Recently, I suggested that surgeon-author Atul Gawande's Checklist Manifesto pointed the way toward a more effective and efficient means of responding to frivolous claims than potentially protracted litigation. Skeletal checklists for just such dispute resolution processes are already in daily use by peer mediators in our public schools.  Because those lists are scalable, they can be readily adapted to address conflicts of far greater sophistication and complexity with minimal effort.

But before the solution,

The Problem

If your physician suggested 17th century medical treatment today - the use of leeches or "bleeding" to relieve your suffering -  patient and physician would soon be packed off to a quiet mental hospital for treatment.   Yet we continue to use dispute resolution processes little changed since the British abolished the Star Chamber in 1641 and enshrined the jury trial as the preferred Anglo-American response to conflict.

It is not simply the age of our adversarial processes that make them inefficient and ineffective today.   The system is inefficient because it has become encrusted with thousands of layers of procedural "improvements" over the course of 400 years - improvements that burden the ship of justice in the way barnacles weigh down ancient square-rigged Brigantines.  And they are ineffective because they are consistently and demonstrably prone to error.

As  the research reported in Beyond Right and Wrong:  the Power of Effective Decision Making for Attorneys suggests, the only sensible way to evaluate how well litigation is presently serving its purpose is to test the accuracy of the settlement decisions that resolve ninety percent of all lawsuits filed.  When researchers investigate those decisions, the error rates fly right off the charts.

According to Beyond Right and Wrong, Plaintiffs make so many settlement "decisional errors" that their interests would be better served by flipping a coin.   And though defendants make fewer such errors - they're still wrong 25% of the time.  And when they're wrong, they're very very wrong - averaging an unnecessary expense of nearly $1.5 million one time out of four.

If your contractor erred twenty-five percent of the time and if his error cost you $1.5 million on each of those occasions, you simply wouldn't hire him again.  Problem solved.  But what if all contractors erred to your considerable economic disadvantage 25% of the time?  What would you do? You'd reject contracting as a profession and seek out a new system for building a skyscraper, that's what you'd do.

Corporate America accepts litigation error rates of this frequency and this magnitude because it doesn't believe it has any  real choice.  Alternate dispute resolution technology - mediation - has become the caboose in litigation's long train.  Even if it weren't, the error that litigators and their clients are making is committed at the time of settlement - in the course of the mediation - not at the time of trial.  ADR in its present form will not save us.

The Solution

If you're skeptical about the ability of checklists to revolutionize legal practice, take a look at what they have done for the gamblers in the most sophisticated casino in the world - Wall Street.  In writing The Checklist Manifesto, Gawande interviewed three high-flying financial investors, all of whom controlled funds in the tens to hundreds of millions of dollars.  All were checklist aficionados.

Monish Pabrai runs a $500 million portfolio.  He told Gawande that his friend Warren Buffet had a mental checklist.  But "I'm not Warren," he said.  "I don't have a 300 IQ."  So Pabrai devised a written checklist based upon his own investment failures as well as on those he observed in the market place.

It turned out that the 300 IQ didn't immunize Buffett from error as effecitvely as a checklist.  Pabrai observed that Buffet and his partner, Charlie Munger, took a beating when they invested in an office and furniture leasing company during the dot.com boom.  Munger and Buffett, Pabrai said "saw the dot-com bubble a mile away" but they failed to see how dependent the company was on the bubble.  Munger himself acknowledged that he'd made a "macroeconomic mistake," one that Pabrai subsequently included in his checklist - make sure you've asked whether a company's revenues are over- or understated due to boom or bust conditions.

Transforming an Open-Ended, Haphazard Process into a Streamlined and Disciplined Protocol

Gawande's financial wizards described their pre-checklist processes as  "open-ended and haphazard."  Using a disciplined and goal-oriented process guided by a checklist provided them with twice the number of investments that were twice as profitable.  That's worth investigating if  "open-ended and haphazard" also describes the way we litigate disputes.

Because there is so much at stake when the government sues Microsoft for antitrust violations or a petrochemical company seeks coverage for the cost of investigating and remediating hundreds to thousands of toxic waste sites,  litigation costs are the least of a corporate client's concerns.   And though lawyers and law firms handling such cases make some effort to apply systematic, disciplined processes to litigation, they rarely manage to do so.

The Dispute Resolution Checklist

The manner in which human beings tussle with one another over power, property and prestige is not much different in adulthood than it is in middle school.  To the extent it is, these simple checklists can be deepened by applying the insights of cutting-edge negotiators like David Lax and James Sebenius who wrote the brilliant 3-D Negotiation.

The Peer Mediation Protocol Scaled to Address Commercial Litigation According to 3-D Negotiation's Insights

• Step One:  introduce everyone; explain the process; establish an atmosphere of cooperation; respect; hope; and, safety.

Step One of the Middle School dispute resolution checklist is a "communication" protocol.  Skyscraper contractors, airline pilots and surgical teams incorporate similar communication checklists into their procedures.  Gawande tells us that when each team member introduces himself by name, group cohesion is increased.  More importantly, so is the likelihood that all team members will be emboldened to speak up when something goes awry during a passenger jet's polar crossing or an emergency appendectomy.

Because people in conflict are both angry and afraid, the Middle School checklist includes instructions meant to calm fears and avoid outbursts -  listen; cooperate; be respectful; focus on the goal of solving the problem; give assurances that the parties will be protected from  emotional bullying and physical harm; and, express hope that a solution will be found.

To deepen the process, we look to one of Lax and Sebenius' negotiation "dimensions"  -- "the setup."  Setting the table for the negotiated resolution of a dispute, they counsel,

means acting to ensure that the right parties have been involved, in the right sequences, to deal with the right issues that engage the right set of interests, at the right table, at the right time, under the right expectations, and facing the right consequences of walking away if there is no deal.

Any effective litigation prevention checklist would first require that all potential stakeholders be identified - not just those individuals involved in the dispute itself, but also everyone who might be affected by the lawsuit's fall-out and anyone in a position to leverage the litigation by transforming it into an opportunity to make a business deal.  And though a place at the table will eventually have to be set for the obstreperous attorney who wrote the hostile "demand" in the first instance, when his place at the table should be set is a matter of preparation, strategy and tactics.

• Step Two:  Define the problem by discussing what happened and why; summarizing everyone's narrative in an effort to harmonize the similarities and throw the differences into sharp relief for later brain-storming
  

Sure, it's easier (and seemingly safer) to write an equally threatening response to the threatening demand letter.  But let's face it.  Those dueling letters almost invariably escalate the conflict, thereby diminishing the chance that anyone will be inclined to sit down and brain storm potential solutions.  Even if the choice is litigation, counsel should consider de-escalating the conflict in certain circumstances and build a "sit down" into the litigation schedule to avoid the spiral of accusation and counter-attack that litigation too often becomes.

Why, you might ask, should in-house counsel waste the human resources necessary to draw up a detailed and disciplined negotiation plan if the plaintiff's lawyer does not follow through on his threats?  This is the same type of push-back airline pilots gave in response to the the procedural checklists required to be reviewed and followed before they could so much as back their plane out of the gate and onto the runway.  In the absence of such checklists, however, we never would have had the "Miracle on the Hudson."

As Gawande reminds us, Captain Chesley B. "Sully" Sullenberger, III -- the 57-year old pilot who landed his Airbus A320 on the surface of the Hudson River with the grace of a glider pilot -- repeatedly rejected journalists' attempts to elevate him to the pantheon of American heroes.  In response to praise for his bravery, his wisdom, and his savvy, Sully remained adamant.  The "miracle" wasn't his.  It belonged to his team and to their "adherence to procedure."

It would have been easy, Gawande observes, for Sullenberger and his team to have skipped the checklist that day.  They collectively had more than 150 years of airline experience among them; they'd  run through the same checklists on thousands of occasions and had never been challenged to test their efficacy against failure.  Not one of them had ever before been involved in an airline accident.  What were the chances?  On that day, the chances of disaster were 100%, as was the crew's "adherence to procedure."

Dispute resolution protocols require that each stakeholder is permitted to tell his story and to have his story acknowledged, summarized, affirmed or rebutted.  We fail to include an interested party or cut off the "irrelevant" narrative of events at our peril.  Every communication is not critical, important or "relevant."  But some communications are.  If we drop the stitch of the one containing the solution to the dispute, the entire effort fails.

• Step 3  Identify the Issues at the table by creating an agenda, using active listening skills, retaining an open-mind, asking all present whether anything has been missed and identifying areas of miscommunication or incorrect assumptions.
  

As a prelude to exploring the negotiated resolution of a threatened lawsuit, both pre-negotiation and "at the table" investigative work must take place.  There is, after all, only so much we can learn without talking to our opposition.  As Lax and Sebenius caution, this step is the one where value is created.

As long as one or more parties care strongly about some aspect of the process or outcome, that aspect is a potential source of value in the negotiation.  So . . . "value" can mean a discounted cash flow.  But it can also mean precedent, relationships, reputation, political appearance, fairness, or even how the other side's self-image fares in the process . . . Value-creation falls into the "win-win" or "non-zero sum" aspect of the process because value creation benefits all parties."

Unlike middle school mediators, corporate negotiators have the ability and expertise to search for and locate opportunities to trade items of unequal value among the parties;  to parlay differences between the parties' appetites for risk and assumptions about the future into a deal more satisfactory than any compromise could be; and, to brain storm contingencies that must be met if the deal is to deliver the value implicit in its design.

• Step 4:  Finding solutions, in which the issues are addressed one at a time; the parties communicate their unique interests, and, how each proposal might satisfy one or more of them.

No matter how much "win-win" value the parties create, someone must still lay claim to that portion of the "pie" to which they believe themselves entitled. "At the table" tactics such as framing and anchoring; making concessions and demanding reciprocity; and, persuasively forwarding one's "case" for their fair share should be discussed by the settlement team in advance and checked off the list as the negotiation proceeds.  Though each step will not necessarily deliver value to the "right" party, the failure to take any one step contains within it the potential failure of the entire operation.

• Step 5 - Agreement and Closing - make certain you and your bargaining partners have the same understanding of the deal you've created and get that deal down into writing.
  

This step is another that both in-house lawyers and outside counsel consider  so basic that it shouldn't require listing.  The lawyers charged with drafting deals, however, create enough errors to support tens of thousands of contract litigators spending tens of thousands of hours fighting over the meaning and application of poorly drafted, ambiguous and sometimes incomprehensible contract terms.  Contract drafting specialists like attorney, speaker and author Ken Adams, should always be consulted when the stakes are high.  And when they're not high enough to justify retaining someone like Adams, they will always justify the inclusion of a drafting checklist drawn from the best manuals available, one like Adams'  Manual of Style for Contract Drafting.

I leave you with these nascent and incomplete checklists in the hope that their very existence might launch an industry-wide conversation in which we question the application of ancient forms of action and reflexive responses to claims that are more suited to a pre-industrial society than to our super-charged age of information.