What is the nature and purpose of the pledge?
The Pledge is not intended to impose enforceable rights or obligations, nor does it constitute a waiver of any right or obligation. Rather, the Pledge is a statement of policy aimed at encouraging greater use of flexible, creative and constructive approaches in resolving disputes.
Indeed, to focus on issues of “legal enforceability” really misses the entire point of the Pledge, which is meant to benefit signatories by signaling their mutual willingness to approach the resolution of disputes in constructive, reliable, and commercially rational ways that give them maximum control over the process, the outcome, and related costs. The beauty of the Pledge is that it gives businesses and their attorneys much greater flexibility in problem solving rather than tying their hands contractually. Companies can point to their adherence to the Pledge as symbolizing a corporate policy favoring appropriate use of face-to-face negotiation, interest-based bargaining, mediation, and other approaches.
Again, signing the Pledge does not mean a company will not seek to enforce legitimate rights or protect its vital interests in court or other forum. It simply lays the groundwork for signatories to avoid the expense, risk, and loss of control that usually comes with full-blown adjudication in the many cases where they are likely to see benefit in alternative courses.
How does this pledge benefit companies and their counsel? (return to top)
A “Pledge” or other company policy respecting the handling of disputes, clearly articulated and broadly communicated, can be an effective platform for resolving conflicts in straightforward and constructive ways that produce better resolutions while controlling risks and expenditures of time and money.
Here are some of the benefits derived from the Pledge:
- By conveying a message that a company will routinely consider negotiation and mediation, where appropriate, the Pledge makes it clear that the exercise of such choices does not reflect a lack of confidence in the company’s bargaining position. Put another way, the Pledge may be viewed as a mechanism for taking the onus off those who wish to start the ball rolling on negotiations, or respond positively to a similar request from another company.
- The Pledge also promotes systematic, early efforts to resolve disputes. Properly communicated in-house, the Pledge also has an important impact on the way problems are handled within a business by encouraging early managerial assessment of the company’s exposure with respect to a given dispute. Before shipping the problem off to the lawyers, line executives who understand key business issues, risks and options are often in a position to nip problems in the bud. As internal policies are articulated, they may also permit a company to develop regular approaches to the handling of different kinds of problems, thus avoiding idiosyncratic approaches motivated by individual agendas or overly emotional responses.
- The Pledge also establishes a flexible framework for helping to resolve complex multi-party disputes. The greatest value of the Pledge may be as a tool for promoting resolution of complex disputes involving multiple parties. The high stakes often associated with these controversies, including the expense of attendant court process, places a premium on satisfactory settlement. Rarely, however, are all of the parties bound by a single contractual agreement addressing dispute resolution. In such circumstances, the Pledge offers a procedural framework to bring parties to the table.
I see the Pledge is authored in Alliance with CPR. Who is CPR? (return to top)
CPR is the inventor and promoter of the Pledge. CPR was originally formed as a coalition of leading General Counsel dedicated to identifying and applying appropriate alternative solutions to disputes thereby mitigating the extraordinary costs of lengthy court trials. That determination is still at the heart of CPR’s activities today.
Why should my company sign the Pledge?
The Pledge benefits signatories by signaling their mutual willingness to approach the resolution of disputes in constructive, reliable, and commercially rational ways that give them maximum control over the process, the outcome, and related costs. The Pledge gives businesses and their attorneys much greater flexibility and control in problem solving, rather than tying their hands contractually.
How does my company make use of the pledge?
The principal means of using the Pledge is to approach all parties to a dispute with the idea of using alternative dispute resolution techniques to explore early resolution.
What costs are associated with using the pledge?
Exploring settlement through alternative dispute techniques is not without cost. Mediators charge by the hour for their services. Generally, parties retain lawyers to guide them through the process. Finally, alternative dispute resolution techniques are not winner take all solutions. Each party should be prepared to compromise its position, thus engendering settlement expense.
Nevertheless, the costs are generally finite, under the control of the parties, as these processes are voluntary, and can be crafted to fit individual cases and the needs of each party.
What downside is there to signing the pledge? (return to top)
Since there is no cost or obligation associated with signing the Pledge, there is no downside to signing it.
What resources are needed for ADR and how does my company obtain them?
Generally, each party needs to retain an advocate familiar with ADR to aid it in using ADR to explore early resolution. In addition, it is usually useful to employ the services of a third party neutral to provide honest, direct and impartial feedback to all parties and help each party evaluate its position and the steps it needs to take to reach settlement.
Is there a category of disputes that do not lend themselves to ADR?
All disputes are capable of being the subject of ADR. However, the decision whether to use ADR can be made at the time a dispute arises. Thus, the Pledge provides a mechanism for a Company to make an informed choice as to what path to take in managing a dispute without compromising its position in the matter.
Do both parties need to sign the pledge?
Obviously, if both sides are familiar with ADR and the Pledge, it makes the process easier. However, it is not necessary for both parties to have signed the Pledge. The party having signed the Pledge can introduce the concept to the counterparty, indicating that discussing with the other party the opportunity afforded by the Pledge has become company policy.
As an unintended consequence, does this help “knock-off companies”?
Given that each dispute rests on its own facts and circumstances, a Pledge signing party can decide in a given case not to invoke the Pledge. Therefore, no advantage is given to a “knock-off” company.
Does this limit our options?
Since no obligations stem from the Pledge, signing it does not limit any options.
Who mediates/negotiates the resolution? (return to top)
Independent third parties chosen by the disputants are used to mediate and negotiate resolution. It is often the case that these “negotiators” will not be involved in the litigation of a dispute.
What is the difference between this and a letter from my lawyer?
Should a company broach the subject of ADR without benefit of having signed the Pledge, its actions can be, and often are, interpreted as a sign of weakness and a lack of confidence in its position. This has the effect of raising the other party’s expectations, making settlement on appropriate terms less likely.
What is the compelling reason to do this versus sue?
First, it allows the disputing parties to control their own destiny. Second, it provides an opportunity to end the dispute before expenses mount up and relationships become tattered.
What is in this for CPR?
As mentioned, CPR is the inventor and promoter of the Pledge. Therefore, its reputation is linked to the Pledge. Additionally, through its distinguished neutrals program, CPR offers neutrals for use as independent third party mediators. These neutrals pay CPR to be on its panels. These neutrals can be used by any party having access to the panels program (usually through third party CPR law firm members) without paying any fee to CPR.
Could this be used with employees?
Yes, it can be used with employee disputes.
How can this result in a settlement if both parties do not agree to binding arbitration?
Both the strength and risk of the Pledge is that the process is entirely voluntary. The parties to the dispute must mutually agree to enter ADR and if appropriate to settle a dispute. This leaves the process and settlement decisions to the parties and keeps the decisionmaking process out of the hands of third parties. However, nothing can be forced on either party. However, it shifts the focus of the parties from “winning” to “resolving.” This shift, along with effective third party facilitation, often leads to early resolution of the matter. Further, even if resolution does not occur at first blush, it can set the table for future settlement discussions.
Will there be any source of legal counsel dedicated to this process (for a fee or not)?
There is planned to be a preferred source of fee-for-service counseling in the person of Dale L. Matschullat and his firm, Schiff Hardin LLP, assuming the popularity of this program warrants it. (return to top)
