key decision points in effectively managing disputes
TRANSCRIPT
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Key decision points in effectively managing disputes
Gitanjali Bajaj & Kirk Simmons
DLA Piper
19 March 2015
Introduction
This session will outline the key decision points for the effective management of disputes during the following stages:
Stage 1: Drafting the dispute resolution ("DR") clause in your contract
Stage 2: When a dispute first manifests itself
Stage 3: When formal proceedings are commenced
Stage 4: When formal proceedings are well underway
Stage 5: Hearing
Stage 6: Settlement
Stage 7: When the final decision is delivered
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Key Decision Points – Stage 1
DRAFTING THE DR CLAUSE IN YOUR
CONTRACT
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1. Drafting the DR clause in your contract
Hypothetical Co Pty Ltd ("Hypothetical") and Theoretisch Co GMBH ("Theoretisch") are negotiating a contract for the supply of widgets.
The in-house legal team at Hypothetical is asked for legal advice about the dispute resolution clause proposed by Theoretisch:
"1. All disputes arising out of the performance of the contract, and during the term of this contract, shall be submitted in accordance with clause 2 below.
2. If either party informs the other of a potential dispute, the parties must negotiate with a view to resolving the dispute. If the negotiations fail, either party may refer the dispute to expert determination in accordance with clause 2.1 or either party may refer the matter to mediation. If either party informs the other that it is dissatisfied with the expert determination, the dispute may be referred to arbitration in accordance with clause 2.2."
What do we think about this DR clause?
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Hypothetical could counter with the following clause:1. If a dispute arises from or in connection with this contract, a party to the contract must notcommence court proceedings in relation to the dispute unless the party has participated in amediation in accordance with paragraphs 2 and 3 of this clause. This paragraph does apply toan application for urgent interlocutory relief.
2. A party to this contract claiming that a dispute has arisen from the contract must give writtennotice specifying the dispute to the other party (or parties) to the contract. Within 28 days ofservice of a notice, senior representatives from the parties must negotiate in good faith with aview to resolving the dispute.
3. If the dispute has not been resolved within 28 days after the date of the notice of dispute,either party may refer the dispute to mediation in accordance with clause X at the Institute ofArbitrators and Mediators Australia ("IAMA") using the IAMA mediation rules in force as at thedate of the dispute.
The words highlighted in green are important – why?
What other matters should Hypothetical have considered?
Hope for the best but plan for the worst
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1. Drafting the DR clause in your contract
Key Decision Points – Stage 2
WHEN A DISPUTE FIRST MANIFESTS ITSELF
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2. When a dispute first manifests itself
Theoretisch receives a customer complaint about awidget.
Theoretisch contacts Hypothetical by telephone andalleges that the widgets supplied by Hypothetical arefaulty and that Hypothetical is in breach of the Contract.
This allegation is raised immediately with in-house legal.
What should we do?
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2. When a dispute first manifests itself
Review the DR Clause
Understand the key issues in dispute and revisit the best/most appropriate forum in which to have the matter resolved
Ensure that you satisfy any mandatory negotiations/mediation process before proceedings are formally commenced
Take such mandatory steps seriously with a genuine attempt to resolve the dispute
Early case evaluation
Early assessment of witnesses
What else?
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2. When a dispute first manifests itself
Choose the right legal team!
Do you need external counsel?
Critical assessment of the law firm/lawyer's experience and track record
Don’t be afraid to ask to speak to other clients when testing a lawyer out
Be wary of the generalist "I can do it all" lawyer
Drill down to specifics when asking questions of your lawyer's experience
For the right case (usually high value), get a second opinion on the early case evaluation.
For the right case (e.g. bet the company litigation) set up a devil's advocate legal team.
Even consider mix and match the best from different law firms (controversial but potentially on the rise)
Do you need a law firm, or are you better off briefing counsel direct?
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Key Decision Points – Stage 3
WHEN FORMAL PROCEEDINGS ARE
COMMENCED
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3. When formal proceedings are
commenced
Theoretisch serves Hypothetical with a Statement of Claim.
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3. When formal proceedings are
commenced
Key Decisions/Considerations
Is the dispute in the correct forum?
Do you need to apply for any emergency relief?
Cost/benefit analysis of continuing the formal proceedings
What else?
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Key Decision Points – Stage 4
WHEN FORMAL PROCEEDINGS ARE
UNDERWAY
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4. When formal proceedings are well
underway
Key Decisions/Considerations:
Evaluate the case as it evolves
Stay involved with the formal proceedings e.g. directions
Discovery considerations
Lay evidence preparation
Expert evidence preparation
Protection of Costs
Trial management
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Key Decision Points – Stage 5
HEARING
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5. Hearing
Parties should agree to the key issues early
Court bundle
Opening statements
Aide (e.g. schedule of admissions / concessions)
Cross-examination
Schedule of issues linked to cross-examination
Questions from the Bench
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Key Decision Points – Stage 6
SETTLEMENT
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6. Settlement
In managing disputes, you need to ask in each case, "are we there yet?" when it comes to resolving a claim
The key is knowing when to ask the question
At each stage ask yourself: "will the settlement odds change prior to the next stage (and why)?"
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Key Decision Points – Stage 7
WHEN THE FINAL DECISION IS DELIVERED
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7. When the final decision is delivered
The Court hands down judgment in favour of Hypothetical. What else is there to do?
Get a written opinion on the meaning and effect of the decision
Does the decision resolve all the issues?
What will be the approach to unresolved issues?
Are any urgent preservation orders necessary?
Can the decision be appealed? Note time limits
Review your effort to protect costs
Calderbank letter / Offer of Compromise
Is there a basis to argue indemnity costs?
Manage cost recovery efficiently.
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Key Contacts
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Gitanjali Bajaj
Partner
T: 02 9286 8440
Kirk Simmons
Senior Associate
T: 02 9286 8111