Openings

In a prior post, I suggested that in the absence of a thorough re-vamping of the rules of civil procedure, parties and practitioners should try to invent new ways to resolve disputes outside the court system, How exactly would that work?

Let’s start by considering how to open a case, both within and outside the court system. If you’re having a problem with your neighbor/boss/business partner/stranger, etc., you can’t simply ask the court to help you resolve that conflict. Instead you must file a complaint setting forth a cognizable legal claim. You must include all the elements of the claim. You must have damages or an entitlement to equitable relief. You must identify yourself as the victim and the other side as the transgressor. To get inside the door of the courthouse, you are required to act in an adversarial manner, and you must allege wrongdoing on the other party’s part.

This is not always a bad way to initiate dispute resolution. A formal complaint does have the advantage of getting the other side’s attention, and letting them know that you feel sufficiently aggrieved by their conduct to initiate formal legal action. But it also throws down the gauntlet. In that context, it’s hard to resist the temptation to go further than is necessary. So to achieve maximum impact, the plaintiff often includes some causes of action that might be a stretch, and some allegations that verge on hyperbole. That is usually done to let the other side know just how severe the consequences  of their actions might be, but it also frequently provokes outrage, denials and counterclaims. In contested litigation, the pleading process, which in an ideal world would serve the useful purpose of finding out what matters are actually in dispute and what matters are agreed, is more likely to inflame passions on both sides, and drive the parties further from resolution.

For a lot of reasons, some historical, some budgetary, and some moral or philosophical, the courts are not likely to open their doors to disputes that do not meet traditional legal standards. Courts are not likely to turn themselves into dispute resolution centers available to manage any sort of conflict, regardless of whether or not it meets those traditional tests of legal sufficiency. But a lot of conflicts that probably don’t meet those requirements seem to find their way into court anyway, simply because there is nowhere else to take them that can provide the same level of gravitas. Which means that the courts spend a lot of time “weeding out” cases that “don’t belong” in court, even though they may involve real conflicts that are important to the parties involved. And even for the conflicts that do happen to meet the legal tests of at least successfully alleging a breach of contract, tort, or violation of some other legal interest, people might be surprised to learn that it’s still not the courts’ primary function to resolve those conflicts. Instead it’s the courts’ job to determine whether one or both sides is able to prove the alleged violations. In many cases, doing that job might have the effect of resolving the conflict, but it’s still not the same thing.

So let’s say you want to try to resolve a conflict–whether or not it meets traditional tests of legal sufficiency–outside of court. What you would probably do, outside the court system, to initiate a dispute resolution process is serve a demand letter. The problem with most demand letters–maybe because they’re usually drafted by lawyers–is that they often find themselves infected with the same values and methods associated with the adversary system, even though they purport to present a means of resolving disputes out of court.

What that means is that most demand letters are going to contain the same language of legal claims, violations and damages that is contained in complaints. Most are going to threaten the party served with severe legal consequences in the event they do not give in to the party’s demands. Even though most demand letters actually invite a negotiated resolution of a dispute, they usually read more as an ultimatum, and many of them seem to leave little room for negotiation. As a result, many demand letters provoke the same kind of angry denials and counter-charges that complaints provoke. Many become the opening salvos in a war of words that will probably end up in court, and only much later return to the negotiating table after a lot of costs and pain have been inflicted by both sides.

Recently I had to respond to a demand letter charging a client with various trademark and false advertising violations. I responded by suggesting that the client was within its rights in some areas but was willing to make certain other changes to its advertising materials in order to resolve the dispute. What I got in reply was a new letter, speaking in the same terms of threats and ultimatums, but demanding only that we do exactly what we had offered to do in response to the original letter! We made the changes, I wrote back thanking the trademark holder’s attorney for his cooperation in successfully resolving the dispute for the benefit of both sides, and that was the end of the matter. The point being that lawyers have a hard time getting ourselves out of the mindset of claims and threats and sanctions, and into a different mindset of cooperative dispute resolution. Another point being that demand letters, even though they purport to seek an out of court resolution of a dispute, still operate in the shadow of the court system.

What I’m suggesting is that we might be squandering an opportunity. We ought to try being more creative in framing demand letters in a way that suggests a positive solution to a problem. That usually requires some acknowledgement of the other side’s interests, and that can be done without appearing weak.

We should recognize that to frame a dispute only as a legal claim might be an unduly narrow way of looking at the problem. Discussion of the parties’ other concerns and interests opens up other ways of potentially resolving the dispute.

We might also consider asking the opposing party to agree that the parties have a conflict, instead of inviting the opposing party to disagree with our characterization of the alleged violation. That would start the parties down a path of agreement, even if the only common ground that can be found at the outset is to the proposition that the parties have a dispute that needs resolving.

Another positive way of framing a demand letter is to invite the other side to suggest a means of resolving the conflict, instead of just demanding that they agree to our terms. That way they are invested from the outset with part of the responsibility for solving the problem.

Granted there are some situations where the stakes are such that you must demand that the other side agree to your terms or face the consequences, but you have to recognize when you take that approach, that if they don’t back down immediately, you’re just headed for litigation. For a large number of contested disputes it might be more productive to suggest right up front that you are interested in sitting down and resolving the dispute in a way that may satisfy both side’s concerns and interests. The vast majority of contested disputes are going to end up in a negotiated resolution eventually anyway. It only makes sense that they start down that path from the outset. I

                       

Joe Markowitz

Joseph C. Markowitz has over 30 years of experience as a business trial lawyer.  He has represented clients ranging from individuals and small businesses to Fortune 500 corporations.  He started practicing with a boutique litigation firm in New York City, then was a partner in a large international firm both… MORE >