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(This is a repost from my blog, In Search of Perfect Client Service. Because the arbitration program described below is a ValoremNext product offering, I wanted the discussion to be available here as well.)

Litigation costs too much. Why? Because it is overburdened with process and tolerated but unnecessary excess.  And who benefits from the focus on process and needless discovery and motion practice? Lawyers.  Who designs the processes and rules for discovery?  Lawyers. And who benefits economically from this focus on rules and process? Lawyers.

Lawyers are the problem, not the solution.  While no solution is perfect and lawyers cannot be entirely eliminated from dispute resolution, it is possible to design a solution that gets to fair results quickly with drastically lower costs.

For small cases, much of the cost results from activity with little substantive impact and cases resolve based on the cost of prosecuting or defending the matter rather than on the merits of the dispute.  Parties negotiate from extremes, which makes resolution that much more difficult.

To take the lawyers out of the equation, as well as their costly focus on process and rules, ValoremNext has designed a simple arbitration solution for small cases. Founder Nicole Auerbach, a certified arbitrator, acts as a neutral, using this simplified approach which ensures resolution in under 60 days:

  1. The parties sign a simple agreement consenting to the Valorem Arbitration Program. 2. There is an initial conference, lasting only one hour, within a week after the agreement is signed.  Each party is represented by a business person, who is the party’s spokesman.  A lawyer may join to advise the client.
  2. In the initial conference, each side will explain its view of the dispute, and identify whether the other party has any information essential to a fair evaluation. Each party will also identify what documents it has to support its claims or defenses, including damages.
  3. The initial conference will end with an agreement or order on when each side is to produce its supporting documents and whether any other documents must be produced. There will be presumption against producing large volumes of documents and no fishing expeditions will be permitted.
  4. In the initial conference, the parties will agree or the arbitrator will decide whether a single, one-hour maximum deposition will be permitted by each side and who the deponent will be.
  5. Three weeks after the initial conference, the parties will submit a brief not exceeding 5 double spaced pages, laying out their claims or defenses and arguments for their position.
  6. Within 10 days, the parties will meet telephonically for the hearing. Each side will have 30 minutes to make its case to the arbitrator and the parties will answer any questions the arbitrator has.
  7. Within one hour of the conclusion of the hearing, each side must submit a confidential email to the arbitrator setting forth its proposed resolution.
  8. Within one day, the arbitrator will choose one of the two offers. There is no baby-splitting or compromise of the two submitted offers.  The decision will be announced by forwarding the accepted proposal to the parties with a brief explanation of what factors determined the acceptance of that position.  This explanation will not exceed two paragraphs.
  9. During the period the arbitrator is considering the matter, the parties may share their proposals with each other and attempt to work out a resolution.

The total time from signing the agreement to conclusion is less than 60 days.  The cost of the arbitration is $7500 or 7% of the amount at issue, whichever is greater.  Each party will pay 50% of the fee, unless the parties agree otherwise or a clause in an operative contract says otherwise.

With minimal lawyer involvement, the total expense per party on a $100,000 claim, including legal fees, should be under $5000.

This is a far cheaper and faster way to resolve a dispute than any existing option, and I tip my hat to my partner, Nicole Auerbach, for this client-focused approach. The details and needed documents for the program on available on Valorem’s website.

Preventing legal problems from ever occurring does not happen serendipitously.  It is a matter of design, intention and execution.  In Life at the Speed of Prevention, we will devote a number of posts to the design of a prevention program.  And I want to introduce two dominant topics in this post.

  1. A proper After Action Assessment program is the most important tool you can deploy to prevent problems from arising.

This sounds like a no-brainer.  I suspect many people will say they regularly do after actions.  But the adjective used, proper, is critical because the two subtopics are not natural, at least for lawyers.  The subtopics are:

  1. Proper After Action Assessments require an environment where people are free to admit mistakes.

 

If people feel compelled to lie or cover-up mistakes in order to avoid real or perceived recriminations, the A3 program is doomed by dishonesty.

 

  1. Proper After Action Assessments must focus on what was done or not done, not who did or did not do it. We use the short-hand “nameless and rankles” to describe this attribute.

 

  1. A proper After Action Assessment must be leveraged and require changes in behavior.

It accomplishes little if one person’s lessons are not widely shared.  Absent sharing, multiple people must experience the same problem so they can each learn to avoid the outcome that first person to learn the lesson experienced.  We call this “Leveraging Lessons Learned,” or L3.  The corollary of this topic is that for After Action Assessments, behavior must change.  The “same old same old” is not a change in behavior and wastes the power of A3s.

Each of these topics and subtopics will be explored as we move forward with this blog.  We hope you’ll contribute your insights to these posts so our discussion is robust and valuable.

 

I’m not a lawyer, I’m a race car driver.  Before telling you why this matters at all, perhaps I should augment the “About Me” section of this blog with some personal reflection.  I retired from the company I served for over 20 years – yes,  a bit early.  I left my seat at the table at a major corporation not because I was tired, or done, or frustrated, or conflicted – I left because I wasn’t done.  I’m worried about the future of the legal profession.  It is pricing itself out of reach of normal people and companies – and that’s the real tragedy of today’s legal market – the real access to justice problem does not involve just the poor, the oppressed, the weak, and the disenfranchised – it involves each and every one of us who needs reliable, affordable, and access to practical legal advice and counsel.  If it doesn’t fix itself, the legal services industry as we know it today will be irrelevant and customers will find new ways.  If we don’t build it ourselves, we have neither the right to complain about what results, nor the assurance that we’ll have any role in the waves of change to come.

So, back to those seemingly different “About Me” roles.  In each of those roles — except for maybe the race car driver – the primary attribute, the distinguishing feature, is not knowledge but wisdom – or what some might call judgment.  Knowledge can be taught.  Experience gained.  But wisdom is that “secret sauce” of the practical application to the situation presented.  Access to, and delivery of, that practical knowledge is what really makes the teacher, the parent, the counselor– and yes the lawyer– relevant and ultimately valued.  All too often, our wisdom is disregarded and mistakes and problems occur.  But the very best do not judge.  They don’t say “I told you so” or “If only you’d listened.” No, the very best understand that the past cannot be changed – it can only form the basis for behavior in the future.  And just like the best teacher is not only a great lecturer, the best lawyer is not the smartest or the most polished advocate. The very best of the best demonstrate and walk their own talk.  The very best in our profession are counselors, not lawyers.

But why do I mention this race driver thing?  Many race drivers are a lot like many lawyers – brash, smart, individual contributors, leaders not followers. But the very best drivers understand the value of teamwork and planning.  Races are won from preparation, and the best preparation is based on focusing on what went well and what not so much in past performances.  The performance phase of the P3 circle of Plan-Perform-Perfect is actually the least important of the three – but that’s where the glory is.  That’s where the heroic act, the brilliant pass, the skillful navigation though a pile up, the incredibly quick pit stop, can be witnessed.  Innate talent can make a difference sporadically, but only relentless planning, immaculate teamwork, and selfless reflection to improve provide the consistent platform for sustainable success.

I’ve started this blog because I want to explore these areas, issues and ideas.  I’m sure I’ll digress from time to time, but I’m committed to returning to a very a simple proposition:  The best legal problem  is the one you never have.  That’s what prevention is all about.  That’s the future of law. That’s NextLaw. That’s why we’ve created ValoremNext.  That’s its vision and its mission.

I hope you’ll stay tuned.  I hope you’ll join this conversation.  But even more than that, I hope you’ll join me on this journey.

 

Since we launched ValoremNext last fall, I have been asked countless times why we did so.  To those asking, it seems illogical for a litigation boutique to create a business designed to prevent litigation and other legal problems.  Those asking don’t understand that at our core, Valorem is not a litigation firm and the lawyers who work here are not litigators.  We are, instead, problem solvers.  At our core, we believe in providing value to our clients—it is, after all, our name. (Valorem is Latin for “value”.)

All too frequently, problems end up in court, so it is only natural that all of us honed our skills as trial lawyers. But, as trial lawyers, we see that our clients rarely want to be in court.  The want the problem solved quickly, and even better, they don’t want to have a problem at all. Their business is selling products and services, and problems and lawsuits are an impediment, big or small, that distracts from the business objective, making and selling products and services.

ValoremNext merges our experience with solving problems with Jeff Carr’s experience preventing them.  I saw numbers once that astounded me.  FMC Technologies, the Company where Jeff served as General Counsel for more than a decade, had grown from a $1.7 billion company to nearly an $8 billion company during his tenure.  And the Legal Department spend had remained essentially flat for that period.  Given the increased cost of outside counsel, the Company’s global footprint and many other factors, those numbers are amazing.  Jeff answered the question of how he had accomplished this with one word—prevention.  I needed to learn more, and over the years where Jeff was my client, I did.

Prevention is not an activity.  It is a mindset, a way of viewing one’s job.  But that mindset translates to activities that yield the output.  For Jeff, the question he always had was whether his approach at FMC Technologies would work elsewhere. For us, the question was how we could translate the FMC Technologies experience for our clients’ benefit.  It was the same question from different angles.  That led to our shared enterprise.

We believed the focus on prevention was timely.  Law departments are being asked to do more with less every year, and “the less” needs to accomplish more and more every year. Law departments have been pushing the efficiency envelope for years, and there is only so much that can be cut before the patient truly suffers.  Prevention is the only logical next step law departments will take to address their more-with-less conundrum.

Why did we call the shared enterprise ValoremNext?  The name flowed from Jeff’s view of the development of law.  There was Old Law, which was focused on inputs, well, actually on time as an input.  New Law was still focused on time as an input, but was working to reduce the cost of time.  A labor arbitrage model, as it were. Engaged Law was where providers focused on outputs and charged for results, not hours.  This is where Valorem planted its flag in 2008.  And then there is Next Law, which is entirely about eliminating the need for legal services to begin with.  Prevention.  Avoidance.  Call it what you will, but the premise is that virtually every legal problem can be avoided.  Next Law was an evolutionary opportunity for Valorem—hence ValoremNext.

There may be no other litigation firm focused on helping clients prevent litigation.  Indeed there may be no other firms so focused on preventing legal problems in the first place.

Why ValoremNext? Because Valorem is about delivering real value to our clients.