It is one of the hottest areas in legal practice at the moment – commercial dispute resolution. Justin Whealing looks at the rise and rise of ADR and how different bodies are turning a buck through settling disputes.

There was an audible gasp from the audience at what had just been said.

On 7 June a number of Australia’s leading private practice, corporate and government lawyers flocked to the Sydney offices of Gilbert + Tobin to hear a high-powered legal panel discuss the topic of Commercial Dispute Resolution – The 2020 Vision.

One of the panel members, the leading litigation lawyer and Gilbert + Tobin partner Colleen Platford, said that clients in the past had been reluctant to seek settlement for psychological reasons.

“There is sometimes a real issue about people not wanting to suggest mediation; they think it is a sign of weakness,” said Platford, as the audience stirred. “That sounds trite but it is a real issue in who is going to make the approach first, for example.”

A fellow panel member, Craig Pudig, the head of litigation at the Macquarie Group, not a position that suits a wilting flower, quickly pointed out that, if such a view exists, it is a view at the margins of the alternative dispute resolution (ADR) scene.

“I have never, ever been involved in any sort of case either as poacher or gamekeeper when someone has come to us to mediate and I have thought they are weak,” said Pudig, a former managing partner of the Sydney office of Clayton Utz.

Pudig’s comments reflect current trends within dispute resolution.

Lawyers in the litigation groups at large law firms will not progress very far if they don’t have skills in ADR, and clients will notice.

“It is important, not just at particular stages but at all stages, when running a piece of litigation, you always have to be thinking if there is an opportunity where I can move this piece of litigation to a position where we can try and resolve it,” said Pudig when speaking to Lawyers Weekly prior to the conference. “Litigation has become far more complex then it was 25 to 30 years ago, when I started as a baby lawyer, so you need to look at different and alternative ways of trying to resolve disputes, particularly those that are more complex and complicated both legally and factually.”

Dealmakers

The burgeoning area of ADR has attracted a swathe of start-up companies looking to get a piece of the action in this area.

In late 2010, Tony Dempsey, formerly a Wallaby, head of the Australian Rugby Union Players Association and lawyer at Clayton Utz, started Wisdomdr, a dispute resolution service, with former Freehills lawyer David Vaux, as they believed there was a more commercial method of solving disputes.

What is interesting about Wisdom’s model is that, far from usurping lawyers, the ‘captains of industry’ brought in by Wisdom (often heads or former heads of ASX200 companies) to help feuding parties resolve a dispute do so with the legal representatives of both sides being present.

“We work with the lawyers,” Dempsey tells Lawyers Weekly. “We find that transactional lawyers in particular and corporate lawyers have a mindset of dealmaking to start with.

“They are very willing to work with us in an environment of collaboration with their clients to try and get the right solution for all of them.”

Wisdom has been spectacularly successful since opening its initial office in Sydney around 18 months ago. The company now has offices in Melbourne, Hong Kong and Singapore, with Dempsey telling Lawyers Weekly his company will be embarking on a capital-raising exercise over the next three months to also further expand into Perth and Brisbane.

“Mining and exploration is an area that could be quite fertile for us,” says Dempsey. “Quite often over there (in Western Australia and Queensland) we are seeing joint venture parties coming into dispute or conflict where they need to resolve it in a way that is removed from the courts.

“They need to have an ongoing working relationship as they are in the middle of a project.”

Steve Lancken, a principal with the dispute resolution experts theTrillium Group, was the MC at both the Commercial Dispute Resolution – The 2020 Vision conference on 7 June and a seminar organised by the NSW Law Society on 12 June titled: Fitting the Forum to the Fuss - ADR: More than Mediation? Examining the ADR Toolkit.

Lancken says the notion that settling involves weakness was featured in both discussions, and it troubles him.

“The first thing I learned was that lawyers don’t yet get the difference between deciding what happened in the past and solving disputes that deal with the future,” he says. “The message we got from lawyers that proposing ADR is a sign of weakness came out in both conferences.”

At the NSW conference organised by the NSW Law Society, Federal Court justice Steven Rares and family lawyer Sandra Hale questioned whether parties go down the ADR route for ulterior motives.

“A constitutional question immediately arises about that as people who have a large purse or a large amount of venom will string disputes out and put the other at as much expense as possible [to spend] resources [they need to file in court] on, among other things, a mediation that the other side is determined will fail,” said Rares on 12 June.

That ADR might be used with such a motive in civil or commercial dispute leaves Lancken incredulous, particularly when the increasing use of ADR is being supported by politicians and law societies around the country.

“What scared me a little bit was that people would use ADR for improper purposes,” he says. “That surprises me and disappoints me and I think we need to be aware of that and dispute resolution practitioners need to be aware of that because that is a very sad thing when that happens.”

Stepping up

While views around how ADR is perceived and used are still open to conjecture, what is not in dispute is its growing influence on the Australian legal landscape.

For a long time, Australia was seen as lagging behind places such as Hong Kong and Singapore, which have long-established commercial arbitral seats that attract regional and international parties.

However, the former federal Attorney-General Robert McClelland and a coterie of senior legal figures of the calibre of Michael Kirby, Trevor Morling QC, Sir Laurence Street and Doug Jones, pushed for Australia to take a more active role in international commercial arbitration, and in August 2010 the Australian International Disputes Centre (AIDC) was opened.

Ex-Minter Ellison partner Michelle Sindler, who left Australia more than 10 years ago partly because she felt ADR wasn’t championed and promoted in the upper echelons of the profession, was enticed back to be the centre’s inaugural CEO. The centre’s opening has helped to put Australia on the international ADR map.

In just over 18 months, the centre has heard over 125 cases, with 15 per cent of the rooms being used by international parties.

The AIDC has also taken in interns from Belgium, Korea and Italy.

In 2011, Doug Jones, a partner with Clayton Utz and the head of the Australian Centre for International Commercial Arbitration (ACICA) became the first Australian president of Chartered Institute of Arbitrators, a global association of more than 12,000 arbitrators.

Just last week, Jones also became the first Australian to be elected to the board of the International Federation of Commercial Arbitration Institutions (IFCAI).

The rising importance of Australia on the global ADR scene has also given local ADR practitioners a boost.

“In my view we can probably be ambitious and say that, in 10 years, mediation and arbitration won’t be the alternative form of dispute resolution; it will be the primary mechanism and litigation will be the alternative,” said Sindler at the conference at G+T on 7 June.

There is no doubt that general counsels and the heads of large corporations are increasingly looking at ADR, and it is not all about the bottom line.

“Large organisations, government and private, are recognising that conflict is expensive, not just the legal costs but expensive in terms of the human cost,” says Lancken. “I am sitting with someone who is a client of mine who has had us working in their organisation for the last 12 months because they want to avoid having conflict in their workplace.

“They have invested a huge amount of money in doing that because it creates a healthier workplace. I think that is where the spotlight is shining. It is not about saving money on lawyers; it is about doing business better.”