april 5, 2006
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www.GovContractsLitigation.com April 5, 2006
Presented by:Richard L. HansonMark G. Jackson
Beyond Mediation and Arbitration:How to Effectively Use ADR in Government Contracts Disputes
www.GovContractsLitigation.com
Interests and Perspectives
Common interests: o Successful contract completion
o Workplace safety
o Dispute avoidance or resolution
o Maintain good business relationship- Not all relationships are the same
- Contract performance continues despite dispute
- Past performance evaluations are important
Differing perspectiveso 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 neutralso Pre-set levels, time allowed
Dispute review board o 1 or more neutrals (3’s typical)o Resource during performanceo Mediation, not arbitration
Partneringo Communication and comfort fosteredo Early get-acquainted sessions, shared mission
Commitment to ADRo 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 litigationo Telephone depositions
o Telephone hearings
o Aggressive trial schedules
o 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
- Desire for vindication
- 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?
Earlyo Contractor has the advantageo Virtually eliminate costs of claim prosecution
After, or in conjunction with, basic discoveryo Can achieve comfort level through limited discoveryo Bulk of litigation costs not yet incurred
When discovery’s complete, trial is loomingo Good opportunity for risk assessmento Significant litigation costs ahead, plus disruption
Post-trial, pre-decisiono Weakest—or strongest—bargaining positiono Little to be saved, except decision time lag
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Effect of Forum Selection
Board v. Court (some factors)o BCAs and CoFC on same levelo Procedural rigor, higher cost with courto Greater expertise probable with BCAo But, that depends on which BCA and which judge
Agency v. DOJo Greater settlement flexibility with agencyo More procedural hurdles with DOJo More genuine interest in ADR at some agencieso But, what if you can’t get along with agency?o 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
Fact-finding
Settlement judge
Advisory opinion
Outcome prediction
Binding arbitration
Two-step
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 findingo Neutral selected by parties
o Usually with subject matter expertise
o If good chance of settlement, disagree on damages
o If complex issue, wish to narrow issues
o If opposition needs realistic view
Mediation (Settlement Judge)o Neutral participant in settlement negotiations
o Broad “zone of reasonableness”
o If creative problem solving, flexibility is needed
o Recognition of merit to each side’s case
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Selecting the Right ADR Method
Outcome predictiono Structured presentations by each sideo Seeking to resolve case, or specific issueso Neutral predicts legal or fact-based decisionso Useful if opposition needs realistic view of case
Mini-Trial (not a trial)o Neutral plus decision-maker from each sideo Expedited, but structured presentationo Presentations of both facts and lawo Neutral as facilitator after presentations
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Selecting the Right ADR Method
Summary trial with binding decisiono Expedited appeal scheduleo Try appeal informally before judge(s)o Agreement to abide by bench decisiono If need for rapid decision, no precedento If opposition needs realistic view
Arbitrationo Neutral third-party reviews evidence, argumentso Could be binding or non-binding (advisory)o Useful if parties disagree on, e.g., damageso 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 Neutralo Often difficult to achieve (but shouldn’t be)
o Cover timing, boundaries, process, procedures, etc., etc.
o Define Neutral’s role
o Have Neutral agree to parties’ terms
Considerations:o Audito Changes to agreemento Confidentialityo Costs, fees, expenseso Discoveryo Documentso Evidentiary (un)availabilityo Form of decision
o Location o Motion practiceo Neutralo Participantso Position papero Recordo Schedule for ADR (when)o Schedule/form presentationso Termination of agreemento 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---------------------------
Avoid showy glitz (distracting)
But make it smooth
Focus on key documents
Electronic presentation if affordable-----------------------------
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
Questions?
Thank you!
Please contact us anytime with additional questions.
Richard Hansonrichardh@prestongates.com
Mark Jacksonmjackson@prestongates.com
For more information on government contracts litigation issues, please visit www.GovContractsLitigation.com.
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