What are the first thoughts that come into our minds when we think about courts? Probably noisy courtrooms, stressful time, unfair outcomes, and aggressive feelings. Still there are few things more dreadful than litigation; damaged relationships with clients, bad reputation and waste of time and money. On the other hand, litigation constantly increases due to the complexity of new business markets. How often are both sides’ interests satisfied? How can courts solve disputes in the most beneficial way if the judge has limited options? As a result, isn’t a newly oriented legal market better than an old limited one?
The Adversarial system
The main idea behind the adversarial procedure is the win-lose method. Litigation tends to produce winners and losers –not solution to common problems. Everyday practice in the courts reveals that the parties need to satisfy other interests than their actual position. On the other hand, the “good” lawyer has to show his power not at the negotiations table, which is considered merely a “prerequisite” for the actual hearing, but by fighting and yelling in the courtroom. As a result, it is nowadays a fact that even “new entries” in the legal profession prefer to follow these certain established paths rather than opening new legal horizons. The hearing is probably an easy means for lawyers to prove their skills and, of course, to get paid.
Negotiation: An Alternative Dispute Resolution (ADR) Method
The constantly increasing business market has created new standards that are more complex and require quicker and more efficient solutions. Therefore, the legal profession had to invent practical methods as alternatives to litigation. In negotiations, the parties seek to resolve a disagreement or plan of transaction through discussions, which may include reasoned argument. Discussions are conducted between the parties themselves or through representatives. Negotiation is applicable in almost all kinds of legal cases of civil and commercial law. The main idea is to keep disputes out of court. The goal is clear; elements of disagreements (conflicts, disputes) are communicated based on reasoned arguments in order to reach an agreement. Norms of reciprocity require mutual exchange. This is a quite unusual rule given “the hostility and the paraphernalia of lawsuits”, because the parties have to handle interpersonal conflicts during the process, which makes the task hard and often risky, if the negotiators are not well qualified. The method of “principled negotiation” can impose mutual gains and fair standards and is a strong basis for the lawyers to secure their clients’ interests. For example:
§ In labour law cases the negotiators should focus on interests, not on positions
§ In divorce law cases the parties should separate the people from the problem
The figure shows the possibility to add value when integrating bargaining is used as negotiation method. See the range of wasted value left unused! The lost possibility frontier is converted into a positive externality, if negotiators try to communicate on common ground and result in positive-sum conditions.
There are two basic orientations towards negotiation; the adversarial orientation of claiming value and the problem-solving orientation of creating value. The difficulty in applying negotiation is to exercise on creating value. In most legal cases, the goal is to win. Since the win-lose logic refers to distribution of limited recourses, the zero-sum game seems to be the only solution; one party gets everything and the other nothing. Even when judges choose to accept a claim partly, the hostility of the lawsuit itself does not allow full satisfaction of interest. Contested cases cannot satisfy both sides. That’s why negotiation as a preparatory stage is important in building trust between parties that allows an open and genuine communication. Through this process the objective is to find the common ground of interdependent interests and to create value by expanding the pie (win-win method). As a result, efficiency is accomplished and lawyers have the opportunity of serving the public as a whole.
The Greek Law
How easy is it to apply theory in practice? Negotiation as an ADR process would have been to no avail, if this theoretical background had not been part of the official legislation in some kind of form. In Greece, the new law under article 6 of L. 2479/1997 and article 18 of L.2743/1999 which amended article 214A of the Code of Civil Procedure (and took effect in September of 2000) indicates an obligatory negotiation in the pre-trial stage of contested cases. Here the parties and their representatives are expected to enter into an essential negotiation before the court hearing and attempt to solve their dispute before the case enters the court. The law can be applied in civil cases subject to the Three-Member District Court (except for cases of divorce, annulment of marriage and labour law disputes). It is known that most civil law cases brought before the Three-Member District Court deal with disputes of high amounts, where great business interests are at stake. The legislator wants to leave the opponents the last chance to overcome their disputes within a reasonable period before the first hearing. Accordingly, the legal process results in an agreement reached by the parties alone and confirmed by the judge, making the agreement both binding and enforceable.
1. The effort to build a collaborating environment turns our legal system into a flexible and fast way to overcome conflicts, since it leaves many choices to the users to reveal true interests. The weight of resolution is transferred outside the courts, which reduces public costs and offers litigants the opportunity to save time and money.
2. The purpose of legislation is to discharge the load of the court hearings; it formally encourages individuals to self-regulate their disputes.
3. Negotiation as a pre-trial stage deals with cases wisely and efficiently; clients settle voluntarily, exchange information directly, and control the situation. Lawyers collect more information, expand knowledge to the maximum by interviewing clients, earn time to research and read. Negotiation does not reduce lawyer’s obligations. On the contrary, he has to brainstorm to find areas of common ground, prepare backup plans, identify personality characteristics, control behaviours and apply particular negotiation techniques during face-to-face discussions (avoid cycles, ask the right questions, summarize the progress). As a result, strong and confident representatives promote deeper and better negotiation standards based on objective criteria, establish trust and help to maintain good relationships between the parties. Additionally, the fact that the judge verifies the terms of agreement provides durability, because the parties believe in the fairness of the settlement.
4. Unlike relevant procedures in other countries, the Greek law does not foresee the involvement of a judge at this stage. As a result, lawyers who participate in negotiations shoulder the task of an “early judge” role. Taking advantage of the new horizons of activity expansion and economic growth, we are talking about a new age in legal culture that can restructure the essence of legal science, since the core will be friendlier to litigants, lawyers and judges.
5. Out-of-court settlement allows negotiators to reform their positions. In cases of lawsuits, parties are bound by their positions as stated in the text, once the action is filed. On the contrary, when parties choose to negotiate they can constantly brainstorm, adjust positions to the new facts, point out more than one promising ideas, make new offers and use their Best Alternative to a Negotiated Agreement (BATNA- a reference point that helps the negotiator evaluate offers and measures success; it is not wise to settle too far from it). Each party can improve his/her BATNA by exchanging recourses –for example legal opinions, relevant law cases, legal remedy-,which increases negotiation power and can even weaken the other side’s power. When practising negotiation, leverage -the power to reach an agreement on your own terms- can become a relevant issue and roles can change sides according to the success of each side to manipulate the case better inside and outside the court.
1. The law enforces no legal ”penalty” against the party that did not appear in the negotiations and the fact is not negatively estimated and does not produce evidence against him. As a result, the value of the negotiation pre-stage is disabled and remains of no importance to the main procedure (the best secret to gain commitment in a contract is to put in a penalty clause so that each party pays a price for failing to perform). The court simply ratifies the minutes and continues with the hearing (art. 214A par. 8b).
2. Furthermore, the reasons of the settlement’s failure are not discussed or mentioned in the court’s ruling. It might be helpful if the court were to consider them and include them in its ruling, so that each side feels the pressure of responsibility or the guilt of low efforts (art. 214A par. 7).
3. Some lawyers comment that a barrier in use of the art. 214A of Code of Civil Procedure does not produce res judicata but simply confirms the volition of the parties.
4. Two related factors that are important to mention are the legal working hours and the payment issue. It is believed that alternative dispute resolution methods reduce legal fees. Therefore, the number of lawyers specialized in consultancy services are relatively small compared to the lawyers practicing litigation exclusively. In the U.S., the same rate is 90/10! American legal practitioners have applied ADR techniques, which leaves 90% of all lawsuits settled out of court. The lawyer’s effort to prepare for negotiation, to protect the client’s interests and to find the common ground of shared interests should be accordingly awarded in monetary terms. The issue for the Greek legal professional is to evaluate its possibilities under a different point of view. Lawyers should first feel confident and then convince their clients of a new mentality that can help achieve superior outcomes for all interested parties.
5. This statement brings us to unfamiliarity. Most lawyers are taught to exercise their legal knowledge on a static basis that they consider as safe. Although legal consultancy is gaining supporters over the last few years, everyday practice has shown quite a lack of expertise in the negotiation battle and, therefore, a lack of clients’ trust to settle disputes out of court. On the other hand, clients seem to seek for the traditional court solution to their cases, even if the suggestion to negotiate has important benefits.
The American legal system already enjoys the advantages of intensive use and the philosophy behind negotiation as an alternative in dealing with conflicts.
§ Alternative Dispute Resolution as a formal technique and an accepted business practice emerged in the U.S. in the 1970s.
§ U.S. corporations pay more than $ 20 billion a year to litigation attorneys –an alarming fact that distracts our attention from other and more important business costs.
§ 90% of all lawsuits are settled out of court
§ The Centre for Public Resources has published a corporate policy statement on ADR for signature by a company’s CEO and chief legal officer. In the Athens Bar Association such document does not even exist as a draft.
§ Over 600 large corporations adopted the ADR policy statement suggested by the Centre for Public Resources, and many of these companies reported considerable savings in time and money. These companies evaluate lawyers not only on lawsuits won or lost but also on disputes avoided and relationships preserved. To managers maintaining a relationship with the customer is more important that the letter of the contract.
Workplace Conflict: Facts and Figures by John Ford (July 2000)
Retrieved from: http://www.mediate.com/articles/Ford1.cfm
The Greek system does not seem to promote “the mutually acceptable resolution of dispute” and insists on the traditional paths, although there are many promising but still limited signs willing to establish negotiation practices. Unfortunately, the new law remains largely ineffective. Phrasal gaps that weaken legal validity impede alternative dispute resolution mechanisms. On the other hand, the need for better-educated lawyers due to the total absence of Alternative Dispute Resolution courses in law schools could be gradually covered by introducing such courses in the basic curricula of Greek Law Schools. Thus, with the exception of the civil or commercial law cases that are strictly subject to court jurisdiction pursuant to article 214A of the Code of Civil Procedure, cases of divorce and labour law could also be settled in legal offices on a more sophisticated basis. Since it is a fact that disputes will constantly arise whenever different interests are at stake in a society, changes in our way of thinking should take place in early steps of every activity. Negotiation is at the bottom line a technique and as such, it can be taught and practiced. After all, winning is of course a matter of results, but also the satisfaction of doing your best to get it…