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April 5, 2006

www.GovContractsLitigation.com. April 5, 2006. Beyond Mediation and Arbitration: How to Effectively Use ADR in Government Contracts Disputes. Presented by: Richard L. Hanson Mark G. Jackson. Interests and Perspectives. Common interests: Successful contract completion Workplace safety

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April 5, 2006

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  1. www.GovContractsLitigation.com April 5, 2006 Beyond Mediation and Arbitration: How to Effectively Use ADR in Government Contracts Disputes Presented by: Richard L. HansonMark G. Jackson

  2. Interests and Perspectives • Common interests: • Successful contract completion • Workplace safety • Dispute avoidance or resolution • Maintain good business relationship • Not all relationships are the same • Contract performance continues despite dispute • Past performance evaluations are important • Differing perspectives • Contractor—bottom line • Government—regulatory, legal principles

  3. Tools Available Tools available (in preferred order): • Dispute avoidance techniques • Settlement, negotiated resolution • ADR • Litigation

  4. Dispute Avoidance, Early Resolution Contractual provisions for: • Issue escalation • Uses existing structure, no added neutrals • Pre-set levels, time allowed • Dispute review board • 1 or more neutrals (3’s typical) • Resource during performance • Mediation, not arbitration • Partnering • Communication and comfort fostered • Early get-acquainted sessions, shared mission • Commitment to ADR • Shared reassurances, typically high-level

  5. 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 litigation • Telephone depositions • Telephone hearings • Aggressive trial schedules • Selective motion practice (in limine, etc.)

  6. Because Our Focus is Federal . . . . ADR Is U.S. Public Policy (examples) • Administrative Dispute Resolution Act (ADRA), 5U.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)

  7. 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

  8. 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

  9. 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

  10. 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)

  11. ADR Pro/Con? It depends

  12. ADR Advantages (Contrast w/Litigation) • Cost • Speed • Lessens Impact on Business Relationship • Recovery • Non-precedential, unpublished

  13. 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

  14. 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.

  15. 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

  16. ADR—Timing, When Should It Be Considered? • Early • Contractor has the advantage • Virtually eliminate costs of claim prosecution • After, or in conjunction with, basic discovery • Can achieve comfort level through limited discovery • Bulk of litigation costs not yet incurred • When discovery’s complete, trial is looming • Good opportunity for risk assessment • Significant litigation costs ahead, plus disruption • Post-trial, pre-decision • Weakest—or strongest—bargaining position • Little to be saved, except decision time lag

  17. Effect of Forum Selection • Board v. Court (some factors) • BCAs and CoFC on same level • Procedural rigor, higher cost with court • Greater expertise probable with BCA • But, that depends on which BCA and which judge • Agency v. DOJ • Greater settlement flexibility with agency • More procedural hurdles with DOJ • More genuine interest in ADR at some agencies • But, what if you can’t get along with agency? • Money issues

  18. 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

  19. 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

  20. Selecting the Right ADR Method • Fact finding • Neutral selected by parties • Usually with subject matter expertise • If good chance of settlement, disagree on damages • If complex issue, wish to narrow issues • If opposition needs realistic view • Mediation (Settlement Judge) • Neutral participant in settlement negotiations • Broad “zone of reasonableness” • If creative problem solving, flexibility is needed • Recognition of merit to each side’s case

  21. Selecting the Right ADR Method • Outcome prediction • Structured presentations by each side • Seeking to resolve case, or specific issues • Neutral predicts legal or fact-based decisions • Useful if opposition needs realistic view of case • Mini-Trial (not a trial) • Neutral plus decision-maker from each side • Expedited, but structured presentation • Presentations of both facts and law • Neutral as facilitator after presentations

  22. Selecting the Right ADR Method • Summary trial with binding decision • Expedited appeal schedule • Try appeal informally before judge(s) • Agreement to abide by bench decision • If need for rapid decision, no precedent • If opposition needs realistic view • Arbitration • Neutral third-party reviews evidence, arguments • Could be binding or non-binding (advisory) • Useful if parties disagree on, e.g., damages • Binding arbitration, U.S. has right to renege

  23. 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?

  24. ADR Agreement • Very important, for parties and Neutral • Often difficult to achieve (but shouldn’t be) • Cover timing, boundaries, process, procedures, etc., etc. • Define Neutral’s role • Have Neutral agree to parties’ terms • Considerations: • Audit • Changes to agreement • Confidentiality • Costs, fees, expenses • Discovery • Documents • Evidentiary (un)availability • Form of decision • Location • Motion practice • Neutral • Participants • Position paper • Record • Schedule for ADR (when) • Schedule/form presentations • Termination of agreement • Witnesses

  25. 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

  26. Unavoidables • Claim certification • Government may withdraw after decision, within 30 days after arbitration award, 5U.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.”

  27. Conclusion • The stakes are high • There’s a lot to consider • It’s worth the effort

  28. 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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