Early Dispute Resolution: An Overview
Early dispute resolution (EDR) is a relatively new dispute resolution strategy. From the outset, it is acknowledged that EDR is not appropriate in all cases. But, in those cases in which it can be utilized effectively, it offers parties a uniquely different – cost-effective and efficient – alternative dispute resolution strategy.
EDR is designed to enable the parties and their lawyers to meaningfully and insightfully evaluate the value of a dispute without the necessity of going through the process of full-blown litigation. Ideally, it is a process engineered to guide the parties to an outcome that theoretically is within a reasonable range of values upon which a settlement would be reached if a lawsuit followed a traditional timeline.
From the outset, the goal of EDR is for each party to have “Sufficient Knowledge”, which is defined “as enough information to understand the merits of each side’s position and leverage, and to make an informed judgment as to the value of each side’s case.”
The key to EDR being effective is the agreement, trust, and candor between the parties and their respective counsel. When parties and their counsel participate in EDR, they are aided by a neutral who guides them through a four-step process aimed to help them resolve the conflict in as little as 30 days.
Here’s how it is designed to work:
Step One: Initial Dispute Assessment
In this first step, the parties and their lawyers begin gathering information from their side (e.g., employees), determining who the key witnesses are likely to be, and identifying the core claims and defenses in the dispute. Additionally, the parties determine what they don’t know and what, if anything, they need to know to meaningfully engage in the EDR process. Working with the neutral, the parties will not “go on a fishing expedition”; but, rather, will endeavor to identify only that information needed to understand the merits of each side’s case and leverage.
Step Two: Information Exchange
In this phase, the parties exchange the information gathered during Step One and request information from the other side based upon the assessment of what is needed to obtain Sufficient Knowledge. Parties are ethically committed to produce the information reasonably requested from the other side without regard to whether it is deemed helpful or hurtful to the case. If a party refuses, the attorney is obligated to end the EDR process.
Recognizing that trust can be a factor, the EDR Protocols available on the EDR Institute website (www.edrinstitute.org) allow the parties to ask each other to declare in writing that a “Compliant Response” has been provided during the Information Exchange. A “Compliant Response” is one in which (i) the client has made a reasonably diligent, good faith search for information and documents, and produced the reasonably responsive information and documents; (ii) the client has not narrowly construed requests for information or documents to withhold material information or documents; and (iii) party witnesses, or witnesses under the party’s control have made reasonably responsive and accurate answers to questions.
Step Three: Objective Dispute Valuation
If both sides have ethically engaged in Steps One and Two they each should have Sufficient Knowledge in this phase. It should now be possible to establish a risk-analysis valuation for the dispute utilizing defined variables.
In this phase, for most disputes, each party should be able to ask and answer the following six questions (although adjustments may need to be made for different causes of action and complex matters):
- How much does each side expect to spend on attorneys’ fees and expenses to take the case through trial?
- What would be the best and worst outcome for each side at trial?
- Recognizing that the worst and best outcomes simply set outer limits, what is the reasonably likely range of damages from winning or losing (high, middle, low) on the core/material claims/counterclaims in the dispute, expressed in percentages?
- Given the likely range of damages as to each material claim or defense, what is the likelihood of prevailing as to each number in the range?
- Forecasting the estimated possible case outcomes, how should they be discounted by the predicted likelihood of their occurring?
- What is the leverage factors apart from legal considerations in the case?
Each party should be able to answer these questions in a written report to be used as part of its negotiation and settlement strategy, and be willing to provide a copy of the report to the other side and to the neutral. This allows each party to assess the other’s analysis and allows the neutral to know how each party is viewing the case. From this information, the parties are in a position to negotiate.
Step Four: Final Resolution
In this phase, the parties negotiate – either directly with each other or with the assistance of the neutral – to try to reach a final resolution. If informal talks do not successfully resolve the conflict, a formal mediation may be conducted at this time. Ideally, substantive bargaining will begin much earlier in the formal mediation process which should result in a smaller time commitment.
If a settlement is not reached, the parties may still litigate.
A Note About Legal Fees
Alternative fee arrangements are able to create incentives for lawyers who achieve favorable results for their clients in a shorter period of time. For example, in “Planned Early Dispute Resolution User Guide” published by the American Bar Association the following was offered as one way to adjust a legal fee arrangement to promote early resolution:
“A fee arrangement for a party interested in resolving a matter promptly could provide bonuses for resolving the matter (meeting designated goals) within specified periods. For example, the lawyers might receive a 15% bonus if the matter is resolved in 90 days, a 10% bonus if resolved within 180 days, and a 5% bonus if resolved within 270 days.”
As zealous advocates, lawyers strive to obtain the best possible outcome for their clients. When lawyers are successful in obtaining such an outcome in a way that reduces the client’s overall financial investment, it is reasonable to encourage appropriate incentivized compensation.
If you are interested in learning more about EDR or want to consider using it in your effort to resolve a dispute, Felicia has been trained by the EDR Institute and is available to assist.
Felicia Harris Hoss
is an attorney-mediator, arbitrator, and early dispute resolution (EDR) neutral, with more than 20 years of legal experience. Through the years, Felicia has helped parties resolve disputes both inside and outside of the courtroom in a wide range of industries involving a broad spectrum of claims. Felicia is available to assist parties and their counsel through online, hybrid, and in-person mediations, arbitrations, and EDR processes.
