Cross-examination.Cross-examination.– Motion for a Directed Verdict.Motion for a Directed Verdict.– Closing Arguments.Closing Arguments.– The Verdict.The Verdict.– Judgment.Judgment.

The Trial:The Trial:– Jury Selection.Jury Selection.– Removal of Judges.Removal of Judges.– Opening Statements.Opening Statements.– Direct Examination.Direct Examination.– Expert Witnesses.Expert Witnesses.– Cross-examination.Cross-examination.– Motion for a Directed Verdict.Motion for a Directed Verdict.– Closing Arguments.Closing Arguments.– The Verdict.The Verdict.– Judgment.Judgment.

Post-Trial Proceedings:Post-Trial Proceedings:– Motion for a New Trial.Motion for a New Trial.– Appeal.Appeal.

A Comment on Finality:A Comment on Finality:– All appeals have been exhausted.All appeals have been exhausted.– The court issues a final judgement.The court issues a final judgement.– The subject matter of the lawsuit is finally The subject matter of the lawsuit is finally

decided between both parties.decided between both parties.

Post-Trial Proceedings:Post-Trial Proceedings:– Motion for a New Trial.Motion for a New Trial.– Appeal.Appeal.

A Comment on Finality:A Comment on Finality:– All appeals have been exhausted.All appeals have been exhausted.– The court issues a final judgement.The court issues a final judgement.– The subject matter of the lawsuit is finally The subject matter of the lawsuit is finally

decided between both parties.decided between both parties.

NEED FOR ALTERNATIVES NEED FOR ALTERNATIVES TO A CIVIL SUITTO A CIVIL SUIT

Lawsuits are expensive and time-Lawsuits are expensive and time-consuming.consuming.

Businesses may prefer an alternative form Businesses may prefer an alternative form of dispute resolution.of dispute resolution.

Lawsuits are expensive and time-Lawsuits are expensive and time-consuming.consuming.

Businesses may prefer an alternative form Businesses may prefer an alternative form of dispute resolution.of dispute resolution.

ADRADRADRADR

ADR: Methods of resolving disputes other than ADR: Methods of resolving disputes other than traditional litigation.traditional litigation.

Involves various alternatives.Involves various alternatives. Allowing parties to settle legal disputes without Allowing parties to settle legal disputes without

courts.courts. Generally voluntary, but often written into Generally voluntary, but often written into

contract language.contract language. Legislatures and some courts require ADR Legislatures and some courts require ADR

procedures for settling differences.procedures for settling differences.

ADR: Methods of resolving disputes other than ADR: Methods of resolving disputes other than traditional litigation.traditional litigation.

Involves various alternatives.Involves various alternatives. Allowing parties to settle legal disputes without Allowing parties to settle legal disputes without

courts.courts. Generally voluntary, but often written into Generally voluntary, but often written into

contract language.contract language. Legislatures and some courts require ADR Legislatures and some courts require ADR

procedures for settling differences.procedures for settling differences.

ADR: BENEFITSADR: BENEFITSADR: BENEFITSADR: BENEFITS

Lessens burden of judicial system.Lessens burden of judicial system.Quicker and less expensive than litigation.Quicker and less expensive than litigation.May help businesses avoid becoming May help businesses avoid becoming

adversaries.adversaries.Encourages partnering and building better Encourages partnering and building better

business relationships.business relationships.

Lessens burden of judicial system.Lessens burden of judicial system.Quicker and less expensive than litigation.Quicker and less expensive than litigation.May help businesses avoid becoming May help businesses avoid becoming

adversaries.adversaries.Encourages partnering and building better Encourages partnering and building better

business relationships.business relationships.

ADR: OPTIONSADR: OPTIONSADR: OPTIONSADR: OPTIONS

Negotiation.Negotiation.Mediation.Mediation.Arbitration.Arbitration.

NEGOTIATIONNEGOTIATIONNEGOTIATIONNEGOTIATION

Earliest and simplest form of ADR.Earliest and simplest form of ADR. Involves discussion and resolution of controversy.Involves discussion and resolution of controversy. Requires parties to recognize logic in handling Requires parties to recognize logic in handling

dispute without resorting to the courts.dispute without resorting to the courts. Demands compromise and finding common Demands compromise and finding common

ground.ground. Parties must be willing to negotiate.Parties must be willing to negotiate.

Earliest and simplest form of ADR.Earliest and simplest form of ADR. Involves discussion and resolution of controversy.Involves discussion and resolution of controversy. Requires parties to recognize logic in handling Requires parties to recognize logic in handling

dispute without resorting to the courts.dispute without resorting to the courts. Demands compromise and finding common Demands compromise and finding common

ground.ground. Parties must be willing to negotiate.Parties must be willing to negotiate.

MEDIATIONMEDIATIONMEDIATIONMEDIATION

Involves the use of a third party.Involves the use of a third party.Helps parties reach mutually acceptable Helps parties reach mutually acceptable

resolution to dispute.resolution to dispute.Listens and coaches parties in finding Listens and coaches parties in finding

compromise.compromise.Usually involves an impartial third party Usually involves an impartial third party

without financial or professional ties to the without financial or professional ties to the parties to the dispute.parties to the dispute.

Involves the use of a third party.Involves the use of a third party.Helps parties reach mutually acceptable Helps parties reach mutually acceptable

resolution to dispute.resolution to dispute.Listens and coaches parties in finding Listens and coaches parties in finding

compromise.compromise.Usually involves an impartial third party Usually involves an impartial third party

without financial or professional ties to the without financial or professional ties to the parties to the dispute.parties to the dispute.

MEDIATION METHODSMEDIATION METHODSMEDIATION METHODSMEDIATION METHODS

Caucusing: mediator meets with each party Caucusing: mediator meets with each party to the dispute separately.to the dispute separately.

Shuttle Mediation: parties to the dispute are Shuttle Mediation: parties to the dispute are physically separated and mediator runs physically separated and mediator runs messages between them.messages between them.

Confidentiality critical for mediation Confidentiality critical for mediation methods to succeed.methods to succeed.

Caucusing: mediator meets with each party Caucusing: mediator meets with each party to the dispute separately.to the dispute separately.

Shuttle Mediation: parties to the dispute are Shuttle Mediation: parties to the dispute are physically separated and mediator runs physically separated and mediator runs messages between them.messages between them.

Confidentiality critical for mediation Confidentiality critical for mediation methods to succeed.methods to succeed.

MEDIATIONMEDIATION

Standards of Conduct:Standards of Conduct:– Model standards of conduct for mediators has Model standards of conduct for mediators has

been drafted.been drafted.– Standards are non-binding.Standards are non-binding.– Standards concentrate on the similarities Standards concentrate on the similarities

between the approaches.between the approaches.Compensation:Compensation:

– No hard-and-fast rule regarding the No hard-and-fast rule regarding the compensation of mediators. compensation of mediators.

Standards of Conduct:Standards of Conduct:– Model standards of conduct for mediators has Model standards of conduct for mediators has

been drafted.been drafted.– Standards are non-binding.Standards are non-binding.– Standards concentrate on the similarities Standards concentrate on the similarities

between the approaches.between the approaches.Compensation:Compensation:

– No hard-and-fast rule regarding the No hard-and-fast rule regarding the compensation of mediators. compensation of mediators.

ARBITRATIONARBITRATIONARBITRATIONARBITRATION

Out of court procedure for settling dispute.Out of court procedure for settling dispute. Dispute submitted to one or more neutral parties Dispute submitted to one or more neutral parties

referred to as an arbitrator.referred to as an arbitrator. Arbitrator’s decision is binding and is called an Arbitrator’s decision is binding and is called an

award.award. Parties can not appeal arbitrator’s decision.Parties can not appeal arbitrator’s decision. Should party fail to comply with award, other Should party fail to comply with award, other

party files petition with court seeking party files petition with court seeking enforcement.enforcement.

Out of court procedure for settling dispute.Out of court procedure for settling dispute. Dispute submitted to one or more neutral parties Dispute submitted to one or more neutral parties

referred to as an arbitrator.referred to as an arbitrator. Arbitrator’s decision is binding and is called an Arbitrator’s decision is binding and is called an

award.award. Parties can not appeal arbitrator’s decision.Parties can not appeal arbitrator’s decision. Should party fail to comply with award, other Should party fail to comply with award, other

party files petition with court seeking party files petition with court seeking enforcement.enforcement.

Controls on Arbitration:Controls on Arbitration:– States have developed their own individual States have developed their own individual

approaches and laws to address arbitration approaches and laws to address arbitration issues.issues.

– Federal Arbitration Act covers all transactions Federal Arbitration Act covers all transactions involving interstate commerce.involving interstate commerce.

– EEOC v. Waffle HouseEEOC v. Waffle House (2002). (2002).

Controls on Arbitration:Controls on Arbitration:– States have developed their own individual States have developed their own individual

approaches and laws to address arbitration approaches and laws to address arbitration issues.issues.

– Federal Arbitration Act covers all transactions Federal Arbitration Act covers all transactions involving interstate commerce.involving interstate commerce.

– EEOC v. Waffle HouseEEOC v. Waffle House (2002). (2002).

ARBITRATIONARBITRATIONARBITRATIONARBITRATION Statutory Coverage:Statutory Coverage:

– Arbitration is not exclusively applied to state-law Arbitration is not exclusively applied to state-law issues.issues.

– Arbitration is applicable at state, national, and Arbitration is applicable at state, national, and international levels.international levels.

– Statutory law is clarified by judicial interpretation at all Statutory law is clarified by judicial interpretation at all levels.levels.

– Federal Arbitration Act provides federal guidelines to Federal Arbitration Act provides federal guidelines to follow.follow.

– At the international level, arbitration regulated by UN At the international level, arbitration regulated by UN Convention on Recognition and Enforcement of Convention on Recognition and Enforcement of Arbitral Awards.Arbitral Awards.

Statutory Coverage:Statutory Coverage:– Arbitration is not exclusively applied to state-law Arbitration is not exclusively applied to state-law

issues.issues.– Arbitration is applicable at state, national, and Arbitration is applicable at state, national, and

international levels.international levels.– Statutory law is clarified by judicial interpretation at all Statutory law is clarified by judicial interpretation at all

levels.levels.– Federal Arbitration Act provides federal guidelines to Federal Arbitration Act provides federal guidelines to

follow.follow.– At the international level, arbitration regulated by UN At the international level, arbitration regulated by UN

Convention on Recognition and Enforcement of Convention on Recognition and Enforcement of Arbitral Awards.Arbitral Awards.

Organizations:Organizations:– Numerous organizations which support Numerous organizations which support

arbitration and provide forum for arbitration to arbitration and provide forum for arbitration to occur and the arbitrator.occur and the arbitrator.

– These include American Arbitration These include American Arbitration Association, Judicial Arbitration and Mediation Association, Judicial Arbitration and Mediation Services, Federal Mediation and Conciliation Services, Federal Mediation and Conciliation Board, and the International Chamber of Board, and the International Chamber of Commerce.Commerce.

Organizations:Organizations:– Numerous organizations which support Numerous organizations which support

arbitration and provide forum for arbitration to arbitration and provide forum for arbitration to occur and the arbitrator.occur and the arbitrator.

– These include American Arbitration These include American Arbitration Association, Judicial Arbitration and Mediation Association, Judicial Arbitration and Mediation Services, Federal Mediation and Conciliation Services, Federal Mediation and Conciliation Board, and the International Chamber of Board, and the International Chamber of Commerce.Commerce.

MINITRIALMINITRIALMINITRIALMINITRIAL

Procedure to settle dispute between Procedure to settle dispute between companies.companies.

Informal, out-of-court procedure.Informal, out-of-court procedure.Conducted by neutral advisor.Conducted by neutral advisor.Involves shortened case presentation. Involves shortened case presentation. Senior executives from both parties dispute, Senior executives from both parties dispute,

who try to reach mutually agreeable who try to reach mutually agreeable settlement.settlement.

Procedure to settle dispute between Procedure to settle dispute between companies.companies.

Informal, out-of-court procedure.Informal, out-of-court procedure.Conducted by neutral advisor.Conducted by neutral advisor.Involves shortened case presentation. Involves shortened case presentation. Senior executives from both parties dispute, Senior executives from both parties dispute,

who try to reach mutually agreeable who try to reach mutually agreeable settlement.settlement.

RENT-A-JUDGE TRIALRENT-A-JUDGE TRIALRENT-A-JUDGE TRIALRENT-A-JUDGE TRIAL

Procedure entails parties to dispute hiring a judge.Procedure entails parties to dispute hiring a judge. Judge hears their case and renders judgment.Judge hears their case and renders judgment. Quicker and less expensive than normal trial.Quicker and less expensive than normal trial. Proceedings are private and do not become part of Proceedings are private and do not become part of

the public record.the public record. Typically decisions made through this alternative Typically decisions made through this alternative

can be appealed to public appellate courts.can be appealed to public appellate courts.

Procedure entails parties to dispute hiring a judge.Procedure entails parties to dispute hiring a judge. Judge hears their case and renders judgment.Judge hears their case and renders judgment. Quicker and less expensive than normal trial.Quicker and less expensive than normal trial. Proceedings are private and do not become part of Proceedings are private and do not become part of

the public record.the public record. Typically decisions made through this alternative Typically decisions made through this alternative

can be appealed to public appellate courts.can be appealed to public appellate courts.

SMALL CLAIMS COURTSMALL CLAIMS COURTSMALL CLAIMS COURTSMALL CLAIMS COURT

Relatively quick and inexpensive way of Relatively quick and inexpensive way of resolving small legal disputes.resolving small legal disputes.

Do not utilize legalese and standard rules of Do not utilize legalese and standard rules of evidence.evidence.

Public courts with limited subject matter Public courts with limited subject matter jurisdictionjurisdiction

Relatively quick and inexpensive way of Relatively quick and inexpensive way of resolving small legal disputes.resolving small legal disputes.

Do not utilize legalese and standard rules of Do not utilize legalese and standard rules of evidence.evidence.

Public courts with limited subject matter Public courts with limited subject matter jurisdictionjurisdiction

chapter 6 dispute resolution davidson, knowles & forsythe business law: cases and principles in...

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