April 5, 2006

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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
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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
• Contractorbottom line
• Governmentregulatory, legal principles

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Tools Available

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

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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 (3s 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

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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 litigation
• Telephone depositions
• Telephone hearings
• Aggressive trial schedules
• 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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ADRDOJ GuidelinesFactors 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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ADR5 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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ADRDOJ GuidelinesFactors 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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ADRAdditional 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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ADRWhether ADR Should Be Considered

• There isnt a case where
• ADR should not be considered.
• There isnt a case where
• litigation should not be considered.
• Likely success or loss in litigation shouldnt
  determine whether to settle.
• Finding a good settlement is why you settle.

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ADRTiming, When Should It Be Considered?

• ADR Practice Tip 2
• Implement your decision to use ADR at the
  appropriate time (its 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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ADRTiming, 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 discoverys complete, trial is looming
• Good opportunity for risk assessment
• Significant litigation costs ahead, plus
  disruption
• Post-trial, pre-decision
• Weakestor strongestbargaining position
• Little to be saved, except decision time lag

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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 cant get along with agency?
• Money issues

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ADRChoosing 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 isnt a trial)
• Structured settlement process
• Summary trial with binding decision

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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 sides case

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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

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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

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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, records published)
• Cost?

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ADR Agreement

• Very important, for parties and Neutral
• Often difficult to achieve (but shouldnt be)
• Cover timing, boundaries, process, procedures,
  etc., etc.
• Define Neutrals 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

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Making a Successful Presentation

• Provide pre-presentation package
• Focus on whats 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
• Theres a lot to consider
• Its worth the effort

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Questions?
Thank you! Please contact us anytime with
additional questions. Richard Hansonrichardh_at_pre
stongates.com Mark Jacksonmjackson_at_prestongates.
com For more information on government
contracts litigation issues, please visit
www.GovContractsLitigation.com.