A Perfect Storm is Gathering

Jan Eijsbouts   Hans Peter Frick   Bengt Gustafson   Marina Kaldina   Wolf von Kumberg   Michael Leathes   Deborah Masucci   Erik B. Pfeiffer   Philip Ray   Roland Schroeder   Steve Weatherley   R. Bruce Whitney

The future ain’t what it used to be – Yogi Berra, Former Coach, New York Yankees

A Perfect Storm is gathering, comprising the effects of severe economic downturn, the alacrity with which corporate law departments seek greater transparency and outcome certainty, and new tools in the field of information and communication technology.  This convergence provokes serious changes in attitude and approach by all dispute resolution stakeholders – especially trial lawyers, mediators and mediation provider organizations.  The status quo has had its day.  Good news for those nimble enough to adapt quickly.Money is a scarce commodity.  Traditional litigation is a money-consumption machine.  Technology can disseminate, instantly and globally, useful feedback about dispute resolvers’ styles, making the mediator best suited to resolve a dispute easily identifiable.  The dire economic climate and the increasing growth of mediation have made the early use of mediator not just good practice, but economic necessity.    A wonderful snippet of homiletic wisdom is found in the writings of Og Mandino, author of The Greatest Salesman in the World. It was so obvious we were bound to ignore it. Do not allow yesterday’s success to lull you into today’s complacency, for this is the great foundation of failure.  Never have these words rung more true, and demanded more attention and action, than in 2009.

The hurricane of an economic and financial turmoil of unprecedented proportions is roaring into every vested domain.  Gone are the days when corporate leaders can feel at liberty to play Russian roulette with shareholder – now read stakeholder – interests and get their way mainly by force and bluster.  The economic meltdown of the last eighteen months has left an empty theater.  Enter, stage right, the eight choreographers of the New Economy – responsibility, transparency, authenticity, trustworthiness, certainty, competency, sustainability, and frugality.

These are critical factors that, in the post-meltdown world are capable of injecting confidence into markets, trust into businesses and value into stock markets.

Simultaneously a second wind of change is blowing, bringing a deepening cold front to the legal professional services industry: more demanding in-house counsel.  Under corporate governance pressure to manage legal risks, General Counsel and their Corporate Law Departments (CLDs) face severe “in control” requirements.  Expected to deliver positive outcomes and therefore cut costs while enhancing (not just protecting!) the corporation’s reputation, CLDs are becoming intolerant of service providers that milk their clients’ predicaments for their own fee earning benefit.  The days when CLDs are happy to delegate and even abandon a case to a law firm with instructions to let it follow its path, are history.  Now they want transparency and greater control.  Lawyers who are reluctant to give clients a clear vision of the risk and cost consequences, or who delay proposing alternative strategies to the desired outcome, will face a reducing workload at a time when their income streams are under pressure.

And there is a third tempest, converging at the very moment the first two collide.  Information and communication technology is eroding traditional legal work.  An increasing proportion of legal work is now commoditized.  Document assembly systems and e-Discovery are big business, creating cost-saving opportunities.  Better, quicker, simpler and less costly ways are emerging for accomplishing many traditional tasks.  ODR – online dispute resolution – was one of the big growth areas in 2008.  Technology is making true transparency possible, and therefore vital.

These global climatic forces, plus other market developments such as the increasing acceptance of non-litigious forms of dispute resolution and the emergence of more, and more credible, mediators, will force lawyers to change their attitude and perspective.  New York Times columnist and author, Thomas Friedman, sees this as the market becoming more adaptable to market needs.  In his bestseller The World is Flat he talked of triple convergence.

For those who read the signals, change their mindsets and prepare well, this is not Armageddon.  There will always be a certain place for court action, but dictionaries will be re-written to cite litigation, not mediation, as the definition of Alternative Dispute Resolution.

Change always accelerates at times of economic stress.  Almost everyone now views risk with increasing alarm.  Interests consciously predominate over positions.  The cast iron case never existed, but now pragmatism, reality and risk factors are weighing more heavily, emphasizing prevention, avoidance and the earliest possible resolution of disputes.  Back-to-basics instincts render brash bravado outdat