IS A DECISION TO IGNORE ADR STILL COMPATIBLE WITH TODAY’S COMPLIANCE REQUIREMENTS?
“See you in court” is not simply a remark heard on the lips of litigious individuals; it also reflects a response from in-house legal departments. If a conflict is about to escalate beyond the level that can be solved in-house, the case is taken to court. This hitherto quite normal and unchallenged approach is influenced by three considerations:
Default effect. Among the discoveries made by researchers in the field of psychology, including the Nobel prize winners Kahnemann and Tversky, is the so-called ‘default effect’. People faced with a glut of available options react by not making any changes to their already established options or opinions. Especially over recent years, the spectrum of conflict resolution tools available has broadened. When confronted with such a multitude of variables, falling back on the tried and tested solution – court proceedings – can easily seem the simplest, quickest and ultimately the most comfortable solution.
Concept of delegation. The ‘concept of delegation’ is a further contributing factor. Legal departments often tend to have a diversified line-up. Handing the matter over to an external litigator at an early stage and instructing him to pursue or defend the claims in court is an approach which appears at first glance to preserve the legal department’s resources.
Compliance duties. The awareness of having to take compliance duties into proper account is another consideration that can make court action appear the optimal solution par excellence. Court proceedings were, after all, seen for many years as being the gold standard among conflict resolution tools. Anyone taking his dispute before a judge could feel confident that his choice was unassailable.
Given the range of conflict resolution instruments available today, these arguments are suitable only to a limited extent.
Apr-Jun 2015 issue
White & Case